This Thursday a new treaty is due to come into effect between Canada and China without debate or public discussion. It is called an Foreign Investment Promotion and Protection Agreement (FIPA) with China. The basic idea for it is that our companies, both resource companies and others, do not always get a fair shake in the Chinese legal system when they have disputes. This agreement will allow both countries to go to binding arbitration at an international tribunal. We have these agreements with many other countries, but there are growing worries that this particular deal is not actually equal to both countries...and Canada may be getting the short end of the stick. Getting out of the treaty is surprisingly difficult, and it would only be good for Canadian companies if they need to use this system more than China does and if China abides by it.
The assumption the Conservative government must be making is that Canada will do better under this system than we currently do. The risk is that while we may hope Canadian companies operating in China will gain a huge advantage by having this arbitration procedure what could actually happen is that the Canadian companies we are so concerned about would be bought out by Chinese companies instead. Under this agreement, "unreasonable" attempts to stop foreign takeovers could be brought to this very arbitration board and either mandated to be allowed or incur huge fines against Canada. Unsurprisingly, a lot of Canadians, especially in the West, don't like the sound of that. And they have reason to worry:
The proposed $15-billion acquisition of Calgary-based energy company Nexen Inc. by a Chinese state oil firm is triple the current total investments by Canadian firms in the communist country...
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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)
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)
(AP Photo/Valentina Petrova)
- 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)
- 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>)
- 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)
- 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)
- 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>)
The result could be disastorous and irreperable impacts on our economy and our sovereignty over our own resources. I don't know about the details of the legal disputes our companies are having in China but it seems as though such a wide-ranging and risky treaty should at the very least be openly and vigourously debated just as NAFTA was.
NAFTA was a huge national debate which cost Mulroney his government (oh...maybe that's why Harper isn't interested) and that was with two democratic nations, including our greatest friend and ally the United States. So why does this deal have so much less to worry about when it is with China which is, to put it mildly, neither of those things?
Another question is why does protection of investors rank so much higher than all other concerns for national sovereignty, our ability as a nation to switch to more post-production of raw resources and our freedom to deal with impending climate change? Now is not the time to tie our hands on increasing extraction of highly polluting resources.
The world has reached consensus on climate change and scientists every day are realizing that their most skeptical worst-case scenarios of only a few years ago are now almost certain to come to pass sooner than they feared. If this treaty goes into effect on Thursday it will be active for 31 years, until 2043. By that point studies from 2009 already predicted that the arctic ocean will be completely ice free in summer, many now think it will happen much earlier, by 2020. Will there be any arctic at all to save by 2043?
We don't know, that's the point of not making huge commitments like this from a government that doesn't even like talking, thinking or researching about the long-term future. The next 30 years are our last chance to stop or even slow huge shifts in the Earth's climate patterns. The only point of this agreement seems to be to help investors in the short term until some Chinese companies buy them out and to provide more "it will hurt the economy and cost us money" arguments against making the hard decisions on slowing climate change.
For a great overview of the technical details of the agreement see this article from the CBC, and also these descriptions from the Green Party and constitutional lawyer Clayton Ruby where he describes the legal implications of the deal and his desire to make a challenge that the FIPA deal is unconstitutional.
Petitions and letters:
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