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.
5:05 p.m.
Assistant Deputy Minister, Trade Policy and Negotiations Branch, Department of Foreign Affairs and International Trade
I'll defer to my colleagues to speak specifically on China.
5:05 p.m.
Deputy Director, Investment Trade Policy Division, Department of Foreign Affairs and International Trade
Typically, when we negotiate FIPAs we do significant consultation on the ground in the partner country because that's where we get access to Canadian companies that can tell us exactly what the issues are, so we did that. There was also a fairly significant consultation with the financial services community. They're an important sector in this industry.
5:05 p.m.
Conservative
Bev Shipley Conservative Lambton—Kent—Middlesex, ON
Even when we're talking about Nexen, there's always the concern that China's big. It's going to come in. Whatever it says, it will do, regardless. It's a state. It's going to be state-run in terms of overruling businesses or investors. How does this agreement help protect that? How does it give confidence to those investors that, in fact, what is written and what is agreed to will be adhered to?
5:05 p.m.
Assistant Deputy Minister, Trade Policy and Negotiations Branch, Department of Foreign Affairs and International Trade
The great value of this agreement for Canadian investors is that China has accepted legally binding obligations not to discriminate against them, to provide a minimum standard of treatment, not to expropriate their investments without compensation, and to refrain from prohibited performance requirements. These are meaningful obligations, all backed up by the ability to challenge violations by taking a case before international arbitration. This provides a great deal of added security for Canadian investors seeking to make investments in the Chinese market.
5:05 p.m.
Conservative
Bev Shipley Conservative Lambton—Kent—Middlesex, ON
Is that the same on the other side? Have we signed the same on the other side?
5:05 p.m.
Assistant Deputy Minister, Trade Policy and Negotiations Branch, Department of Foreign Affairs and International Trade
It comes down to your assessment of the extent to which the two legal systems are comparable. The FIPA has the greatest value where the legal system is less developed or may be subject to political influence. I'm not going to be making characterizations about the systems in China—people can draw their own conclusions about that—but I suspect that part of the reason the Canadian business community is telling us they really want this is because they believe that having access to international arbitration is valuable.
5:05 p.m.
Conservative
5:05 p.m.
Conservative
Lois Brown Conservative Newmarket—Aurora, ON
Thank you very much, Mr. Chair.
Thank you, gentlemen.
I'm a visitor to this committee, so thank you again for allowing me to ask a question.
5:05 p.m.
Conservative
Lois Brown Conservative Newmarket—Aurora, ON
My constituency is called Newmarket—Aurora, and in the last 10 years it has become a very urban riding. We have quite a number of manufacturers. Magna International is the biggest corporation in Aurora and has many manufacturing plants in Newmarket. Many of those plants have gone overseas to other countries, and we are seeing great interest from our own chamber of commerce in making initiatives happen in China. In March there will be the second visit on which our chamber has taken a full complement of people over to investigate opportunities, and some of them are manufacturers.
I think what I want to hear from you today is that this is the mechanism that my constituents can count on to say they are protected, should they make the decision to put a substantial investment in China. May I go home and say that?
5:10 p.m.
Assistant Deputy Minister, Trade Policy and Negotiations Branch, Department of Foreign Affairs and International Trade
I think you would be on safe ground in saying that with FIPA they would have substantially greater protection than they do now.
5:10 p.m.
Conservative
5:10 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Thank you.
I think everybody agrees that moving forward, giving investors in both countries some certainty is a good thing. The issue isn't whether or not we want an investment agreement; it's whether this particular agreement achieved the balance and the benefits that we want it to.
I want to come back to this, because many people are alleging that this document does not give reciprocal access, and they point to a number of different things.
First, we know there's twice as much Chinese investment in Canada as there is Canadian investment in China. We know already that the Chinese only have to give national treatment to existing investment in China, so right off the bat we have to give existing national treatment to twice as much Chinese investment in Canada as they do to ours.
Number two, again it's going back to the existing nonconforming measures. We know that both countries have frozen their nonconforming measures, which will continue to apply. The countries have simply agreed not to adopt any further nonconforming measures. We've already established that China has far more nonconforming measures than Canada does.
I'm going to ask you if during negotiations you compiled a list of the nonconforming measures in China, and I'll ask you to produce those to this committee so we can see what nonconforming measures are going to continue to bind Canadian investors in China. If it's the case that they have more nonconforming measures, obviously, those will hamstring Canadian investment in China going forward much more so than Chinese investors in Canada. When you take those two together, that's what is causing many to think there's been a failure to achieve full reciprocity in this agreement.
Do you have a comment on that?
5:10 p.m.
Assistant Deputy Minister, Trade Policy and Negotiations Branch, Department of Foreign Affairs and International Trade
Yes. The reciprocity in the agreement is that we've undertaken reciprocal obligations.
China has not granted national treatment on establishing investment to anybody. What we have in this agreement, which is significant, is a most-favoured-nation clause. To the extent that the Chinese ever do grant further concessions to others in separate bilateral negotiations, they will automatically confer to Canada.
5:10 p.m.
NDP
5:10 p.m.
Assistant Deputy Minister, Trade Policy and Negotiations Branch, Department of Foreign Affairs and International Trade
About 100.
5:10 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
No, that's FIPAs they have signed. How about trade agreements?
5:10 p.m.
Assistant Deputy Minister, Trade Policy and Negotiations Branch, Department of Foreign Affairs and International Trade
It would depend on how you define that agreement. Does that include—
5:10 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
I understand they've signed one trade agreement, and that's with New Zealand, I think.
5:10 p.m.
Assistant Deputy Minister, Trade Policy and Negotiations Branch, Department of Foreign Affairs and International Trade
Are you talking about a free trade agreement?
5:10 p.m.
Assistant Deputy Minister, Trade Policy and Negotiations Branch, Department of Foreign Affairs and International Trade
There are more. I would say roughly 10 free trade agreements.
5:10 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Again, I understand your point; I don't know if you're getting my point. It's true they have to give most-favoured-nation status, but it's the nonconforming measures that exist today that will continue to bind all those investments in the future. You can't assess the reciprocity of this deal in a vacuum. You can't ignore the fact that there are going to be continuing nonconforming measures in China.
Do you have a list of those nonconforming measures in China to share with this committee so that we can see exactly which ones will bind investment in the future?
