Agreement cuts provincial powers to govern

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What if a provincial government signed an agreement forcing it to make most of its regulations identical to those of another province? What if this government voluntarily made itself, and every municipality within its borders, open to lawsuits over virtually anything it did that restricted investment? What if it tied its own hands so that, no matter how much a region was suffering economically, it could not provide assistance that might “distort investment decisions?”

Well, there are no “what ifs” about it. This past spring, B.C.'s Gordon Campbell and Alberta's Ralph Klein signed an agreement with exactly these sweeping constraints on the ability to govern. It is called the Trade, Investment, and Labour Mobility Agreement. B.C. and Alberta trade officials are now shopping it around to other provinces to get them to sign on. The agreement comes into effect next April.

According to Todd Hirsch of the Canada West Foundation, the agreement could erase the borders between B.C. and Alberta so that the only differences between them will be “voting and the colour of the licenceplate.”

Except, once the agreement comes into full force, voting provincially in B.C. and Alberta could be a waste of time.

Under the agreement, the B.C. or Alberta government will be barred from doing anything that could “impair or restrict” trade, not only between the provinces but also through them to another province or country. One article just flatly decrees that there shall be “No Obstacles” to this trade.

Governments will be prohibited from providing subsidies that either directly or indirectly “distort investment decisions.”

Some exceptions, such as for water, are permitted but even these are to be reviewed annually to get them reduced.

The agreement also requires B.C. and Alberta to “mutually recognize or otherwise reconcile their existing standards and regulations” if these “impair or restrict” trade, investment or labour mobility. Then it prohibits new regulations from being introduced that would have these effects. Since regulation always restricts investment in some way, the result will be that all future B.C. and Alberta governments will be prevented from strengthening their regulations.

How exactly is this going to work? What would happen, for example, if B.C. voters decided they had had enough of leaky condos and voted for a party committed to tougher construction regulations? A government elected on such a commitment would quickly find it had to betray its promise or be vulnerable to a trade investment challenge.

Plus if either province considers any new initiatives, it has to give the other party to the agreement the right to comment in advance and is then obligated to “take the other province's comments into consideration.” In sharp contrast, citizens in B.C. and Alberta were never consulted by their own governments on this astonishing agreement.

As part of their sales job, Alberta's Gary Mar and B.C.'s Colin Hansen have claimed the agreement will not result in lower provincial standards — just ones that are “appropriate.” In reality, however, the agreement can only lead to deregulation because businesses are only likely to sue governments over regulations they think are too high, not ones that are too weak.

In a vastly expanded version of provisions in NAFTA, any resident of B.C. or Alberta will gain extensive new grounds to sue government. A dispute panel will be empowered to make binding decisions and grant compensation of up to $5 million for any government action that violates the agreement. Repeated complaints can be taken about the same government policy or regulation.

Governments can go on bended knee to trade investment panels and argue that their regulations were “necessary,” but trade dispute panels rarely accept such arguments. Plus, this agreement only recognizes a limited list of regulatory objectives as “legitimate.”

For example, a city's desire to prevent urban blight is not on the list of legitimate objectives, so municipal bans on billboards would likely be a violation.

No wonder Gary Mar could tell a business audience in Richmond that the dispute process is “everything Canadian business asked for.”The pact creates endless potential for litigation against government right down to the school board level, without any demonstrable benefit. A 1998 study done for the B.C. government found that: “efforts to liberalize interprovincial trade will have almost no effect on trade flows. The reality is that interprovincial trade barriers are already very low.”

As for labour mobility, all provisions for increased labour mobility will already be covered in Manitoba Premier Gary Doer's initiative to see professional requirements harmonized across Canada.

To sum up, the agreement pretty much bans new regulation and government assistance for economic development. Perhaps in anticipation of the pact, the B.C. legislature's fall sitting was cancelled with the government claiming there was not enough to do. When asked about the constitutionality of the agreement, Steven Shrybman, a partner in the law firm of Sack, Goldblatt, and Mitchell, commented that “a basic principle of constitutional law is that a government cannot fetter its own legislative prerogatives by abandoning its authority to govern.”

Sounds like what the Trade, Investment, and Labour Mobility Agreement is all about.

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