Saturday, June 15, 2013

“Order-In-Council to impose one-sided China trade deal”

This article by Mihael Willman was posted on October 20th, 2012.

Stephen Harper has not yet signed off on the one-sided trade deal with China, and one of our aboriginal "First Nations" is challenging the deal in court.

The agreement is extremely one-sided, and the plan is to force it through by our equivalent to your presidential "executive orders" without any parliamentary debate.

There seems to be a lot of delays, hopefully it will fail eventually...

Jeff G.


Order-In-Council to impose one-sided China trade deal

This is a guest column; 'Mihael Willman' is the pseudonym for a concerned Canadian – JG.

by Mihael Willman

How can a country work on an international agreement for years and still manage to get it wrong? Either its negotiators were completely incompetent, asleep at the switch and clueless as to what they were agreeing to, or they were more interested in protecting a few business interests as opposed to those of Canada at large.

During his last visit to Beijing in February 2012, Stephen Harper announced that Canada had concluded negotiations with Communist China for a Foreign Investment Promotion and Protection Agreement (FIPA) which will further bilateral investment between both countries 'by providing a more stable and secure environment for investors on both sides of the Pacific.' Yet protection under this agreement only goes to businesses already operating in either country. This provides protection to those Canadian businesses already in China, but a very limited protection for those who would like to invest there. Not exactly conducive to helping Canadian businesses make investments in China.

This agreement was signed in Vladivostock and then tabled in the House of Commons in September. Only then were its contents finally made public and available to Canadians to study. According to the agreement it 'has to be tabled in Parliament for 21-sitting-days before ratification and will enter into force after an exchange of notes between the Parties indicating that each Party has completed its domestic approval processes.'

'Domestic approval processes!' What a farce. To date, all the negotiations have been in secret, which is the norm. However, only Ottawa was involved, with no input from any of the provinces or other affected parties, though the February press release did say that: 'Canada consulted with a variety of stakeholders including those in mining, manufacturing and financial sectors.' Wonder if they bothered to consult Canadian legal experts on international investment law? This despite stating that the 'negotiated text' had to 'undergo a thorough legal review in English, French, and Mandarin.' Or were those involved in this legal review simply a bunch of Harper 'Yes-Men'?

Unlike the NAFTA deal, which was debated in Parliament, with a lot of input from the public, this agreement will 'come into force once the Order in Council has been approved by the Governor General and the ratification process in the People's Republic of China has been completed.' Therefore, no debate in Parliament, no consultation with the provinces or the public. By a simple Order in Council, the hands of all future governments will be tied for the next thirty-one years. Looks like Stephen Harper has picked up a lot of new (or is it old) tricks from his new 'best buds' the Communist Chinese!

And what exactly does this agreement do? It protects the rights of businesses from arbitrary expropriation or nationalization in the other country, 'except for a public purpose, under domestic due procedures of law, in a nondiscriminatory manner and against compensation' and gives the respective investors equally favorable treatment accorded 'to its own investors with respect to the expansion, management, conduct, operation and sale or other disposition of investments in its territory.'

In addition, it allows the respective investors to sue the host country if they feel that their interests have somehow been damaged.

According to Gus Van Harten, an Osgoode Hall Law School professor specializing in international investment law, while the agreement allows both Chinese and Canadian companies to sue Canada and China respectively, the government of Canada can't sue any Chinese investors for breaking Canadian laws. This means that Chinese companies can sue the government of Canada, or any of the provinces, if their profits are impacted by any delays, environmental protection measures or other Canadian laws. Certainly doesn't sound as if Chinese companies will be accorded equally favorable treatment as Canadian companies, rather it appears as if they will have greater rights, to the point of influencing Canadian domestic policy.

Since most of these Chinese companies are state-owned enterprises, this actually means that the Chinese government, through their companies, can sue Canada, a right not accorded to Ottawa. In addition, while Canadian companies are privately owned and have rather limited financial resources to sue China, the Chinese state-owned companies have the unlimited financial backing of China at their disposal. Doesn't sound like a level playing field to me, or a benefit to Canadian investors in China.

And to make matters worse, the lawsuits will be dealt with by three arbitrators in secret. A drastic departure from previous Canadian government policy. Awards made by Tribunals are supposed to be publicly available, however, release of other documents will only be made if 'a disputing Contracting Party' namely the party being sued feels that it is in the public interest to do so. We can all assume that China will not allow lawsuits against itself to be made public. But what about Canada? Who will decide if it is in the public interest to disclose information about Chinese companies suing Ottawa?

Under NAFTA, Canada has lost about half of the lawsuits launched by U.S. companies and has had to pay nearly $200 million in compensation. In the 16 cases where Canada launched lawsuits, most often against the U.S., it has lost each and every case. Anyone who thinks that Canadian companies will have a better chance against China are more than naive, they're downright stupid.

China is beginning to play hardball around the world. In the same week as Ottawa tabled this new Canada-China FIPA agreement, Chinese insurer Ping An filed a claim against Belgium for $3 billion in compensation relating to their investment losses in the Belgo-Dutch bank Fortis, after the bank was nationalized and sold off as a result of the 2008 financial crisis. And financial analysts believe there are more lawsuits to come, since a number of Chinese investments in the last five to ten years may be experiencing financial problems.

Similarly, after Washington forbade a Chinese company from building wind farms in Oregon for security reasons, because they are close to a military training site, the company decided to sue on the grounds that the decision violated their 'right to equal protection under the law.'

So if communist Chinese companies suffer losses due to world economic conditions, or are denied permits because of possible national security risks, the country in question better pray that it will not be sued to make up for any losses incurred. Some deal!

And yet we, the public, have been told it is a great deal. According to the February 2012 press release: 'Once implemented, the Canada-China FIPA will facilitate investment flows, contributing to job creation and economic growth in Canada.' (More about the fallacy of job creation in a following article.)

Update June 14th, 2013:

As of June 2013, Stephen Harper has not yet signed the FIPA agreement. Furthermore, the B.C. Hupacasath First Nation is in court challenging the FIPA agreement, as of the beginning of June. – Mihael.

This entry was posted on Saturday, October 20th, 2012 at 1:53 pm and is filed under Canadian Interest, China Threat To Canada, Guest Writers. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.



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