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The UK’s Accession to the CPTPP is a threat to Indigenous Rights in Canada

The trade agreement may impact Canada’s ability to implement UNDRIP

June 21, 2023

3-minute read

There is a renewed threat to the rights of Indigenous Peoples buried within the investment chapter of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). With the impending accession of the U.K. to the CPTTP, provisions that allow foreign investors to launch claims outside of domestic courts for compensation, known as investor-state dispute settlement or ISDS, may negatively impact Canada’s ability to implement the United Nations Declaration of the Rights of Indigenous Peoples (UNDRIP)

Canada’s deputy prime minister has described ISDS as elevating “the rights of corporations over sovereign governments.” When the U.K. joins the CPTPP, London-based oil and gas companies like Shell and BP will be able to access the ISDS provisions within the agreement because of their investments in Canada.

U.K. investors have already demonstrated their comfort with using ISDS in other agreements to protect their interests—launching over 100 claims to date internationally. These claims risk provoking a regulatory chill – foreign investors trying to influence Canada or the provinces/territories by threatening expensive arbitration when a government decision on a permit, or a new law or policy, could impact their investment. The CPTPP provides U.K. extractive companies with a powerful tool to pressure governments to keep laws and policies favourable to their interests, at the expense of the climate, health and the rights of Indigenous Peoples.

The threat of ISDS to Indigenous rights is not theoretical. The former Special Rapporteur on the Rights of Indigenous Peoples, Victoria Tauli-Corpuz, undertook two extensive studies on international investment agreements. She found that the ISDS provisions, especially the non-discrimination and expropriation clauses, have “significant potential to undermine the protection of indigenous peoples’ land rights and the strongly associated cultural rights.” 

The United States-Canada-Mexico Agreement (known in Canada as CUSMA) provides a recent example of the threat of ISDS to Indigenous rights. A U.S. company, Ruby River Capital, recently launched a claim against Canada for $20 billion USD in compensation for the refusal, at the environmental assessment stage, of a gas pipeline and LNG terminal. The increase to greenhouse gases was one of the reasons provided for the refusal, along with the significant effects on the cultural heritage of the Innu First Nation, given the disturbance to marine mammals such as the Beluga whale and fishing and hunting rights.

CUSMA was the first international trade and investment agreement to include a new clause aimed at comprehensively protecting the rights of Indigenous Peoples in North America: Article 32.5 the Indigenous Peoples Rights General Exception. This clause was modelled on, and arguably improves upon, the General Exception for the Treaty of Waitangi developed by New Zealand to protect the rights of Māori. 

The exception in CUSMA was developed to apply to both trade and investment disputes, but the eventual policy decision to phase out ISDS from CUSMA as between Canada and the U.S., was considered to be an even better result for the protection of Indigenous rights, not to mention the ability of Canada to regulate to protect the public interest. 

The CPTPP was negotiated prior to CUSMA. Although the CPTTP includes the Treaty of Waitangi exception, there is no general exception applicable to protect the rights of all Indigenous Peoples in CPTPP member states. New Zealand and Australia have recognized that ISDS is a threat to their sovereignty and have proactively agreed to enter into side letters with the U.K. which will disapply the ISDS procedure as between their countries. Canada has not negotiated this type of arrangement.

Late last year, Australia’s minister of trade confirmed that in order to protect their ability to govern in the public interest, Australia will no longer include investor-state dispute settlement in any new trade agreements. At a time when Canada’s trading partners are rethinking ISDS or abandoning it altogether, why is Canada continuing with the outdated ISDS provisions in the CPTTP when new countries join the trade pact?  

This decision is even more egregious as it disregards the work undertaken by the Indigenous Working Group on Trade Policy to develop the General Exception for Indigenous Peoples Rights—as well as the protective and inclusive precedent language for investment agreements in the 2021 Model FIPA. At the very least, if Canada and the U.K. are determined to allow for ISDS, Canada should restrict its use to the proposed bilateral Canada-U.K. free trade agreement still under negotiation. ISDS in a modernized free trade agreement should  include the Indigenous Peoples Rights General Exception and the new provisions based on the 2021 Model FIPIA, similar to the announced provisions in the modernized Canada-Ukraine agreement.

The time to course correct is now. The U.K. has not yet acceded to the CPTTP and Canada is currently negotiating a bilateral trade agreement with the U.K., so there are opportunities to rectify the ISDS oversight. Similar to Australia and New Zealand, Canada could negotiate a side letter disapplying ISDS as between Canada and the U.K. Both Canada and the U.K. have transparent court processes which investors can access, and this supports the decision that ISDS is not required between Canada and the U.K. 

To move forward with ISDS in 2023, especially without clear protections for the rights of Indigenous Peoples, is a legal misstep by Canada. The timing of the decision not to seek a side letter is problematic  as it coincides with the introduction of Canada’s first Declaration Act Action Plan, which will be launched today, June 21, 2023—National Indigenous Peoples' Day. The generational work of implementing the objectives of the UN Declaration of the Rights of Indigenous Peoples, through the Action Plan, as well as ensuring Canada’s laws are consistent with the Declaration, will be transformational.   

As Canada begins this challenging work domestically, the government must act honourably and also uphold Indigenous rights internationally. Seeking a side letter from the U.K. disapplying ISDS provisions in the CPTPP would be an excellent start.

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