TILMA endangers democracy

Following the Whitehorse Chamber of Commerce luncheon, one of the Trade Investment and Labour Mobility Agreement authors suggested “hire the…

Following the Whitehorse Chamber of Commerce luncheon, one of the Trade Investment and Labour Mobility Agreement authors suggested “hire the best trade lawyers available to tell you who’s right.”

That is exactly what we did.

And their analysis is exactly why the Yukon Federation of Labour has taken a strong position opposed to the TILMA agreement.

What follows is the 10-point summary of an assessment of the agreement by Steven Shrybman, a lawyer with Sack Goldblatt Mitchell of Ottawa.

While it may appear lengthy, I urge everyone to read it — it will give you some idea of just how bad the trade agreement is.

Alex Furlong, president, Yukon Federation of Labour, Whitehorse

An Assessment of

the Trade, Investment and

Labour Mobility Agreement


On the basis of our review, we have come to the following conclusions:

1) The Trade, Investment and Labour Mobility Agreement is authorized by the Agreement on Internal Trade, which was negotiated by the provinces and the federal government more than a decade ago.

However, the provincial trade agreement substantially expands the scope of the federal agreement, most importantly by including dispute procedures that may be invoked by private parties, and which can give rise to damage awards that will be enforced by Canadian courts.

A Potent Instrument for Deregulation

2) Among the more onerous of the Trade, Investment and Labour Mobility Agreement obligations is the prohibition on existing and future government “measures” that “operate to restrict or impair” trade, investment or labour mobility, unless such measures are exempt under the regime.

Because “measure” is defined to mean “any legislation, regulation, standard, directive, requirement, guideline, program, policy, administrative practice or other procedure,” virtually all actions by government may be regarded as offending these broad constraints.

After all, virtually everything that a government does affects the market in some manner, otherwise there would be no need for it to act in the first place. A priori, such measures affect the rights and opportunities of companies and individuals to conduct business, make investments or provide services, and therefore, unless exempt, may be challenged under the trade agreement for doing so.

3) The provincial trade agreement dispute procedures empower private parties to challenge provincial measures that are alleged to offend its rules.

Such disputes are then resolved by tribunals that operate under international arbitration rules, and have authority to award up to $5 million in damages to the private party where a government refuses to remove a measure that violates the trade agreement rules.

Because claims may be unilaterally asserted by individuals and corporations, they are likely to proliferate and create real pressure upon governments and other public bodies to abandon or weaken policies and laws that are otherwise entirely warranted and lawful.

4) While fashioned as a trade, investment and labour mobility agreement, the majority of government measures subject to the trade agreement’s rules have little if anything to do with inter-provincial trade, investment or labour mobility, per se.

While such measures may indirectly impact investment, trade and labour mobility, these effects are incidental to their primary purpose, which may range from environmental protection to day-care regulation.

5) To safeguard certain measures from challenge, the trade agreement establishes general exceptions, and allows other measures to be defended if they can be proven to be necessary to serve a “legitimate objective.”

Nevertheless, broad areas of public policy and law must conform to the trade agreement’s requirements, including many measures relating to the environment, consumer protection, health care, education, and other social services.

Even measures which are exempt must be annually reviewed “with a view to reducing their scope.”

It would also be easy to overestimate the safe haven provided by the legitimate objective exception, which has been interpreted narrowly by other trade tribunals.

Impact on Public Services

6) The trade agreement not only provides a new instrument for attacking government policy and law, but also for limiting the role and capacity of government to provide, or support, public services.

This latter consequence arises from the fundamental contradiction that exists between the free market policies of trade liberalization and those necessary to establish and sustain public services that are provided in accordance with non-market principles, such as ensuring universal access or not-for-profit delivery.

7) Canada has acknowledged this basic conflict, and has taken steps to exempt health and certain other social services under NAFTA and the WTO.

Remarkably, the deal’s authors have declared no similar exceptions.

While existing (but not future) measures relating to health and social services are sheltered from TILMA disciplines for a two-year transitional period, unless the parties agree otherwise, social services such as health care, childcare and education will be entirely exposed to TILMA disciplines on April 1, 2009.

8) Thus, the deal gives private parties the right to challenge the regulations, programs, and funding arrangements that provide the foundation upon which public and social services depend.

In fact, international investment rules, that are analogous but less expansive than those set out in the trade agreement, have been invoked on several occasions to either limit the scope of public sector service delivery, or to claim damages when governments seek to terminate privatization schemes that fail.

9) Because the deal provides unprecedented grounds for asserting private interests and a sympathetic forum for doing so, it is likely to become the preferred venue for those seeking to privatize public services.

Rather than spend years litigating before domestic courts, challenges such as the one mounted by Doctors Chaoulli and Day to Quebec’s medicare system are now likely to proceed under the agreement.

Not only does the deal offer much broader grounds for launching such attacks, and a far more expeditious route for doing so, it also holds out the prospect of winning substantial monetary awards.

10) Because TILMA establishes a new high-water mark of investor entitlement, these rights can now also be claimed by US and Mexican investors in consequence of NAFTA guarantees of national treatment. Moreover, these rights are bestowed on US and Mexican investors without any reciprocal gains for BC or Alberta investors in the US or Mexico.

Prepared for the Yukon Federation of Labour by Steven Shrybman: Sack Goldblatt Mitchell, September 2007