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Free-Trade / Fair Trade -- From the 20th Century to 21st Century

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On April 22, 2016, Michael Woods gave a presentation on the North American Free Trade Agreement (NAFTA) at the Inaugural Conference on International Inter-Tribal Trade at the Faculty of Law at the University of Oklahoma. The conference was organized with the assistance and hard work of the Citizen Potawatomi Nation, the Mohawk Council of Akwensase, the Chickasaw Nation, the Law Faculties of the University of Oklahoma and Thompson River University and Donna William. Woods, LaFortune LLP joined other firms including Luksi Group LLC, Berkey Williams LLP, Garwill Law Professional Corporation as participants.

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Free-Trade / Fair Trade -- From the 20th Century to 21st Century

  1. 1. Free-Trade / Fair Trade From the 20th Century to 21st Century Inaugural Conference in International Inter-Tribal Trade University of Oklahoma College of Law Norman, Oklahoma - April 22, 2016 Michael Woods, Partner – Woods LaFortune LLP
  2. 2. Woods, LaFortune LLP Woods, LaFortune LLP is an innovative, flexible and proactively cost-effective boutique law firm that focuses on international trade and business, investment, customs, government procurement and government relations. We provide a wide range of services to our clients including advocacy before domestic and international courts and tribunals, strategic advice and analysis, business planning and analytical research. Michael Woods woods@wl-tradelaw.com 613.355.0382 www.wl-tradelaw.com
  3. 3. From the 20th Century to the 21st Century “There was a time in this fair land when the railroad did not run When the wild majestic mountains stood alone against the sun Long before the white man and long before the wheel When the green dark forest was too silent to be real” Gordon Lightfoot
  4. 4. From the 20th Century to the 21st Century “Well, I’ve been up to the mountain I’ve walked down by the sea I never questioned non one And no one questioned me … I never came to borrow I only came to learn …” Gordon Lightfoot
  5. 5. Free Trade – Fair Trade “The ground on which we stand is sacred ground. It is the dust and blood of our ancestors.” Chief Plenty Coups, Crow (1848-1932)
  6. 6. Free Trade – Fair Trade “Suppose a white man should come to me and say, Joseph, I like your horses. I want to buy them. I say to him, no, my horses suit me; I will not sell them. Then he goes to my neighbor and he says, pay me money, and I will sell you Joseph's horses. The white man returns to me and says, Joseph, I have bought your horses and you must let me have them. If we sold our lands to the government, this is the way they bought them.” Chief Joseph, Nez Perce (1840-1904)
  7. 7. Free Trade – Fair Trade •Free Trade Agreement “An agreement among two or more countries (more specifically, customs territories) to drop all internal trade barriers as among the countries. Each party to an FTA, however, retains its own separate schedule of tariffs for imports from third countries, thus making the FTA a less economically integrated entity than a customs union. […] The North American Free Trade Agreement (NAFTA) is the quintessential example of a FTA.” Raj Bhala, Dictionary of International Trade Law
  8. 8. History of Free Trade •A complex field of law «Anyone who reads GATT is likely to have his sanity impaired». Senator Millikin regarding GATT, during a hearing of the Senate Committee on Finance. «[O]nly the learned can communicate with it, and then only in code» Herbert Feis, regarding the potential International Trade Organization Charter. «I think your difficulty (…) is the inherent complexity of the subject (…) I must admit I am thoroughly confused.»
  9. 9. Free Trade – Fair Trade • Free Trade and First Nations – Two Solitudes or Commercial Allies? • Conflicting or Common Interests or Both? • Starting point – What is Free Trade from Canada – U.S. perspective (NAFTA) ? • What does it mean for North American First Nations? • Options – paths - strategies
  10. 10. What is Free Trade? •Economic Strategy and Doctrine • Free exchange of goods and services and investment • Assumption: the more country exchange, (goods, services, capital) the more they creates wealth • Requires elimination of barriers to trade • Comparative advantage
  11. 11. What is Free Trade? • Economic Nationalism • An economic strategy and doctrine • Trade barriers • Measures to favour national industries
  12. 12. What is Free Trade? The debate • John A. McDonald - “National Policy” (Tariff Policy) (1880-1911)
  13. 13. What is Free Trade? The debate • Wilfred Laurier – Reciprocity with United States and the UK
  14. 14. What is Free Trade? The debate continues … • John Turner : «Once a country yields its energy, once a country yields its agriculture, once a country open itself up to a subsidy war with the United States, then the political ability of this country to sustain the influence of the United States, to remain an independent nation, that is lost for ever!» • Brian Mulroney : «I did it to promote prosperity. I, as a Canadian, genuinely believe that it is right for Canada.»
  15. 15. What is Free Trade? Arguments in favour: • Promotes peace and economic development • Encourage competitiveness • Creates employment • Increases global wealth
  16. 16. What is Free Trade? Arguments against: • Employment in areas that are less effective will disappear • The opening of global market can create an important adjustment • In exchange, a much larger global wealth is created. Some indicate that this wealth allows to mitigate the negative effect of job loss in areas that a relatively less effective. • Opening of markets – painful adjustments, employment threatened.
  17. 17. What is Free Trade? Arguments against: •Foods security •Protection of Environment •Developing countries exploited (North-South)
  18. 18. KEY GATT Articles • Article I – Most Favoured Nation (MFN) • Articles II – Tariff Concessions • Articles III – National Treatment • Articles XI – Elimination of Import / Export Restriction • Articles XX – General Exceptions • Articles XXIII – Dispute settlement • Articles XXIV – Customs Unions / FTAs
  19. 19. World Trade Organization – WTO • Objective – Continue process of trade liberalization • GATT plus: • 162 members • Services • IP • Agriculture • Safeguards, Anti-dumping • Improves Disputes settlement process
  20. 20. History of Free Trade • 21st Century: • “When the 20th century trade is about “made-here-sold- there” goods […] twenty-first century trade is about “made- everywhere-sold-there” Richard Baldwin • Trade barriers is no longer the issue, the focus is on preferential market access, and international supply chains • Apparition of Regional Trade Agreement: • Free trade agreement (FTAs) : sets tariffs to zero between signatories • Regional Trade Agreement (RTAs): harmonizes tariffs against third nation
  21. 21. History of Free Trade •21st Century: • RTA made their apparition in the late 20th Century, but by the 21st , they were dominating as the go to trade agreement • NAFTA, came into force in Jan 1, 1994 • Asia Pacific Trade Agreement – APTA, came into for Jan 1, 2002 • EU-US TTIP – still under negotiation • EU-Canada (CETA) – final legal text revealed on Feb 29, 2016 • Trans-Pacific Partnership (TPP) – still under negotiation
  22. 22. From the 20th Century to the 21st Century NAFTA
  23. 23. The North American Free Trade Agreement - (NAFTA) • Tri-lateral free trade agreement • Binding upon U.S.A., Canada and Mexico (“the Parties”) • For U.S. and Canada, extension of pre-existing FTA • Coverage: • Goods (Tariff and Non-Tariff) • Investments • IP rights • Services • Government Procurement
  24. 24. What is the NAFTA? • A snapshot of its scope: • In 1993, trilateral trade within the North American region was US$288 billion. In 2014, Canadian’s total trilateral merchandise trade exceeded US$1.12 trillion.* • As of 2014, the prosperity and development of the North American economy has more than doubled in size since 1994. The combined gross domestic product (GDP) for Canada, the U.S., and Mexico surpassed US$20.0 trillion in 2014 up from nearly US$8.0 trillion in 1993.* *Global Affairs Canada
  25. 25. What is the NAFTA? • A snapshot of its scope (continued): • Created world’s largest free trade area • Links 450 million people producing $17 trillion in goods and services* • U.S. had $918 billion in two-way trade in goods and services with its NAFTA partners in 2010 alone* *Office of the U.S.T.R.
  26. 26. What is the NAFTA? • What is in the NAFTA? • National Treatment • Most-Favoured-Nation Treatment • Tariff Elimination • Import and Export Restrictions • Investment provisions
  27. 27. NAFTA – A Comprehensive Protection Plan NAFTA also provides: • A reduction of trade barriers • Creation an expanded market for goods and services produced in North America • Implementation of intellectual-property protections • Creation of dispute-resolution mechanisms • Implementation of regional labor and environmental safeguards
  28. 28. Background NAFTA CHAPTER 11
  29. 29. NAFTA Chapter 11 • Designed to: • Establish a more stable and predictable • Enhance prosperity by increasing FDI • Ensure that investment policies are held to uniform standards
  30. 30. NAFTA Chapter 11 • Mechanism: • Establish obligations for the Parties’ treatment of NAFTA investors and their investments • Investors can seek to have these standards enforced by bringing a claim under Ch. 11 • Where a Tribunal determines that Ch. 11’s standards been breached, the investor may be entitled to recover damages
  31. 31. NAFTA Chapter 11 THE NAFTA CHAPTER 11 CLAIM PROCEDURE
  32. 32. NAFTA Chapter 11 Claim Procedure • Standing: • In order to commence a Ch. Claim, a party must be an “investor of a Party” • Can be any citizen (corporate or individual) of any of the three countries, who has an investment in one of the other countries
  33. 33. NAFTA Chapter 11 Claim Procedure • Consent to arbitration and jurisdiction: • NAFTA Parties bound by general consent to Arbitrate in Article 1122 • Therefore, an investor need only bring a claim to commence arbitration • Claimant must not pursue other judicial or quasi-judicial remedies, other than for injunctive and other extraordinary relief
  34. 34. NAFTA Chapter 11 Claim Procedure •Applicable arbitral rules: •Three options for claimants: •ICSID Rules •ICSID Additional Facility Rules •UNCITRAL Rules
  35. 35. NAFTA Chapter 11 Claim Procedure •Appointment of Arbitrators: •Except where parties agree otherwise, Tribunal comprised of three arbitrators •One arbitrator appointed by each party, and the third (who is presiding arbitrator) appointed by agreement of the disputing parties
  36. 36. NAFTA Chapter 11 SUBSTANTIVE INVESTOR PROTECTIONS
  37. 37. Article 1102 – National Treatment •Article 1102: National Treatment “Each Party shall accord to investors of another Party treatment no less favorable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of investments.”
  38. 38. Article 1102 – National Treatment •Same protection is extended in 1102(2) to “investments of investors” - Article 1102 requires a host state to provide NAFTA investors and investments with treatment that is no less favorable than the treatment they provide to domestic investors and investments in like circumstances.
  39. 39. Article 1102 – National Treatment 1. Treatment “no less favorable” - Host state must provide to qualifying NAFTA investors/investments treatment that is at least as advantageous as that provided to its own investors/investments
  40. 40. Article 1102 – National Treatment 2. In “like circumstances” - To trigger 1102 protection, NAFTA investor/investment must be in “like circumstances” to a domestic investor/investment receiving more favorable treatment: - For example: - Same industry - Same economic sector - In direct competition
  41. 41. Article 1102 – National Treatment 3. With respect to the establishment, etc. - Treatment complained of must concern any of the enumerated actions related to the investment: - Establishment - Acquisition - Expansion - Management - Conduct - Operation - Sale or other disposition
  42. 42. Article 1102 – National Treatment S.D. Myers Inc. (U.S.) v. Canada, 2000 • U.S. company providing PCB disposal services barred by Canadian border closure from transporting waste across Canada-U.S. border for treatment at its U.S. facilities • Border closure adversely affected U.S. companies bidding on same remediation contracts as domestic companies who had treatment facilities in Canada • NAFTA Panel finds violation of Article 1102
  43. 43. Article 1102 – National Treatment Feldman v. United Mexican States, 2002 • Government of Mexico denies tax rebate to foreign-owned re-sellers and exporters of cigarettes • Tax rebate was available to domestic entities performing the same services • No legitimate regulatory or public policy justification for the distinction • NAFTA tribunal finds violation of Article 1102
  44. 44. Article 1102 – National Treatment Corn Products International v. Mexico, 2008 • Mexico imposes tax on producers of high-fructose corn syrup (HFCS) • Tax not applied to producers of cane sugar • Mexico’s domestic sugar industry comprised solely of can sugar producers • Tax had discriminatory effect upon producers of HFCS, all of whom were foreign-owned • NAFTA Tribunal finds violation of Art. 1102
  45. 45. Article 1102 – National Treatment Note also: In the Matter of Cross-Border Trucking, 2001
  46. 46. Article 1103 – MFN Treatment •Article 1103: Most-Favored Nation (MFN) “Each Party shall accord to investors of another Party treatment no less favorable than that it accords, in like circumstances, to investors of any other Party or of a non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments.”
  47. 47. Article 1103 – MFN Treatment • Same protection is extended in 1103(2) to “investments of investors” • Imposes the same obligation upon NAFTA Parties as Article 1102, but extends the comparators beyond domestic investors and investments to third-party investors and investments as well
  48. 48. Article 1103 – MFN Treatment Same principles apply as in Art. 1102, except that group of possible comparators is broadened to include not only domestic investors but investors of other non-Parties as well.
  49. 49. Article 1103 – MFN Treatment In the Matter of Cross-Border Trucking, 2001 • Note: also established breach under Article 1102 • U.S. moratorium on issuing motor carrier licenses to foreigners lifted for Canadians, not for Mexicans • Effectively prevented Mexican nationals from investing in the U.S. industry • Because the lifting of the moratorium with respect to Canadians gave Canadian companies preferential treatment as compared to Mexicans, NAFTA tribunal found breach of Article 1103
  50. 50. Article 1104 – Standard Treatment •Article 1104: Standard of Treatment “Each Party accord to investors of another Party and to investments of investors of another Party the better of the treatment required by Articles 1102 and 1103.”
  51. 51. Article 1104 – Standard Treatment • Article 1104 addresses the right of an investor or investment to the better of national treatment (or most-favored-nation treatment).
  52. 52. Article 1105 – Minimum Standard of Treatment •Article 1105: Minimum Standard of Treatment “Each Party accord to investments of investors of another Party treatment in accordance with international law, including fair and equitable and full protection and security.”
  53. 53. Article 1105 – Minimum Standard of Treatment • This obligation imposes an absolute (rather than comparative, as in 1102, and 1103) baseline with respect to the standard of acceptable treatment that must be provided to foreign investors and their investments, which includes: • Treatment in accordance with international law • Fair and equitable treatment • Full protection and security
  54. 54. Article 1105 – Minimum Standard of Treatment • NAFTA FTC Note of Interpretation: •Clarifies that the standard set out in Article 1105 refers to a standard established under customary international law, rather than one to be interpreted by reference to the Parties’ other treaties.
  55. 55. Article 1105 – Minimum Standard of Treatment Treatment in accordance with international law : •Denial of justice, arbitrary •grossly unfair treatment •outright and unjustified repudiation of obligations)
  56. 56. Article 1105 – Minimum Standard of Treatment Fair and equitable treatment: •Detrimental reliance upon legitimate expectations •Certainty, transparency and stability of host state’s regulatory regime
  57. 57. Article 1105 – Minimum Standard of Treatment Full protection and security: •Protection from discriminatory treatment •Government’s adherence to its own laws and regulations
  58. 58. Article 1105 – Minimum Standard of Treatment GAMI Investments (U.S.) Inc. v. Mexico, 2004 • Mexican government implements laws and regulations meant to stabilize sugar industry, mismanages and fails to enforce them. • Result is that the value of U.S. shareholder’s investment in Mexican sugar mill is undermined. • NAFTA Tribunal decides that where this mismanagement amounts to outright repudiation of Mexico’s own laws, the government’s conduct could establish breach of Article 1105.
  59. 59. Article 1105 – Minimum Standard of Treatment • The NAFTA Parties have subsequently issued a Note of Interpretation intended to clarify Art 1105. • Following the Note of Interpretation, the jurisprudence the notion of Fair and equitable standard.
  60. 60. Article 1106 – Performance Requirements Article 1106 – Performance Requirements “ No Party may impose or enforce any of the following requirements, or enforce any commitment or undertaking, with respect to the establishment, acquisition, expansion, management, conduct or operation of an investment of an investor of a Party or of a non-Party in its territory: • To export a given level or percentage of goods or services; • To achieve a given level or percentage of domestic content; • To purchase, use or accord a preference to goods produced or services provided in its territory, or to purchase goods produced or services provided by persons in its territory • […]”
  61. 61. Article 1106 – Performance Requirements “Performance requirements” refers to an array of requirements put in place by a host state concerning the performance of foreign-owned enterprises in its territory. • Art. 1106 sets out those performance requirements that are prohibited under NAFTA, as well as a list of exceptions.
  62. 62. Article 1106 – Performance Requirements ADM Inc. (U.S.) v. Mexico, 2007 • Excise tax imposed by Mexican government upon soft drink producers using sweetners other than cane sugar. • All domestic producers used cane sugar, U.S. producers used high- fructose corn syrup. • NAFTA Tribunal finds excise tax amounts to prohibited performance requirement – to use certain percentage of domestic product and accord a preference to goods produced domestically.
  63. 63. Article 1110 – Expropriation and Compensation • Article 1110: Expropriation and Compensation “No party may directly or indirectly nationalize or expropriate an investment of an investor of another Party in its territory or take a measure tantamount to nationalization or expropriation of such an investment (“expropriation”), except: (a) for a public purpose; (b) on a non-discriminatory basis; (c) in accordance with due process of law and Article 1105(1); and (d) on payment of compensation in accordance with paragraphs 2 through 6.”
  64. 64. Article 1110 – Expropriation and Compensation Nationalization : The state takes ownership of property or investments across a sector or industry Direct Expropriation : Taking physical possession of an investment or property by transfer of title or seizure of property Indirect Expropriation: Taking measures which have the effect of destroying the ability to manage and control the investment, or have the effect of depreciating substantially the value of the investment
  65. 65. Article 1110 – Expropriation and Compensation AbitibiBowater (U.S.) v. Canada • AbitibiBowater announced closure of pulp and paper mill facilities in Newfoundland • Newfoundland government cancels water and hydroelectric contracts with company in retaliation • AbitibiBowater alleges expropriation of its investment (and measures tantamount to expropriation) • Government of Canada settles claim for $130 million
  66. 66. Article 1110 – Expropriation and Compensation Metalclad Corp. (U.S.) v. Mexico • U.S. company purchased hazardous waste transfer station in Mexico. • Mexico’s federal government allowed local municipal government to deny necessary permits to investor, preventing it from operating. • NAFTA Tribunal decided that by allowing local government to treat investor in an unfair manner and act outside its sphere of jurisdiction, Government of Mexico engaged in acts tantamount to expropriation in breach of Article 1110.
  67. 67. Additional Key Cases • TransCanada Corporation et al. v. USA • Clayton/Bilcon v. Government of Canada • Grand River Enterprises Six Nations, Ltd. et al v. USA
  68. 68. NAFTA EXEMPTIONS Indigenous peoples were not present at the NAFTA negotiations but Canada, USA, & Mexico each inserted specific language or "non- conforming measures" within NAFTA that exempt specific sectors from operation of the treaty. Canada - Annex II (reservations or exemptions) exempted "Aboriginal Affairs” sector Canada reserves the right to deny investors or "another Party" the rights or preferences provided to "aboriginal peoples" in five areas: national treatment, most-favored-nation treatment, local presence, performance requirements, and senior management and boards of directors.
  69. 69. NAFTA EXEMPTIONS US exemption under "Minority Affairs” included indigenous interests within its borders with non-indigenous minorities and reserves the right to adopt or maintain rights or preferences to what are termed "socially or economically disadvantaged minorities." The USA reserves these rights in the same areas as Canada with the exception of MFN. Mexico also exempted sector "Minority Affairs," obscuring the fact that only 10% of its minority population can arguably be termed non-indigenous. Reserved these rights in only the two areas of national treatment and local presence.
  70. 70. 21st Century Free Trade Agreements CETA (Canada-EU) TTIP (USA-EU) TPP
  71. 71. Canada – E.U. Comprehensive Economic and Trade Agreement (CETA) • “It is a great success today. We signed the start of a process leading to the deepening of our economic cooperation.” Mirek Topolanek, Prime Minister of Czech Republic “It is a highly ambitious economic agreement which will bring considerable benefits to both sides.” José Manuel Barroso, Former President of E.U. “We have an opportunity to become a gateway to the North American market.” Stephen Harper Former Prime Minister, Stephen Harper, President of the Czech Republic Mirek Topolánek and the former E.U. President José Manuel Barroso - Canada-E.U. summit, May 6, 2009
  72. 72. CETA - Comprehensive Economic and Trade Agreement • In a nutshell: • 5 years in the making • Tariffs will be eliminated or reduced only on items that qualify under the CETA rules of origin • CETA Rules of origin = Canada and the EU have to ensure that steps in their qualifying process were taken. Both parties can also engage the service of providers to complete the qualifying proceed • Quotas on agricultural products, Fish and Seafoods, Textiles and Apparel, Vehicle
  73. 73. CETA - Comprehensive Economic and Trade Agreement • CETA Rules of origin: “For the purposes of this Agreement, a product is originating in the Party where the last production took place if, in the territory of a Party or in the territory of both of the Parties in accordance with Article 3, it: (a) has been wholly obtained within the meaning of Article 4; (b) has been produced exclusively from originating materials; or, (c) has undergone sufficient production within the meaning of Article 5. 2. Except as provided for in paragraphs 8 and 9 of Article 3 (Accumulation of Origin), the conditions set out in this Protocol relating to the acquisition of originating status must be fulfilled without interruption in the territory of one or both of the Parties.”
  74. 74. TPP – Trans-Pacific Partnership • In a nutshell: • 13 countries • Comprehensive market access • Regional approach to commitments • Address new trade challenges • Inclusive trade • Platform for regional integration
  75. 75. TPP – Trans-Pacific Partnership • What’s new with the TPP? • Incorporation of new and emerging trade issues such as digital economy, participation of state-owned enterprises in international trade and investment and the ability for small businesses to take advantage of trade agreements. • Diversity of countries in size, geography of development • Non-conforming measures: parties are allowed to open their markets to foreign investors, except where they have applied the said non-conforming measure. Those exceptions are listed in a country-specific annex
  76. 76. TPP – Trans-Pacific Partnership • Critics to the TPP? • State’s sovereignty : limited regulatory powers for governments • Difficulty in predicting trend: Lack of consistency and coherence in the jurisprudence • The big question: • Is constitutional democracy at risk?
  77. 77. Free Trade and First Nations • Two Solitudes or Commercial Allies? • Conflicting or Common Interests or Both? • What does it mean for North American First Nations? • Options – paths - strategies
  78. 78. From the 20th Century to the 21st Century What is next for the First Nations?
  79. 79. What is next for the First Nations? • Free Trade and First Nations in Canada – new law, new options, new opportunities • Supreme Court of Canada - Aboriginal title land and Treaty Territory in Canada. • Haida Nation v British Columbia (Minister of Forests), [2004] 3 SCR 511 - confirmed the Crown’s duty to consult with Aboriginal peoples in • Tsilhqot’in Nation v. British Columbia (2014 SCC 44) • confirmed the Tsilhoqot’in people’s exclusive Aboriginal title to BC Interior lands • outlined a legal test for other First Nations across • First Nations able to successfully establish Aboriginal land title holders the right to extensive possession in addition to ownership rights, including the right to decide the use of the land, the right to profit from economic development of the land, and the right to pro-actively use and manage the land. • Will require new, creative and flexible approaches on all sides
  80. 80. What is next for the First Nations? • Grassy Narrows First Nation v. Ontario (Natural Resources) 2014 SCC 48. • Supreme Court of Canada made a major decision on Aboriginal Treaty territory. • The Crown has the authority to “take up” lands in question • Citing Tsilhqot’in decision, the Court also reinforced its language duty of the Crown to consult and accommodate the affected First Nations in a manner “consistent with the honour of the Crown.” • Crown infringement of treaty rights (such as the issuance of resource development and harvesting leases on treaty lands) will require the Crown to act in a manner consistent with its fiduciary relationship with Treaty rights holders.
  81. 81. What is next for the First Nations? Daniels v. Canada (Indian Affairs and Northern Development), 2016 SCC 12 : In this Supreme Court decision, the top court was asked to answer three questions: 1. Whether or not Métis and non-status Indians are “Indians” under s. 91(24) of the Constitution Act, 1867; 2. Whether the federal Crown owes a fiduciary duty to Métis and non- status Indians; and 3. Whether the Métis and non-status Indians have the right to be consulted and negotiate with.
  82. 82. What is next for the First Nations? Do Métis and non-status Indians are “Indians” under s. 91(24) of the Constitution Act, 1867? YES - As in Canada v. Khadar, a declaration can only be granted if the declaration will have practical utility and if it will settle a “life controversy” between the parties. - Both provincial and federal government have denied authority over both group, making them a “jurisdictional wasteland with significant and obvious disadvantaging consequences”. - “The existence of a legislative vacuum is self-evidently a reflection of the fact that neither level of government has acknowledge constitutional responsibility. A declaration would guarantee both certainty and accountability”. (para 15)
  83. 83. What is next for the First Nations? The term “Indian” under s. 91(24) of the Law of 1867 includes the Métis that do not meet the three definitional criteria set out in Powley, test that was developed specifically for the purposes of the application of s. 35(1) of The Law of 1867, which protect historic community-held rights. Powley test: For the purposes of s. 35(1) of The Law of 1867, qualifies as a Métis, a person who: 1. Self-identify as a Métis 2. Has an ancestral connection to an historic Métis community; and 3. Who is accepted by the modern Métis community
  84. 84. What is next for the First Nations? • Constitutional differences between s. 35(1) and s. 91(24) of The Law of 1867: • S. 35(1) purpose is “the reconciliation of Aboriginal and non-Aboriginal Canadians in a mutually respectful long-term relationship” • S. 91(24) purpose is to includes both Métis and Non-status Indians in relation to the broader goals of Confederation. • “Constitutional changes, the apologies for historic wrongs, a growing appreciation that Aboriginal and non-Aboriginal people are partners in Confederation […] all indicate the reconciliation with all of Canada’s Aboriginal peoples is Parliament's goal.” – Beckman v. Little Salmon et al., [2010] 3 S.C.R. 103, para 10.
  85. 85. What is next for the First Nations? • Métis and Non-status Indians are “Indian” as they are all Aboriginal people. The term “Indians” has been used as a general term referring to all Indigenous people, including mixed-ancestry communities like the Métis. • Imprecise definition of “non-status Indians”: • Indians who no longer have status under the Indian Act; or • Members of mixed communities which have never been recognized as Indians by the federal government • Some identify with their Indian heritage; • Others identify with the term Métis, being more reflective of their mixed origins.
  86. 86. What is next for the First Nations? • More importantly, s. 35 of The Law of 1867, states that Indian, Inuit, and Métis peoples are Aboriginal peoples for the purposes of the Constitution. • Therefore, the terms “Indian” or “Indians have two meanings: • A broader meaning, used in s. 91(24) of The Law of 1867, including Métis, and Inuit – can b equated with the term “aboriginal people of Canada”, also used in s. 35; and • A narrower meaning that distinguished Indian bands from other Aboriginal peoples.
  87. 87. What is next for the First Nations? • Legislative amendments setting the tone for the declaration: • 1958 Amendment of the Indian Act: Métis who had been allotted scrip but were already registered as Indians (and their descendants) remain registered under the Act. • Clarify their status with respect to treaties and reserves • 1980, Natives and the Constitution: this document written by the Department of Indian Affairs and Northern Development, clearly expressed the federal government’s authority to legislate over Métis under 91(24) of the Law of 1867.
  88. 88. What is next for the First Nations? • Nota bene : • this declaration will guarantee accountability of the provincial and federal governments over them, BUT does not create a duty to legislate. • Provincial legislation with respect to Métis and non-status Indians does not become ultra vires with the federal jurisdiction: • The Supreme Court previously stated that “should favour, where possible, the ordinary operation of statutes enacted by both levels of government” Western Bank v. Alberta, [2007] 2 S.C.R. 3, para. 37.
  89. 89. What is next for the First Nations? Does the federal Crown owe a fiduciary duty to Métis and non-status Indians? - NO, but - In Delgamuukw v. British Columbia, [1997] 3 S.C.R. 1010, the Supreme Court indicated that Canada’s Aboriginal peoples have fiduciary relationship with the Crown. Thus, “the declaration lacks practical utility because it is restating settled law.” (para 53)
  90. 90. What is next for the First Nations? Do the Métis and non-status Indians have the right to be consulted and negotiate with? - NO, but: - This declaration lacks practical utility as it would also restate the existing law: - Haida Nation v. British Columbia, [2004] 3 S.C.R. 511, et Tslhqot’in Nation v. British Columbia, [2014] 2 S.C.R. 257 recognized a context-specific duty to negotiate when Aboriginal rights are engaged.
  91. 91. What is next for the First Nations? • Hupacasath First Nation v Canada (Ministry of Foreign Affairs) 2015 FCA 4 • Since SCC confirmed Crown’s duty to, courts have been tasked with determining precisely when the duty is triggered • Hupacasath First Nation argued that the duty applied to the ratification of the Canada-China Foreign Investment Protection Agreement (“CC-FIPA”) as potential of arbitral awards creates incentive for the government to act in a manner that avoids breaching CC-FIPA and that this may cause the government to injure HFN rights and interests. • Consequently, the HFN argued Canada was obligated to consult with it and, if necessary, accommodate its rights and interests. • At the first instance, the Federal Court rejected the HFN’s argument. It found no conflict, “actual or potential,” between the provisions of the CC-FIPA and the HFN’s asserted rights and interests. The HFN appealed to the FCA.
  92. 92. Canada-China FIPA Challenge • Hupacasath First Nation v. Canada (Foreign Affairs and International Trade Canada), 2015 FCA 4 • Background: • In September 2012, Canada signed a reciprocal foreign investment agreement with the People’s Republic of China. • The Agreement provides a minimum standard of treatment to foreign investors by providing a guarantee against discriminatory treatment and also provides a protection from expropriation without compensation. • Hupacasath First Nation, is a band under the Indian Act, with 285 members living on two reserves covering roughly 56 acres of land on Vancouver Island, British Columbia.
  93. 93. Hupacasath First Nation v. Canada • Federal Court: • Hupacasath alleged that the Agreement might affect Aboriginal rights and interests it has asserted over lands in British Columbia and therefore, the Minister of Foreign Affairs had an obligation to consult Hupacasath prior to entering into the Agreement. • Application dismissed, the Court found that the Agreement could not potentially cause harm to Hupacasath, and that the Hupacasath’s asserted rights and interests were “non-appreciable” and “speculative”.
  94. 94. What is next for the First Nations? • Trial Judge found potential adverse effects “non-appreciable” and “entirely speculative” as a matter fact • Application was on behalf of a small 300-member nomadic tribe • Territory of about 230,000 hectors in Alberni Valley of Vancouver Island • Limited budget, resources, and few strategic allies & little media cover • Case heard before Tsilhqot’in, Grassy Narrows First Nation, and Harry Daniels et al.
  95. 95. Hupacasath First Nation v. Canada • The issues before the Federal Court of Appeal: • Does the federal court have jurisdiction over decisions by the Government of Canada to enter into international agreements and treaties falling under the Crown’s prerogative power? and • Is the exercise of a Crown prerogative power justiciable? In other words, can the Hupacasath’s case be heard at all?
  96. 96. Hupacasath First Nation v. Canada Conclusion of the Federal Court of Appeal: • The Jurisdictional issue: • Rejected the Crown’s position that “the residue of discretionary or arbitrary authority, which at any given time is legally left in the hands of the Crown” • The Crown holds prerogative powers on the conduct of foreign affairs: “An interpretation that the Federal Court has the power to review federal exercises of pure prerogative power is consistent with the Parliament’s aim to have the Federal Courts review all federal administrative decisions. The contrary interpretation would carve out from the Federal Courts a wide swath of administrative decisions that stem from federal prerogative, some of which can have large national impact”. (para 54)
  97. 97. Hupacasath First Nation v. Canada Conclusion of the Federal Court of Appeal: • The Issue of Justiciability: • The government of Canada’s position that exercises of pure prerogative are reviewable only when Charter rights are at issues was rejected, adding that non-justiciable issues are very rare and are limited to: “Exercises of executive power [that] are suffused with ideological, political, cultural, social, moral and historical concerns of a sort not amenable to the judicial process or suitable for judicial analysis. In those rare cases, assessing whether the executive has acted within a range of acceptability and defensibility is beyond the court’s ken or capability, taking courts beyond the proper role within the separation of powers” (para 66)
  98. 98. Hupacasath First Nation v. Canada Duty to Consult: • The Federal Court of Appeal found that the duty to consult did not arise in these circumstances: • Adverse effects to Canada-China FIPA on the Hupacasath were speculative • Investment in Canada does not necessarily lead to a conclusion that Aboriginal rights will be affected “The problem with the appellant’s submission is that notwithstanding the existence of other agreements, there is no evidence deserving of sufficient weight that these agreements are causing or might cause Canada to make decisions that are contrary to law. In particular, there is no evidence that those agreements are causing Canada to make decisions that do not respect Aboriginal rights (para 91)”
  99. 99. Hupacasath First Nation v. Canada What can we retain from the decision? • Although the Hupacasath First Nation was unsuccessful in its claim, this decision is significant as it states the authority of the Federal Court of Appeal with respect of the Federal Court’s jurisdiction vis-à-vis Crown prerogative and the review of executive authority that will be considered non- justiciable.
  100. 100. What is next for the First Nations? • Hupacasath First Nation v Canada (Ministry of Foreign Affairs) 2015 FCA 4 • Would finding of fact differ in context of broader application? • Canada’s Aboriginal Population – 1.4 Million (4% of Canada) • 634 recognized First Nations governments or bands • Reserves cover 28, 000 sq.km. comprehensive and special claims have brought 1.6 M sq. km. under Aboriginal control • New political awareness, important resources, recognition and strategic allies • Post Tsilhqot’in and Grassy Narrows First Nation
  101. 101. What is next for the First Nations?
  102. 102. What is next for the First Nations?
  103. 103. What is next for the First Nations?
  104. 104. What is next for the First Nations? The fundamental objective of the modern law of aboriginal and treaty rights is the reconciliation of aboriginal peoples and non-aboriginal peoples and their respective claims, interests and ambitions. The management of these relationships takes place in the shadow of a long history of grievances and misunderstanding. The multitude of smaller grievances created by the indifference of some government officials to Aboriginal people’s concerns, and the lack of respect inherent in that indifference has been as destructive of the process of reconciliation as some of the larger and more explosive controversies. Justice Binnie’s unanimous Supreme Court decision Mikisew Cree First Nation v. Canada (Minister of Canadian Heritage)
  105. 105. What is next for the First Nations? A NAFTA Chapter 11 challenge: • Grand River Enterprises Six Nations, Ltd., et al. v. United States of America • Claim on behalf of a corporation owned by Six Nations of the Iroquois Confederation and to members of the Six Nations • Issue was treatment of “non-participating manufacturers” under the terms of a settlement agreement between 46 U.S. states and the major tobacco companies to recoup public monies spent to treat smoking-related illnesses.
  106. 106. What is next for the First Nations? Grand River Enterprises Six Nations, Ltd., et al. v. United States of America’s NAFTA Chapter 11 challenge (continued) : • Claim based on Articles 1102, 1103, 1104, 1105, 1110 • Aspect of the claim was time barred (3 years limitation period) • Tribunal found that Grand River and two individual claimants did not have an investment in the United States • One individual claimants was found to have an investment but failed to established a violation of the relevant articles with respect off reservation sales of cigarettes
  107. 107. What is next for the First Nations? Grand River Enterprises Six Nations, Ltd., et al. v. United States of America’s NAFTA Chapter 11 challenge (continued) : • Article 1105 case involved a review of arguments on violation of the Jay Treaty and the UN declaration of the Rights of Indigenous People and the principles of customary international law • Nation Chief of the assembly of First Nations endorsed the claim • Issue of what constitute an investment in context investment was reviewed
  108. 108. What is next for the First Nations? Jay Treaty - Article 3 “It is agreed that it shall at all Times be free to His Majesty's Subjects, and to the Citizens of the United States, and also to the Indians dwelling on either side of the said Boundary Line freely to pass and repass by Land, or Inland Navigation, into the respective Territories and Countries of the Two Parties on the Continent of America (the Country within the Limits of the Hudson's Bay Company only excepted) and to navigate all the Lakes, Rivers, and waters thereof, and freely to carry on trade and commerce with each other … No Duty of Entry shall ever be levied by either Party on Peltries brought by Land, or Inland Navigation into the said Territories respectively, nor shall the Indians passing or repassing with their own proper Goods and Effects of whatever nature, pay for the same any Impost or Duty whatever. But Goods in Bales, or other large Packages unusual among Indians shall not be considered as Goods belonging bona fide to Indians … no Duties shall be payable on any Goods which shall merely be carried over any of the Portages, or carrying Places on either side, for the purpose of being immediately re-embarked, and carried to some other Place or Places … “
  109. 109. What is next for the First Nations? Grand River Enterprises Six Nations, Ltd., et al. v. United States of America’s NAFTA Chapter 11 challenge (continued) : • On issues of (enterprises) tribunal found that the claimant assertion were too general and lacked specific evidence with respect to Seneca, law and customs • With respect to reasonable expectation (Art 1105), claimants argued that Iroquois Confederation was covered 3 of the Jay Treaty • “The Tribunal believes that both Parties advanced positions regarding the state of U.S. federal Indian law that were unjustifiably categorical.” … “It is clear … that the domestic law is far from conclusive ….” (para 137-138)
  110. 110. What is next for the First Nations? Grand River Enterprises Six Nations, Ltd., et al. v. United States of America’s NAFTA Chapter 11 challenge (continued) : • “The evidence before the Tribunal has shown mane of the actual or potential effects of the MSA and related measures on reservation tobacco sales and distribution to reservations retailers. The United States federal government admits to the need for consultations with indigenous communities on legislative and administrative measures affecting them, as a matter of federal policy if not as a matter of international law.” (para 212) • Tribunal found that the individual claimant had failed to meet the burden of proof in the circumstances and that the economic loss was insufficient to amount to expropriation
  111. 111. What is next for the First Nations? Grand River Enterprises Six Nations, Ltd., et al. v. United States of America’s NAFTA Chapter 11 challenge (continued) : • However as with the Hupacasath case, it is arguable that a broader based case with a stronger argument as to what constitute an establishment under First Nation law, may lead to different result.
  112. 112. What is next for the First Nations? NAFTA - Art 1139 […] investment means: (a) an enterprise; (b) an equity security of an enterprise; (c) (c) a debt security of an enterprise (i) where the enterprise is an affiliate of the investor, or (ii) where the original maturity of the debt security is at least three years, but does not include a debt security, regardless of original maturity, of a state enterprise; (d) a loan to an enterprise (i) where the enterprise is an affiliate of the investor, or (ii) where the original maturity of the loan is at least three years, but does not include a loan, regardless of original maturity, to a state enterprise;
  113. 113. What is next for the First Nations? […] investment means (continued): (e) an interest in an enterprise that entitles the owner to share in income or profits of the enterprise; (f) an interest in an enterprise that entitles the owner to share in the assets of that enterprise on dissolution, other than a debt security or a loan excluded from subparagraph (c) or (d); (g) real estate or other property, tangible or intangible, acquired in the expectation or used for the purpose of economic benefit or other business purposes; and (h) interests arising from the commitment of capital or other resources in the territory of a Party to economic activity in such territory, such as under (i) contracts involving the presence of an investor's property in the territory of the Party, including turnkey or construction contracts, or concessions, or (ii) contracts where remuneration depends substantially on the production, revenues or profits of an enterprise;
  114. 114. What is next for the First Nations? but investment does not mean, (i) claims to money that arise solely from (i) commercial contracts for the sale of goods or services by a national or enterprise in the territory of a Party to an enterprise in the territory of another Party, or (ii) the extension of credit in connection with a commercial transaction, such as trade financing, other than a loan covered by subparagraph (d); or (j) any other claims to money, that do not involve the kinds of interests set out in subparagraphs (a) through (h); investment of an investor of a Party means an investment owned or controlled directly or indirectly by an investor of such Party;
  115. 115. What is next for the First Nations? but investment does not mean (continued): investor of a Party means a Party or state enterprise thereof, or a national or an enterprise of such Party, that seeks to make, is making or has made an investment; investor of a non-Party means an investor other than an investor of a Party, that seeks to make, is making or has made an investment; New York Convention means the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, June 10, 1958; Secretary-General means the Secretary-General of ICSID; transfers means transfers and international payments; Tribunal means an arbitration tribunal established under Article 1120 or 1126; and UNCITRAL Arbitration Rules means the arbitration rules of the United Nations Commission on International Trade Law, approved by the United Nations General Assembly on December 15, 1976
  116. 116. What is next for the First Nations? NAFTA Article 1139 • investment of an investor of a Party means an investment owned or controlled directly or indirectly by an investor of such Party; • investor of a Party means a Party or state enterprise thereof, or a national or an enterprise of such Party, that seeks to make, is making or has made an investment;
  117. 117. From the 20th Century to the 21st Century NAFTA Strategies
  118. 118. NAFTA Strategies “The Columbia River Treaty has had devastating effects on Aboriginal Title and Rights, including throughout the Arrow Lakes area which is vitally important to the Okanagan Nation Alliance.”
  119. 119. NAFTA Strategies “When all the trees have been cut down, when all the animals have been hunted, when all the waters are polluted, when all the air is unsafe to breathe, only then will you discover you cannot eat money.” Cree Prophecy
  120. 120. NAFTA Strategies “Treat the earth well. It was not given to you by your parents, it was loaned to you by your children. We do not inherit the Earth from our Ancestors, we borrow it from our Children.” Native Proverb
  121. 121. NAFTA Strategies NAFTA Options : •NAFTA Chapter 11 – an investment •Aboriginal Title •Aboriginal Rights •Aboriginal Title as Basis for Claim •Claim to Aboriginal Tittle •First Nation Investor – Sovereignty/Duel Nationality
  122. 122. From the 20th Century to the 21st Century Beyond NAFTA
  123. 123. Beyond NAFTA Broader Options: “He who would do great things should not attempt them all alone.” Seneca proverb Government? “It is time for a renewed, nation-to-nation relationship with First Nations peoples, one that understands that the constitutionally guaranteed rights of First Nations in Canada are not an inconvenience but rather a sacred obligation." PM Justin Trudeau
  124. 124. Beyond NAFTA “I know that a prime minister of Canada needs to be deeply respectful of the other levels of government - whether it be municipal, provincial, or … nation-to- nation relationships with aboriginal governments.” Prime Minister Justin Trudeau
  125. 125. Beyond NAFTA “We owe the Aboriginal peoples a debt that is four centuries old. It is their turn to become full partners in developing an even greater Canada. And the reconciliation required may be less a matter of legal texts than of attitudes of the heart.” Former Governor General Romeo LeBlanc
  126. 126. Beyond NAFTA “Prime Minister Justin Trudeau appeared to back away Wednesday from an election pledge that First Nations would have a veto over natural resource projects on their territories. During a joint press conference whether he would still stick to his pledge that a First Nation’s no meant “no” on TransCanada’s proposed cross- country Energy East pipeline project and Kinder Morgan’s Trans Mountain pipeline project in British Columbia. The prime minister responded saying that he was committed to a “renewed relationship” with First Nations that “respect inherent and treaty rights.” He said the federal Liberal government looked to “First Nations and Indigenous peoples as partners in all that happens in this land.” [http://aptn.ca/news/2016/02/04/trudeau-election-pledge-on-first-nation/]
  127. 127. Beyond NAFTA “Our land is more valuable than your money. It will last forever. It will not even perish by the flames of fire. As long as the sun shines and the waters flow, this land will be here to give life to men and animals.” Chief Crowfoot, Siksika (circa 1825-1890)
  128. 128. Beyond NAFTA “We do not inherit the earth from our ancestors, we borrow it from our children.” Unknown, Haida Indian Saying
  129. 129. Beyond NAFTA "The United States and Canada share the goal of enhancing shared prosperity, creating jobs, protecting workers and the environment, and promoting sustainable economic development. Recognizing that the Trans-Pacific Partnership, which links together countries that represent nearly 40 percent of global GDP, would advance these objectives, Canada and the United States are working to complete their respective domestic processes." President Barack Obama and Canadian Prime Minister Justin Trudeau
  130. 130. Beyond NAFTA Strategic Allies - “The controversial but not-yet-ratified trade agreement could tie the hands of the Trudeau Liberals on two key parts of its agenda — fighting climate change and repairing relations with aboriginal people, the Nobel-winning professor Joseph Stiglitz warned ….” CBS News “A Dirty Deal …”: • Sierra Club • “The Trade Justice Network is comprised of environmental, civil society, student, Indigenous, cultural, farming, labour and social justice organizations that have come together to challenge the scope and secret negotiating process of most free trade agreements.”
  131. 131. Beyond NAFTA Council of Canadians co- releases paper that says ISDS must be rejected to protect the climate… [http://canadians.org/blo g/council-canadians-co- releases-paper-says-isds- must-be-rejected- protect-climate]
  132. 132. Beyond NAFTA “In our every deliberation, we must consider the impact of our decisions on the next seven generations.” Iroquois Maxim

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