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Is Canada negotiating a free trade agreement with China?

Prime Minister Justin Trudeau and Liberal MP Joe Peschisolido. Photo by the Richmond News.

Is Canada negotiating a free trade agreement with China?

The Vancouver Sun reports, “Canada may have begun negotiations for a free-trade agreement with China, according to conflicting statements from Ottawa officials. …[Liberal Steveston-Richmond East MP Joe] Peschisolido, at the opening of the Vancouver China Culture Centre in Richmond, told the crowd in attendance that the government of new Prime Minister Justin Trudeau has launched negotiations with Beijing, drawing one of the event’s loudest applause. ‘About four months ago, we officially started negotiations with the People’s Republic of China on our free-trade agreement’, Peschisolido said. “It will be a comprehensive deal, dealing with all sectors.'”

The British Columbia-based MP also commented, “We have a deal with South Korea, and we’d like to model that for China, for Japan, and we’re also looking very serious at the TPP (Trans-Pacific Partnership), which we’ve signed but haven’t ratified yet. We’re a trading nation, but it has to be good for Canada. It has to be a win-win, as they say.” The Canada-South Korea FTA and the Trans-Pacific Partnership both include the controversial investor-state dispute settlement (ISDS) provisions which, in our view, disqualifies them from being “win-win” agreements.

In January, the Globe and Mail reported that Trudeau plans to lead a high-level trade mission to China and seek a free trade agreement. Later that month, the newspaper additionally reported, “China wants to forge a historic free-trade deal with Canada, but a senior Chinese official said this will require Canadian concessions on investment restrictions and a commitment to build an energy pipeline to the coast.”

While this has variously been interpreted to mean either the Kinder Morgan Trans Mountain pipeline or the Enbridge Northern Gateway pipeline, it could also mean the TransCanada Energy East pipeline.

TransCanada has argued that while it could cost up to $8.20 per barrel to ship oil to China via the Northern Gateway pipeline, it would cost about $8.50 to do so via the Energy East pipeline. From Saint John, supertankers would move the oil through the Strait of Malacca between Malaysia and Indonesia and then north through the South China Sea.

The previous Harper government had also sought a free trade deal with China. The Canada-China Foreign Investment Promotion and Protection Agreement (FIPA) was ratified in September 2014 by the Harper Conservatives with support in the House of Commons from the Trudeau Liberals.

As a net importer of Chinese investment, especially in energy and resources, investment protection provisions pose a real threat to the public interest. The existing investment pact with China notably allows Chinese energy companies to threaten the federal, provincial or territorial governments against imposing environmental rules on tar sands production, pipeline construction and other projects. Chinese firms are almost certain to make use of their treaty protections as they increase their investments in Canadian energy and resource projects, including the CNOOC (the China National Offshore Oil Corporation) purchase of the Canadian energy firm Nexen in 2013.

The Hupacasath First Nation, a 300-member nation located on Vancouver Island, opposed the Canada-China FIPA arguing that the Harper government had failed to consult First Nations before signing it as required by law. They said that FIPA, notably its investor state provision, could be used to override Indigenous rights and give the balance of power in questions of resource management to corporations rather than affected communities. As such, they, and other First Nations, argued that the FIPA is an infringement on inherent Aboriginal Title and Rights.

Today’s Vancouver Sun article notes, “A spokesman from the federal Ministry of International Trade said Canada is not engaged in FTA negotiations with China…”

But press secretary Alex Lawrence also stated, “Expanding trade with China is a key piece in the International Trade Minister’s mandate letter. We are certainly looking at all avenues to further deepen our trade and investment relationship…”

We’ll keep watch on this.