Schneiderman’s New Constitutionalism in Analyzing the Trade, Investment and Labour Mobility Agreement Between British Columbia and Alberta
Perceived barriers between and among states on various activities, especially those that can provide economic benefits, have led to various agreements trying to eradicate these obstructions. This is true both locally and internationally and these agreements are believed to be the solution for removing restrictions on trades between and among states. Some examples are the General Agreement on Tariffs and Trade (GATT) for an international setup and Trade, Investment and Labour Mobility Agreement (TILMA) for its localized version such in the case of British Columbia and Alberta TILMA in Canada.
Even before this TILMA between and/or among provinces came into, there was already the Agreements on Internal Trade (AIT) existing among Canadian provinces. Efforts for these agreements are made in order to lessen the barriers existing between and/or among provinces, which, according to MacMillan and Grady (2007), is a big “irritant” to the economic union of Canada. However, are these agreements really beneficial to those who are supposed to benefit them? Or are these agreements not in breach of previous agreements the Canadian government have signed with? In fact, one author and a University of Toronto professor, David Schneiderman, has written a paper that may relate to these kinds of agreements, both locally and internationally, which, he entitled Investment Rules and the New Constitutionalism,
On the other hand, this paper will try to examine and analyze and will finally conclude if what Schneiderman have argued on the New Constitutionalism discussion may be used or not, as a basis to evaluate the agreements, specifically the TILMA entered into by and between British Columbia (BC) and Alberta provinces of Canada.
II. Overview of BC – Alberta TILMA
The agreement’s operating principles have made the two western Canadian provinces to resolve on establishing comprehensive agreement on trade, investment and labour mobility (may collectively referred to as “the benefits”) on all sectors of the economy (Trade, Investment, 2006 p. 1). The whole idea of TILMA was established based on Article 1800 of the Agreement on Internal Trade (AIT) permitting the two provinces to enter into additional arrangements for further liberalization of trade, investment and labour mobility. It was further resolved that the agreement would eliminate barriers restricting or impairing the benefits; would enhance the stability and growth as well as competitiveness of the involved provinces; would increase opportunities and give better options to labourers/workers, business entities, investors and to the end users/consumers while reducing the costs at the same time; and it would promote an environmentally safe and sustainable development together with high consumer development levels as well as higher labour and health standards. In fact the mentioned resolutions of the TILMA are only partial list, however from the aforementioned, a clear view of what the agreement is all about may be construed. This agreement came into effect on April 1, 2007, (MacMillan & Grady, 2007, p. 3) and is scheduled to be fully implemented by April 1, 2009.
The above mentioned resolutions however, are from the claims of the proponents of the agreement and all those stated are only the possible good effects. This is however not true in reality, that no flaws are found in the agreement. In fact, according to Lee and Weir (2007, p.1), the barriers that BC-Alberta TILMA proponents are referring to, do not really exist and the two further noted that the cost of these so-called barriers are so little, 0.05% of the Gross Domestic Product (GDP).
Despite the criticisms, the two parties represented by the provinces of Alberta and British Columbia are encouraging other provinces to enter in the same TILMA to promote further the possible benefits that these efforts might give. However, the question is, are these benefits for real? Or are they just a myth? This paper cannot however answer this question. The focus of this paper is on the relevance of Schneider’s presentation on the New Constitutionalism to the BC-Alberta TILMA analysis.
III. The Concept of New Constitutionalism
The world is indeed getting older. As a result, many things are acquiring their “new” versions. Aside from New York, New Jersey, neocolonialism or anything else “new”, there is the more serious issue of New Constitutionalism. What is this “new” in constitutionalism? This is a concept, which, according to Schneiderman (2000, p.757), rremoves key aspects of economic life from the influence of domestic politics within nation states and with a manifestation of this new orthodoxy is the network of bilateral investment treaties designed to ensure foreign investors security from “discrimination” and “expropriation,” and conferring standing on investors to sue in the event that their investment interests are impaired.
According to Professor Stephen Gill at York University (as stated in the arguments of Schneiderman), this concept of new constitutionalism refers to the quasi-legal restructuring of the state and the institutionalization of international political forms that emphasize market credibility and efficiency and also limit the processes of democratic decision making within nation states mandating the insulation of key aspects of the economy from the influence of politicians or the mass of citizens by imposing, internally and externally, ‘binding constraints’ on the conduct of fiscal, monetary, trade and investment policies.
Aside from Professor Gill, other views on new constitutionalism is that of So?tan & Elkin, (1996, p. 3) describing the concept as a family of theoretical perspectives, all of which share an effort to understand institutions from the designer’s (or creator’s, or founder’s, or framer’s, or reformer’s) perspective, not simply the point of view of social engineers, of experts constructing institutions from the foundation up but seems more appropriate to see it as the point of view of citizens, of persons with an active interest in the improvement or reform of the institutional framework within which they live, in this case, we may assume the investors playing this role, having that “active” interest.
With this new constitutionalism, Schneiderman explains that the proliferation of rulemaking and rule enforcement mechanisms designed to constrain state intervention in the market is one among its very foundation. One good example is the “nondiscrimination” (Schneiderman, 2000, p.759) principle of goods and services crossing the borders, from one state to another, from one country to another. This is actually in accordance with the General Agreement on Tariffs and Trade (GATT). Why? What happens and what is good if the meddling of the state is minimized in terms of political and trade matters? The answer is on its effect to the economic life aspect where the new constitutionalism confers privileged rights of citizenship and representation on corporate capital, while at the same time constraining democratic processes. Central to the new constitutionalism, then, is the imposition of “discipline” on state institutions, both “to prevent national interference with property rights and [to provide] entry and exit options of holders of mobile capital with regard to particular political jurisdictions” according to Gill (1995, p. 413 cited in: Schneiderman, 2000, p.758). Organizations or agreements such as the NAFTA, the European Union, and the WTO are very good examples of as a form of “new constitutionalism”-the orthodox model for economic and political development in the post-1989 world.
Another obvious effect of this so-called New Constitutionalism are the series of bilateral agreements obviously entered into by some regional, bilateral or multi-lateral states with regard direct foreign investment (DFI) that have rigid mechanisms “interlocking the network of rules and rule-making structures” (Schneiderman, 2000, p.759) limiting the actions that independent states may take against any of the parties. This is because a mere access to each other, by both parties, in terms of trade of goods and services are still having some limitations and are considered as insufficient to ensure the background conditions for freedom of movement in the global marketplace, thus more defined trade agreements are necessary.
Does this concept of New Constitutionalism by Schederman relevant for the analysis of the BC-Alberta TILMA? This question will be answered in the conclusion after the following analysis on specific areas, consist of approaches for 1. Trading of Goods and Services 2. On Investment Regulations and 3. Labour Mobility. These are the major sections of TILMA which can be examined thoroughly to find the answer for the question. It should be noted, however, that the examples noted by Schneiderman are for international surroundings and agreements when the new constitutionalism concept is discussed while the case of BD-Alberta TILMA is within the same nation state of Canada. After the examination, it will be concluded if this difference in application will matter or not in determining the applicability of the new constitutionalism concept in the TILMA between BC and Alberta.
IV. The New Constitutionalism as Discussed by Schneiderman and the TILMA Between BC and Alberta
The TILMA between BC and Alberta have in fact been heavily criticized as far as claiming the positive effects the proponents are forecasting to be only “mythical” (Lee and Weir 2007) or this pact “poses a very serious threat to democratic decision-making, alongside the parallel risk of other provinces joining the B.C.-Alberta TILMA” (Sinclaire, 2007). However, according to Macmillan and Grady, this TILMA between the two provinces seeks to go much further than a sheer trade agreement because it includes in it more important provisions that do not only aim for the greater financial and economic benefits but as well as environmental harmonization, child welfare, health surge capacity, tourism marketing, oil and gas regulation, and e-learning effects. It is further believed that TILMA’s primary objective is to create a seamless border between the two provinces, addressing a host of regulatory and administrative matters that the AIT does not cover but most of all, it is wotrth remembering the agreement’s goal towards sutainability and other qualitative aspects of its objectives mentioned.
The following are the precise categories where the New Constitutionalism concept may be compared with and used to analyze the BC-Alberta TILMA.
On Trading of Goods and Services
One good example for the treatment of goods and services, or, generally of trade, in the new constitutionalism regime, is the case of the World Trade Organization (WTO) monitoring the movement of goods and services across state borders and ensuring the compliance of each state with the Uruguay Round General Agreement on Tariffs and Trade (GATT) principle of “nondiscrimination.” This idea of nondiscrimination is defined by Schneiderman (2000, p. 83) in his another discussion as disciplines that include national treatment, requiring treatment no less favorable than that available to nationals within the investing state, and most favored-nation status, mandating treatment no less favorable than that available to investors of a third country.
On the side of BC-Alberta TILMA, the treatment for goods and services between involved states, which, for this case, are the two mentioned provinces, are clearly defined. Under the applicable rules of the TILMA, the general treatment of goods and services, or trade are the following
i. assuring each party that no measures would operate in each other’s end that restrict or impair trade between the two of them on the “no obstacles” provision;
ii. the two provinces shall agree to “non discriminate” each other and shall agree to like, directly competitive or substitutable goods and services of either party, treating the goods or services from the other not less favourable than its own;
iii. charging equally on trade, goods or services as how as it charges to its own goods and services unless the difference is justifiable in case the charge of one over the other is greater than it charges to its own.
The above applications would result to lower cost of goods and services on the part of the businesses eventually passing on the benefits to the consumers or endusers. Is is observable that there relevance between the new constitutionalism concept an dthe applicable provisions of the BC-Alberta TILMA. For this section, it is therefore reasonable to derive an idea that the TILMA may be analyzed using the idea of new constitutionalism as discussed by Schneidrman.
On Investment Regulations
Rules governing the investment practices in a new constitutionalism regime involve nondiscrimination of goods and services and the right to sue from the side of investors in case their investment interests are impaired. With this regime, legal conditions are enhanced while the forces of majoritarian politics are diminished according to Schneiderman.
In the case of BC-Alberta TILMA, the rules on investment include the following:
i. The two provinces must reconcile their business registration and requirements for reporting in order to allow enterprises that have met the requirements of one be deemed to have met the same requirements imposed by the other;
ii. None of the party shall require one business enterprise belonging to the other party to maintain a representation office or a business venture or residency in the other party’s territory as a qualification to carry business activities;
iii. The two provinces deemed not to require each other that enterprises must have agents or an agent located in either territory for service of notices for proceedings or any judicial matters to be qualified in establishing or maintaining local presence in either of the two provinces or to be a resident in either territory.
iv. Non construction from the provisions of the agreement preventing either of the parties from maintenance, designation, or regulation of a monopoly for the supply of goods and services within their respective territories.
For investment purposes, greater similarity is detected between the new constitutionalism concept and the TILMA of the two provinces. In this regard, what Schneiderman have noted in his paper are also applicable in analyzing the effects and consequences, possible fallouts or anything related to the BC-Alberta TILMA. The idea behind the two, new constitutionalism and the TILMA in terms of investment is to limit the intervention of the states for economic and financial success.
The new constitutionalist’s concept on mobility involves transnational economic forces requiring state action both to remove fetters on economic mobility and to institutionalize enforceable legal regimes with which to limit state capacity and discipline rogue states. On a greater perspective however, such as on an international perspective, the rules for labour mobility is very difficult to fathom and will encounter difficulties due to forces governing labour and immigration. However, on the part of the BC and Alberta, which both belong to a single state/country and are separated by provincial borders alone labour mobility is not that complicated.
Labour mobility provisions, some of the major ones, in the case of BC-Alberta TILMA provide that
i. Any worker certified by the province of Alberta’s regulatory body for any occupation shall be deemed valid and recognized for practice in the area of British Columbia, and vice versa;
ii. Licenses required by one province or by its regulatory bodies prior the practice of a profession or prior commencement of work shall be deemed consistent either the requirements of another province, except when additional material trainings and education are needed or required by the other;
iii. The parties shall also work to further reconcile measure and increase the consistencies in their labour related rules.
Although labour mobility is not easily feasible in an international context, regional and intra-national context may adapt it. The one included in the discussion of Schneiderman is on labor standards and not on mobility.
Is the paper presented by Schneiderman relevant enough in analyzing the BC-Alberta TILMA? This is the deciding part of this paper and the stand is afformative: the new cosnstitutionalism discussed by Schneiderman is indeed relevant and will be useful to analyze the TILMA. Generally, what the new constitutionalism concept is aiming is similar to that of what the TILMA is set to achieve, again, through the insulation of key aspects of the economy from the influence of politicians or the mass of citizens by imposing, internally and externally, ‘binding constraints’ on the conduct of fiscal, monetary, trade and investment policies and these are imbedded in the agreement, the limitations, the rules, the restrictions and the likes.
One issue that Scheiderman has presented is on the possibility of international /transnational regimes friction aaginst local or domestic administration. States are understandably the terrains of political struggles and have in them the inherent constitution of potential sites of structural recalcitrance and/or social resistance to these global strategies and also, these are observable in the BC-Alberta TILMA’s critics.
The statement of Schneiderman that a recent UN study confirms that investment protection agreements are relatively insignificant in determining amounts of foreign direct investment (FDI) can be also applicable to the TILMA and in fact, some observations opined that the BC-Alberta TILMA is not as good as it seems because of some flaws in it. The same is true with new constitutionalism where it was observed by Schneiderman that only the powerful states benefit from the agreements putting much limitations on the struggling developing states that signs the agreemnt. How? They are forced not to deviate from the rules of the agreemnt for the fear of capital flights from powerful nations, fiscal incapacity but most of all, with the legal constraints of the agreemnt that is in force. Thus, the regime can be truly be undemocratic.
Finally, the arguments of Schneiderman is not directly related to Canada, or any other intrastate/interprovincial agreements although the agreement between Canada nad Sounth African was mentioned. Nonetheless, it does not erase the fact that the concept behind TILMA and the new cnstitutionalism discussions in his paper are parallel.
Lee, M ; Weir, E. (2007). “The Myth of Interprovincial Trade Barriers and TILMA’s Alleged Economic Benefits” Behind the Numbers. Canadian Centre for Policy Alternatives – BC Office.
Macmillan, K. E. ; Grady, P. (2007). New Prescription: Can the BC-Alberta TILMA Resuscitate Internal Trade in Canada. C.D. Howe Backgrounder 106.
Schneiderman, D. (2000). Constitutional Approaches to Privatization: An Inquiry into the Magnitude of Neo-Liberal Constitutionalism. Law and Contemporary Problems, 63(4), 83.
Schneiderman, D. (2000) Investment Rules and the New Constitutionalism. Law and Social Inquiry 25(3).
Sinclair, S. (2007). Transforming the Agreement on Trade through Binding Enforcement Briefing Paper. Canadian Centre for Policy Alternatives 8(2).
So?tan, K. E. ; Elkin, S. L. (Eds.). (1996). The Constitution of Good Societies. University Park, PA: Pennsylvania State University Press.
Trade Investment and Labour Mobility Agreement. 2007. British Columbia- Trade Investment and Labour Mobility Agreement Official Website. Retrieved 28 May 2008. ;http://www.tilma.ca/agreement/files/pdf/AB-BC_MOU-TILMA_Agreement-Apr06.pdf;.