A new trade deal between Canada and China could put the rights of investors above those of First Nation governments.
Prime Minister Stephen Harper and Chinese President Hu Jintao signed the Foreign Investment Promotion and Protection Agreement in September, while attending an annual Asia-Pacific economic summit.
The agreement has been in the works since 1994 and was tabled in the House on Sept. 26. It is scheduled for ratification on Nov. 1.
The deal isn’t much different than the 20-or-so other similar agreements Canada has with other countries – except for one major difference. With this deal, Canada is dwarfed by the size of its partner.
As a result, the agreement is comparatively sweeter for Chinese investors, a number of which are already working in Canada, said international trade expert Gus Van Harten.
This becomes particularly worrisome because, as with similar agreements, the bulk of the agreement sets out a framework for arbitration, should any disputes arise. This arbitration is outside the laws of either country.
This may be good news for Canadian companies looking to work in China, but it could mean trouble for the young and fragile system of treaties, case law and implementation of aboriginal rights and First Nation governments in Canada.
Like most international trade deals, this one does not recognize land claims or self-government, said Van Harten. It considers all land within Canada’s borders under the rule of the Canadian government.
If a Chinese investor feels it is being discriminated against or treated unfairly, it can take its case to arbitration.
Almost anything could spur this, said Van Harten – even recommendations imposed on the company by the Yukon Environmental and Socio-economic Assessment Board, or consultation requirements enforced by a First Nation government on the Chinese project that sits on the First Nation’s land.
The trade agreement promises China that its companies will be treated the same as Canadian companies, and Canadian companies have to consult with the First Nation and accommodate the assessment board’s recommendations.
But what if the Chinese investor makes a frivolous complaint? Or what if it feels the recommendations force it to do something it wasn’t warned of when encouraged to invest in the project by the federal government?
The way international trade arbitration works, it doesn’t really matter if the claim is all that valid, said Van Harten. It is a process with little oversight, and the process favours the investor, he said.
Only the investor can bring forward a case. Canada couldn’t claim anything against a Chinese company.
And in the end, arbitrators can rule against anything that has already been established in Canada – from a First Nation’s agreement, to a Supreme Court of Canada decision, to the Constitution, said Van Harten.
The fact that aboriginal rights and First Nations’ land claims are constitutionally entrenched, does not protect them from possible rulings in any arbitration cases, he added.
“By this treaty, Canada delegates judicial authority over all decision-making authorities in the country, including First Nation authorities, to these arbitrators,” said Van Harten, explaining that the arbitrators are usually corporate-commercial lawyers, academics or corporate board members. “These arbitrators have the power to decide, based on very broad standards, that an aboriginal or First Nations authority made a decision that wasn’t fair to the Chinese investor.”
Signing this agreement does not guarantee China will file any claims with the arbitrators. The process is expensive and often takes a long time.
Plus, the agreement includes “policy flexibility for certain sensitive sectors and activities, including rights or preferences provided to aboriginal peoples,” according to an email from Caitlin Workman, a spokesperson for Foreign Affairs and International Trade.
But that won’t protect aboriginal rights if an arbitrator sides with a Chinese company, said Van Harten.
“And how is it that a First Nation can be bound by a treaty that it didn’t consent to?” he asked. “Same thing for a province.”
When asked whether First Nations were consulted about the FIPA before it was signed, Me’shel Gulliver Belanger, another spokesperson for the federal department, could not provide dates or examples of any First Nation government consultation.
Yukon wasn’t consulted until after the FIPA was signed, said Stephen Rose with the territory’s Department of Economic Development.
At this point, it’s too early to comment on what this agreement may mean for the territory, Rose added, as the department is still reading through the long, dense document.
Opposition Leader Liz Hanson worries that the agreement will tie the hands of provinces and territories in their own jurisdictions.
Worst of all, the agreement locks regional governments into conditions for the next 31 years, she added.
A lot – especially restrictions around the territory’s resources, which China is most interested in – can change within five years, let alone 30, said Hanson.
She is calling on Premier Darrell Pasloski to prove he has “a thought independent of what the federal message is,” and to stand up for the rights of his own government by speaking out against this agreement.
Van Harten is encouraging all regional and First Nation governments to do the same.
But they only have about a week left to do so. Once the agreement is ratified, that’s it, he said.
“It is reckless for the government to carry on with this treaty and put it into effect,” he said. “The federal government does not have provincial consent, it does not have First Nations’ consent and is not intending to get either. It’s almost hard to believe what the treaty is doing and that’s partly why it’s not being understood, because it’s just so vast and so shocking. It’s being rushed through for a reason – to stop awareness and organization to use the Canadian legal system to protect Canada against what the federal government is about to do to us.”
Van Harten is offering his expertise, free of charge, to any government or organization wanting to learn more. He he is a professor at York University’s Osgoode Hall Law School and can be contacted at his Toronto office.
Contact Roxanne Stasyszyn at