Evidence of meeting #51 for International Trade in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was investment.
A recording is available from Parliament.
4:40 p.m.
Vernon MacKay Deputy Director, Investment Trade Policy Division, Department of Foreign Affairs and International Trade
Yes, I would say you are.
4:40 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Okay.
Did you compile a list of the nonconforming measures in China and the nonconforming measures in Canada?
4:40 p.m.
Deputy Director, Investment Trade Policy Division, Department of Foreign Affairs and International Trade
Under this treaty, there's no requirement to list the nonconforming measures, unlike some of our free trade investment chapters. The existing nonconforming measures are what we call “grandfathered”.
4:45 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Right, and I understand that.
It says that we know that China does not have to give national treatment or most-favoured-nation treatment to Canadian investments going forward beyond any existing nonconforming measures in place now.
In other words, from my understanding and my information, China, being a command economy, being a state-controlled economy, would have many nonconforming measures that will currently stay in to constrain Canadian investment in the future. Is that correct?
4:45 p.m.
Assistant Deputy Minister, Trade Policy and Negotiations Branch, Department of Foreign Affairs and International Trade
I just want to clarify that point you made about MFN, because there's a distinction between national treatment and MFN. The MFN obligation in the FIPA also applies to the establishment of investments, not just to the treatment, whereas the national treatment obligation is limited to the treatment of investments once established.
4:45 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Yes, I understand that.
I'm talking about article 8.2, where it says articles 5, 6, and 7. That's most-favoured-nation treatment, national treatment, and I think there's a third one. Senior management—
4:45 p.m.
Deputy Director, Investment Trade Policy Division, Department of Foreign Affairs and International Trade
It is senior management and board of directors.
4:45 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
There are those three provisions. It says that they do not apply to any existing nonconforming measures.
What I'm saying is that moving forward, investments are subject to more nonconforming measures in China because of their economy than exist in Canada, because we have a much more open economy. Is that a fair statement?
4:45 p.m.
Deputy Director, Investment Trade Policy Division, Department of Foreign Affairs and International Trade
Just to repeat what we agreed earlier, I would say that today there are certainly more existing nonconforming measures. Going forward, of course, we don't know exactly what to expect, other than that the treaty is designed to capture the reforms going forward. We know that they cannot get more restrictive for existing Canadian—
4:45 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
I understand that totally. I'm talking about the investments captured now that are frozen in time. What I would put to you is that there are many nonconforming measures in China that will apply to Canadian investors in China and far fewer nonconforming measures that apply to Chinese investors in Canada. I think I have the answer to that.
I want to move to the investor-state provision. You agree that the investor-state provision is a departure from Canada's usual language in FIPAs. What I'm referring to, specifically, is that this Canada-China FIPA allows a disputing party, a party being sued, to not have public hearings unless it determines that it's in the public interest to do so. It doesn't have to disclose documents unless it determines that it's in the public interest to do so, meaning that China, for instance, does not have to have public hearings and does not have to disclose documents if they don't want to.
Isn't that correct?
4:45 p.m.
Assistant Deputy Minister, Trade Policy and Negotiations Branch, Department of Foreign Affairs and International Trade
The answer to the last part of the question is correct, but as I pointed out in my opening statement, this is the first time China has accepted any discipline on transparency on any of its investment treaties whatsoever.
4:45 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
It appears that it's the first time Canada has ever signed a document in which we agree to a process that's not transparent as well. It looks like both countries made some history here.
4:45 p.m.
Assistant Deputy Minister, Trade Policy and Negotiations Branch, Department of Foreign Affairs and International Trade
That's not true. The transparency provisions are a reflection of the current Canadian model for that.
4:45 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
What other FIPA, Mr. Burney, can you point to where Canada has put in language that allows a disputing party to not have public hearings or produce documents if it simply chooses not to? Can you point me to one of the 24 FIPAs that says that?
4:45 p.m.
Assistant Deputy Minister, Trade Policy and Negotiations Branch, Department of Foreign Affairs and International Trade
I'll turn to my colleagues on that. What I would say is that prior to 2004, that was not a requirement of the Canadian FIPA model, including the NAFTA. The transparency provisions are a relatively new feature. The FIPAs since 2004 typically would have those provisions, yes.
4:45 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Okay.
Why the departure today? Why did Canada agree to a dispute resolution mechanism that allows one party to have hearings behind closed doors and not produce documents to the public, purely on its own initiative?
4:45 p.m.
Assistant Deputy Minister, Trade Policy and Negotiations Branch, Department of Foreign Affairs and International Trade
The Canadian public policy objective is primarily to ensure that challenges taken against Canadian government measures are arbitrated in a fully transparent manner. That policy objective was served, and we considered it a significant milestone to have brought the Chinese to a point where they've accepted that those kinds of provisions are permissible in the context of this FIPA.
4:45 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
You have no assurance, in any claims made against the Chinese government moving forward, that they will ever have a public hearing or that they will ever release documents. It's purely up to their discretion.
4:45 p.m.
Assistant Deputy Minister, Trade Policy and Negotiations Branch, Department of Foreign Affairs and International Trade
What I'm confident of is that any challenge against any Canadian measure would be carried out in a fully transparent manner in full accordance with government policy.
4:45 p.m.
NDP
4:45 p.m.
Assistant Deputy Minister, Trade Policy and Negotiations Branch, Department of Foreign Affairs and International Trade
The FIPA permits Canada to exercise its policy preference. It also permits China to exercise its policy preference.
4:45 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
That's right; this FIPA permits Canada to also not disclose documents if it determines that it's not in the public interest. It allows Canada not to have public hearings if it determines that it's in the public interest not to do so. If that's not Canada's policy, why didn't we just specifically say all disputes filed against the Canadian government will be held in public and documents will be disclosed to the public, if that's our policy?
4:50 p.m.
Assistant Deputy Minister, Trade Policy and Negotiations Branch, Department of Foreign Affairs and International Trade
I believe that the government has said that, as a matter of policy—
4:50 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
I know what they said. I'm a lawyer. I'm reading what the document says. They didn't put it in writing, though, did they?
I'll read you the Canada-Romania language. It says that hearings under this article shall be open to the public. It also goes on to say that “all documents submitted to...the tribunal shall be publicly available”.
It's up to them, dependent on whether they think it's in the public interest. Why didn't we use that language in terms of the disputes against Canada?
4:50 p.m.
Conservative
The Chair Conservative Rob Merrifield
I'll allow a quick answer to that, Mr. Davies, and that's the end of your time.