Controversial Canadian Trade Agreement May Favor Tar Sands

Within days, the Canadian Conservative government is expected to approve a Foreign Investment Promotion and Protection Agreement (FIPA) treaty with China.  The FIPA treaty has come under fire because of concerns related to China’s investment in the tar sands and other oil and gas development in Alberta and British Columbia.  In short, many Canadians are concerned is that FIPA would require Canada to protect Chinese investor profits in projects like the Northern Gateway Pipeline or tar sands companies over human rights and environmental protections.   

The FIPA is within days of becoming law.  It is already signed by Prime Minister Harper and Chinese President Hu Jintao at the APEC summit in September 2012.  Unlike the U.S. where two-thirds of the Senate must approve international treaties, the Harper government is not holding public hearings or allowing legislative debate prior to the adoption of this treaty outraging many Canadians. 

A FIPA is a agreement to “protect and promote” foreign investment. While FIPAs are already in place for numerous countries, this agreement is under more scrutiny because of the level of investment from China into Canada particularly in the tar sands. Under the treaty, China could sue for decisions by any level of government in Canada if they felt they were not being treated the same as Canadian ones.  In turn, Canada could be forced to pay compensation for government policies that are considered punitive when in fact they are designed to protect the environment or human rights.  And the resolution of these disputes would occur in international courts rather than in Canada. 

The lack of consultation on the treaty has tens of thousands of Canadians to express outrage over the process. Organizations in Canada are demanding hearings and a broader consultation process.  The Union of British Columbia Indian Chiefs are opposed to the adoption of FIPA suggesting the government has a legal obligation to consult with them before ratifying FIPA.  Western Coast Environmental Law has weighed into this debate on behalf of First Nations concerned about the protection of natural resources related to oil and gas (including tar sands) development. The Council of Canadians is also leading the charge against the treaty.  As a result, there is now question whether the treaty is unconstitutional.

At the same time this is being debated, the federal Canadian government is considering whether to approve China’s National Offshore Oil Company’s $15 billion purchase of tar sands company Nexen.  While the FIPA agreement will have no bearing on the Nexen takeover, it is related to the growing political opposition of Chinese investment in Canada.  The test for the federal government is whether the deal provides a “net benefit” to Canada raising questions about how much Canada should allow foreign investment when it comes to natural resources such as tar sands.  Right now, unless the Harper government listens to the concerns of Canadians, it is expected that both the Nexen takeover and the FIPA will pass but the debate over Harper’s policies to allow Chinese investment in Canada will likely grow.

We should always be cautious not to paint foreigners as the "bad guys" just because they are foreign. But in this case, the passage of FIPA will create pressures to weaken the already minimal health, environment and climate protections in the tar sands. It will potentially circumvent constitutionally mandated First Nations rights. Canada should hold a broad public discussion about whether such a trade agreement is even in Canada's best interest especially given the increasing threat of climate change from developments such as the tar sands. At a minimum, Canada needs to ensures that if such a trade agreement moves forward it has strong protections of First Nations rights and of the public interest.