Attention should be paid to the fact that the Prime Minister has signed a deal with President Hu of China that promises investor protection. The text of said deal is not yet before the House of Commons, but everything I read about it (including from business analysts at Heenan Blaikie and Osler, Hoskin and Harcourt) anticipates the deal will include investor-state provisions similar to those in Chapter 11 of NAFTA.

Chapter 11 of NAFTA allows corporations from Mexico or the USA to claim damages against Canada if any level of Canadian government (municipal, provincial or federal) causes them to experience less profits than they had anticipated. Canada has actually repealed a law limiting a toxic gasoline additive when the US-based manufacturer sued under Chapter 11 — and we paid $10 million plus in damages. This outrage only gets more outrageous if the claims for multiple millions in damages come from a non-democratic enormous economy to which we have hitched our wagon as a compliant resource colony.

When will Mr. Harper share the text of this investor agreement with Parliamentarians? When will it be shared with Canadians? It was signed on September 8th when both Harper and Hu were in Russia. It must now be ratified. Assuming all the Conservative MPs who are worried about selling out our country to China do what they always do and submit to the will of the Boss, it will become a trade obligation. China will, if offended by any new health, labour, or environmental law, be able to make a claim for damages. I have already witnessed the chilling effect of Canada knowing a US based corporation can sue under Chapter 11. It was rumoured that former Liberal Health Minister Allan Rock refused to ban cosmetic use of pesticides for fear of Chapter 11 claims by US pesticide manufacturers.

What happens when Canadian laws, passed democratically, are struck down in hotel room arbitrations launched by the Communist Party of China?

I pay attention to things that CNOOC’s CEO says in public. In the August 29, 2012, Wall Street Journal, CNOOC CEO Wang Yilin said, “Large-scale deep-water rigs are our mobile national territory and a strategic weapon.” OK, so the bitumen isn’t mobile – until you mix it with diluents and stick it in a pipeline. But the oil sands do become Chinese territory. What did he mean about “strategic weapon?”

Are there national security implications?

I would love to trust in a national security review under the 2009 amendments to the Investment Canada Act, except that Stephen Harper specifically rejected the advice of the blue ribbon panel (struck after the Minmetal attempt to buy Noranda) that Canada needed a clear, objective definition of “national security.” The experts thought we should have a definition and use it to assess any takeovers of Canadian companies by foreign interests — particularly state-owned enterprises. Our PM rejected the advice. Instead the Canada Gazette for the 2009 amendments says that “national security” cannot be defined. It is, apparently, a fluid term.

Smart people I respect, like Andrew Coyne, say “don’t worry — there’s no national security threat when you cannot take the resource out of the country.” But then I run into stories like this:

Beijing hints at bond attack on Japan

Jin Baisong from the Chinese Academy of International Trade – a branch of the commerce ministry – said China should use its power as Japan’s biggest creditor with $230bn (£141bn) of bonds to “impose sanctions on Japan in the most effective manner” and bring Tokyo’s festering fiscal crisis to a head.

Writing in the Communist Party newspaper China Daily, Mr. Jin called on China to invoke the “security exception” rule under the World Trade Organisation to punish Japan, rejecting arguments that a trade war between the two Pacific giants would be mutually destructive.

Separately, the Hong Kong Economic Journal reported that China is drawing up plans to cut off Japan’s supplies of rare earth metals needed for hi-tech industry.

– The Telegraph, September 19, 2012

OK, maybe he’s just threatening to destroy Japan’s economy. Maybe he doesn’t mean it. Maybe the WTO wouldn’t let him do it…. but then there was the Sino-Forest fraud, busted by the Ontario Securities Commission:

OSC puts the spotlight on Sino-Forest gatekeepers

In its allegations Tuesday, the OSC noted that auditors Ernst & Young “were not made aware” of Sino-Forest’s “systemic practice of creating deceitful purchase contracts and sales contracts.” The commission makes no further comment on the audit firm’s work. A spokeswoman for Ernst & Young could not be reached for comment Tuesday.

The OSC issued a report in March calling on boards, underwriters, auditors and stock exchanges to improve the practices for listing foreign companies on Canadian stock exchanges, saying there has been a broad lack of “skepticism” about business practices in emerging companies like China.

– Globe and Mail, May 22, 2012

There’s a beautiful term: “broad lack of skepticism.”

It makes me nervous that Chinese companies are merely branches of the Chinese government. The Communist Party hierarchy appoints the boards of directors of CNOOC, Sinopec and Petro-China.

When I read in the business pages that Petro-China wants to bid on construction of the Enbridge pipeline, and read in the same story that Chinese companies are very competitive in their bids because of low labour costs, I picture the labourers who built the national dream of Pierre Berton’s imaginings… with a brutal and nasty history. We have a temporary foreign workers programme. It could happen. And the bitumen going through the proposed pipeline is to go to Chinese supertankers to Chinese refineries.

All this makes me nervous. It makes me nervous in two quite contradictory ways. Firstly, I am a tolerant small “l” liberal type of person. I am not Sino-phobic. China is not a country one can ignore. In terms of global climate negotiations, China’s engagement is essential. China has been, at least at COP17, far more progressive than Canada in talking about the need for a global climate deal.

I want greater ties with China for environmental endeavors, and cultural exchanges, and — yes – trade too. Losing sovereignty to China makes me nervous. I don’t want to be intolerant. But I want us to trade items made in Canada, by Canadians, to China. I don’t like the idea of China owning Canada. It makes it hard for us to point out to the Chinese government that it must start respecting human rights. We need to be really forceful in advocating for religious and political freedom in China. How do we do that when they have veto power over Canadian laws?

And then there are issues of global tensions. Mr. Harper and John Baird are talking tough to Iran. But what about the fact that, while we claim we are exerting sanctions on anyone doing business with Iran, Sinopec, now a major stake-holder in Syncrude, is Iran’s number one customer for oil? Or, that Chinese oil money helps prop up Bashar al-Assad?

So, bottom-line, the Nexen-CNOOC deal doesn’t have me nearly as freaked out as the investor deal Stephen Harper signed in Russia. But when I think about the idea of “net benefit” I just don’t see any answer but “no.”

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When we talk about nuclear issues, we know that we have just approved the sale of yellowcake from Saskatchewan to China under terms that the U.S. finds too shaky to meet the terms of the nuclear non-proliferation treaty. We cannot track yellowcake adequately under these new rules. We, therefore, could be not only dealing with companies that buy the Iranian oil and prop up that regime, as China props up Syria, but we could also be in a situation where Canadian yellowcake makes its way into the Chinese nuclear program or even into the Iranian nuclear program. We cannot track these sales.

We have let the horse out of the barn without paying attention. In 2009, when we amended the Investment Canada Act, we should have put a clause in, as the experts recommended, for national security checks to be included. We have no protection. We are not paying attention.

Deepak Obhrai: Mr. Speaker, first and foremost, I want to make it very clear for the hon. member that we are concerned with what is happening in Iran, as she herself is concerned with the situation. However, our approach is to work with our allies. Of course we are aware that China is one of the larger customers of Iran going back before these sanctions were put forward and therefore diplomatically the pressure is being put on China from everyone to reduce the imports of oil into China.

The member keeps talking about China. It is India as well that is reducing its imports from China. However, this is working together diplomatically with all our allies to ensure that pressure is put forward on China and on other countries that are buying the Iranian oil to get them to come to the table and talk about the nuclear activities.

Right now as we talk the second stage of that conference will be taking place pretty soon in which all five countries, including China, will be talking with the Iranians in reference to their nuclear activities.

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The issue deals with the question of the integrity of Canada’s ability to enforce sanctions against Iran when we are increasingly dealing with what we consider new markets or new trading partners, however we want to put it, but essentially allowing state-owned Communist Party enterprises owned by the Government of China to become increasingly large investors in Canada.

Some of the very same companies, not just the general concept of state-owned Chinese enterprises, are major investors in Iran. In fact, the single largest customer for Iranian oil is Sinopec. Sinopec, as people may know, has been investing heavily in the oil sands. In fact, it purchased a 9% share that used to be ConocoPhillips’ share of the oil sands, and at the same time, the ConocoPhillips’ share was a share of Syncrude, so it is a major investor now in Syncrude, but it is not the only company that deals with Iran as well as investing in Canada.

I would mention, for instance, China National Offshore Oil Corporation, sometimes called CNOOC, has completely purchased, or one of its subsidiaries has purchased, the Long Lake oil sands mine in Alberta. At the same time, it is doing a $16 billion investment with Tehran in the North Pars gas fields. That is not the only company. If we look at PetroChina, it has a 25 year deal with the National Iranian Gas Export Company, and at the same time it was only six years into its 25 year deal with the Iranian National Gas Company when that same company, PetroChina, purchased all of the mine at MacKay River oil sands project.

What does this mean for us in terms of our sanctions? On March 5 I said that in light of the increased tensions around Iran and around nuclear issues, the importance of sanctions could not be overestimated. I asked the minister, in this light, whether we were concerned that our new trading partner, Sinopec in China, which is the largest buyer of Iranian oil, was undermining the sanctions.

The minister’s response, while interesting, did not relate to my question. I hope this evening, as we pursue this matter, we can perhaps get an answer to the question.

I would like to put into the discussion we are having this evening that I am not the only member of Parliament who is concerned about Chinese investments in Canada at the same time that these same Chinese companies are the major oil customers for Iran, undermining sanctions. This is a quote from the hon. member for Mount Royal that reproduced in the Ottawa Citizen:

To the extent that we’ve now got sanctions-violating companies here in Canada that are doing business in Iran, the implications are serious…. They are very, very serious. 

Again, that was the hon. member for Mount Royal, who has a very strong record in the area of working as hard as we all can to ensure that President Mahmoud Ahmadinejad understands that Canada is not his friend. We are friends of the people of Iran but we are not his friends.

How then did they perceive what is going on in global diplomacy when we are opening our arms? We are actually undermining environmental laws, and Bill C-38 was its destruction of the Canadian Environmental Assessment Act. It appears to be in the interest of speeding things that Sinopec wants. How do we justify that?

Deepak Obhrai: Mr. Speaker, I thank the hon. member for bringing this concern to Parliament today, as has the member for Mount Royal.

Canada is deeply concerned by the Iranian government’s continued disrespect for the human rights of its citizens, its destabilizing regional role and its nuclear proliferation activities.

I will say quite clearly that Iran clearly knows that Canada is no friend of Iran. We have the largest, strongest sanctions against Iran, going beyond what the Security Council has said.

Most recently, on January 13, we expanded existing sanctions by adding five entities and individuals to our list of designated persons. Prior to that, on November 21, 2001, Canada implemented a number of strong measures against Iran under the Special Economic Measures Act. These expanded sanctions prohibit all financial transactions with Iran or any person in Iran, adding individuals and entities to the list of designated persons and expanding the list of goods prohibited for export.

The member has raised the question of China. As a result of the sanctions that we have put on Iran, there is no direct energy sector relations between Canada and Iran.

Furthermore, all Canadian sanctions against Iran were drafted as broadly as allowed under Canadian law. There is no power in Canadian law to apply sanctions to non-Canadians outside Canada. However, the prohibitions apply to persons in Canada and Canadians abroad, and they apply to financial transactions carried out for the benefit of and on the direction of or order of any person in Iran. 

Canada’s concern about the nuclear, and not only nuclear activities but also human rights violations has been long-standing. As part of our ongoing efforts to promote respect for human rights in that country, Canada led the adoption of the resolution on the situation of human rights in the Islamic Republic of Iran in the fall of 2011 session of the United Nations General Assembly. This marked the ninth consecutive year Canada led this initiative. The resolution was co-sponsored by 42 member states and supported by 89 in the vote, with only 13 members voting against it. This represented the largest margin of adoption since Canada assumed the lead on this resolution in 2003.

I do join with the member on the opposite side in expressing the concern that she has expressed about the nuclear proliferation by Iran and the threat that Iran poses to the region. We will be working with our international allies, and that includes China as well, to ensure that sanctions are applied and that as much diplomatic pressure is put on Iran as we can.

The post Adjournment Proceedings – Foreign Affairs appeared first on Elizabeth May.

In this light, are we not concerned that our new trading partner, Sinopec in China, which is the largest buyer of Iranian oil, is undermining the sanctions?

Hon. John Baird: Mr. Speaker, we are tremendously concerned about three things going on in Iran. Obviously the enrichment and the IEA report of its nuclear activities cause all of us substantial concern.

We are concerned about the deteriorating human rights record of the Iranian regime, and that is why Canada has led efforts at the United Nations to bring light to this huge problem. We are also concerned by the intervention that Iran takes in neighbouring countries supporting international terrorism.

We will work to take every diplomatic effort necessary, in concert with our allies and others, to ensure that Iran does not obtain nuclear weapons.

The post Oral Questions – Foreign Affairs appeared first on Elizabeth May.

Last week the European Union announced a boycott of Iranian oil, delayed until July, to pressure the Iranian regime over its disputed nuclear program.  The Iranian government has in turn threatened to disrupt oil tanker shipping from the Gulf through the Straits of Hormuz in the event of economic restrictions on its own oil exports.  The United States government has indicated it would militarily oppose such an action.  At the same time, Asian nations that import 75% of Iranian oil exports are resisting joining the boycott for either economic reasons or because they consider the boycott counter-productive.

“This kind of brinkmanship diplomacy is more likely to build resentment and solidarity among the Iranian people and strengthen the hand of the government,” added Green International Affairs Critic Eric Walton. “If Iranian authorities are being honest with their own citizens and the international community about their nuclear program – and we should start with the good faith assumption that they are – they will suffer no financial penalty on oil exports.”

Combined with this pragmatic shift in tactics would be an agreement to address Iranian regional security concerns and commence Regional Nuclear Arms Reduction talks with neighbouring nations already possessing nuclear weapons, including Pakistan, India, Russia, China,  and Israel.

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