International Trade Committee on Oct. 18th, 2012

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

Then the decisions of the tribunals would be available to the public?

[Ian Burney]

Yes.

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

Where will they be available?

[Sylvie Tabet, Director and General Counsel, Trade Law Bureau, Department of Foreign Affairs and International Trade]

Decisions would be available.... For example, if the ICSID arbitration rules are used, they would be on the ICSID website. All decisions against the Canadian government are on the Canadian government website.

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

Thank you very much.

[The Chair, Conservative, Rob Merrifield]

Thank you.

That has probably cleared up all of Mr. Easter's questions, but go ahead anyway.

[Wayne Easter, Liberal, Malpeque, PE]

I'm afraid not, Mr. Chair.

I would say in the beginning—and thank you, folks, for coming—that an hour's briefing is not exactly enough, given the comprehensiveness of these treaties.

Mr. Cannan suggested that the opposition could debate this by using an opposition day. That's just not the way to do business, and in my view it breaks the word of the Minister of Foreign Affairs, who said in 2008 that “[We] will allow Canadians and parliamentarians to debate these treaties.” Well, this is not a debate. This is a briefing.

[The Chair, Conservative, Rob Merrifield]

Go ahead and ask the question.

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Chair, I would say that at the end of my presentation I will be tabling a number of written questions with the witnesses and would hope I could have a response to those within a very short period. They're very technical.

As well, Mr. Chair, on this issue I don't know about government members, but I certainly know that in our offices there's a lot of concern among the public about this agreement. I will admit this: I think there is some mix-up between the FIPA and the proposed CNOOC-Nexen agreement. In any event, there's a lot of concern among Canadians about this agreement, and it needs to be addressed.

Turning to my questions, I'm told on the one hand that the FIPA will apply to current investment but not new investment. I personally think it applies to both, but I'm told by some people in the legal community that it only applies to current investment.

Can you answer that so that it's clear?

[John O'Neill]

The FIPA will apply to current investment and future investment. The only portion of the treaty that does not apply to future investment is the national treatment at what we call the pre-establishment phase—that is, before the investment is actually established—but every other provision of the treaty applies to existing investments and to future investments that are established, and to those wishing to establish for most-favoured-nation treatment.

[Wayne Easter, Liberal, Malpeque, PE]

There's a huge concern that should a province or a municipality make a decision that would impact upon a Chinese company's investment in Canada—make a policy change related to the environment, or whatever—and there was a legal suit, the federal government then would be obligated to compensate, if the Chinese company won the suit.

Is there any way in which this agreement effectively concedes either legislative or judicial elements of our sovereignty in a way that other FIPAs do not?

[Ian Burney]

No. There is no substantive provision in this FIPA that is different from the FIPA model that we have. If you're asking for a comparison between this FIPA and others, the answer to that part of the question would be no.

[Wayne Easter, Liberal, Malpeque, PE]

That is in comparison with others, but maybe there's something we don't know about the total range of the FIPAs out there.

Once we have signed these FIPAs that protect the investments of companies, is there any way that a provincial or municipal decision could result in a lawsuit being filed for which the federal government would end up having to provide compensation?

[Ian Burney]

An arbitration could be undertaken if an investor thinks that the obligations to the agreement have been violated, but the basic obligations of the agreement are that we not discriminate against foreign investors.

The Canadian policy regime now is not to discriminate against foreign investments. To the extent that this continues to be the case, we would not give rise to exposure to arbitration.

[Wayne Easter, Liberal, Malpeque, PE]

I think there's a problem here. I remember well when we ended up compensating Exxon—I believe for close to $2 billion—when we were in government, over something.... We made a change in the additives to fuels, or whatever. That tells me that sometimes investors get protection that does impact upon our sovereignty.

You mention in your remarks on page 3 that the Canada-China FIPA ensures that the federal, provincial, and territorial governments will have full policy flexibility in key areas, such as health and education. In what areas do we not have policy flexibility under this agreement?

[Ian Burney]

I'll turn to my colleagues for more specificity, but we have basically grandfathered all nonconforming measures and have taken a broad-based exception in a number of areas that allow us not only to maintain currently nonconforming measures but also to expand the degree to which they are nonconforming in the future. The list of these includes social services, rights or preferences provided to aboriginal peoples, rights or preferences to socially or economically disadvantaged minorities, residency requirements for ownership of oceanfront land, government securities, maritime cabotage, licensing fishing or fishing-related activities—

[Wayne Easter, Liberal, Malpeque, PE]

These are in the agreement?

[Ian Burney]

Yes. These are all areas that are—

[Wayne Easter, Liberal, Malpeque, PE]

So they're specified.

Now, you went to great lengths to talk about this being the first time that China has gone this far and allowed these kinds of concessions. Our concern here, or certainly mine, is what we gave up in return in order to gain those kinds of limited concessions. I say “limited concessions” because some sectors are completely off limits, as you say in your remarks, to foreign investments—such as mining in certain areas, and others.

What did we give up? I know how trade agreements work: there's give and take. What are the risks for us from China's having granted some concessions to us?

Mr. Chair, I have a number of questions that I'm going to table with the witnesses.

[The Chair, Conservative, Rob Merrifield]

That's fine. You made that point.

Go ahead.

[Ian Burney]

I think the key point is that this FIPA is not an instrument pertaining to market access in terms of investment. It's not intended to open up sectors on either side that are currently not open—and we have ours, too. This is an agreement to basically protect investment, by and large, once it's in the market.

What have we given up? I would say very little. We've basically undertaken not to discriminate against Chinese investments once they're undertaken and once they're here in Canada, but that's the policy framework we currently have—we don't make it a practice to discriminate against foreign investors based on their nationality now—so all we're really doing is undertaking a legal obligation to do what we're already doing, and in return, Canadian investors now have the same protections in China.

[The Chair, Conservative, Rob Merrifield]

Very good. Thank you very much.

Mr. Shipley is next, I believe.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, witnesses.

Just to follow up a little bit, it would appear to me that the whole intent of this agreement, which has been brought forward since about 2008, is to make things equal for both countries and to level the playing field in a lot of respects. With regard to the current investor protection and the concern that they may have to be out on their own somewhat in terms of the legal implications, when you went to the investors—either the investors who are in place now or potential investors who are wanting to expand—I think I heard you say that they believe this FIPA is good.

[Ian Burney]

Yes.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

How did you actually go out and get input from the investors?