TILMA: City of Vancouver report cites a dozen areas of potential negative impact; says “city would receive little or no direct financial benefit”

A recent report on the implications of the BC-Alberta Trade, Investment and Labour Mobility Agreement for the City of Vancouver appears to support what many citizens have been saying since it was signed last year – that the trade deal would undermine local autonomy and weaken important measures.

The May 14, 2007, analysis by the City’s corporate services general manager notes that while TILMA may contribute “to a stronger local economy…it will not result in significant new municipal revenues.”

The City seems resigned to that fact that when fully implemented in April 2009 the TILMA “will apply to BC and Alberta municipalities.” The idea of seeking an outright exemption from the agreement is not even mentioned.

The report states the negative implications for Vancouver may involve “restrictions on City Council’s powers of local autonomy, and/or increased administrative costs associated with complying to the TILMA.”

As a result, the report states its “critical” for the City to take an active role in negotiations with the province “through the Union of BC Municipalities” leading up to the full implementation of the agreement in April 2009.

Vancouver’s analysis of TILMA is similar to the one conducted by the City of Regina in that it attempts to do so with a degree of neutrality on the bigger picture saying “the report does not address the question of whether the TILMA is on the whole beneficial or not for British Columbia, Alberta and/or other municipalities.” Rather, it looks at TIMLA from the local perspective asking two key questions:

Will the City of Vancouver benefit directly or indirectly from the TILMA?

Will the TILMA have negative impacts on/implications for the City?

The report states that TILMA is “intended to harmonise government measures that affect trade, investment and labour mobility.” This contradicts the provincial government’s ridiculous assertion that TILMA is not meant to harmonize measures but instead reconcile and/or mutually recognize them.

Also revealed is the bizarre fact that during the two year “transition period” before the agreement’s full implementation “municipalities may not adopt any measures that would be inconsistent with the TILMA, or amend or renew any measure in a manner that would decrease its consistency with the TILMA,” even though “there is no legislation in place at this time that requires the City of Vancouver to comply to TILMA.”

Vancouver concurs with what many other municipalities have been saying and that is “there was no formal consultation with BC municipalities during the development of the Agreement.” This seems to completely contradict statements in editorials made by BC Economic Development Minister Colin Hansen that local governments were consulted.

The Vancouver report appears to validate fears that TILMA may weaken measures stating on page four: “Existing standards and regulations must be mutually recognised and/or reconciled to remove differences between the provinces. The Agreement provides an incentive for reconciliation at the lower of the two standards in question.”

Oddly, the City’s report does not elaborate on this particular point.

Citing the deeply flawed and discredited September 2005 impact assessment by the Conference Board of Canada for the BC Ministry of Economic Development, the Vancouver analysis addresses the economic benefits of TILMA touted for the Lower Mainland/Southwest and Northeast BC stating that while the trade agreement may result in a stronger local economy “the City would receive little or no direct financial benefit as a result.”

The report goes on to say that any “potential benefits to the City associated with a generally stronger economy must be assessed in the context of any negative impacts, such as restrictions on the City’s powers of local autonomy, and/or increased administrative costs.”

It’s at this point in the report that over a dozen areas are listed where TILMA could negatively impact the City of Vancouver. These include incentives to local business, procurement policies, tendering thresholds, business license conditions, property tax incentives, grants, store hour or smoking regulations, preservation of agricultural lands, conservation of heritage sites, maintenance of scenic views, residential-commercial integration issues, economic development promotion and sign bylaws.

With respect to regulatory bylaws the report states that many of these “will not be relevant to the TILMA and/or will be protected under the “legitimate objectives” section of the Agreement, but some may not be.”

It appears the City of Vancouver might be putting too much faith in TILMA’s “legitimate objectives” clause to protect some measures and is underestimating the difficulties it could face satisfying the three fold test that is required to prove a legitimate objective.

Article 6 of the agreement provides in part:

A Party may adopt or maintain a measure that is inconsistent with Articles 3, 4 or 5, or Part II(C) provided that the Party can demonstrate that:

a) the purpose of the measure is to achieve a legitimate objective;

b) the measure is not more restrictive to trade, investment or labour mobility than necessary to achieve that legitimate objective; and

c) the measure is not a disguised restriction to trade, investment or labour mobility.

In his analysis of TILMA for the Ontario Federation of Labour, Steven Shrybman of Sack Goldblatt Mitchell LLP elaborated on this stating:

“It will be far easier to establish that a government measure impaired or restricted investment, trade or labour mobility, than it will to establish that any such measure satisfies the three pronged test of Article 6. Moreover, dispute panels are entitled to second-guess the government Party on these questions, and because tribunal members are chosen by the Parties, they are likely to share their enthusiasm for de-regulation. This bias is in fact apparent from the record of dispute bodies analogous to those empowered by TILMA, including panels operating under the AIT and NAFTA. The likelihood of confronting an unreceptive panel only exacerbates the already daunting challenges of defending against a TILMA challenge and may discourage government from proceeding with a new regulatory initiative in the first place.

“While it would be unreasonable to simply dismiss the potential of Article 6 to create a safe haven for certain government measures, it would be easy to overestimate the ameliorative effect this exception will have on the broadly framed and far reaching constraints of the TILMA regime.” (Page 11)

Like Regina and Saskatoon, the City of Vancouver report contains a significant oversight in relation to the exceptions listed in Part V of TILMA. The report states:

“Already-incorporated exceptions to the TILMA include measures relating to: aboriginal peoples, water, and services and investments pertaining to water, taxation, revenue generation, including royalties and mark-ups, regulated rates established for the public good or public interest, social policy, including labour standards and codes, minimum wages, employment insurance, social assistance benefits and worker’s compensation, disposition of rights, exploration and development and management or conservation of energy or mineral resources, renewable and alternative energy, management and disposal of hazardous and waste materials, disposition of harvesting rights and management and conservation of forests, fish and wildlife.”

Unfortunately, the City neglected to mention that Article 17 of TILMA requires a ministerial committee to “review annually the exceptions listed in Part V with a view to reducing their scope.”

This means the list of exceptions in TILMA will shrink over time, eventually exposing them to the full force of the agreement.

The Conference Board of Canada describes this on page fourteen of its report An Impact Assessment of the BC/Alberta Trade, Investment and Labour Mobility Agreement (September 2005):

“The change in the architecture of the TILMA is considered to be an improvement, in terms of the coverage of the measures included, when compared to the AIT. It is also more transparent since future negotiations can focus on the removal of the exceptions from the explicit exclusion list.”

Additionally, a February 2007 TILMA brochure confirms that “ongoing efforts continue to reduce exceptions.”

The exceptions in TILMA are by no means completely safe. It is disappointing that Vancouver city administration did not provide this information to City Council.

The report also identified the administrative costs associated with complying with TILMA. These include:

– preparing for the TILMA over the next two years, including taking part in the transition period negotiations to ensure appropriate municipal exclusions, reviewing new/amended measures to assess compliance with the TILMA,

– complying to TILMA on an ongoing basis, e.g., reviewing all new or amended measures to ensure compliance with the TILMA,

– responding to allegations of contraventions, and/or

– increased administrative costs associated with tendering at the significantly-lowered tendering thresholds.

No estimated dollar amount was assigned for this additional work, however.

Finally, there is the matter of the City’s obligation to comply with TILMA. The agreement between BC and Alberta “has no legal effect on the City of Vancouver unless the Province enacts or amends legislation that would apply specifically to the City,” the report states.

There are a number of ugly heavy-handed ways the province could require compliance by uncooperative local governments, though. These include:

– imposing TILMA-related conditions in relation to grants,

– using existing or new legislation to supersede or reject a local government measure, and/or

– seeking indemnity from a municipality that contravenes a TILMA provision that results in the Province having to pay a monetary penalty.

It is interesting to note that Regina’s analysis arrived at similar conclusions.

As reports trickle in from various cities one thing appears common to nearly all and that is TILMA will definitely have a negative impact on local governments – some to the point where permanent exemptions from the reckless scheme are being demanded.

According to the official TILMA website the agreement focuses on two key goals: No obstacles and non-discrimination. One size is meant to fit all so it will be interesting to see what kind of concessions local governments will be able to wrangle from the provinces during the transition period.