Canada ratifies its new FIPA with China

Canada has now ratified its new Foreign Investment Promotion and Protection Agreement (FIPA) with China. The agreement was first signed in 2012, and will now take effect October 1, 2014.

It's raising a lot of concern on Parliament Hill, and on social media.

The agreement has been criticized for being lopsided in favour of Chinese investors, and for opening Canada up to lawsuits and legislative interference.

One international trade consultant says, however, that many of those concerns are overblown.Laura Dawson is president of Dawson Strategic. Her firm helps private companies navigate international trade and investment agreements like the Canada-China FIPA.

"There is really no basis for the sort of 'sky is falling' attitude that the opponents to trade and investment are taking on this agreement," she told Jim Brown this week.

We have this kind of agreement with more than 27, I think, different governments around the world, and they're a fairly straightforward agreement. There's nothing that's particularly new or dangerous here.Laura Dawson

Gus Van Harten has another view on the FIPA. He's an international investment law expert, and associate professor at the Osgoode Hall Law School at York University.

"I just don't think it's a good deal for Canada," he told CBC, when China and Canada first signed the agreement two years ago. "The treaty provides protections for investors in one country, from the other country, and there is just a lot more Chinese investment here than vice versa. What that means is that Canadian taxpayers and voters are assuming more of the risks than China. It's a simple fact of the degree to which Chinese investment out paces Canadian investment the other way."

To Laura Dawson, the imbalance in size between China and Canada is exactly why this FIPA is needed.

"In terms of China, yes, it's a huge place, and Chinese companies do not always behave in ways that we might want them to, but having a rules-based agreement to deal with them is much better than the sort of ad hoc, anything can happen 'wild West' that we have now, " she says.

"When you're dealing with China you're always going to be dealing with a lopsided agreement because they are the second-largest economy in the world. So a relatively small economy like Canada can't effectively deal with China without agreements. We need more agreements with China, not fewer."

Jim Brown spoke to Don Davies about the China-Canada FIPA this week, and the New Democratic Party's Trade Critic had additional concerns about the document. He said however that it's the specifics of the agreement, and not the principle behind it, that his party opposes.

"We recognize that China is an ascending economy, it's Canada's second largest trading partner and the concept of establishing fair rules for investment between the two countries I think is a good one," he says.

We're not opposed to the idea of an agreement, but when we read this particular agreement that's been negotiated we believe that its a flawed deal.Don Davies, NDP Trade Critic

Davies says the deal appears to benefit Chinese investors more than Canadian businesses, and takes issue with the agreement's 31-year term. He also has concerns with the dispute-resolution mechanisms in the FIPA.

"There is a tribunal process where corporations can take their disputes to a tribunal for resolution, and for the first time we allow either party to the dispute to insist that the hearing be held behind closed doors, which is a violation of our open court system."

Consultant Laura Dawson says from her point of view, the dispute tribunals in this agreement have been established according to "well-publicized, well-established" legal standards.

"Because some of these processes included discussing commercial information, which we like to hold confidential if you're a business, there is some secrecy," she says. "But these are not secret tribunals held by guys in black cloaks."