That, in the opinion of this House, the government should inform the Government of the People's Republic of China, that it will not ratify the Canada-China Foreign Investment Promotion and Protection Agreement.
He said: Mr. Speaker, I rise today to move a motion on behalf of the official opposition, the New Democrats, to direct the Government of Canada to inform the Government of the People's Republic of China that it will not ratify the Canada-China foreign investment promotion and protection agreement. In doing so, I rise proudly in the knowledge that we are discharging a profound responsibility to this chamber, to Canadians and to our country.
This FIPA is critically flawed in a number of ways and, if allowed to proceed in its present form, will do serious damage to Canada. In fact, in view of the very serious concerns raised about this deal by international trade experts and others, it would be absolutely reckless for the government to proceed to ratify this treaty. Indeed, I believe that many members on the government side are aware of the dangers this deal presents to Canadian interests and are troubled by the agreement's violation of core Canadian values.
I say this because even though the government has been in a position to implement the treaty for over five months now, it has declined to do so. While there may be several reasons for this delay, I believe that one of them is the distinct awareness that this deal is bad for Canada, fails our businesses, threatens our economic interests, violates our democratic processes and puts our taxpayers at risk.
Before proceeding to outline these flaws and shortcomings in detail, I would like to set forth some general principles that the New Democrats hold when it comes to this issue.
New Democrats believe in the importance of engaging with diverse economies and emerging markets. We support the development of clear rules that give confidence to investors, create level playing fields, preserve democratic policy-making and are transparent and accountable to Canadians. We believe in trade and investment policies that promote and protect Canada's interests.
With respect to China, we believe that Canada should deepen and broaden our economic relations. China is the second-largest economy in the world, it is in ascendancy and there are many opportunities for mutual benefit and synergies between our two nations. Developing a rules-based framework that improves the investment and economic activities in both countries is desirable and necessary. With careful negotiation, it is also achievable.
New Democrats know that an investment agreement done well has the potential to be of great benefit to both countries. However, a deal that is poorly negotiated risks doing great harm. Because the Conservatives have taken an extreme ideological approach to negotiating and ratifying trade and investment agreements, they have concluded a carelessly and poorly negotiated deal. Put bluntly, this FIPA will do harm to Canada's economic interests. Canadians deserve better.
Let me start, then, with a summary of the problems with this FIPA.
It ties the hands of Canadian governments at all levels—municipal, provincial, federal and first nations—and restricts them from taking legislative measures in the public interest. It exposes Canadian taxpayers to huge liabilities and multi-billion-dollar lawsuits by foreign corporations if they feel that public legislation affects their profit expectations. It is imbalanced and lacks reciprocity for Canadian investors. It does not help Canadian investors effectively break in to China's markets. It puts at risk Canada's vital natural resources, including those in strategic areas such as energy, and allows these assets to be controlled by foreign state interests, including state-owned enterprises that serve foreign state interests, not commercial ones. It contains an unaccountable dispute resolution mechanism that allows China or Canada to hear lawsuits involving taxpayers' money outside Canadian courts and in secret: no public access, no public disclosure, no media, no transparency and no accountability. It subordinates our environment to corporate interests and puts legislative efforts to protect our land, air and water at risk of being struck down by corporate lawsuits.
It was passed by the Conservatives with no consultation with provinces, first nations, trade experts, business, labour or the public. Outside of this one day called for by the New Democrats, there has not been a single minute of democratic debate after 18 years of negotiation. Once ratified, this FIPA will lock Canada into these damaging terms for a minimum of 31 years.
This is a major economic initiative, and contrary to repeated Conservative misstatements, a deal that raises concerns unlike any other. It concerns billions of dollars of investment. It is the first time since NAFTA that Canada has signed an investor protection agreement with a country that is a major investor in Canada. Unlike virtually every other FIPA Canada has signed, China is a major capital exporting nation with massive foreign currency reserves.
Let us look at the numbers. Chinese investment in Canada hardly registered in 2007. It was too small to record. In 2011, it was $11 billion. In 2012, it doubled to $22.5 billion. According to the Conference Board of Canada, China is projected to be Canada's number two foreign investor in Canada by 2020, exceeding $50 billion a year. That is in seven years.
Before the $15 billion CNOOC-Nexen takeover, Chinese state-owned enterprises, such as PetroChina, Sinopec and CNOOC, had already invested over $10 billion in the Canadian oil and gas sector and controlled more than 7% of Canada's oil sands interests. Today, over $25 billion of Canada's oil sector is controlled by China's state-controlled firms.
Let me quote an economist, Wendy Dobson. She said, “There is a tidal wave that is heading out of China in the next decade and I don't think we're ready for it”.
She estimated that this tidal wave amounted to more than $1 trillion of investment worldwide to acquire access to resources and technology. Yet this deal, which will involve those sums of money, was rammed through this Parliament without any study, debate or vote.
On October 23, as official opposition critic for international trade, I presented a motion to the Standing Committee on International Trade to conduct a study of the agreement and to call a varied list of Canadian stakeholders to committee to provide their views. Conservatives refused to even debate that motion in public. No study was agreed to.
On October 31, the NDP member for Ottawa Centre rose to request an emergency debate on the FIPA. That request was denied by the government.
On October 2, 18, 24, 25 and 31, members of the NDP rose in question period to request that the FIPA be properly studied by a parliamentary committee. Each time, the Conservatives refused even to address the merits of the question.
Through Leadnow, some 80,000 Canadians have sent messages to the government voicing their concerns about this FIPA and requesting proper study and prudence. Just yesterday, in one day, I received over 17,000 emails after this motion calling for this debate was made public. That was in 24 hours. Despite all of this widespread concern and opposition, the Conservative government has refused to bring this FIPA forward for debate, study or vote.
I want to turn to some of the details of why this FIPA is so dangerous and poorly negotiated. I will turn first to natural resources.
This FIPA requires Canada to award national treatment to investments made by Chinese firms once established in Canada. This paves the way for a massive natural resources buyout and foreign-state expansion of ownership in our economy. For example, I have referenced CNOOC's recent purchase of Nexen, which was approved by the Conservatives. Under the FIPA, if CNOOC wants to expand by buying up other oil interests, it can, and it must be treated by this FIPA as if it were a Canadian company. Any attempt by any government to limit this expansion may be met by a lawsuit claiming damages for unequal treatment.
There is a loophole in this FIPA: non-producing oil properties are not subject to Investment Canada Act review. This means that when oil reserves are present, but drilling has not yet commenced, those oil leases are not subject to any kind of review and therefore would qualify under this FIPA for national treatment.
This FIPA will place Canada's strategic oil reserves, and in fact strategic sectors beyond oil, into the hands of foreign states and state-owned enterprises that do not operate as purely commercial businesses but rather would serve the interests of a foreign state. This locks us into a dangerous path of foreign ownership and resource extraction until at least 2044.
Canadians are opposed to this. Canadians want a national conversation and a policy that makes responsible choices for the wisest long-term stewardship of our natural resources in Canada.
This deal is unbalanced. First, this deal allows both parties to maintain their current non-conforming measures. This means that both countries commit to not implementing any new discriminatory barriers to each other's investors in the future, but the agreement allows both to keep any existing non-conforming measures.
Here is the problem. China has been and is a command economy. It has many non-conforming measures. These include requiring foreign investors in China to partner with local Chinese enterprises, to use local suppliers and to source local goods and services. Anyone who has done business in China is well aware of these requirements. However, Canada, which has been on a trade liberalization trajectory for the last 30 years, has largely eliminated such requirements. The result: Canadian investors are at a major disadvantage. This deal fails to secure reciprocal and equal access to China for Canadian investors.
When I asked DFAIT officials at committee for a list of China's non-conforming measure, they first said that they did not have them, then they said that they were on the website, and then they said that they were not sure. The government has signed an agreement allowing China to keep non-conforming measures in place that bind Canadian investors, and it cannot even tell us what they are.
In addition, this deal fails to include Canada's pre-establishment rights model, which grants protections to both existing investors and those seeking to invest. Instead, the Conservatives have acceded to the Chinese model, which provides very little protection to prospective investors compared to existing ones. The result: again, imbalance against Canadian investors. Why? It is because relatively speaking, Canadian investment in China is a relatively small $4.5 billion. In 2012, China had five times that amount invested in Canada, and it is growing exponentially.
As Paul Wells wrote last September, when this deal was released, quoting an investment analysis: “It will be interesting to see if this is spun as an agreement that 'liberalizes' or opens markets for Canadians. If it is, that will not be true”.
Canadian companies need and deserve an agreement that helps remove the barriers that are keeping them out of Chinese markets. The simple reality is that this FIPA fails to provide effective tools to challenge the protectionist barriers the Chinese government has at its disposal to block new foreign investment in the profitable sectors of its economy. For certain, access to sensitive areas of the Chinese economy by Canadian investors has been restricted, while Canada has thrown the doors wide open to firms from China.
This deal will also expose Canadian taxpayers to expensive litigation and billions of dollars in damages. This FIPA provides a mechanism to Chinese companies to sue the federal government if they feel that Canada has passed regulations or policies that they feel amount to unfair treatment or that interfere with their expectations of profits or future expansion.
Foreign corporations can sue Canadian governments and cost Canadian taxpayers billions of dollars. I would like to emphasize that this is not the Conservatives' money; this is Canadian taxpayers' money for enacting laws that protect our energy security, environment, jobs or public health.
This is not a hypothetical concern. Chinese state-owned insurance company Ping An sued Belgium for $3 billion in damages after its profit expectations were not met after the European recession. Canada has been forced to pay damages exceeding $157 million to U.S. firm AbitibiBowater following the Newfoundland government's decision, after the company closed its pulp and paper mill, to reclaim the water and timber use rights it had provided. An investor state tribunal has now ruled against the Government of Canada in another case, because the Newfoundland government tried to get foreign oil companies to invest a certain amount in local research and development to create good jobs in that province. The amount of damages that have to be paid has not yet been released.
Other lawsuits have been filed challenging Quebec's decision to place a moratorium on fracking, Ontario's offshore wind power policy and the Canadian court's invalidation of a drug patent.
In short, this FIPA provides protectionist policies for foreign corporate profits and not for the well-being of Canadians, our economy or our environment.
As the South African government put it, “Investor-state dispute resolution that opens the door for narrow commercial interests to...matters of vital national interest” is a direct challenge to “constitutional and democratic policy-making”.
Let us hear it from the horse's mouth. Here is what one of the international arbitrators himself had to say about the exact type of clause contained in this FIPA:
When I wake up at night and think about arbitration, it never ceases to amaze me that sovereign states have agreed to investment arbitration at all. Three private individuals are entrusted with the power to review, without any restriction or appeal procedure, all actions of the government, all decisions of the courts, and all laws and regulations emanating from parliament.
That was Juan Fernández-Armesto, an arbitrator from Spain.
Canadians do not agree with this.
All 50 U.S. states, every one of them, have passed resolutions opposing the application of investor state dispute resolution mechanisms in their jurisdictions. They did it last year again.
Let us look at the investor state dispute mechanism in this particular FIPA. This deal changes Canada's long-standing policy of ensuring public access, public disclosure and transparency in arbitrations. For the first time in Canadian history, the Conservatives have agreed to a dispute resolution procedure that violates the Canadian tradition of open courts at the whim of three arbitrators who have no responsibility or accountability whatsoever to Canadians.
I thought Conservatives did not like unelected judges overturning democratic decisions by elected officials. However, in this case, they cannot help but trample down the door and give over sovereignty to three unappointed, unaccountable, world legal arbitrators to overrule decisions made in this Parliament. That is undemocratic and indicative of Conservative principles.
These panels lack the standards and safeguards that apply to judges in Canadian courts. There is no security of tenure for arbitrators, raising concerns about their ability to be impartial. There is no prohibition on arbitrators being paid for non-judicial activities, giving rise to apprehensions about bias and conflicts of interest. Worst of all, these hearings can be conducted in secret, and documents can be hidden from the public.
I have heard a lot of dissembling from the government, so I am going to read for Canadians exactly what the FIPA says in article 28. It states: “Where a disputing Contracting Party”—that is the sued state—“determines that it is in the public interest to do so...all other documents submitted to, or issued by, the Tribunal shall also be publicly available”.
Here is the next clause: “Where...a disputing Contracting Party”—that is the state being sued—“determines that it is in the public interest to do so...hearings held under this Part shall be open to the public”.
If China determines that it is not in the public interest to do so, at its sole discretion, hearings are not open to the public and documents need not be disclosed. What a violation of Canada's tradition of open courts, where Canadians can see justice done when their money is on the line.
Canadians can decide for themselves when Conservatives stand up and say that these hearings will be held in public. I read it right there in black and white.
Interestingly, Canada has made 16 claims through NAFTA's ISDS mechanisms, mostly against the U.S., and we have never won a single case. Neither the U.S. nor China, on the other hand, have ever lost an arbitration brought against them by another country.
I want to talk about the environment a bit. I want to read a section of the FIPA, as well. One would think that when Canada negotiates a deal on corporate interests, it would make sure that nothing in that agreement would inhibit the ability of Canadians governments to protect the environment. Here is what the clause says:
Provided that such measures are not applied in an arbitrary or unjustifiable manner, or do not constitute a disguised restriction on international trade or investment, nothing in this Agreement shall be construed to prevent a Contracting Party from adopting or maintaining measures, including environmental measures: (a) necessary to ensure compliance with laws and regulations that are not inconsistent with the provisions of this Agreement
What does that mean? Why do they not just say that nothing in the agreement would prevent any Canadian government from taking any measure to protect the environment, period. That is what the Conservatives could have said. They did not.
The government failed to consult. Wise governments consult, especially when important issues involving Canada's economy, resources and policy-making freedom are at stake, and especially when we are talking about profoundly large deals that would bind Canada's interests for the next three decades.
Canadians want us to be prudent, cautious, informed and intelligent, yet after 18 years of negotiation, the Conservatives have announced this FIPA as a fait accompli, take it or leave it, without conducting a minute of consultation. Predictably, the Conservatives have been taken to court by a first nations lawsuit that was filed on January 18 because of this lack of consultation.
In conclusion, no rational government that cares about Canada's economic interests, democratic policy-making, and citizens' interests could possibly stand beside such a flawed agreement. No prudent government that is sincerely concerned about Canada's future generations, resource security, and environment could possibly defend this FIPA in its current form. No responsible government could defend an agreement that has taken 18 years to negotiate, that would bind Canada for 31 years, and that would affect billions of dollars of investment without proper study and input from Canadians.
Canadians want and deserve a well-negotiated agreement with our trading partners, including China. Let us take the time to ensure we secure such an agreement.
I urge all members of this House to support this prudent, thoughtful, and wise motion.