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Free Trade Area of the Americas (FTAA)
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Current FTAA Negotiations
Background Information on Investment Negotiations
Canada has an interest in securing a stable, transparent and non-discriminatory
environment for Canadians and Canadian companies operating in the
hemisphere. Canadian direct investment abroad brings concrete benefits
to Canada, and the Americas account for over 60% of Canadian direct
investment abroad which totalled $ 432 billion in 2002.
Investment rules do not exempt foreign investors from the domestic
laws of the host country. Foreign investors are required to obey
all Canadian laws and regulations. Canadian investors abroad are
also required to obey the laws of the country in which they operate.
The FTAA negotiations are set to conclude in 2005; considerable
work remains to be done on the investment chapter. The draft chapter
on investment, as its stands now, includes a number of key elements,
such as non-discrimination, transparency, and provisions on expropriation.
Such obligations will not prevent governments from adopting legislation
and regulating in the public interest.
First, Canada maintains its long-standing position that health,
public education, and social services more generally, are not negotiable.
While the FTAA investment chapter will contain obligations, it will
also allow individual countries to exclude certain sectors. In this
regard, Canada already listed a number of important sectors to be
excluded from FTAA rules on investment, including social services
such as public education and health, law enforcement, child care
and social security.
Second, in addition to the ability to exclude key sectors from
the obligations, the draft FTAA text allows countries to file reservations
for measures they wish to maintain, which would otherwise not be
in compliance with the FTAA rules.
Third, the draft FTAA investment chapter contains a proposal on
general exceptions tabled by Canada, and by which all measures necessary
for the protection of health and the environment would be excluded
from the chapter.
Finally, the draft FTAA investment chapter also suggests that governments
should not seek to attract investments by relaxing their domestic
labour or environmental standards. Canada supports this sound principle.
Canada will continue to preserve, through its active participation
in the FTAA investment negotiations, its ability to adopt measures
in key policy sectors, and to regulate in the public interest.
Free trade agreements and investment-protection agreements generally
provide for a mechanism for the settlement of investment disputes.
Such a dispute settlement mechanism is essential and ensures that
disputes are settled on the basis of mutually agreed rules, rather
than through size or political might.
In addition to the NAFTA and the Canada-Chile Free Trade Agreement,
Canada has some 22 foreign investment protection agreements with
countries around the world. These all include an investment dispute
settlement mechanism.
Thirty-four countries are currently contributing proposals and
participating in the FTAA negotiations. We thereby have a rich mix
of perspectives and experience to elaborate a chapter on investment
and provisions for the settlement of investment disputes.
From the Canadian perspective, our position obviously takes into
account our experience with existing trade and investment agreements,
including NAFTA Chapter 11, and the clarification work undertaken
in that context.
On October 7, 2003 the three NAFTA trade ministers approved guidelines
for submissions from non-disputing parties and a standardized form
for Notices of Intent to submit a claim. As an additional step,
Canada and the United States also affirmed that they will consent
to open public hearings in all Chapter 11 arbitrations to which
either is a party. These steps build upon the Chapter 11 Notes of
Interpretation issued in July 2001 by the NAFTA Free Trade Commission.
Such clarification enhances the transparency and effectiveness
of the NAFTA investment dispute settlement mechanism. Canada will
work to ensure that these improvements are reflected in the investment
chapter of the FTAA.
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