The article you just read was brought to you by a few thousand dedicated readers. Will you join them?

Thanks for coming by The Tyee and reading one of many original articles we’ll post today. Our team works hard to publish in-depth stories on topics that matter on a daily basis. Our motto is: No junk. Just good journalism.

Just as we care about the quality of our reporting, we care about making our stories accessible to all who want to read them and provide a pleasant reading experience. No intrusive ads to distract you. No paywall locking you out of an article you want to read. No clickbait to trick you into reading a sensational article.

There’s a reason why our site is unique and why we don’t have to rely on those tactics — our Tyee Builders program. Tyee Builders are readers who chip in a bit of money each month (or one-time) to our editorial budget. This amazing program allows us to pay our writers fairly, keep our focus on quality over quantity of articles, and provide a pleasant reading experience for those who visit our site.

In the past year, we’ve been able to double our staff team and boost our reporting. We invest all of the revenue we receive into producing more and better journalism. We want to keep growing, but we need your support to do it.

Fewer than 1 in 100 of our average monthly readers are signed up to Tyee Builders. If we reach 1% of our readers signing up to be Tyee Builders, we could continue to grow and do even more.

If you appreciate what The Tyee publishes and want to help us do more, please sign up to be a Tyee Builder today. You pick the amount, and you can cancel any time.

Support our growing independent newsroom and join Tyee Builders today.
Canada needs more independent media. And independent media needs you.

Did you know that most news organizations in Canada are owned by just a handful of companies? And that these companies have been shutting down newsrooms and laying off reporters continually over the past few decades?

Fact-based, credible journalism is essential to our democracy. Unlike many other newsrooms across the country, The Tyee’s independent newsroom is stable and growing.

How are we able to do this? The Tyee Builder program. Tyee Builders are readers who chip into our editorial budget so that we can keep doing what we do best: fact-based, in-depth reporting on issues that matter to our readers. No paywall. No junk. Just good journalism.

Fewer than 1 in 100 of our average monthly readers are signed up to be Tyee Builders. If we reach 1% of our readers signing up to be Tyee Builders, we could continue to grow and do even more.

If you appreciate what The Tyee publishes and want to help us do more, please sign up to be a Tyee Builder today. You pick the amount, and you can cancel any time.

Support our growing independent newsroom and join Tyee Builders today.
We value: Our readers.
Our independence. Our region.
The power of real journalism.
We're reader supported.
Get our newsletter free.
Help pay for our reporting.
News

China Deal Trumps Province, First Nations on Energy Projects: Treaty Expert

FIPPA carries big labour and regulatory implications for LNG development.

By Andrew Nikiforuk 24 Sep 2014 | TheTyee.ca

Andrew Nikiforuk is a contributing editor to the Tyee. He will be talking in Squamish about the province's LNG plans on Thursday night. More details here. Find his previous stories here.

This coverage of Canadian national issues is made possible because of generous financial support from our Tyee Builders.

image atom
Prime Minister Stephen Harper: Approved 31-year treaty with China without debate.

One of the nation's investment treaty experts warns that Canada's highly preferential trade agreement with China could have important implications for resource and LNG development in British Columbia and the rest of the country.

The controversial Canada-China Foreign Investment Promotion and Protection Agreement (FIPPA), which the Harper government signed into effect with virtually no parliamentary debate "means that any B.C. government or legislature or courts would now be subject to obligations arranged by the federal government and China under the treaty," says Osgoode Law School professor Gus Van Harten.

It also means that the FIPPA obligations can overrule the priorities and rights of First Nations in the province.

Van Harten offered two critical examples on how FIPPA could impact the province.

If the government of British Columbia decided to change the rules on hydraulic fracturing of shale gas to protect water or reduce methane leaks, those changes could be contested by Chinese investors as unfair and a violation of their expectations at the time they invested.

In addition, if the B.C. government stipulates that more British Columbians must be employed by the industry as opposed to foreign temporary workers, then Chinese investors could contest those changes too, also as an unfair change to the rules in place when they invested.

"If they want to change the rules about extraction or employment, the government would be restrained by obligations in the treaty," adds Van Harten, the author of Investment Treaty Arbitration and Public Law.

The government of B.C. has already signed an agreement with China that would allow the importation of cheap labour from the superpower to build LNG terminals.

How does FIPPA connect to that labour agreement? Van Harten wonders.

"The governments of British Columbia and the federal government have to come clean about their decisions and how they may have been influenced by obligations under the treaty," adds the law professor.

Give public a 'window' on treaty

The B.C. government has actively subsidized shale gas and LNG development with low royalties, infrastructure incentives, free water, and free geoscience amounting to more than a billion dollars worth of taxpayers' money.

A B.C. government website boasts that "British Columbia offers low corporate tax rates, royalty credits, tax credits, and refunds for investments in research and development, machinery and equipment."

Under FIPPA the cessation of any of these subsidies could be challenged by Chinese investors too. It's not easily predicted, Van Harten notes, because under FIPPA the situation with subsidies is much more complex. Some subsidies are allowed by the agreement while others are not.

The treaty expert would like to see provincial or federal legislation that provides the public with "any information available to government about how the treaty has been invoked by foreign investors so the public can have a window on the treaty's impact on government in Canada."

FIPPA, which faces ongoing legal challenges from First Nations, has many controversial chapters and significantly departs from other trade agreements in critical ways.

Expert lists concerns

Here are just a few of the treaty's unique components as explored by Van Harten in a forthcoming and in-depth study for The Canadian Yearbook of International Law.

It gives China unique Most Favoured Nation status and "obligates Canada, but not China, to open its economy to the other state's investors."

It allows Chinese investors, in general, to purchase assets in Canada that Canadian investors would not be able to purchase in China.

It limits Canada's ability to screen Chinese investments to review under the Investment Canada Act while preserving China's ability to screen Canadian investments at any level of government and without the limitations imposed on screening by the Investment Canada Act.

It allows foreign investors from either country to bring claims against the other, but it does not allow either government to bring claims against foreign investors -- a clear imbalance.

It omits a reservation designed to preserve aboriginal rights, something included in all of Canada's 25 other similar investment and trade agreements.

The treaty has a lifespan of 31 years -- a longevity greater than the great majority of similar treaties signed by Canada.

It gives a special status to foreign investors such as the China National Offshore Oil Corp. (CNOOC) or China Petrochemical Corp. (Sinopec) in the form of substantive legal protections not enjoyed by other private parties, including domestic competitors.

It allows investors such as Chinese state-owned corporations to bring claims against the government in secret. (Van Harten says the arbitration would have to be made public only when an award is issued.)

Furthermore the treaty's definition of investment is extremely broad.

It does not mean just land or buildings but includes resource concession rights, debt instruments (that is, portfolio investment), intellectual property rights and "any other tangible or intangible... property and related property rights acquired or used for business purposes."

Who controls LNG benefits?

Chinese interest in the province's proposed 14 LNG terminals is substantial and largely confined to powerful state-owned corporations with direct ties to China's totalitarian Communist party.

These mega-firms, among the world's largest oil companies, have all been embroiled in scandals and corruption probes around the world, including Canada.

Sinopec, China's largest company by revenue, has a 15 per cent stake in the Pacific Northwest LNG project.

CNOOC owns a 60 per cent stake in the Aurora LNG project proposal and is pursuing an interest in Prince Rupert LNG project.

And PetroChina Co. Ltd. is a major partner in a consortium led by Royal Dutch Shell to build an LNG project in Kitimat.

A 2013 report by the US-China Business Council noted that, "Investment and market access restrictions continue to be a priority concern" for U.S. and Canadian companies trying to operate in the restrictive and highly protectionist Chinese economy.

No independent public review on the implications of unprecedented treaty took place prior to its ratification.

Trade between China and Canada is highly imbalanced. In 2013 Canada exported about $20-billion worth of raw goods (ores, fish and wood pulp) to China, while it imported $50-billion worth of machinery, footwear, furniture, toys and plastics from that country.  [Tyee]

Share this article

The Tyee is supported by readers like you

Join us and grow independent media in Canada

Facts matter. Get The Tyee's in-depth journalism delivered to your inbox for free.

LATEST STORIES

The Barometer

What Issue Is Most Important to You This Election?

Take this week's poll