International Trade Committee on Oct. 18th, 2012

[Ian Burney]

The short answer to that question is no, we don't have a list. As I mentioned in my opening remarks, a key feature of this treaty, which does not appear in very many of China's agreements whatsoever, is the ratchet mechanism. That means every time a change is made in China, it can only be made in a liberalizing direction from where they are today, and every time they do that, it's locked in at that new level of liberalization. That, together with the MFN obligation, ensures that Canada will always have the best treatment available to foreign investors in China. That's a significant milestone.

[Don Davies, NDP, Vancouver Kingsway, BC]

With respect, Mr. Burney, how could we agree, after 18 years of negotiation, to say we'll accept any existing nonconforming measures in China and that those can continue, but not have a list of what they are and not know what it is we've just agreed to? I find it very hard to believe that our negotiators did not have a list of nonconforming measures to share with this committee.

[Vernon MacKay]

No, I think that's a mischaracterization of the negotiation. We have access to GATS lists. China's a member of the WTO.

[Don Davies, NDP, Vancouver Kingsway, BC]

Can you provide those to the committee, then, their nonconforming measures?

[Vernon MacKay]

Those are easily available. Yes, we can do that.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

On the non-disclosure or the dispute resolution mechanism that will go in private, can you tell us in what scenarios it's envisioned that China may consider that it's not in the public interest to have a public hearing? Was that discussed? Did they tell you when they said, in their view, it would not be in the public interest to have a public hearing?

In Canada, in our political culture, Canadians are used to having open court systems. It doesn't depend on the defendant whether a court hearing is open to the public or not. In particular, did they tell you when they would invoke that?

[The Chair, Conservative, Rob Merrifield]

Allow him to answer.

[Ian Burney]

Just to be fair, we're talking about a scenario in which a Canadian investor is suing the Chinese government for some action happening in China.

[Don Davies, NDP, Vancouver Kingsway, BC]

Right.

[Ian Burney]

The Chinese are reserving the right to carry on those proceedings in private.

[Don Davies, NDP, Vancouver Kingsway, BC]

Right.

[Ian Burney]

It may be in the interest of the Canadian investor to have those remain in private as well.

[Don Davies, NDP, Vancouver Kingsway, BC]

Is it in the interest of the Canadian public, sir?

[Ian Burney]

The Canadian public's policy objective is to ensure that when a measure in Canada is challenged, the process be fully transparent. We can guarantee that.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Shory is next.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Thank you, Mr. Chair. It seems as if I'm not the last questioner today.

[The Chair, Conservative, Rob Merrifield]

No, you're not.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Thank you.

Mr. Chair, I was deeply struck by the deep desire I saw from the opposition today when they asked why there was no debate on this agreement. When I thought about it, this measure was tabled in the House of Commons in September. The NDP had three opposition days to debate it. Unfortunately, they did not put any priority on it. I understand they are anti-trade and—

[Wayne Easter, Liberal, Malpeque, PE]

I have a point of order, Mr. Chair.

[The Chair, Conservative, Rob Merrifield]

It had better be a point of order.

[Wayne Easter, Liberal, Malpeque, PE]

It is a point of order. What's this got to do with finding out the seriousness of this—?

[The Chair, Conservative, Rob Merrifield]

That's not a point of order.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

On a point of order, the Liberals had a couple of days too.

[Devinder Shory, Conservative, Calgary Northeast, AB]

My colleague Mr. Easter is very smart. He knows the Liberals also had an opportunity one day. They could have debated it in the House.

Let me go back to Mr. Burney.

Mr. Burney, in your opening remarks you made a comment that all investments coming into the country must go through an approval process. Then you talked about some foreign equity caps, etc. Next you said that “the FIPA with China is not meant to and does not remove these barriers to entry”, but then again you said: The Canada-China FIPA will support Canadian businesses' efforts to explore the growing investment opportunities in the world's second-largest economy across a range of key sectors....

I want you to elaborate on how it will help the investors to explore and move further.

[Ian Burney]

Thank you.

I think it comes back to the substantive obligations in the treaty. It is the obligation to provide national treatment once an investment is established, but certainly there's an MFN obligation in establishing an investment. There is an obligation not to expropriate Canadian assets once they're in the market and, if they are expropriated, to pay fair compensation promptly.

There are obligations that prevent restrictions on capital flows once the investment is in the market in China. There are performance requirement disciplines in the agreements. All of these things create a more favourable environment for a Canadian investor to invest in China, all backed up by recourse to international arbitration. That is a significant difference from the standpoint of Canadian investors compared to what they would be facing today.

Coming back to the point that China has something like 100 BITs, or bilateral investment treaties, with other partners, a key point here is that we need to put our own companies on a level playing field in the Chinese market. All of Canada's competitors, or many of them, currently have access to the protections of an investment treaty with China, but at the moment Canadian investors do not. This treaty provides state-of-the-art protections that will put Canadian companies on a level playing field with most of their international competitors, and better preference to those that still do not have an investment treaty, including the United States.