OTTAWA—The Harper government’s ratification of the Canada-China investment treaty last Friday sets a number of precedents in an agreement one expert says is unlike any other that Canada has signed.
The investment deal, known as the Canada China Foreign Investment Promotion and Protection Agreement (FIPA), will give Chinese investors in Canada rights to market access the same as any Canadian company, but Canadian investors will not be given that same right to access the Chinese economy.
“That is a unique feature of this FIPA,” said Gus Van Harten, an associate professor at Osgoode Hall Law School and an expert on international investment treaties.
“Usually, you would see no right of access to either country or you would see both countries giving reciprocally the same right of access to market investors. That is one major difference.”
Van Harten, a prominent critic of the treaty, says it gives China the right to block a range of Canadian investments in China through local or national regulations. Unlike the Investment Canada Act, the right to block an investment is not limited to a single federal law.
Other elements that make this treaty unique in Van Harten’s analysis include the lack of a requirement to disclose details of a lawsuit filed under the treaty unless it is deemed in the public interest.
Trade Minister Ed Fast says the deal, to become effective Oct. 1, will give Canadian companies in China a more predictable and transparent business environment.
“This FIPA will create jobs and economic opportunities for Canadians in every region of the country,” Fast said in a statement announcing the deal was ratified. “It will give Canadian investors in China the same types of protections that foreign investors have long had in Canada.”
Van Harten and Green Party leader Elizabeth May say that assurance doesn’t hold water.
“[FIPA] locks in discriminatory measures about how companies operate in Canada,” May told reporters at a press conference Monday, Sept. 15.
May said the tribunals set up under the investor-state arbitration provision of the treaty, which act as special courts under these kinds of deals, are statistically proven to be far more likely to side with the larger economic power.
She said this FIPA is also unique because most of the companies coming to Canada under the deal will be owned and controlled by the Chinese Communist Party. These state-owned enterprises have much more bureaucratic muscle to sue under the treaty, she said.
‘A Little Disappointed’
Van Harten said it is also different because other treaties give protections or preferential treatment to aboriginal people in Canada. He notes in the treaty, those provisions do not apply as broadly.
Hupacasath First Nation, a small band of 300, challenged the treaty in the Federal Court of Appeal and would have set a precedent in whether First Nations should be required to be consulted on international negotiations.
“We just wanted to be consulted with and [to determine] if there was an infringement of our rights,” said Hupacasath chief councillor Steven Tatoosh.
The case is still before the courts, but according to Tatoosh the band was surprised to hear the government had decided to ratify.
“Not really informed and a little disappointed about the outcome,” he said. “It looks like if a decision went in our favour, it wouldn’t mean a thing now that the agreement will be come into effect on Oct. 1.”
Canada has to date concluded 25 bilateral treaties and completed another 5 trade agreements that include an investor state arbitration clause. Most can be cancelled with six months’ notice and terminated within a years’ time, including NAFTA. Only one other treaty—the one penned between Canada and Egypt—has a similar lifespan as the one with China.
“We are locked in for a minimum 15 years at which point a future government needs to give a one-year written notice to People’s Republic of China that we wanted out. After the one-year written notice any existing investments from the People’s Republic of China into Canada will be protected for a further 15 years. This locks us in for 31 years,” said May.
The three biggest economic powers Canada has investment treaties with are the United States, now China and, if it is passed, the Canada- EU trade agreement.
“With all three treaties Canada will be the most locked-in Western developed country in the mechanism for investor-state arbitration,” said Van Harten.
Kaven Baker-Voakes is a freelance reporter based in Ottawa.
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