The threat to Canada’s sovereignty — what we are giving to China

On Thursday, October 18th, 2012 in Island Tides

In the last issue of Island Tides, I detailed my fears about the Canada-China version of the Foreign Investment Promotion and Protection Agreement (FIPPA).  In Question Period, I had asked about when we would see the text (announced back in February when the Prime Minister was in China, and signed September 9 in Vladivostok, where both President Hu and the Prime Minister attended the APEC meetings).

On September 26, 2012 (the day after my Island Tides deadline), with no press release or briefing, the Parliamentary Secretary to the Minister of Foreign Affairs, rose in the House to table a few documents.  It was during a part of every day called “Routine Proceedings.”  The media had sped off for scrums after Question Period.  I was waiting my turn to table petitions.  Maybe another twenty MPs were in the Chamber when Deepak Obhrai tabled a deal with Norway and two with China – the agreement for peaceful use of nuclear energy and the “Agreement between the Government of Canada and the Government of the People’s Republic of China for the Promotion and Reciprocal Protection of Investments” (the Canada-China Investment Treaty).

The nuclear deal is a cover for our sales of uranium to China.  Under the terms of the Nuclear Non-Proliferation Treaty, no country is to sell nuclear materials to a country with nuclear weapons unless it can absolutely guarantee a system of verifications and monitoring to ensure uranium for peaceful uses does not end up in nuclear weapons.  The two page deal released September 26, cannot do that.

The more far-reaching deal is the second. It is the one my last column was focused upon without having seen it. It does, in fact, set out a series of obligations for Canada, new rights for Chinese state-owned enterprises, and fails to deliver on reciprocity for Canadian companies operating in China.  Worse yet, it will not be voted on in the House.  It will be automatically enacted 21 sitting days from when it was tabled in the House.  By November 1, barring a miracle, Canada will be bound for the next 15 years (minimum) to these terms.  If a future government wants to get out of it, a one year notice is required – and even once the treaty is cancelled, any existing Chinese operations in Canada are guaranteed another 15 years of the treaty’s benefits.

Canada must promote and encourage Chinese investments in Canada (Article 3).  Chinese government-controlled companies operating in Canada must be treated exactly the same as Canadian companies (Article 6).

The right for China to claim damages over Canadian laws

The Canada-China Investment Treaty allows Chinese companies (including state-owned enterprises) to sue Canada over decisions that can limit or reduce their expectation of profits. In treaty language, this is called “tantamount to expropriation.”  China can claim damages against Canada for decisions at the municipal, provincial, territorial or federal level.  Even decisions of our courts can give rise to damages.  A similar deal between China and Belgium now has Belgium dealing with a $3 billion claim by china for a banking investment that went belly up.

One improvement over NAFTA Chapter 11 is a list of “exceptions.” Unless the actions are “arbitrary or unjustifiable” or can be seen as a “disguised restriction of trade,” the treaty says measures to protect health, safety or the environment are exempted. I am very doubtful these exceptions will make any real difference as the complaint process is secret and China is going to have the stronger economic clout to force Canada to agree. The damage claims start with six months of diplomatic negotiation. If that fails, damage claims move to arbitration – behind closed doors.

In those secret hearings, no other level of government – even if it is the government that made the decision China challenges – have any right to intervene or attend the arbitration.  No other interested parties are included.

A one- way street

Although the Harper Conservatives claim the deal is about protecting Canadian companies doing business in China, the deal is lop-sided in favour of China.  For example, Canada could not demand “performance standards” (percentage Canadian jobs or materials for example) of a Chinese SOE. But China can make demands (and create hurdles) against Canadian companies.

Restrictions on our use of our own resources

The Canada-China Investment Treaty requires that if, in the future, Canada wants to conserve natural resources (fisheries, water, oil, uranium, forests –  everything is covered), and reduce Chinese access to these resources, we are only allowed to do so to the extent we limit our own use of those natural resources.

On October 1, 2012, I asked the Speaker for an Emergency Debate on the treaty.  I explained in a letter I had tabled with the Speaker on September 28 (and available on the website) all the reasons that it was an emergency.  Sadly, he ruled that it was not a case for an emergency debate.   I asked in Question Period on October 4th, with 16 sitting days left until the treaty takes effect, whether the Prime Minister had chosen to approve this treaty by Order in Council to keep its details from Canadians or to avoid having to force Conservative MPs to vote for something they did not believe in.  House Leader Peter Van Loan said there could be debate if an Opposition Party chose to use one of its Opposition Days to do so.  I cannot get either the Liberals or the NDP to agree to give it an Opposition Day.  But even if they did, it is not the same as submitting the treaty to the process in the House.  True, treaty making is a Royal Prerogative, meaning it does not have to go before the House.  Nevertheless, the House has been debating C-42, the Canada-Panama trade agreement since last spring (total volume of trade $213 million.) and we had six days debate in the House and 6 days in Committee before passing C-23, the Canada-Jordan trade agreement (volume of trade $90 million.)  This sweeping deal with China is not due for a single hour of debate before passage (trade volume $64 billion.)

Please join me in trying to raise the alarm about this treaty.  We do not have much time left.

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  • zoë

    Thanks Elizabeth May – you are our lifeline to the house! If only all our ministers were as dedicated to analyzing, reporting and being responsible to the people!

  • Anu

    I think we are all too speechless to even leave a comment. I am..flabbergasted so to speak! Please do let us know what I/we can do. I have redistributed your letter. What would we do without you. NO one of the other parties has even voiced concern.

  • Gladys Hills

    Elizabeth truly amazing the work you do. Sending healing energy to you to heal the dysfunctional political system. My choice for next PM. Anything is possible if.

  • Anna Sophia

    Ms. May, What about the international bankers and the debt with compounded interest we Canadians pay daily? Christopher Porter of the Canadian Action Party ( ) stated in the 2012 Toronto Danforth bi-election that it was $170 MILLION A DAY! We could use that money to do what China is doing instead. We used to borrow from the PEOPLE’S Bank of Canada and often interest free too. Retired high school teacher Bill Abrams explains it very well.

  • Louise

    Thank you for bringing this information to the public attention. What can we do to stop this? As you say, time is short and by the time the public realizes what has happened, it will be too late. I have written to my member of parliament advising him of my opposition to this deal. I have sent a copy of lawyer Gus Van Harten’s letter to CBC National News to ask them to cover the story. ( I have posted on facebook. I have talked this up with friends. Unfortunately it feels like a drop in the ocean. How do we get something like the Quebec student protest to happen quickly, to bring attention to this, and to bring pressure upon the government to prevent ratification?
    Elizabeth you are doing an amazing job. Please let us know what more we can do.

  • Anna Sophia

    Ms. May, also free trade, aka, sending the majority of our factories to China, outsourcing to the 3rd world and buying up their crap, has IMO is hurt us Canadians, as well! Now we are surprised they are going to buy up our natural resources. Our civil servants seem to be for globalists, corps and elite. It’s framework is based on the UNs Agenda 21 stated to be very “anti-human” and it’s masked behind the green propaganda. Very scary. If we address the real issues we could turn this around. 1. stop borrowing from private banks that charge interest on interest. 2. localization & 3. no to Agenda 21.

  • Skookum1

    Can’t a supreme court injunction prevent the treaty from coming into effect because it violates the constitution on several counts? I.e. bypassing provincial rights on resources and other matters? Surrendering sovereignty? Does the Chinese Politburo effectively wind up having more power in Canada than the Crown itself?

    That Harper’s government is illegitimate because of the electoral fraud and campaign financing matters make this all the more offensive, even more than signing away territorial sovereignty to the United States re military activities on Canadian soil.

    The current budget omnibus bill is being given front page coverage by the major media to avoid having to let the public know about this vile and treasonous treaty.

    That the Liberals and NDP won’t use their Opposition Days to bring this to the fore says a lot about their own agenda……

    As with the Omnibus bill, you are the only sane and principle voice in the Commons at present. The others care not for Canada or its democracy or its land, they care only for power……and if bacon fat from Beijing has greased the Tories, it’s probably greased them as well.

    I urge you to write to the OTHER Elizabeth, the Second, to notch up previous complaints about the illegal election fraud we have seen, and point out to Her Majesty that her realm is about to become a satrapy of the Chinese state.

    “Something must be done” And if she says that we have to take the matter to the Governor General, who is a Harperite henchman, it’s clear that we need another constitution, and another government, and political system, willing to rebuke and reject the treaty forthwith. Because it violates international law to start with; what’s the harm in defying international law. What’s China going to do? Invade???

  • JB

    We are all so alarmed about what is unfolding under the Harper Regime day by day . My heart aches about the loss of the Canada I know and love. I have been reading these comments and echo – WHAT CAN WE DO? I have signed the petition. I have circulated it. I am willing to sign a letter to the Lt Governor and/or Queen Elizabeth. ..

  • Steven Hapless

    More short-sighted stupidity from Harper regime – what can we do – it is runaway ignorance? I write, phone, rally etc. and seems to not matter.

  • BetterChicken

    Uncle Sam…Help!!! We are being sold out to communists!!!

  • Priscilla Judd

    His was the reply I got from my MP. I also received one from the Prime Minister’s office. Apparently, they sent my concerns to another Minister… I can post that one too if you would like to see it. Certainly, Mr Mayes doesn’t agree with your take on the matter. Perhaps the info here can help you understand why they think it’s a good deal and that might give you some relevant talking points. Thanks for all you do Ms May, I appreciate it very much.

    Ms. Judd,

    Thank you for copying my office your email to Prime Minister Harper regarding Nexen and FIPA.

    A review was initiated in August, on whether the Nexen proposed investment is to the net benefit of Canada, according to six criteria as set out in the Investment Canada Act. The $15.1-billion CNOOC-Nexen deal — which has been approved by shareholders — represents a net benefit to the country at large. Your government has extended its review of the deal until mid-November while it assesses the benefit to Canada and determines whether the company, which is publicly traded in Hong Kong and New York, operates as a commercial entity. At the same time, Prime Minister Harper has promised to release a new “framework” that will explain the government’s rationale for its decision on the Nexen deal and serve as a guide to other state-owned companies.

    On October 18th the Hon. Christian Paradis, Minister of Industry stated:

    “One thing is certain: every foreign investment made in Canada has to create a net benefit for Canada and every decision has to be made in the best interests of Canada.
    There are factors clearly set out in section 20 of the Investment Canada Act. Again, I repeat: there are guidelines relating to foreign state-owned corporations. In addition, new provisions regarding national security have been put in place. That said, the transaction is being carefully studied as we speak.”

    My view is that the government needs to follow the review process as outlined by the Investment Canada Act. I would like to take this opportunity to outline the federal government’s position and responsibility when it comes to assessing the takeover of a Canadian company by a foreign company.

    The Minister of Industry is conducting a review of the proposed investment, and his approval is required prior to implementation. The Minister approves applications where he is satisfied that a proposed investment is likely to be of net benefit to Canada. The definition of “net benefit” will be very broad in terms of Canada’s overall interest in this transaction.

    In making his determination, the Minister carefully considers the plans, undertakings and other information submitted by the investor (CNOOC) in light of the net benefit factors listed in section 20 of the Investment Canada Act.

    The six factors listed in the Act are:

    - the effect of the investment on the level and nature of economic activity in Canada, including the effect on employment, on resource
    processing and on the utilization of parts, components and services produced in Canada;
    - the degree and significance of participation by Canadians in the Canadian business;
    - the effect of the investment on productivity, industrial efficiency, technological development, product innovation and product variety in Canada;
    - the effect of the investment on competition within any industry or industries in Canada;
    - the compatibility of the investment with national industrial, economic and cultural policies; and,
    - the contribution of the investment to Canada’s ability to compete in world markets.

    As CNOOC is a Chinese state-owned enterprise, the Guidelines–Investments by State Owned Enterprises–Net Benefit Assessment published under the Act apply to this proposed investment.

    The Guidelines clarify that in the review under the ICA, as part of the assessment of the enumerated factors, the Minister will examine:
    - the corporate governance and reporting structure of the non-Canadian;
    - how and the extent to which the non-Canadian is owned or controlled by a state, and;
    - whether the Canadian business to be acquired will continue to have the ability to operate on a commercial basis.

    I can assure you that this transaction will be scrutinized very closely. It is incumbent upon the Chinese to indicate, as the relationship goes forward, their willingness to play by the same rules as Canada.

    I would only add that our government has made targeted amendments to the Investment Canada Act to provide greater transparency to the public, more flexibility in enforcement and an alternative to costly and time-consuming litigation.

    FIPA with China provides important benefits for Canadian investors. For businesses looking to set up in China, China cannot treat a Canadian company less favourably than they would any other foreign company looking to do the same. Fundamentally, this investment treaty will help protect the interests of Canadians.

    Creating a secure, predictable environment for Canadian investors is why, since 2006, we have concluded or brought into force FIPAs with 14 countries, and are actively negotiating with 12 others. The Canada-China FIPA is very similar to the other FIPAs that Canada is a party to. It contains all of the core substantive obligations that are standard in our other FIPAs.

    We have introduced an unprecedented process for putting Canadian international treaties to the scrutiny of the House of Commons. In 2008, our Government announced that treaties between Canada and other states or entities, and which are considered to be governed by public international law, will be tabled in the House of Commons. Accordingly, the Canada-China FIPA was tabled in the House of Commons on September 26, 2012. This reflects our government’s commitment to transparency and accountability.

    With regards to investor-state dispute settlement, it is Canada’s long-standing policy to permit public access to such proceedings. Canada’s FIPA with China is no different. As we do with all other investor-to-state disputes, this FIPA allows Canada to make all documents submitted to an arbitral tribunal available to the public. All decisions of the tribunal will be made public. Ultimately, access to international arbitration will provide Canadian investors with the confidence that comes from recourse to an independent, international body to adjudicate any disputes. It is also important to note that under this treaty, both Canada and China have the right to regulate in the public interest. Chinese investors in Canada must obey the laws and regulations of Canada just as any Canadian investor must.
    At the same time, Chinese investment in Canada will continue to be subject to the Investment Canada Act for both the net benefit test for acquisitions above the applicable threshold and for national security concerns with respect to any investment. Decisions by Canada under the Investment Canada Act are excluded from challenge under the provisions of the FIPA.

    We’ve been clear that Canada wants to continue to expand its relationship with China, but we want to see it expand in a way that produces clear benefits for both sides. By ensuring greater protection against discriminatory and arbitrary practices, and enhancing predictability of a market’s policy framework, this FIPA will allow Canadians to invest in China with greater confidence.

    Once again, thank you for bringing your concerns regarding Nexen and FIPA to my attention.


    MP Colin Mayes

  • Jean

    I would like to thank you for standing up for us and our country. I consider FIPA to be a treasonous act and that Harper and his regime be charged accordingly.
    Jean from Surrey, B.C.

  • AO

    I don’t understand why OUR government doesn’t buy out Nexxen for the good of our nation, people and environmental standards (if Harpler hasn’t totally obliterated that along his path of conservative destruction). Then we’d have control of OUR oil, OUR jobs, OUR safety and human rights standards and the future of OUR GDP and positive economy for once.

  • MadewithprideinCanada

    On the bottom of all Conservatives is the little stamp that reads “Made In China”!!!
    Viva la Resistance!!!!!

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