—seventeen, but the government has a responsibility. All parliamentarians have a responsibility to come up with the best agreement for Canada that we can come up with.
The problem with the government is that it either denies debate or limits debate, so that the proper hearings cannot be held across the country, and in this case globally, I would submit, to find the best solution for Canadians on an investment treaty with China, to fix those flaws.
That is where we want to be. We want to ensure the facts are laid out, both the good points and the bad points, so that we can fix the flaws in this particular agreement to ensure that it is best for Canada.
The facts are these: Foreign investment protection agreements are important for Canadians investing abroad, as well as businesses here at home. While the Canada-China FIPA contains several flaws that raise serious concerns, completely abandoning the treaty is not the answer to assist Canadians and Canadian businesses in dealing with investments and trade issues with China, which is a major player in the world.
Second, a better opposition day motion would have toned down the anti-foreign investment and trade rhetoric by highlighting the areas that require improvement, and I hope I can do that through the course of my remarks.
There is no question that the Canada-China foreign investment protection agreement needs to be improved, but not completely discarded.
The Liberal Party has raised concerns about provisions in the Canada-China investment agreement, particularly on issues of transparency during arbitration, termination of the agreement and the length of time the agreement is in force. Liberals have consistently called for a public debate on the issue, not on a motion such as this but a real debate where the treaty is actually laid out. I would submit that beyond that, we need to be bringing in witnesses, going to see businesses, some in favour and some opposed, to see the implications from their perspectives.
Unfortunately, the government has failed to take responsibility for this treaty and has blocked discussion on it, creating a vacuum that has been filled with misinformation and fearmongering. That really concerns me because there are two major extremes, and that is causing a lot of dissension toward the agreement. Indeed, if the government had the will, the FIPA could be fixed.
It is important to keep in mind that the only briefing ever provided to the Canadian public and Parliament came about as a result of a motion presented to the international trade committee, at which government officials were permitted to speak for a single hour. The minister never went before committee on this issue. By way of a motion that the government members were too embarrassed to defeat, officials were before the committee for one single hour. Does anyone think that on an investment treaty this broad that is enough time to debate the issues and get some answers? I certainly think not.
From what we know, the key issues surrounding the Canada-China FIPA are these: one, transparency in terms of public awareness of disputes; two, federal liabilities for provincial decisions based on the Constitution; three, restrictions on investment and joint ventures in China, restrictions on what industries Canadians can invest in in China vis-à-vis what China investment companies and state-owned enterprises are allowed to invest in in this country; four, security concerns raised by both CSIS and United States security agencies; five, energy investments such as CNOOC and national treatment on further investments. Those are the five key areas about which there are concerns. To a great extent, if the government had the will to allow itself to debate the issue, many of those key issues could be solved and we could have an investment treaty that in fact works. Let us not just throw it out, but let us also not just do as the government does and sign it because it is under a bit of pressure.
Let me come back to each of the issues. On the transparency issue, in terms of disputes to be resolved through arbitration, officials told the committee the following:
...it is Canada's long-standing policy to permit public access to such proceedings. Canada's FIPA with China...will allow Canada to make all documents submitted to an arbitral tribunal available...subject to the protection of confidential business information.
Later in the same testimony, we found out Canada has little to do with it. In response to the question that stated that FIPA means that “China...does not have to have public hearings and does not have to disclose documents if they don't want to”, the response from officials was, yes, that was correct.
On the transparency issue, I am saying that officials, in that single hour of testimony we had from them in questions, admitted that there is an entirely different situation related to transparency on disputes that has to occur in this country versus the transparency that has to occur for Canadian investors having a dispute on the China side of the equation.
When asked if the government has done an economic impact assessment of the agreement, something that has been done for all the FTAs, which has been used as the basis of defending them, officials confirmed that no such analysis was undertaken or apparently attempted. That is a serious issue, when we have the Government of Canada undertaking a major international agreement, which any of us who have read the document and the timeframes know is basically locked in for 31 years, and the government has not done a cost-benefit analysis. That is just about unbelievable, but in fact it is true.
The second major concern that I raise was a termination clause. In other FIPAs, there is usually an easy mechanism to end the agreement early if the agreement does not end up providing Canadians the protection it is supposed to. This agreement remains in force indefinitely, and the exit mechanisms generally consist of a six-month or one-year notice and then the exiting investments remain in force for a period of a certain number of years that would be spelled out.
For example, under NAFTA, which is a major agreement, a party may withdraw six months after it provides written notice of withdrawal to the other parties. If a party withdraws, the agreement shall remain in force for the remaining parties. In our agreement with Lebanon, there is a one-year notice for termination, and then existing investments remain in force for some 20 years. In Jordan, it is the same thing; there is a one-year notice of termination, but the existing investments would remain in force for 15 years. In Argentina, it is much the same.
However, and this is the point I raised earlier, the parliamentary secretary said that this FIPA with China is the same, but it is not the same in many respects. It is similar, but with many different qualifiers around it. With China, this agreement is not indefinite until termination notice. In other words, we are locked in for an initial period of 15 years, which is unprecedented in terms of these agreements. Then it can be terminated on one year's notice and existing investments remain in force for another period of 15 years. Hence, that is where we get the 31-year agreement point that many people keep citing. This is a departure and locks us into the agreement, regardless of whether it ends up providing Canadians the protection it is supposed to.
The third point of concern is federal liability for provincial decisions and the constitutional impact. At the international trade committee on October 18, 2012, in response to the direct question, “Would this FIPA subject provinces to claims for damages as a result of this legislation if a Chinese investor believed that provincial actions had violated this deal?” officials responded, “No, it doesn't subject provinces to any claims. The federal government is responsible. The federal government would be accepting all obligations”.
That is something we seriously have to consider. If a province makes a decision, and a Chinese business is upset because it believes that it has future lost profits as a result, and it wins the case, the federal government is responsible for all those obligations. The federal taxpayer could end up having to pay for those obligations.
That is key. That is not different from some of the other trade agreements. I recognize that. However, we should go in with eyes wide open and look at whether there is any way of limiting that liability to the federal taxpayer as a result of provincial decisions, for whatever reason they are made.
The fourth area is restrictions on investment in China and on joint ventures.
During the briefing by officials at the international trade committee, the following was stated:
Some sectors are completely off limits to foreign investment, such as mining of certain minerals. In other sectors, foreign investments are restricted or “encouraged”, meaning that they are subject to foreign equity caps or requirements for Chinese control or joint venture arrangements.
The official went on to state that this agreement:
will support Canadian businesses' efforts to explore the growing investment opportunities in the world's second-largest economy across a range of key sectors, including financial services, natural resources, transportation, biotech, education, information technology, and manufacturing.
Further to this point concerning restrictions with China, and to the point the Prime Minister raised in the House on October 23, 2012, regarding reciprocity, the following should be noted from the U.S.-China Economic and Security Review Commission report of 2012, which states:
The Chinese government identifies “oil and petrochemicals” as one of seven strategic industries for which the state must maintain “absolute control through dominant state-owned enterprises.”
As such, foreign companies are not permitted to participate in China's domestic strategic industries, except through joint ventures.
There we have it. There are different rules for our investments in China versus its investments here. We need to be looking out for those pitfalls in terms of this particular agreement.
The point is that state-owned enterprises in China are designed in such a way as to enhance total economic endeavours and the foreign, political and trade policies of China. We need to recognize that up front. That is not necessarily a bad thing, but we need to go in with eyes wide open and ensure that we protect ourselves from any problems that may occur as a result of that strategy.
I would like to move that the motion be amended by replacing all the words after the words “China that” with the following: prior to any decision and the ratification of the Canada-China Foreign Investment Promotion and Protection Agreement, the said agreement should be referred to the Standing Committee on International Trade to conduct hearings across Canada and report back its findings and any recommendations to amend the agreement to the House.