Despite the opposition, the new Foreign Investment Promotion and Protection Agreement between Canada and China might just be exactly what both countries need
By Leah Kellar, Staff Writer
The clock is ticking toward possible ratification of Canada’s biggest trade agreement since the North American Free Trade Agreement (NAFTA).
Signed a little over 10 years ago between Canada, the United States and Mexico, NAFTA completely altered the playing field in terms of free-trade and foreign investment policy — and was met with great controversy and debate during its day.
A similar story seems to be playing out now with the proposed Canada-China Foreign Investment Promotion and Protection Agreement (FIPA).
The FIPA allows for additional protection of foreign investments between the signing parties. This protection consists of a controversial judicial mechanism — investor-state arbitration — deemed by many to be unconstitutional.
Such a change seems to signal an eroding of Old World influence in the business realm.
Investor-state arbitration allows the parties — Chinese investors and the Canadian federal government — to settle disputes through a mutually agreed upon third party without going through the courts. Decisions made through such arbitrations are legally binding and confidential.
Critics say it will take decision-making power away from the smaller stakeholders, such as the provinces and First Nations peoples.
The FIPA was set for ratification 21 days after it was tabled September last year, but was delayed after public outcry.
“What we’re calling for at this stage is…[for] the secret investor-state arbitration to be removed from the deal,” says the activist Jamie Biggar. “There to be a requirement that First Nations are to be consulted about the agreement and that the provinces consent to it by voting. Biggar is executive director of Leadnow, an online activist organization.
But the lawyer Milos Barutciski, who specializes in specializes in international trade and investment, feels otherwise.
“What the opponents of the FIPA have said —and I think in a way that’s slightly misleading — is that all proceedings under the FIPA will be closed,” said Barutciski. “The FIPA does allow the parties to close the proceedings but the one that counts that they should be concerned with…is the proceedings against Canada.”
Barutciski says that the pleadings will be made public before investor-state arbitrations, but once the hearings start, the books are closed.
“It will be treated exactly the same way NAFTA treats claims against Canada or the states. Canada and the United States will open these things up between them,” said Barutciski.
He asserts that claims made against China will likely not be disclosed — and that it is that government’s right to do so.
But despite what one might think about the confidential nature of investor-state arbitration, Biggar says, most can agree that the FIPA was tabled too quickly and without due public and provincial legislative consultation.
“So you compare that to what we’re seeing today where Prime Minister Harper quietly tabled notice essentially of his intention to ratify the agreement without a single vote in parliament,” said Biggar. “I think that that’s incredibly problematic and undemocratic.”
But the importance of FIPA cannot be highlighted enough, despite its consequent delays. Last year alone, China has already poured $22.9 billion into Canada, according to the U.S. global financial data provider, Dealogic. FIPA, if ratified, might just take on a whole new significance for foreign investors in Canada —and for Canadian investors in China as well.
According to a recent Globe and Mail article, China has now overtaken Britain as Canada’s number two export destination
Such a change seems to signal an eroding of Old World influence in the business realm; market dynamics are fostering new relationships between new and once unlikely partners.
Twenty-four FIPAs are currently in force between Canada and other countries.