Canada and North America in the Hemisphere: The Three Countries' Investment-Protection Norms in Latin America

by Amy Tieu and Stephen Clarkson

In the rapidly expanding literature on global norm diffusion, Canada's role, whether as rule maker or rule taker is largely unrecognized. As an "intermediate power" occupying a position in the global hierarchy somewhere between middle-power and great-power standing, Canada has played a mainly secondary role in accepting and generating new norms in two generally distinct categories. In what could be called its ‘white knight’ guise, it has supported, and occasionally even led, the generation of liberal, government-friendly norms aimed to enhance international peace, security, and justice. In the 1990s it was a major player in articulating the Responsibility to Protect doctrine, in supporting the global treaty to ban the use of anti-personnel land mines, and in leading the effort to create a muscular International Criminal Court.

At the same time it was developing a dual ‘black prince’ role that reflected its shift to a neo-conservative paradigm concerning foreign direct investment that had government-restraining implications both domestically and internationally. At home, the federal government began in the 1980s by Ottawa conceding powerful rights to American transnational corporations (TNCs) vis-à-vis their Canadian branch operations by agreeing in the Canada-United States Free Trade Agreement (CUFTA, 1988) that the principle of National Treatment should be extended from not discriminating against imported goods to not discriminating against imported capital. This meant that government policies could no longer be oriented towards giving incentives to domestic companies to help them offset the greater weight of the United States’ TNCs. The process of weakening Canadian governments in relation to foreign capital was dramatically deepened in the North American Free Trade Agreement‘s (NAFTA, 1994) Chapter 11, which allowed US investors to avoid having to use either the Canadian legal system or the GATT’s and, after 1995, the WTO’s intergovernmental dispute-settlement processes. Instead, they were empowered to take any complaints they had against federal or provincial or municipal regulations that affected their financial prospects for arbitration in special ad hoc binational conflict-resolution forums.

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