APEC case study on inclusive policies: Advancing Indigenous peoples’ economic interests through Canada’s trade agreements

Introduction

“There remains no more important relationship to me and to Canada than the one with Indigenous Peoples.” – Prime Minister Justin Trudeau, December 13, 2019.

The Government of Canada has been closely following public and political discourse on trade and globalization at home and within its major trading partners. This discourse has included growing public concern with specific aspects of international trade and investment agreements, such as a perceived lack of transparency in the negotiating process; negative and/or divergent effects on certain segments of the population; and, the potential threats to the environment, health and safety, consumer standards, and the Government’s right to regulate.

Informed by these realities, and as part of its Export Diversification Strategy, the Government of Canada is advancing an inclusive approach to trade that seeks to ensure that all Canadians can benefit from the opportunities that flow from international trade and investment.

The Government’s inclusive approach to trade centers on three key pillars: (1) informed and inclusive trade policy-making; (2) provisions in trade agreements that promote sustainability, transparency, and inclusivity; and, (3) international engagement to advance support for sustainable, transparent, and inclusive trade initiatives. Canada’s approach is informed by ongoing dialogue with a broad range of Canadians, including those that are underrepresented in trade, such as women, SMEs and Indigenous peoples.

The social, cultural, and economic progress of Indigenous peoples is a key priority of the Government of Canada and this commitment is reaffirmed in each Federal Minister’s mandate letter. In 2016, Indigenous peoples in Canada represented 1.6 million people, roughly five percent of Canada’s total population ^{Footnote 1} . Indigenous peoples’ economic development varies in degree and trade policy is one of the many vehicles available to advance concrete outcomes.

As such, and in line with the Government’s broader reconciliation efforts, Canada is advancing Indigenous peoples provisions in its free trade agreement negotiations that seek to ensure that Indigenous peoples and businesses in Canada have access to the benefits and opportunities that flow from international trade and investment.  

Barriers and challenges

The Indigenous economy in Canada is diverse, with over 43,000 Indigenous-owned SMEs operating in all sectors of the economy. Over 10 percent of these Indigenous SMEs operate within Canada’s top 15 export industries and 50 percent operate in sectors with high export potential. That said, in 2017, Statistics Canada data reported that only 7.9 percent of Indigenous businesses export, compared to 11.7 percent of Canadian SMEs that export^{Footnote 2}. As workers, Indigenous peoples’ employment rate in 2016, was 8.4 percent lower than their non-Indigenous counterparts. Employment rates vary between Indigenous peoples, with on-reserve First Nations employment rate 24.2 percent lower than the non-Indigenous population and Métis peoples exhibiting employment rates close to or exceeding those of the non-Indigenous rate ^{Footnote 3}.

Indigenous businesses encounter similar barriers in accessing international markets as their non-Indigenous counterparts, including lack of access to capital; market information; and mentoring networks. However, these barriers are compounded by additional Indigenous-specific challenges that are more difficult to surmount. These include a lack of infrastructure in rural and remote regions (where the majority of Indigenous peoples live in Canada); lower levels of education, skills, and training; higher rates of poverty; and lack of access to land and infrastructure to use as financial collateral. All these barriers and challenges are often exacerbated by racism, discrimination, and longstanding stereotypes.

If barriers and challenges for Indigenous businesses could be minimized and ultimately removed, the benefits for the Indigenous economy in Canada would be significant. For example, a 2016 report from the National Indigenous Economic Development Board highlighted that closing the opportunity gap between Indigenous peoples and non-Indigenous Canadians would have the potential of boosting Canada’s economy by $27.7 billion annually, roughly a 1.5 percent GDP increase ^{Footnote 4} . Another report from Canada’s Advisory Council on Economic Growth estimates that if Canada could increase its workforce participation rate among lower-income, lower-skilled workers, and Indigenous peoples, Canada’s GDP per capita could rise by 6 percent ^{Footnote 5}. This economic growth could have a big impact on Indigenous businesses and their communities, as Indigenous businesses tend to export to more diverse markets, compared to their non-Indigenous counterparts.

Policies and actions for inclusion

Through its inclusive approach to trade, the Government of Canada is actively advancing programs and policies that seek to ensure that Indigenous peoples in Canada can best take advantage of international trade and investment opportunities. In the context of trade policy and trade agreements, and through close and direct engagement with Indigenous peoples, Canada is implementing a two-track approach to advance the interest of Indigenous peoples by seeking:

1. Reservations, exceptions, and exclusions to provide the Government of Canada flexibility to take measures related to Indigenous peoples and businesses; and,
2. Provisions throughout the agreement designed to increase Indigenous peoples’ access to trade and investment opportunities. 

Canada’s reservations, exceptions, and exclusions in its free trade agreements

The longstanding approach of the Government of Canada in negotiating free trade agreements has been to ensure that no obligation it takes in a trade agreement conflicts with its obligations to Indigenous peoples, including the rights of Indigenous peoples as set out in Section 35 of the Constitution Act, 1982. Furthermore, for broader socio-economic development, Canada also seeks to ensure that it maintains policy flexibility in order to provide Indigenous peoples and businesses with preferential treatment. To that effect, Canada has traditionally sought chapter-specific reservations, exceptions, and exclusions in the areas of services, investment, government procurement, the environment, and state-owned enterprises in its FTAs.

More recently, in addition to securing its traditional chapter-specific reservations, exceptions, and exclusions, the new Canada-United States-Mexico Agreement (CUSMA) included Canada’s first Indigenous Rights General Exception. This dedicated General Exception provides the Government of Canada with greater certainty that it can adopt or maintain measures necessary to fulfill its obligations regarding the constitutionally protected rights of Indigenous peoples in Canada and those rights set forth in self-government agreements. The General Exception co-exists with and complements Canada’s other chapter-specific reservations, exceptions, exclusions, and other Indigenous-specific provisions throughout the Agreement.

Increasing international trade and investment opportunities for Indigenous peoples

Canada is also advancing provisions in its trade negotiations to increase the opportunities for Indigenous peoples to benefit from trade and investment. Canada developed, in close collaboration with Indigenous peoples, various provisions on trade and Indigenous peoples for inclusion in Canada’s FTAs, where appropriate. These provisions can take different forms, including as a dedicated chapter or chapter-specific provisions throughout the Agreement. The objective of these provisions are to:

• enhance the ability of Indigenous peoples and businesses to benefit from the opportunities created by international trade and investment;
• reaffirm important existing Indigenous-specific international instruments, such as the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP);
• recognize the important role of the environment in the economic, social, and cultural well-being of Indigenous peoples and the importance of respecting, preserving, and maintaining the knowledge and practices of Indigenous peoples that contribute to the conservation of the environment; and,
• facilitate the sharing of information and best practices in support of Indigenous peoples’ participations.

Engagement with Indigenous peoples on the Government’s trade policy priorities

Canada has been proactively engaging in comprehensive dialogue with Indigenous peoples and their representatives on Canada’s trade policy priorities. Global Affairs Canada, the federal department responsible for trade policy, established a trade-focused Indigenous Working Group (IWG) in September 2017. The IWG includes a wide-range of partners, including representatives from the National Indigenous Organizations ^{Footnote 6} , modern treaty partners, Indigenous groups and business associations, and legal and policy experts.

The catalyst for the development of the IWG was the Government’s commitment for a renegotiated CUSMA to be as inclusive as possible. Since its inception, Government officials have engaged the IWG on a wide range of trade and investment issues of importance to Indigenous peoples, including chapter-specific issues (e.g. investment, the environment, and intellectual property). Through close collaboration with the IWG, the Government developed various Indigenous-specific provisions which it advanced in the CUSMA context for the first time; these included a dedicated Trade and Indigenous Peoples Chapter and an Indigenous Peoples Rights General Exception.

Impact

Canada’s ongoing engagement with the IWG has provided the Government with an essential vehicle for the development of its Indigenous trade policy; in line with its commitment to informed trade policy making as part of its inclusive approach to trade. The IWG has assisted the Government in informing and developing its evidence-based Indigenous peoples trade policy by providing a useful and pragmatic mechanism for dialogue.

During the initial dialogue with the Working Group, time was invested in learning from one another. For example, dedicated sessions were organized on specific trade policy areas, where members were provided detailed overviews of Canada’s negotiating approach, including the purpose and goals of specific FTA chapters. This allowed members to provide informed comments, suggestions, and recommendations from Indigenous peoples’ perspectives, which has assisted in the Government’s objective of mainstreaming Indigenous-specific provisions through out its FTA negotiations.

In addition to assisting in the mainstreaming of Indigenous-specific provisions in its FTAs, the IWG has also been fundamental in influencing the development of programs within Global Affairs Canada. For example, in October 2018, Canada’s Trade Commissioner Service (TCS) led the first Government-sponsored Indigenous business trade mission to the World Indigenous Business Forum in New Zealand. The TCS also organized and led an Indigenous business delegation on a trade mission to the United States in May-June 2019. This trade mission’s objective was to connect Indigenous businesses with Indigenous tribes in the United States to foster and take advantage of the inter-tribal trade networks. Indigenous participants have reported numerous business leads being pursued as a result of these trade missions.

Lessons learned and way forward

Government of Canada officials have learned a lot from working with the Indigenous Working Group on trade policy.  We have benefited from their perspectives and insights, and we have gained a richer understanding of the effects and opportunities of FTA provisions on Indigenous peoples in Canada and globally.  The IWG highlighted that  Indigenous peoples have been trading since time immemorial and that is far  longer than FTAs have existed and as such we seek to facilitate trade and remove barriers to the greatest extent possible.  The IWG has indicated that Indigenous peoples value and seek to protect their traditional knowledge  and traditional cultural expressions from commercial exploitation and trade provisions can assist in those efforts.  The IWG has also emphasized  that  Indigenous peoples want to protect their rights and also participate in and benefit from trade like all peoples around the world since doing so brings increased wages, productivity, innovation, and overall economic prosperity.

canada is are committed to keeping the IWG and Indigenous peoples apprised of Canada’s ongoing trade negotiations (bilateral and multilateral), seeking their insights and support, and engaging on any other trade related issues of importance to Indigenous peoples.

Role for regional cooperation

With approximately 370 million Indigenous peoples worldwide, making up roughly 5 percent of the global population ^{Footnote 7}, regional forums, such as APEC, where a majority of the world’s Indigenous peoples live, can play a role in advancing Indigenous economic development and participation in trade. As an incubator, APEC is a perfect forum to engage a wide range of economies on new ideas and policies on advancing Indigenous economic empowerment through trade. This engagement could contribute to informing international trade policy by developing common norms and to facilitating cooperation activities, such as the sharing of experiences and best practices. Furthermore, engagement on this innovative and new trade policy issue would be in line with Chile’s 2019 theme of inclusive growth and be supportive of New Zealand’s APEC 2021 presidency where they have identified advancing Indigenous peoples in the economy and trade as one of their key priorities.