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Karl Nerenberg has been reporting on federal politics from Parliament Hill for rabble.ca since September, 2011. In his long career, he has won numerous awards as a broadcaster and documentary filmmaker.

FIPPA and the Brave New World: What's behind the secretive Canada-China deal?

| November 1, 2012
FIPPA and the Brave New World: What's behind the secretive Canada-China deal?

One great myth of the West during the post World War II and Cold War periods -- and for a number of years after the Cold War -- was that democracy and capitalism were intimately connected. 

Democracy, the myth went, happened where there was "free enterprise." Capitalism was either a pre-condition to free and democratic political institutions, or an inevitable and natural corollary of them. 

Well, 21st Century China has given the lie to that myth. 

Of course, Hitler's Germany and Mussolini's Italy -- where, in both cases, private business flourished in totalitarian states -- should have negated that Cold War myth even before it took hold. 

But those dictatorships were in the past, and easy to ignore.

China is a present-day phenomenon, and impossible to ignore. 

Bankers, policymakers, trade consultants and others who promote economic ties to China all recognize the strange irony of a one-party Communist dictatorship assuming the new role of capitalist powerhouse.

The take on the democracy-capitalism nexus in China that those elites have is: "It will all work out in due course." The free market will, over time, bring free -- or at least freer -- political institutions to China. 

One day, they say, there will be some sort democracy in China. A burgeoning middle class will demand it.

And just as China has evolved quite quickly from the status of a low value-added, cheap labour economy to a leading supplier of everything from television sets to cutting edge environmental technologies, so will it evolve politically.

What emerges may not resemble democracy as we know it in the West. But it will be something quite different from the current one-party state.

It's a theory -- but who can tell what will happen, really?  

In the meantime, after a brief flirtation with a strong human rights stance vis-à-vis China, the current Conservative Government in Ottawa seems to have fallen in love with the Chinese economic leviathan. 

Fostering close economic relations with China

 China is a good part of the reason for which Harper and his colleagues want Canada to be part of a new Pacific free trade zone. 

The Chinese market is almost the only reason for which they want that pipeline to ship tar sands bitumen from northern Alberta through some of the most environmentally fragile territory anywhere in Canada (much of it home to First Nations) to the British Columbia coast. 

And the growing economic importance of China is why Canada has negotiated a two-way agreement on foreign investment with that country, almost in total secrecy and with no public discussion or debate. 

The deal is known by an opaque and nearly impossible-to-remember acronym: FIPPA, the Foreign Investment Promotion and Protection Agreement. 

The agreement's putative purpose is to protect Canadians who invest in China and Chinese who invest in Canada from unfair and arbitrary treatment. And there is a muscular arbitration process built into the agreement to settle disputes and grievances.  

Canada has signed a number of these reciprocal investment agreements, in most cases with countries in which Canadian investment vastly outweighs those countries' investment in Canada. 

In those cases, the deals have been much to the advantage of Canadian business. 

Canadian firms that do business internationally have benefitted by having formal protection against what they sometimes perceive as abusive and arbitrary actions by foreign governments.

China is a different story. 

Chinese investment in Canada is far greater than Canadian investment in China. 

And, in this Brave New World, where one party Communists have partially morphed into globe-trotting capitalists, some of that Chinese investment is by state-owned companies. Witness the Nexen takeover case in Alberta. China clearly wants to own a piece of Canadian energy. 

In addition, we have to remember that this agreement does not concern trade. It will not give Canada greater access to the much-touted, vast and potentially lucrative Chinese market.

What many in Canada fear this reciprocal investment deal will do, however, is give Chinese investors veto power over Canadian social and environmental rules and laws.  

An arbitration process that could trump Canadian laws?

 In an interview on CBC radio's The Current, Osgoode Hall law professor Gus Van Harten argued that while the investment deal has protection for Canadian health and safety legislation, it could result in attacks on many Canadian economic and environmental measures.   

The agreement's arbitration process could trump Canadian laws, both federal and provincial, and even trump Canadian Supreme Court decisions.

Van Harten cites cases involving similar agreements between China and, say, Belgium, where the agreement's arbitrators have awarded billions of taxpayer dollars to litigating Chinese firms.

It is worth listening to the complete broadcast of that day's The Current, because it is just about the only public debate we've had on this issue.

The NDP's trade critic Don Davies tried to get the Commons Trade Committee to consider this investment deal. That would have meant public hearings with witnesses representing a variety of views and interests. The Conservatives blocked that effort.

Now, the Official Opposition is pushing for a "take note" debate in Parliament on this agreement. 

Such a debate could not stop the deal from going forward, but would allow for at least some public airing of all the complex elements and potentially dangerous consequences of this investment deal.

The interests of Canadian investors are paramount

The government argues that it is going beyond the call of duty by tabling this agreement in Parliament, something the Liberals did not do with similar investment agreements.

David Fung of the Canada-China Business Council defended the agreement on The Current. His main argument seemed to be that Canadian investors welcome this deal, and that Van Harten's warning of potentially dire consequences is "fear-mongering."

In the House, both the Trade Minister Ed Fast and the Prime Minister hewed to the same line. And, of course, for good measure, Fast also added the Conservatives' by now ritual jab about the NDP's "job killing carbon tax."

NDP Leader Tom Mulcair pointed out that this deal with China is meant to last 31 years, but that it is not customary for any government to adopt measures that bind subsequent governments. 

"Let me be very clear," Mulcair said in the House on Wednesday, "The Conservatives will not tie the hands of the NDP. We will revoke this agreement if it is not in the best interests of Canadians."

The Prime Minister's response might very well become a new Conservative attack line:

"The leader of the NDP is saying he would revoke the hard-earned right of Canadian investors to be protected in a marketplace like China. That is precisely why Canadian investors, the Canadian business community and the Canadian public at large does not trust the NDP with economic policy."

The Prime Minister did not mention the "hard-earned right" of Canadian governments to legislate environmental rules. Unlike previous Conservatives, such as Brian Mulroney, Mr. Harper has not given the environment a high priority. Some might say he has not even given it a low priority. 

Harper is, not surprisingly, most solicitous of Canadian investors. He has also occasionally shown some, at least notional, concern for First Nations. 

Well, this agreement could actually have very significant consequences for the "Crown-First Nation" relationship in which the Prime Minister claims he places such great store. 

More about that in the days to come. 


Karl Nerenberg covers news for the rest of us from Parliament Hill. Donate to support his efforts todayKarl has been a journalist for over 25 years including eight years as the producer of the CBC show The House. 







Well said, yaaaaqov. One need look no further than this recent rabble piece for examples of anti-communist hysteria against China, courtesy of Terry Glavin, complete with in terrorem references to "state-owned enterprises". And we regularly get more of the same sort of thing from Andrew Nikiforuk, who complains that China's oil companies deal with "terrorist sponsoring governments" such as Iran, Iraq, Syria and Sudan.

Nobody ever seems to oppose trade and financial agreements with the United States or Europe on grounds of their terrible human rights records, their sponsorship of terrorism, their domestic inequalities of income and wealth, or the rapacious characteristics of their ruling classes; but suddenly when it comes to trade with China we're all expected to accept knee-jerk condemnation of their trading partners, their political and economic systems (about which most of us know nothing, but are prepared to believe every slander and trope that's hurled out against them) and to join the choir in singing from the imperialists' hymn-book.

It's common to deny suggestions of racism by insisting that people mean well and are motivated not by anything negative but by simple desire to stand up for what is right, democratic, good for the environment, etc. Actually when you examine the texts of well-known racists such as organized fascist groups, etc, you see that their critiques of immigration policies and such are always framed as motivated by a desire to save the nation, to uphold its values, to restore its health and vitality. So I don't at all buy your dismissal of the idea that racism and racially-tinged fear of a newly powerful and different and thus scarily 'other' Asian global capitalism might be motivating a significant segment of the population who are getting agitated over FIPPA. Look at the way the issue gets framed in some of the literature online, in the media, etc. For instance I recently saw an image of Harper with yellow stars for eyes and in a general sense dehumanized and turned into a monster amidst a swirling Chinese flag.

Invoking the membership of indigenous people among a mass of well-meaning 'grassroots Canadians' will not cut it either. There are lots of Canadians who love to care about the well-being of indigenous people on Turtle Island when it comes to standing up for this or that environmental crusade, but who will never take seriously any prospect of seriously questioning the ongoing colonial relations between the Canadian nation and indigenous nations.

Meanwhile, invoking the specter of a Chinese 'dictatorship' strikes me as farcical and absurd - and more than that, irresponsible and obfuscating. How does it make sense for we white middle class canadians to sit around, drawing our priviledge from the ongoing exploitation of migrant workers, indigenous ppl, working class ppl, global majority populations around the world (in part via the corporate sectors that our pensions, bank acccounts, etc bankroll - and through the global institutions that have forced the developing world to dismantle their postcolonial welfare systems (itself a powerful reason to understand why so many Asian states decided to embrace a new model of capitalism while rejecting Western supervision of their economies)) - to say that such or such an Asian country is democratic, or not, or a dictatorship, or not, all the while comparing them against our 'imperfect' model of democracy - and neglecting to mention the white supremacist constant of Canadian history because it just isn't relevant? How many of us liberal pro-democracy world-savers have studied Chinese history and politics?  Democracy in Canada is not 'imperfect', it's a fantasy that masks genocide, multiple and shifting forms of apartheid, a wide range of world-annihilating corporate imperialist projects (for instance, do you know that Canadian banks basically control a huge portion of the Caribbean economy, and have done so for centuries? Does such a fact, considered alongisde an endless list of other similar facts, matter at all when we talk about what 'democracy' is? For whom is Canada democratic? Maybe for a sort of elite - a quite populous Canadian elite marked by a clear pattern of race and class and gender priviledge.) Can we stop moralizing on democratic values and taking the term democracy at face value when what it tends to used to mean is capitalist and colonial and liberal? I don't understand the exploitation of migrant workers in China as a conspiracy between global capital and some evil elite of Chinese fake communists. There are very clear but complex reasons why the Chinese communist party has decided to pusue the economic path it has settled on. These decisions have been made amidst intense debate and discussion and competition and struggle and shifting global political patterns. Analyzing this situation requires careful study, but such analysis is made impossible by the usual automatic liberal critiques of things that don't seem 'democratic' the way we think they should be.

Is FIPPA an injustice? Clearly. Is the campaign against FIPPA primarily about justice? I don't think so.

Dear Yaaa...,

This much in what you write seems true to me, without a doubt: "global capital exploits Chinese workers to keep the global flow of affordable consumer products going (let's remember which consumers benefit from the flow of cheap resources to low-wage Chinese factories, people!)"

There is, I agree, a kind of conspiracy between Western consumers and investors and a wealthy Chinese elite that disguises itself as the leadership of a "Communist" Party and that pariticpates in and benefits from the exploitation of its own people.

Having said that --

The protests against the FIPPA on the part of grass-roots Canadians, including First Nations people, cannot be justly characterized as racist and are not, at their heart, a protest against Asian State capitalists ("bad") as opposed to Western "regular" capitalists ("good").

The protests are about Canada's environment and the capacity of Canadian democratic institutions, however flawed, to execute the will of the people, however imperfectly that will is transaletd into political power.  Plus, it is a protest against the secretive and entirely undemocratic decision-making process that brought us this deal.

Thus, the implied accusation of racism ont he part of the protesters is a "bridge too far," and not justified by the facts.

As well, in case there is any misunderstanding, the author of the original piece did not intend to compare Chinese Communisms to Western Fascism in evoking the fact that capitalism coexisted happily with Fascism in the West, then, just as it does, now, with Communism in China.

The intended point of mentioning the Western Fascist states was only to underscore the fact that the so-called "free market" is neither a pre-condition nor a necessary and inevitable corollary of a democratic polity. A small and rather obvious point, perhaps; but that is all I actually said.

karl n

Helpful to get detailed analysis about what FIPA actually is and isn't - but you decided to go 'there'... suggesting that China is a modern-day version of European totalitarian and fascist dictatorships from 3/4 of a century ago (umm... I know little about Chinese politics but I'm pretty sure the stuff going on there has roughly zero resemblance to what Hitler and Mussolini did; and can we get past the idea that non-Western places are the pasts of the West? if anything they're the future - which you hint at at the same time). I'm still waiting for someone to explain to me how exactly China is any less democratic than 'our' system of corporate-supervised elections and racialized exploitation - besides, of course, to the extent that global capital exploits Chinese workers to keep the global flow of affordable consumer products going (let's remember which consumers benefit from the flow of cheap resources to low-wage Chinese factories, people!). As much as anything else, the hysteria over FIPA seems to be about white middle class liberals feeling outraged at the prospect of actually ever experiencing any harm from the effects of capitalist globalization - which is only supposed to benefit us and harm others! FIPA is certainly part of a history of Canadian colonial elites selling off the land and its resources to global capital - and the story of how Chinese capitalism gets seen as an affront to 'democracy' is interesting as a way to analyze the power of the idea of 'democracy' in the racial fantasies and paranoias that shape Canadian politics. Campaigns around ecological justice and neoliberal international agreements are a lot more interesting politically when they aren't racist. I think I know some people in this country who might not be all that enthusiastic about the growing tide of indignant white populism...

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