Taking apart Tories' Party Line on China-Canada Treaty
Chinese investment may facilitate the creation of jobs and growth in Canada. On the other hand, if it removes value-added benefits from Canada's resource sector or other areas of the economy, then it may undermine jobs and growth. A problem with the treaty is that it will hamper the ability of Canadian governments to ensure that benefits of resource extraction in Canada accrue reasonably to Canadians. On the other hand, China will retain a wider range of policy tools to discriminate in favour of its own companies in China.
Also, the potential role of the treaty in protecting Canadian companies in China is being overstated by the government and other proponents of the deal, some of whom are lawyers at firms that offer investor-state arbitration services. No foreign investor has ever sued China in a known case under one of these treaties since the explosion of investor lawsuits against countries began about 15 years ago. This may be because companies fear jeopardizing their relationship with the Chinese government. On the other hand, Canada has been sued many times by U.S. companies under NAFTA and has lost important cases on economic measures and environmental regulations (Ethyl v Canada, SD Myers v Canada, AbitibiBowater v Canada, and Mobil/ Murphy Oil v Canada), and the lawsuits against Canada keep coming. If anything, Canada appears more vulnerable to being sued and having to pay compensation to Chinese investors under the treaty.
Notably, at the time of NAFTA, Canadians were told that NAFTA was needed to protect investors in Mexico. Since then, U.S. investors have sued Canada dozens of times under NAFTA and a Canadian investor has sued Mexico in just one case. Meanwhile, Canadian investors have lost all of the 16 cases they have brought under these treaties, usually against the U.S.
The arbitration mechanisms under these treaties enrich lawyers and arbitrators, but there is little evidence that they can protect Canadian business in a meaningful way against a major player like the Chinese government, especially when China has retained the right to continue to discriminate in favour of its own companies.
http://thetyee.ca/Opinion/2012/11/05/Van-Harten-FIPA/