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Report of the Joint Public Advisory Committee to the
Second North American Symposium on Assessing Environmental Effects of Trade
on the NAFTA Chapter 11 Public Workshop held on March 25, 2003

EnviReform: Strengthening Canada's Environmental Community through International Regime Reform:
Exploring Social Cohesion in a Globalizing Era

North American Commission for Environmental Cooperation
in collaboration with the United Nations Environment Programme
Gustavo Alanís Ortega, JPAC Chair

We had our first seminar on Washington a few years ago, and I am very pleased that the committee continues to work in this field. I wish the CEC great success in the work of these two days, at this Second Symposium on Assessing the Environmental Effects of Trade. As Elizabeth Dowdeswell said a few moments ago, I am to report on the conclusions from yesterday's workshop on chapter 11.

Yesterday's workshop was the second public workshop organized by JPAC on chapter 11. The first was in Ottawa last June, together with the ministerial meeting. The workshop that we had yesterday was intended to touch upon certain specific subjects, particularly in the realm of interpretation of chapter 11, matters that have to do with the advantages and disadvantages of investment agreements, expropriation and minimum standards of international treatment, and some questions that had to do with transparency. Other important aspects have to do with the possibility or viability of suggested modifications to NAFTA. Taking all this into account, it is important to point out that since the workshop of nine months ago, there has been more interesting research on the subject and therefore yesterday the discussion was more to the point. There is no agreement that we could see, but there is great interest and great concern on these issues. There are many things ahead - challenges, obstacles. One aspect is that we should understand better what we want to propose for the future. We must solve matters of interpretation, problems on the ambiguity of concepts, and there will debate be in the future. But we must recognize that yesterday's concerns are very serious. There are proposed solutions that are not easy to apply in practice, and that it is why it is important to have these public workshops to know what people think - academicians, entrepreneurs, different levels of society. This information will be published on our webpage in a few days and the public will have access to it. This is information that, for us as a joint public committee, will be very valuable when we draft our recommendation to the council of ministers. Yesterday we heard the public's opinions very clearly and we thank you for your interest in the workshop.

Before we start speaking of the subjects that were contemplated yesterday, it's important to recognize we have made progress. For instance, regarding the meetings of the public officials on trade and the environment, we have noticed more openness, and we are going to have a JPAC meeting with these public officials on March 26, tomorrow. The council of ministers has adopted the idea that the summaries of these debates will be at the disposal of the public and we're considering also a joint meeting of trade ministers and environment ministers. We're now looking at a possible agenda, so we can have results at that meeting.

As to the matters discussed yesterday, we consider that these matters can be grouped into three categories: the first is chapter 11, second is the solution of disputes, and the third is possible solutions for problems that we meet.

As to the provisions of chapter 11, the concern has to do with expropriation, one of the problems mentioned yesterday is that there is no definition of indirect expropriation and the risk of the threat that this might mean so that regulations can be issued for the environment and in other public policy areas, because when you issue such regulations it could be understood as an expropriation. As to important matters such as most favoured nation treatment, we have noticed that there is no great concern. Expropriation is of more concern. There is some concern that these considerations should not be interpreted in light of the preamble of NAFTA, because it speaks of the protection of the environment, and there is a fear this should be done more in favour of trade than of environment.

As the process of dispute resolution, yesterday there was concern expressed that the process relies on the expertise of trade lawyers who are defending environmental cases. There was concern that trade lawyers are somehow taking a position that judges the regulations that have to do with the environment. There was also a need expressed for more transparency in the arbitration procedure, because there is the perception by different sectors that the cases are not only of trade disputes between a firm and the government but there also is another type of implication that has to do with public policy, labour or trade, health and safety, and so on.

How can we refer to the solutions to try to solve these problems? There was an agreement in the sense to reopen NAFTA would be very difficult at present, so it was not considered to be a solution.

There was also the idea that we could we write in some general exceptions to chapter 11, but it was established that this would not be proper because these general exceptions would imply that there would be a reform to chapter 11. Also with regard to solutions, concern was expressed about what could be, at the end of the day, the results of putting such language in chapter 11. Furthermore we saw some worry that it would be difficult to have this work done by public officials who are in charge of environmental matters. Their work would be more difficult.

There was also agreement on the problems relating to interpretative statements. Yesterday it was said that interpretative statements are like a modification or reform rather than an interpretation of chapter 11. This probably has no value in an arbitration process. It was also said that these statements were not likely to solve the problems of the process because the applicable rules are not only in NAFTA. Despite these difficulties, there was a feeling among many present that interpretive statements could be a possibility to explore. It was also noted that in the negotiations of the FTAA, and in addition the agreements between the U.S. and Singapore and the U.S. and Chile, there might be an opportunity for improvements in another areas. There might be some progress in those agreements that would have some consequences for NAFTA and it would have to change as a result of these new agreements.

Finally, some other matters came to light. The first is in the context of Mexico and also the FTAA. It was said that if what we look for at the end of the day is a state of law in developing countries, it cannot happen at the same time as improving the institutional capacity. This is of course at the administrative level of the authority in charge of executing the laws. Many countries will not be ready to fulfil their obligations and this is something we'll have to face when the FTAA goes into force.

Another issue mentioned has to do with justice and balance. It was said there are no appropriate balances - there is an imbalance in the remedies available to investors with regard to chapter 11 and the remedies that citizens might have to protect the environment. It was argued that courts that could be constituted in accordance with chapter 11 are there to provide some balance between the public sector and the private sector, and at the same time a balance of the objectives of public policy. Such a balance did not exist. We are calling for a balance of public policy and its objectives so that we can achieve what we all have heard is the goal: sustainable development.

With this I conclude. I know it's very difficult to summarize the amount of issues discussed yesterday, all of them very useful, very valuable and very important. Please, if there's something that you consider important that I have not included, let me know.

 

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