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There's Nothing Fair About Canada-China Trade

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Last week, a casualty of China's unfair treatment of foreign investors spoke privately about the new trade deal signed between Ottawa and Beijing. His mining company was there, spent millions and was forced to sell, a de facto expropriation, to a Chinese "company." Governments and proxies on behalf of politicians control all Chinese companies.

"There is nothing in this deal with China [the Foreign Investment Promotion and Protection Agreement] that will protect Canadians there because they have not agreed to apply our laws there," he said. "It's quite unbelievable."

In fact, the Tories, backed by a naïve Canadian Chamber of Commerce and a handful of big, conflicted business interests, have demonstrated the worst negotiating skills since Neville Chamberlain.

Ottawa capitulated to China on everything. The deal, using a hockey metaphor, allows only a select few to play on Team Canada on a small patch of ice in China and to be fouled, without remedies or referees. By contrast, Team China can play anywhere on Canadian ice, can appeal referee calls it dislikes and negotiate compensation for damages while in the penalty box behind closed doors.

The terms agreed to by Ottawa are unprecedented and would be laughed out of Britain, Brussels, Canberra or Washington. Beijing has negotiated a heads-I-win-tails-Canada-loses deal.

Here's why:

-- The Agreement gives China Inc. "enclave legal status". Once allowed inside the country, Chinese companies have more power than Canadian companies. They can take any dispute with governments or courts outside the Canadian legal system to an arbitration process under its Article 4 and 22. These arbitrations, unlike those in NAFTA, are conducted in secret, have no limits on damages awarded and are adjudicated by three arbitrators/lawyers - one appointed by the Canadian authority being sued, one by China Inc., and a third from the World Bank approved by both. In other words, Chinese companies are allowed the privilege of having their disputes with Canadian authorities settled in secret by three individuals, two from outside Canada.

-- Ottawa's inept negotiators gave up a requirement for transparency as part of this arbitration dispute settlement mechanism. The Agreement allows the Canadian federal government to withhold documents if it wishes to. This is contrary to all other international treaties involving such dispute mechanisms.

-- The agreement opens wide a "Trojan Horse" loophole. Chinese investors or companies already in Canada can contest all government or court decisions and can also bypass Investment Canada. Once in, they can buy anything they wish without foreign investment review. This means that those Chinese entities already here will simply be able to act as proxies for those not yet approved to come in which means an open-ended access to control over anything and everything without scrutiny. All Chinese companies have one beneficial owner: Beijing's military dictatorship.

-- The Agreement allows China Inc. to contest and bypass or be compensated regarding compliance with Canadian standards, requirements to use Canadian labor or materials or suppliers. China Inc. can challenge or be compensated if they disagree with the scale and timing of resource projects.

-- The Agreement appears to be unconstitutional because its Article 4 allows China to bypass and contest provincial, territorial, First Nations, municipal or successive federal government decisions on resource and commercial management. The provincial governments must collectively challenge this treaty before the Supreme Court. An example would be that if the National Energy Board approves the Northern Gateway Pipeline through BC, but BC restricts or rejects the deal, Sinopec (big China Inc. appendage) can sue under this treaty. The matter would then be resolved behind closed door in arbitration by two lawyers from outside Canada.

-- Canada has done what no other country has and agreed to lock itself in for 31 years. NAFTA has a six-month exit clause.

-- The most egregious aspect of this Agreement is that it's based on the wrong template of deals signed with the US and other countries that provide Canadians with reciprocal rule of law, market access and transparency. China provides none of reciprocal privileges and can remain as protectionist, corrupt and discriminatory as it now is. This un-level playing field is enshrined in Articles 22, 4 and AnnexD34 of the Agreement, according to international treaty expert Gus Van Harten with Osgoode Hall. This is an Agreement unbecoming a nation-state.

And those banks and law firms and big shots, with toeholds in China who have set loose their lobbyists to get this damaging deal inked, are no more of a "net benefit" to Canada than will be China Inc.'s CNOOC if it's allowed to grab control of Nexen.

Opposition parties are screaming but they always do about trade deals. By contrast, I am a free enterpriser, a free trader, a small "c" conservative and an experienced business person and believe this Agreement represents a naïve, shocking lapse in judgment. Or perhaps it represents something more sinister.

There is not a single gain for Canada here whatsoever: No market access, no reciprocity, zero rights for our investors there. China Inc. gets everything.

Obviously, this deal would never have happened in Europe or the US and Canadians must demand the same national protection. This deal must be overhauled or, better yet, shredded. The provincial governments must challenge this in the Supreme Court.

Ottawa cannot sign anything that disadvantages Canadians and Canada for 31 years in favor of a notorious regime.