Stephen Harper, the man who made the FIPA happen. via Flickr user kashmera.
Canada’s new FIPA (Foreign Investment Protection and Investment Act) deal with China was ratified this past Friday afternoon, which, as any political actor knows, is the best time to release bad news.
Over the past two years, the FIPA deal has generated a ton of negative attention, as it has largely been covered in such terms as “New Treaty Allows China to Sue Canada to Change its Laws,” or “Stephen Harper sells Canada.” And, by all accounts, these bombastic headlines represent completely valid concerns. Though it’s more than a bit hyperbolic to say that this FIPA will suddenly reverse Canada’s laws.
To put the FIPA deal into perspective, Canada currently has 27 different FIPA deals with nations all over the world. The idea behind these treaties is that, if foreign investors are piling a bunch of money into Canada, they are able to protect their investments against unfavourable regulations.
The fears of Canada being hit with a wave of lawsuits from foreign investors has already been realized by a different kind of deal, a FTA, and it's one you may have heard of: NAFTA. That North American treaty opened the door to a string of lawsuits against Canada by American investors, some of which were settled using public funds, to silence the lawyers of tobacco giants or energy companies who were not cool with certain Canadian laws; like Canada’s anti-tobacco advertising, or a Canadian regulation that chose to avoid a particularly toxic additive in gasoline.
While NAFTA has already opened Canada up to a whirlwind of legal headaches, our FIPA agreement with China is particularly worrisome, because any litigation against Canada, newly made possible by this FIPA deal, would be held in secret. So not only will Canadians never likely know the true impact of the FIPA deal, it makes it very easy for its supporters to say that it’s no big deal.
Given the shit we’ve already got ourselves into with American investors, it’s no wonder that a FIPA deal with China of all places is stirring the pot in Canada. China, by all accounts, is one environmental disaster balanced on top of another, like some kind of toxic Jenga game. In an article published on Sunday in the New York Times, China is compared to America in the late 1960s—a time when the industrial benefits of American prosperity were beginning to be weighed against the severe environmental impact of such progress.
The article cites growing numbers of Chinese citizens who feel as if air pollution is a “very big problem,” and points to incidents like a so-called “airpocalypse” in Beijing where the city was coated with “a thick, soupy concoction so dirty, so polluted, that day in China’s capital turned to night.”
On top of that, an NGO recently counted the amount of “cancer villages” in China, that are downriver from industrial plants and show a high level of rare cancer cases, at 450.
This kind of impact made by the energy industry is, however, not just a Chinese problem. In Aamjiwnaang near Sarnia, Ontario, there are repeated reports of rare cancers caused by the Chemical Valley to First Nations people, without any proper government study done to back it up. In Fort Chipewyan, which sits right by Fort McMurray, a.k.a ground zero for the Alberta tar sands, rare cancers there are an “ongoing tragedy” according to one whistleblowing doctor and the people of Fort Chip itself. And in Peace River, Alberta, families have abandoned their homes due to the toxic air, likely generated by the nearby Baytex plant.
In both China and Canada, environmental issues are abound. Clearly, China is much worse than we are—and for that reason, it’s understandable that people are concerned this new FIPA will only make Canada’s environmental protections even worse. The FIPA does clearly state, however, the necessity of projects “to protect human, animal or plant life or health.”
On top of that, the FIPA goes both ways. Yes, it can allow China to launch secretive lawsuits against Canadian interests if certain investments don’t go their way, but it also protects Canadian companies that make Chinese investments. While that may make this agreement sound like more of a quid-pro-quo thing, it’s not. As Newsweek pointed out yesterday, Chinese investments into Canada dwarf Canadian investments into China. The Chinese have already invested $30 billion into Canada’s energy industry alone, whereas Canada has invested $4.2 billion, across all Chinese industries.
To get the perspective of a Canadian with interests in China, I turned to a Financial Post article from 2012, where Diane Francis quotes a mining executive who has operated within Chinese borders. His reaction to the FIPA was definitive: “There is nothing in this deal with China [the Foreign Investment Promotion and Protection Agreement] that will protect Canadians there because they have not agreed to apply our laws there… It’s quite unbelievable.”
All that said, whether you like it or not, China and Canada do a ton of big business together. And by business, I mean that China buys a lot of Canadian energy resources off our hands. This may seem like an invasion of sovereignty to, as Maclean’s pointed out today, the “wild imaginings” of “excitable nationalists” who make “silly arguments.” But the problem with the FIPA is much more specific than that. This isn’t a matter of the big bad Chinese coming and throwing oil all over our beavers and mounties, this is about (for the ten trillionth time in this country’s history) a fundamental disrespect for First Nations people, upon whose land we are developing a multi-billion dollar energy extraction industry. The most egregious and unreasonable facet of this FIPA agreement is that it does not have any sort of “carve-out,” i.e. provision or clause, that would require Chinese investors to care for the rights and treaties of First Nations when making their investments. Even though the FIPA does have particular clauses about environmental protection and public health, aboriginal interests, a fundamental cornerstone of Canadian law, are completely ignored by the language of the deal.
This opens up a whole bunch of problems. So I spoke with Douglas Sanderson, a lawyer and professor at U of T’s law faculty, who specializes in aboriginal land claims, about how this FIPA could challenge the rights of First Nations. He was quick to point out that, “We don’t have any factual basis with which to say this will trump aboriginal rights.” And because the FIPA is new, and the litigations will be secret, he’s right. There’s nothing on the books right now to unequivocally prove this will harm First Nations.
Even so, the Hupacasath First Nation has already launched a suit over this FIPA, against the Ministry of Foreign Affairs Canada and our Attorney General. The gist of Hupacasath’s argument was that Canada has a duty to consult the First Nations before ratifying such a deal as the China-Canada FIPA. Hupacasath lost, however, because the judge determined their claims to be “speculative in nature,” given that the FIPA has not directly caused any issue that would legally harm Hupacasth’s interests. Basically, their argument was too abstract to prove.
Despite this, Sanderson pointed out that our new FIPA still puts the Crown in a very tough spot when it comes to First Nations. In a post-FIPA Canada, if an energy project is approved with Chinese investments, that proves to go against aboriginal land rights, and a First Nations group successfully sues to have the project canceled, then: “Investors who have invested in the possibility of that pipeline have the right to sue the provincial or federal government for their lost investment.”
Furthermore: “The body that hears that dispute isn’t a Canadian court, it’s some panel of international arbitrators who aren’t interested in Canada’s constitutional duties to consult and accommodate aboriginal rights under section 35 of the Constitution Act. Instead, they’re just looking at straight up contract law. Like, ‘Did you make these investments with the intent to do x and get y amount of money out of it? And were you stopped?’ ‘Yes.’ ‘Therefore, damages are owing.’”
So basically, this places Canada’s energy extraction projects, that have Chinese investors, in a very precarious position when it comes to First Nations. And, it is a yet another deflection by Ottawa—who did not even bother to write a First Nations clause into this FIPA deal—of Canada’s duty to engage in a consultation process for aboriginal communities when new energy extraction projects are planned for native land. This does not mean Canada’s laws about aboriginal land rights have been, or can be, erased by the FIPA; but it does mean that the FIPA is a bad deal, which will inevitably lead to prolonged and expensive court battles.
As Sanderson said, the FIPA deal is: “Bad for First Nations, because it effectively puts another thumb on the scale of decision making in the regulatory process; one that does not favour respecting aboriginal rights.
“Instead it favours the investments of foreigners. So, that’s bad… The fact that there’s not a carve-out in the agreement for aboriginal and treaty rights… is bad for all Canadians. Because it means the Crown is either going to respect aboriginal and treaty rights, and get sued. Or federal and provincial governments are not going to respect aboriginal and treaty rights, in which case the project will go ahead. And then the feds or the province will get sued by First Nations, and then the Crown will get sued [by Chinese investors] and Canadian taxpayers will be stuck with the bill.” This is all coming at a crucial point in the history of Canada’s energy industry. With so many dubious pipelines on the table, like Keystone XL and the Northern Gateway, and globally negative press about Canada’s reckless resource extraction tarnishing our once friendly brand as a nation, it’s incredibly disheartening to see such poor decisions being put onto the books. Our deal with China expires in 31 years, and has to be in effect for a minimum of 15. NAFTA, by contrast, has a six-month exit clause.
Given that this deal will go into effect on October 1st, there is one major project that may be affected sooner than later: The Northern Gateway pipeline. One of the companies with declared financial interests in the Northern Gateway is Nexen, which in 2012 was taken over by CNOOC, the Chinese National Offshore Oil Corporation, a state-owned enterprise that is largely known to be an arm of the Chinese State itself.
With unceded First Nation land, like Unist’ot’en, sitting directly in the pathway of what will possibly, one day, be the pipeline’s route—deals like this do not bode well for a peaceful and reasonable negotiation. Even though the FIPA does have provisions to stop projects that are quite obviously detrimental to the environment, those protections alone are not enough to satisfy the particular concerns of First Nations.
As Sanderson told me, “The provisions tend to be interpreted very narrowly. Without an imminent environmental threat, it’s not clear that First Nations concerns about how, for example, a pipeline may alter or affect the course of migratory animals is going to rise to the level of concern of international investors by an international arbitration panel… It’s a real problem.”
Update: the original version of this article referred to NAFTA as a FIPA, when it is in fact an FTA.