7 Things Harper Doesn't Want You

To Know About The China Trade

Treaty (And A Few He Does)

The Huffington Post Canada | By Daniel Tencer

Posted: 09/17/2014

I’m going to go out on a limb and say the Harper government doesn’t want attention drawn to the deal it just signed with China.

Why? Because after two years of delays, the official announcement of an investor-protection treaty with the world’s second-largest economy came in the form of a press release late Friday afternoon. That’s how you release information if the idea is to bury it.

Not to mention the two years of delays to begin with. Harper made the surprise announcement of a Canada-China Foreign Investment Promotion and Protection Agreement, as it’s known, on a trade mission to Vladivostok, Russia, in 2012. China finalized the deal quickly, but Canada sat on it.

The holdup may have had to do with that fact that even some members of Prime Minister Stephen Harper’s own government had doubts about the deal. And CBC suggests Harper signed the deal because of an upcoming photo op in Beijing.

But then Canadian leaders sign these sorts of deals all the time — Canada already has 17 of these types of investor-protection treaties in place, and is negotiating a dozen more.

So whatever the reasons, we’ve got an investor protection treaty with China. Here are seven things Harper probably doesn’t want you to know about the trade deal (and a few he’s probably OK with you knowing):

Chinese investors will have the right to challenge our laws with no recourse to Canadian courts

Supreme Court of Canada (Getty)

The Canada-China FIPA isn’t a complete trade deal. It’s more like one chapter of a trade deal -- the chapter that deals with protecting investors’ rights.

Under these agreements, foreign companies gain the right to sue the host country in an international tribunal that doesn’t answer to national courts. Critics say this essentially gives foreign companies the ability to trump Canadian laws.

True, but under the Canada-China FIPA, a Chinese investor or business will have to prove they were subjected to different rules than would apply to a local investor or business. That strongly limits the extent to which Canadian laws can be challenged at the tribunals, and Canada’s ability to pass environmental and other laws likely won’t be as constrained as critics say. Canada will still be able to reject major investments from Chinese companies.

Supporters of the Canada-China FIPA say Canada needs a deal like this with China because we are running a $30-billion-a year trade deficit with the country. To get our money back, we need Chinese investment, and the FIPA gives investors the confidence they need to put their money here.
The government can keep lawsuits secret

Getty

In the treaty, the government retained the right to hide documents filed in a lawsuit against Canada under the Canada-China FIPA. This is despite (or perhaps because of) the fact that these rulings can go against Canadian government policy.
There was no public consultation, no debate, no legislation

Getty

This trade treaty, meant to last a generation, got an hour of debate in front of the House of Commons’ trade committee, and that’s it.
Canada will be bound by the treaty for 31 years

Getty

NAFTA can be terminated in six months, but the Canada-China FIPA runs a minimum of 15 years, has a one-year notice of termination period, and extends rights to Chinese companies already operating in Canada by 15 years after the deal is cancelled.

Supporters of the deal say the at minimum 31-year timeline makes sense for protecting long-term investments and projects.
Some say it’s a better deal for China than for Canada

Shanghai (Getty)

So far, FIPAs have been advantageous to Canadian business because they have largely protected Canadian investments in other countries. (“Canadian mining companies are using FIPAs with developing countries to claim damages from community opposition to unwanted mega-projects,” the Council of Canadians reports.)

But with China, Canada is on the other side of that equation — it’s largely the destination country for investment. “Canada will be much more exposed to claims and corresponding constraints” than China under the deal, Osgoode law prof Gus Van Harten writes.

Though the deal sets up the same protections for Canadians investing in China as for Chinese investors in Canada, it creates “de facto non-reciprocity,” Van Harten argues, because of the imbalance in the trade relationship.
Minority shareholders will be able to sue

Investors look at stock prices at a securities exchange in Shanghai on August 22, 2014. (Getty)

Even if a Chinese citizen owns a small portion of a Canadian company, they will be able to use the tribunals set up under the FIPA, Van Harten says.
There’s a legal challenge to the deal in the courts right now

Hupacasath First Nations welcoming figures, Port Alberni, B.C. (Getty)

British Columbia’s Hupacasath First Nation launched a court challenge on the constitutionality of the deal in January, 2013, arguing the government had violated its responsibility to consult with first nations on constitutional and treaty issues. The B.C. Supreme Court rejected that argument in October, 2013, but the first nation is now appealing that ruling before the Federal Court of Appeal.