Featuring fresh takes and real-time analysis from HuffPost's signature lineup of contributors
Diane Francis

GET UPDATES FROM Diane Francis
 

How the Nexen Deal Could Dent Our Pipeline

Posted: 10/10/2012 6:20 pm

If the CNOOC/Nexen approval is given, before the Keystone pipeline is approved, a new set of questions for the Americans will be opened up. So will any trade deal, now in Parliament, that gives China similar privileges as Americans now get.

Letting China Inc. have special access could give President Obama a reason not to approve Keystone, and could also Romney, if he wins, a reason to consider not approving the line as he has pledged to do on Day One.

I raise the issue of Keystone XL, not because the Americans have a right to tell us what to do, but because they always do what is in their national interest. So does China and it has obviously the targeted the oil sands with a view toward diverting new or all of its oil to China.

That is the endgame, make no mistake about it. This is not about Nexen, or offering opportunities to Canadians to do business in China.

The proposed bilateral Foreign Investment Promotion and Protection Agreement with China would give its entities the same recourse and dispute settlement mechanism (called Chapter 11 in NAFTA) as Americans enjoy through NAFTA. They can claim discrimination if denied investments or immigration requests.

This should unsettle Canadians. Chinese companies here and elsewhere have behaved questionably and, besides, there is no rule of law in China. This means Canadian companies and individuals will not enjoy the privileges we are extending to them.

The CNOOC/Nexen deal, and trade deal, are not in the "national interest" of Canada, in my view, which is the issue that is under scrutiny by Investment Canada right now.

So, to underscore, if the Tories in Ottawa and Edmonton decide to open the oil business to China Inc., then the Americans would decide not to approve Keystone and become dependent on another huge pipeline from Alberta where foreigners will dominate.

Chinese companies have become aggressive, both here and in the US. Last week, one sued authorities and President Obama for banning it from buying power generation facilities using wind.

Here, the under-publicized cautionary tale about one of China's largest state-owned enterprises bears repetition and the latest developments are concerning:

-- In 2007, gigantic state-owned enterprise, Sinopec Shanghai Engineering and its Canadian subsidiary SSEC Canada brought in 132 temporary workers from China to build storage tanks at an oil sands project.

-- In April 2007, an accident there that killed two and injured another five of these workers. The rest were quickly sent home.

-- After an investigation, Alberta health and safety officials laid 53 health and safety charges against Sinopec, SSEC and their client, Canadian Natural Resources Ltd. (CNRL). Alberta was unable to serve Sinopec in China so took the matter to court.

-- Sinopec said that it had no official presence in Canada and could not be charged. (Sub SSEC Canada has one employee and is 90 per cent owned by Sinopec, according to newspaper reports).

-- November 2011, the Alberta Court of Appeal said Sinopec could be charged. In January 2012, Sinopec's vice chair announced the company would ask the Supreme Court of Canada to exempt it from Canadian laws on the same basis.

-- In July, the Supreme Court of Canada refused to hear the appeal. No reason given.

-- In September, SSEC Canada and Alberta prosecutors made a deal to avoid a trial and the company pleaded guilty to three workplace safety charges and admitted its unsafe practices resulted in the deaths of two workers and injuries to another five.

-- Meanwhile, the Alberta Employment Standards discovered the wages and benefits owed to the workers had not been paid and the $3.17 million had gone back to the company in China. Even though it was not responsible, CNRL agreed in 2007 to give Alberta the millions in trust for these workers.

-- One of the workers, Huang Yungang, launched a lawsuit against Sinopec to recover $42,900 of his wages with the help of the Christian Labor Association of Canada. He later dropped the lawsuit after he returned to China and in court documents, Sinopec and SSEC said the worker agreed to contribute part of his wages to social welfare and insurance funds in China.
In an interview this week, an Alberta Employment spokesman said the money was given back to CNRL but the company has committed to pay the funds up until 10 years from the accident should workers be found.

"A consistent effort has been made by the government to try and locate these workers, that involved discussions with the company and with the Chinese government. We have yet to be able to identify where these workers may be located. We are still open to any communication," said the Alberta spokesman.

So ask yourself. Do we need to let China control our companies and resources? Do we want China to be able to claim discrimination when it loses contracts and deals or to litigate against immigration or workplace rules and regulations?

Do we need to build a pipeline to the west coast for China? No but we need that pipeline. The pipeline should be built by Canadian governments and the oil should be made available to the highest bidders be they Japanese, Korean, Taiwanese, Chinese or refineries in California, Mexico or South America.

Do we need Keystone to be built? You bet. Approval for that pipeline is unquestionably in Canada's "national interest."

Letting the Chinese Trojan Horse gallop into our country is decidedly not.

 

Follow Diane Francis on Twitter: www.twitter.com/@dianefrancis1

FOLLOW CANADA BUSINESS