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Selling Canada out, one deal at a time

By Gus Van Harten

Wed., Sept. 30, 2015

Since winning his majority, Stephen Harper’s government has signed or finalized 23 new trade or investment deals.

The right trade agreements can create opportunities for Canada. But the Harper government has seemed more interested in getting lots of deals than in making sure each is good for Canada’s economy.

Of all the deals facing Canada, three are by far the most important. They are the Foreign Investment Promotion and Protection Agreement (FIPA) with China, the Comprehensive Economic and Trade Agreement (CETA) with Europe, and the U.S.-led trans-Pacific Partnership (TPP).

Considering the financial transfers they tend to create, a more precise name for these deals might be: A Locked-In Agreement to Transfer Public Money to Large Companies, Lawyers and Arbitrators.

The deal we know the most about is the FIPA with China. Of the big three, it is the only one that has been finalized.

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Some details of the FIPA will illustrate my point that the government has been behaving like a salesperson who gets lots of orders by selling at a loss. For example:

1. The Harper government gave Chinese investors “market access” to Canada — meaning a right to buy what they want in our economy — without getting the same for Canadian investors in China.

That is the most lopsided concession I had ever seen by Canada or, for that matter, any other country across hundreds of similar agreements.

2. When he announced the FIPA, Harper said that a FIPA “ensures non-discriminatory treatment” for foreign investors. But the actual terms of the FIPA (Article 8(2)(a), to be exact) let China keep all its existing laws, policies, or practices that discriminate against Canadian investors.

No one could fact-check Harper’s misleading claim at the time because the text was kept secret for about eight months after he made it.

3. In the FIPA, the Harper government exposed Canada to potentially massive financial liabilities due to the generous protections it gives to foreign companies, including a right to seek uncapped amounts of compensation from governments directly before international tribunals.

The Mulroney government gave similar rights to U.S. companies in Canada under NAFTA. But NAFTA was concluded before anyone could predict the hundreds of costly claims brought by foreign companies against countries in the last 15 years.

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Having looked closely at the FIPA, I also see cause for concern in the CETA and the TPP.

Harper was clearly desperate to finalize the CETA before the election. Several times he has announced it with fanfare. Yet, despite various concessions, he could not get it done in time. This is mostly because the Europeans looked closely at the deal’s generous protections for foreign investors and asked about the consequences for domestic courts, democracy, and public budgets.

There has been a similar debate in the United States over the TPP.

Worse, Harper is poised to compromise Canada’s dairy and auto industries in a bid to finish the TPP negotiations before the election. The Americans seem to have sensed his political vulnerability and played him to Canada’s expense.

My guess is that, if the TPP is concluded before the election, its text will be kept secret until after the election. Voters will not have a chance to learn from outside experts what the government gave up.

I wish I could be more positive about these long-term deals and their costs and benefits for Canada. The FIPA in particular is disheartening to think about because it has already been locked in, for decades.

Frankly, Harper strikes me as a true believer on “free trade.” True believers can look like born suckers when combing through the details after a tough negotiation.

Gus Van Harten is a professor at Osgoode Hall Law School and author of Sold Down the Yangtze: Canada's Lopsided Investment Deal with China (Lorimer, 2015).

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