Controversy squared: China and the Peel watershed

The Peel watershed imbroglio has been going on for years, and the recently announced Canada-China investment protection treaty has provoked a blizzard of newspaper columns and letters to the editor.

The Peel watershed imbroglio has been going on for years, and the recently announced Canada-China investment protection treaty has provoked a blizzard of newspaper columns and letters to the editor.

What if the two controversies were linked?

Roll the tape forward a few years and suppose that the Yukon had a government that actually wanted to do something about the Peel. No sooner has the new premier announced a new park the size of Belgium, then she (or he) gets slapped with a summons to a China-Canada investment arbitration. Guess what? Some of the claims in the Peel were owned by a Chinese company.

If you thought the controversy a decade ago over the mining company that had claims in Tombstone Park was exciting, wait until you see one involving giant Chinese state-owned mining companies and secret international arbitration tribunals.

Perhaps this is a fanciful scenario. Or perhaps tying the hands of future premiers is the point. It will be much harder for future governments to be anti-mining if they have to worry about being taken to secret arbitration tribunals by foreign companies claiming their investments are being effectively expropriated by new regulations. We don’t know the details, but the China deal’s secret arbitration proceedings sound worrying compared to the more transparent NAFTA tribunals we already have.

One has to be wary of activists making overblown claims about investment treaties. When I was in the foreign service, I was involved with the ill-fated Multilateral Agreement on Investment, a sort of multilateral version of what Canada and China have just signed.

The devil truly is in the details in these highly complex legal documents, as you can see from the wildly different opinions you see in the papers from trade lawyers on the China pact. And it is necessary to take the claims of some anti-trade activists with a grain of salt, especially those who claimed that the Canadian way of life was threatened by US Free Trade, then NAFTA, then each of the nine other free trade and 23 investment protection treaties we have signed since.

But this China treaty is actually a big deal for the Yukon. For us, this is all about how to handle incoming investment. Our resource projects need lots of international capital, including Chinese. But relatively few, if any, Yukon companies are going to invest in China. So any “gives” that the federal government surrendered at the negotiating table will affect us, while the “gets” may benefit primarily big southern Canadian companies with Asian ambitions.

The federal Department of Foreign Affairs consults closely with provinces and territories on international deals that affect their jurisdiction, which this one does. We can presume that Yukon officials have been negotiating with the feds for years, and that they have not objected to the deal being signed.

Which makes the silence on the China-Canada deal from the premier’s office all the more eerie. They issued a press release about the Yukon’s new sister province in China, and bragged about the $700 million in Asian investment already in Yukon-based projects, but there’s been no mention of the investment deal.

We really need a statement from the premier, who is responsible for our external relations, on what the implications of the China-Canada deal are. In theory, the deal’s principles are that we won’t treat Chinese companies any worse than we treat Canadian companies in some areas (known as “national treatment”), while in other spheres we promise to not treat them any worse than we treat other foreign companies (“most favoured nation status”).

But what specifically does this mean in practice? And what are the risks? What are the implications for mining regulations, project approval processes and royalties? What happens if we revoke a water licence or change a regulation and a company takes the Yukon to a secret arbitration panel? Who pays if we lose?

Are First Nations governments affected, and will companies be able to sue over the actions of aboriginal governments?

And why are we taking on these obligations? What do we get out of this deal, besides the opportunity to be sued by large Chinese conglomerates?

The government itself crows that we already attracted $700 million in investment before the China-Canada deal even existed. How much more do they expect this deal will net us?

The Conservative government in Ottawa apparently plans no debate on the agreement, and it will automatically come into effect just 21 parliamentary business days after being tabled. And here in the Yukon we have no serious government statement on the topic. We should expect better from our leaders on such an important treaty.

Keith Halliday is a Yukon economist and author of the Aurore of the Yukon series of historical children’s adventure novels. He served in the economics branch in the Department of Foreign Affairs and worked on trade matters at the Canadian Mission to the European Union.

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