Canada-China FIPA

Good Idea; Flawed Deal

By Randall Garrison, MP
Esquimalt Juan de Fuca

China is the world’s second largest economy and our second most important trading partner.  We should pursue opportunities to build mutually beneficial commerce with China that benefits Canadians now and secures our future.

New Democrats also believe in the importance of working with China to create clear rules that give investors confidence and protect and promote Canadian interests.  We know that it is possible to sign international deals that work for Canada.  

This is why so many Canadians are so passionately opposed to the Harper Government’s Foreign Investment Promotion and Protection Agreement (FIPA) with China.  On Friday, September 12, the Conservatives quietly ratified this deal, just days before Parliament was set to return for the fall session.

For two years, the New Democrats have pointed out these flaws in Parliament.  We proposed that the FIPA’s provisions be carefully studied by the International Trade Committee, a proposal refused by the Conservatives.  We also moved a motion calling on the Canadian Government to decline to ratify this FIPA until its deficiencies were rectified.  Unfortunately, both the Harper Conservatives and Trudeau Liberals joined together to defeat this prudent measure.

New Democrats believe that investors in China and Canada ought to be treated fairly.  We believe that an agreement that establishes clear and predictable rules to encourage and govern investment in both countries is achievable.  We also know that such an agreement can be negotiated while respecting the principles of reciprocity, transparency and sovereignty.

The Harper Government’s Canada-China FIPA fails these three principles.

In four specific ways, the Harper Government failed to secure a good deal for Canada at the negotiating table.

The FIPA is imbalanced and lacks reciprocity.  The Canada-China FIPA gives clear advantages to Chinese investments in Canada without securing the same benefits to Canadian companies operating in China.  Examples include lop-sided rules on investment review to significant differences in market access.  Perhaps most alarming, the FIPA locks-in existing discriminatory measures in China - measures that do not exist in Canada - for three decades.

The FIPA is secretive.  Parties to lawsuits claiming an infringement upon investments can request arbitration panels to conduct their hearings in secret.  In consequence, major decisions involving important public policy issues and significant sums of public money can be made behind closed doors.  This violates the rule of law that requires our legal system to operate with transparency and in full view of the public and media.

FIPA creates massive liabilities for taxpayers.  Claims against Canada for regulating or legislating in the public’s interest could cost Canadian taxpayers millions - or billions   - of dollars if investors persuade the tribunals that their profit expectations have been interfered with.  These include challenges to laws aimed at protecting our environment, managing our natural resources or other significant domestic policy areas.

Locked-in for 31 years. Canada will be subject to the terms of this deal for a minimum of 31 years.  This is an excessive length of time to bind future Canadian governments, and exceeds most comparable treaties.

As is typical of the Harper Conservatives, there has also been a lack of adequate consultation, notably with Canada’s aboriginal governments, which has led to a legal challenge by the Hupacaseth First Nation.  Curiously, after claiming that this lawsuit was responsible for delaying Canada’s ratification, the Harper Government has now proceeded with FIPA implementation even though the case is still before the courts.

The New Democrats will continue to lead the call for international trade and investment agreements that benefit the Canadian economy, protect Canadians’ interests and respect Canadian values. 

Unfortunately, the Harper Conservatives have now ratified the FIPA and it will take effect on October 1, 2014. Nevertheless, the Conservative government needs to hear loud and clear that many Canadians are opposed to the FIPA. Specifically, you can write to Hon. Ed Fast, Minister of International Trade to make sure he hears that you oppose the FIPA. Hon. Ed Fast: