TILMA: Agreement targets subsidies, non-profit organizations could be at risk; CFIB and Leader-Post not telling whole story

“Subsidies are seen as inconsistent with TILMA.”
– Shawn Robbins, Director of Internal Trade, Ministry of International and Intergovernmental Relations, Government of Alberta

In Free-trade agreement's impact on 'Riders is debatable (Apr. 27, 2007) the Regina Leader-Post reports that, according to a local labour representative, under the Trade, Investment and Labour Mobility Agreement (TILMA) the Saskatchewan Roughriders football club “could face impending doom” because of a clause in the agreement “preventing the subsidization of for-profit businesses by government.”

In a recent post to his blog, Larry Hubich, the president of the Saskatchewan Federation of Labour (SFL), cited the following passage from UBC professor Dr. John Helliwell’s review of the Conference Board of Canada’s Report titled Assessing the Impact of Saskatchewan Joining the BC-Alberta Trade Investment and Labour Mobility Agreement:

“[A] professional football franchise in one province could launch an objection, subject to binding panel arbitration, against the government of a city in another province if they were to provide government subsidized infrastructure for the local team…”

TILMA architect Shawn Robbins, the director of internal trade under the ministry of international and intergovernmental relations of the government of Alberta reportedly disputed the claim saying “I’m not sure if TILMA would apply (to the Roughriders). The provisions do not affect not-for-profit enterprises.”

The Leader-Post noted that the “Roughriders are classified as a non-profit corporation, according to Deb McEwen, the director of communications for Sask Justice.”

What Shawn Robbins and the Leader-Post failed to mention, though, is that while subsidies to non-profit corporations are presently listed as “exceptions” in TILMA, Article 17 of the agreement requires that the “exceptions listed in Part V” be reviewed annually “with a view to reducing their scope.”

The list of “exceptions” in TILMA is meant to shrink over time not increase.

In the article, Robbins went on to say that “Subsidies are seen as inconsistent with TILMA.”

Well, there you have it coming directly from the Alberta government – subsidies are a target.

It seems clear, then, that under TILMA subsidies to non-profit corporations will eventually be exposed and risk being challenged with possible lawsuits and damage awards. Supporters of TILMA, like the Canadian Federation of Independent Business, the Saskatchewan Chamber of Commerce and Saskatchewan Party Leader Brad Wall, always seem to steer clear of discussing the devastating impact Article 17 of TILMA would have on Saskatchewan should it sign the agreement.

“It's hard to imagine another CFL team that would pursue this,” said Marilyn Braun-Pollon, the Director of Provincial Affairs for the CFIB in Saskatchewan.

Can Braun-Pollon promise that? TILMA does not contain that type of guarantee.

It should be noted that not all CFL franchises are publicly-owned. Some, like the Calgary Stampeders, are private.

Grievances from other CFL teams might be the least of the worries since TILMA appears to expand foreign investor (US and Mexican) rights that can be asserted under NAFTA provisions to challenge a measure.

Can the Edmonton Oilers, Calgary Flames and Vancouver Canucks of the National Hockey League be assured that no one out there would file a claim against them? Can Braun-Pollon give that assurance to the thousands of businesses her organization represents?

In the article Braun-Pollon once again complains about the existence of “unnecessary rules and red tape” even though on April 3, 2007, the Edmonton Journal editorial board said there is “little in the way of genuine trade barriers remaining between the two westernmost provinces,” and Saskatchewan Party Leader Brad Wall said Saskatchewan has “fewer trade barriers and restrictions than either B.C. or Alberta.”

TILMA's damage would not begin or end with subsidies to non-profit organizations. It could also affect other “exceptions” listed in Part V of the agreement such as:

– Measures adopted or maintained relating to: Aboriginal peoples; water; regulated rates established for the public good or public interest; labour standards and codes; minimum wages; employment insurance; social assistance benefits and worker’s compensation.

– Business subsidy measures adopted or maintained to provide: Compensation to persons for losses resulting from calamities such as diseases or disasters; assistance for book and magazine publishers, sound recordings, and film development, production and distribution; assistance for recreation and assistance for academic research.

– Subject to Article 4, measures adopted or maintained relating to: the licensing, certification, registration, leasing or other disposition of rights to energy or mineral resources; exploration and development of energy or mineral resources; or management or conservation of energy or mineral resources and measures adopted or maintained to promote renewable and alternative energy.

– Measures relating to the licensing of a motor vehicle operated by or on behalf of a person who may charge or collect compensation for the transportation of passengers in that vehicle.

– Measures adopted or maintained relating to: the licensing, certification, registration, leasing or other disposition of rights to the harvesting of forest or fish resources; the management or conservation of forests, fish and wildlife; or requirements that timber be used or manufactured within the territory of a Party.

– Measures adopted or maintained relating to the management and disposal of hazardous and waste materials.

The breath of TILMA is astounding with subsidies being only a small part.

Article 3 of TILMA is crystal clear that there are to be “No Obstacles” and that “Each Party shall ensure that its measures do not operate to restrict or impair trade between or through the territory of the Parties, or investment or labour mobility between the Parties.”

“[The agreement’s] provisions are seen as levelling the playing field for businesses between provinces,” said Robbins.

It’s obvious the creators of TILMA see subsidies as an obstacle that must be removed at all cost – regardless of the magnitude of harm it would likely cause in the process.

TILMA is about putting private profits ahead of the public interest.


NOTE:

TILMA defines a “business subsidy” as: “a financial contribution by a Party, namely: cash grants, loans, debt guarantees or an equity injection, made on preferential terms; a reduction in taxation and other forms of revenue generation, including royalties and mark-ups, or government levies otherwise payable, but does not include a reduction resulting from a provision of general application of a tax law, royalties, or other forms of a Party’s revenue generation; or any form of income or price support that results directly or indirectly in a draw on the public purse that confers a benefit on a specific non-government entity, whether organized as one legal entity or as a group of legal entities, but does not include generally available infrastructure, assistance to provide generally available infrastructure, or subsidies defined as non-actionable under Article 8 of the World Trade Organization Agreement on Subsidies and Countervailing Measures.”

A “measure” includes any legislation, regulation, standard, directive, requirement, guideline, program, policy, administrative practice or other procedure.