OTTAWA - The federal government has rejected demands for public hearings on its investment protection agreement with China, leaving the controversial deal even supporters say is far from perfect on a fast track to ratification.

Opposition critics say the haste to ratify a deal that took 18 years to negotiate in just 21 sitting days — and without hearings — leaves Canada vulnerable to costly surprises down the road.

"The Conservative government measures success by how fast they can sign agreements, they are putting speed ahead of quality," said NDP trade critic Don Davies, whose request to hold public hearings on the Foreign Investment and Protection Agreement (FIPA) to the Commons trade committee was rejected by government members this week.

"We all agree that close economic relations with China is a desirable thing, but not at the expense of a bad deal."

Instead, MPs on the committee will be given a briefing — for one hour — by department officials on Thursday. No independent witnesses will be called.

A spokesman for Ed Fast said the trade minister was not available for an interview, but noted MPs can always debate the treaty in days allotted to the opposition in the Commons.

Rudy Husny of Fast's office defended the deal as "very similar to other treaties signed by Canada with other countries" and something Canadian firms have long sought.

The agreement, whose details were first revealed on Sept. 26, has faced opposition from civil society groups such as the Council of Canadians, but also from non-aligned voices.

Critics have directed their fire at some unusual aspects of the FIPA, including an effective 31-year lifespan — by comparison NAFTA can be cancelled on six months' notice — and failure by Canadian negotiators to received "national treatment" for prospective new investments into China. Existing Canadian investors are guaranteed treatment no worse than domestic Chinese firms under the deal.

The agreement is not wholly reciprocal, say critics, because among other aspects China can place conditions on local preferences, including suppliers and employment, on Canadian investors, while Canada — because of NAFTA obligations — is barred from doing so.

The biggest problem, says Gus Van Harten, an expert on international investment law at Osgoode Hall Law School, is the predominantly one-way direction of expected future investments, meaning Canada will be assuming most of the risks.

"All the other FIPAs Canada has signed is with countries that don't invest in Canada," he explains. "In this treaty, it's fair to conclude that Chinese investment in Canada is very likely to outstrip significantly Canadian investment in China."

The proposed $15-billion acquisition of Calgary-based energy company Nexen Inc. (TSX:NXY) by a Chinese state oil firm is triple the current total investments by Canadian firms in the communist country, and Nexen is "just the edge of the wave" of what is coming, he said.

Van Harten notes that Canada has already been forced to pay about $160 million in compensation to foreign firms for government policies considered to have broken trade rules under NAFTA. The risks are even greater with a FIPA deal with China, a country he says has already shown itself to be litigious.

"You can support FIPAs to support Canadian investors, but this puts us in the sitting duck position because only investors can sue the government, governments cannot sue the investors," he points out.

"This is exactly what China wants if their aim is to acquire major ownership of Canada's resources ... and move them out and be processed in China."

Even some supporters such as Gordon Houlden, a former Canadian diplomat with 22 years in China, agrees the China FIPA is unusual because of its long lifespan and the fact it doesn't give national treatment to new investments. That is not expected to be problematic for Chinese firms looking at Canada, but may not be the case when Canadian firms want a piece of the action in China.

Still, Houlden, who is currently director of the China Institute at the University of Alberta, believes the critics are exaggerating the risks.

China is now one of most desired locations in the world for foreign firms, so its unlikely Canadian investors would be stymied. As well, the deal establishes that disputes will go to international arbitration, taking them out of the hands of notoriously unpredictable Chinese courts.

"I'd say grab it and run with it. If I was investing in a rural province, I'd want a FIPA for protection," he said.

Trade lawyer Lawrence Herman of Cassels Brock judged the deal "not up to the gold standard" but reasonable overall.

"It helps put the business investment relationship into a treaty framework with a set of rules, which helps Canadian investors," he said.

All interesting points, says Davies, and issues that should be studied by the trade committee.

"There are extraordinary and unusual aspects of this FIPA that are raising alarm bells and we think require further examination," he said.

According to the timetable, the deal will be ratified on Nov. 1.

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  • Here are a few details of the major investment deal coming soon between Canada and China, as well as a list of what CBC chief political correspondent Terry Milewski calls a "small blizzard of incremental agreements," signed in Beijing. <em>With files from CBC</em>. (Diego Azubel-PoolGetty Images)

  • The Big One: FIPA

    Prime Minister Stephen Harper called the foreign investment promotion and protection agreement (FIPA) between Canada and China the first "comprehensive economic agreement" between the two countries. In fact, what was signed by Harper and Chinese Premier Wen Jaibao in Beijing is not the final deal, but a declaration of intent: Now it must be legally reviewed and ratified by both governments, which for Canada will mean a debate in the House of Commons. Once both countries complete this process, it will need to be formally signed to take effect. This deal will protect Canadians investing in China, as well as Chinese investors in Canada, from "discriminatory and arbitrary practices." Once in place, investors can have more confidence that rules will be enforced and valuable business deals will be subject to predictable legal practices. Harper told reporters in Beijing he "absolutely" expected that it will make a "practical difference." "The agreement does not override existing Canadian law in regard to foreign investment and foreign investment review," Harper said. "Those laws remain in place." Negotiations for this agreement took 18 years, and key players in manufacturing, mining and the financial sectors were consulted to get to this stage. It's not unusual for Canada to have this kind of an agreement with a trading partner. FIPAs are in force with 24 other countries that trade with Canada, and active negotiations are underway with 10 other countries, according to the government's announcement. (Diego Azubel-PoolGetty Images)

  • The 'Blizzard' (By Sector):

    (AP Photo/Valentina Petrova)

  • Agriculture

    - A new protocol, building on a 2010 agreement to restore Canada's market access to the Chinese market for Canadian beef following the 2003 BSE outbreak and resulting border closures, to allow industrial beef tallow (fat) to be imported for the first time in almost a decade. China used to be Canada's top export market for tallow ($31 million in 2002), and now Canada has a shot at a share of the $400 million in tallow China imports from around the world. - A memorandum of understanding (MOU) on canola research, to address a recent fungal disease in canola and rapeseed that threatens Canada's valuable trading relationship with China in canola. - On Tuesday, Chinese aquaculture feed company Tongwei announced it will increase its purchase of Canadian canola by up to $240 million per year by 2015. (DAVID BUSTON/AFP/Getty Images)

  • Natural Resources:

    - A MOU between Natural Resources Canada and the Chinese Academy of Sciences to collaborate on scientific research on sustainable development of natural resources. The government release touts benefits including new technologies for resource firms, carbon emissions reduction strategies, reduced environmental impacts and natural hazards from resource development, and new opportunities for Canadian suppliers of equipment and services. - A MOU spelling out a "framework" for Parks Canada and China's state forestry administration to collaborate and share scientific expertise in the management of national parks, natural reserves and other protected areas. The agreement includes language around ecological restoration, conservation measures for endangered wildlife, wetlands development, and the preservation of forests and wetlands. (<a href="http://www.flickr.com/photos/47096398@N08/" target="_hplink">Flickr: eleephotography</a>)

  • Energy

    - A continuation of the MOU, first signed in 2001 and renewed in 2006, on energy co-operation to "engage China on energy issues" through a Canada-China joint working group on energy co-operation, chaired by Natural Resources Canada and China's national energy administration, which is responsible for Chinese energy policy. The working group oversees joint research projects, exchange of expertise, and co-operation between energy companies in both countries, including the promotion of energy efficiency and renewables. It aims to both attract capital investment and improve market access for Canadian energy resources and technology. (MARK RALSTON/AFP/Getty Images)

  • Science and Technology

    - Approval of seven projects, valued at $10 million, under the Canada-China framework for co-operation on science and technology and innovation, including: a diagnostic kit for acute kidney injuries, a wind energy seawater desalination system, a waste heat-recovery system to help oil refineries consume less fuel, new solar cells for renewable energy panels, a real-time multi-sensor navigational tracking device for hand-held devices, a blue-green algae bloom warning system and "next generation" large-scale geographic information systems. - Two more calls for proposals, valued at $18 million ($9 million from each country) for joint research under the same framework. These proposals are for the development of "innovations with high commercial potential" in the areas of human vaccines and clean automotive transportation. The Canada-China joint committee on science and technology, made up of individuals from industry, academia and government, sets the priorities and oversees these projects. (To date, 21 projects ranging from nuclear power to AIDS drugs, to clean technologies for pulp and paper have received some $28 million in funding.) (TOSHIFUMI KITAMURA/AFP/Getty Images)

  • Education

    - A renewed MOU extending and modifying the Canada-China scholars' exchange program, which has seen 900 students travel between Canada and China since 1973. New eligibility rules and scholarships will be in place for the next round of competitions in 2012, including eight to 12 Canadian scholarships for Chinese professionals and 20 awards for Canadian university students. (<a href="http://www.flickr.com/photos/plutor/" target="_hplink">Flickr: Plutor</a>)


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  • 20: Australia

    Source: <a href="http://www3.weforum.org/docs/CSI/2012-13/GCR_Rankings_2012-13.pdf" target="_hplink">World Economic Forum</a>

  • 19: South Korea

    Source: <a href="http://www3.weforum.org/docs/CSI/2012-13/GCR_Rankings_2012-13.pdf" target="_hplink">World Economic Forum</a>

  • 18: Saudi Arabia

    Source: <a href="http://www3.weforum.org/docs/CSI/2012-13/GCR_Rankings_2012-13.pdf" target="_hplink">World Economic Forum</a>

  • 17: Belgium

    Source: <a href="http://www3.weforum.org/docs/CSI/2012-13/GCR_Rankings_2012-13.pdf" target="_hplink">World Economic Forum</a>

  • 16: Austria

    Source: <a href="http://www3.weforum.org/docs/CSI/2012-13/GCR_Rankings_2012-13.pdf" target="_hplink">World Economic Forum</a>

  • 15: Norway

    Source: <a href="http://www3.weforum.org/docs/CSI/2012-13/GCR_Rankings_2012-13.pdf" target="_hplink">World Economic Forum</a>

  • 14: Canada

    Source: <a href="http://www3.weforum.org/docs/CSI/2012-13/GCR_Rankings_2012-13.pdf" target="_hplink">World Economic Forum</a>

  • 13: Taiwan

    Source: <a href="http://www3.weforum.org/docs/CSI/2012-13/GCR_Rankings_2012-13.pdf" target="_hplink">World Economic Forum</a>

  • 12: Denmark

    Source: <a href="http://www3.weforum.org/docs/CSI/2012-13/GCR_Rankings_2012-13.pdf" target="_hplink">World Economic Forum</a>

  • 11: Qatar

    Source: <a href="http://www3.weforum.org/docs/CSI/2012-13/GCR_Rankings_2012-13.pdf" target="_hplink">World Economic Forum</a>

  • 10: Japan

    Source: <a href="http://www3.weforum.org/docs/CSI/2012-13/GCR_Rankings_2012-13.pdf" target="_hplink">World Economic Forum</a>

  • 9: Hong Kong

    Source: <a href="http://www3.weforum.org/docs/CSI/2012-13/GCR_Rankings_2012-13.pdf" target="_hplink">World Economic Forum</a>

  • 8: United Kingdom

    Source: <a href="http://www3.weforum.org/docs/CSI/2012-13/GCR_Rankings_2012-13.pdf" target="_hplink">World Economic Forum</a>

  • 7: United States

    Source: <a href="http://www3.weforum.org/docs/CSI/2012-13/GCR_Rankings_2012-13.pdf" target="_hplink">World Economic Forum</a>

  • 6: Germany

    Source: <a href="http://www3.weforum.org/docs/CSI/2012-13/GCR_Rankings_2012-13.pdf" target="_hplink">World Economic Forum</a>

  • 5: Netherlands

    Source: <a href="http://www3.weforum.org/docs/CSI/2012-13/GCR_Rankings_2012-13.pdf" target="_hplink">World Economic Forum</a>

  • 4: Sweden

    Source: <a href="http://www3.weforum.org/docs/CSI/2012-13/GCR_Rankings_2012-13.pdf" target="_hplink">World Economic Forum</a>

  • 3: Finland

    Source: <a href="http://www3.weforum.org/docs/CSI/2012-13/GCR_Rankings_2012-13.pdf" target="_hplink">World Economic Forum</a>

  • 2: Singapore

    Source: <a href="http://www3.weforum.org/docs/CSI/2012-13/GCR_Rankings_2012-13.pdf" target="_hplink">World Economic Forum</a>

  • 1: Switzerland

    Source: <a href="http://www3.weforum.org/docs/CSI/2012-13/GCR_Rankings_2012-13.pdf" target="_hplink">World Economic Forum</a>