Canada-China FIPPA agreement may be unconstitutional, treaty law expert says

15 Dec

Beth Hong, October 17, 2012

The Canada-China Foreign Investment Promotion and Protection Act (FIPPA), Canada’s biggest foreign trade treaty since NAFTA, will come into effect at the end of October and bind both the federal and provincial governments of Canada to its clauses for the next 31 years until 2043. International investment law expert and Canadian citizen Gus Van Harten says provinces have a strong case for challenging the treaty on constitutional grounds.

Prime Minister Stephen Harper shakes hands with Wen Jiabao, Premier of the People’s Republic of China, in the Great Hall of The People in Beijing, China. PMO photo by Jason Ransom.

 

With two weeks remaining before the controversial Canada-China Foreign Investment Promotion and Protection Act (FIPPA) is ratified, international investment law and treaty expert Gus Van Harten says BC has the option of delaying the treaty’s ratification through the courts.

“The province can call for an injunction in the BC Superior Court, requesting the courts to order the federal government not to ratify the treaty until the constitutional issues are resolved,” Van Harten told The Vancouver Observer.

The other option, Van Harten added, was an upswelling of public opinion against the treaty that will pressure elected officials in Parliament as well as provincial legislatures.

According to international law, a foreign investment protection agreement (FIPA) treaty binds the state regardless of changes in federal or provincial governments.

“It’s a done deal between the two countries—by signing a treaty, the Harper government can bind future governments and bind the Canadian electorate for 31 years,” Van Harten said.

Van Harten—who has a PhD in international law from the London School of Economics, and teaches law at Osgoode Law School—is one of five internationally recognized experts in Canada on international investment and treaty law and how they work on a practical basis. He said that he is an outlier for speaking out, based on his experience.

“The difference between me and many others is that a lot of academics work in the system as lawyers or arbitrators or experts, and they’re much more cautious about saying things that are critical of the system,” he said.

He noted that FIPPA is a good news for lawyers, who stand to profit off potentially multi-million dollar lawsuits.

“The lawyers who work in this field will like that—their business is to sue,” he said. “It’s not good for Canadian taxpayers.”

Any province with Chinese investors in natural assets over the next 31 years has right to challenge constitutionality of FIPPA

BC isn’t the only province that has a strong case in courts against the federal government over FIPPA because they face potentially serious fiscal risk if Chinese companies invest in major assets.
“It could be Ontario down the road, it could be the ring of fire—which is a strip of mineral rich land in Northern Ontario. In the north, there could be development of mines in northern Canada,” Van Harten said. “Same with Saskatchewan, with the mineral right there.”
“In Alberta, the Alberta economy is going to have a significant portion of Chinese ownership in its resource sector, and if Alberta was concerned for a long time about not having control over its resources vis-à-vis the federal government, how does it feel not having control over its resources vis-à-vis Chinese investors?”

The only provincial governments that shouldn’t be concerned about FIPPA are the ones which won’t expect to be getting any significant Chinese ownership of assets, Van Harten said.

“I don’t think any responsible government can assume that that’s going to be the case. In fact, they should be assuming the opposite and asking the questions now before the 31-year commitments are finalized on October 31 In fact, they should be assuming the opposite and asking the questions now before the 31 years kicks into effect on October 31.”

Van Harten’s concerns “speculative”: BC Environment Minister Terry Lake

Van Harten also sent letters to premiers of all across Canada, including BC Premier Christy Clark. He did this to help the provinces understand the scope of the fiscal risks this treaty will have on them and taxpayers.

Clark’s Press Secretary Michael Morton confirmed that Clark’s correspondence branch received the letter. Clark did not respond to questions from The Vancouver Observer about her reaction to any of the concerns it raised.

BC Minister of Environment Terry Lake responded to Van Harten’s letter to the Premier and concerns about FIPPA in a written statement, calling the letter “speculative”:

“We are intervenors in the hearing and examining  issues that are critical to our five conditions that must be met on all pipeline projects in BC. At the same time we are working with our federal counterparts on [Northern Gateway Proposal] related issues where BC’s interests are at stake.”

“As this is ongoing work and international treaties are the purview of the federal government I am not going to comment on speculative comments by Mr. Van Harten.”

No response from feds about concerns over FIPPA

FIPPA is the biggest foreign trade agreement since the North American Free Trade Agreement (NAFTA). FIPPA is an agreement with provisions to protect Chinese investors in Canada, and vice-versa. However, it also contains many clauses that have alarmed Van Harten and opposition MPs such as Green Party MP Elizabeth May. May requested an emergency debate on the treaty at the beginning of October to the House Speaker. Her request was denied.

Van Harten wrote a letter to Prime Minister Stephen Harper and Minister of International Trade Ed Fast last week outlining his concerns as a legal expert and Canadian citizen, but has yet to get any confirmation on whether his letter has been recieved.

A spokesperson for Minister Fast responded to questions from The Vancouver Observer  about Van Harten’s letter and concerns with the following written statement:

“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 (subject to the redaction of confidential information).

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.

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.”

Harper government rushing FIPPA, not allowing enough debate

However, Van Harten disagrees on with the Minister on various points.

“Why it is being concluded now in a form that is not advantageous to Canada is perhaps because the Harper government wants to pass it quickly while it has a majority in Parliament, and has been prepared to give away things that it would not have given away presumably as a minority government because it would not have been able to pass it through Parliament”

He added that the bulk of the responsibility for FIPPA lies at the majority Conservative government.

“To be honest, the provinces didn’t start this. It’s the federal government which has taken this reckless step,” he said.

NDP MP Don Davies proposed a motion in the Standing Committee on International Trade to debate, study, and recommend amendments to FIPPA on October 2.

After the majority Conservative committee voted for a confidential, in-camera meeting, the motion was removed from the Committee’s agenda.

International Trade committee member and Liberal MP Wayne Easter decried the killing of the motion, saying it was hindering Parliament from doing due diligence.

“We should be doing what Parliament is supposed to do and hold a consultation so that we know just exactly what is happening under the investment agreement, and so that we can look at the implications,” Easter said.

Two weeks won’t be enough time to fully debate and study the implications for all provinces, hence Van Harten’s recommendation for provinces to request a delay, and then the courts for an injunction based on constitutional grounds.

“I just want to emphasize to you the actor who is to blame at the moment is the federal government,” he said.

“The provinces would be to blame if they sat on their hands despite the implications of this treaty.”

LeadNow, a citizen’s advocacy group, has launched a petition to stop FIPPA.
Republished from the Vancouver Observer:
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