Ottawa – The $15.1 billion offer to buy Calgary-based energy firm Nexen should be blocked for several reasons, including that the state-owned Chinese buyer CNOOC will have more rights than a Canadian firm would to challenge regulation of its tar sands and shale gas activities and expansion plans, says the Council of Canadians.
“The Harper government's top priority is to expand tar sands production and make sure these oil companies have enough pipelines to get it onto the market, no matter what the environmental or health impacts,” says Maude Barlow, national chairperson of The Council of Canadians. “Harper is so desperate to do this that he is signing investment protection agreements with China and other countries that give foreign oil, gas and resource companies powerful legal tools to frustrate or block environmental or public health protections.”
Canada's Foreign Investment Protection and Promotion Agreements (FIPAs), like the one Canada signed with China earlier this year, extend greater rights to foreign firms than those enjoyed by national firms. These include the right to national treatment, but the FIPAs also typically include bans on performance requirements, vague “minimum standards of treatment,” and protection from regulatory expropriation.
“The Council of Canadians is demanding that the federal government make public the terms of the FIPA recently signed between Canada and China,” says Barlow. “The CNOOC bid to takeover Nexen is the latest development in a deeply troubling trend. Canada is already the most “open for business” country in the world. Anyone can come in and take what they want, make as much money as they want, pay next to no royalties, and now not be governed by an environmental assessment process.”
Canada's FIPAs, like NAFTA, contain an investor-state dispute settlement process that allows foreign firms to bypass Canadian courts and laws to challenge government measures in front of private investment tribunals. U.S. energy companies Exxon Mobil and Murphy Oil recently won a NAFTA investor-state case against a requirement to invest a small portion of offshore oil profits into research and development projects in the Province of Newfoundland and Labrador. Canada will have to dismantle the offending performance requirement on Exxon and Murphy or pay an award to the firms of as much as $65 million.
“The Nexen buyout will mean significantly expanding the environmental destruction of the tar sands to water, the climate and Indigenous peoples,” adds Stuart Trew, Trade Campaigner with The Council of Canadians. “It might be a good money-maker investment for CNOOC, but China is clearly hoping this investment and expansion will put renewed pressure for unsafe and unpopular pipelines to the West Coast. All of this becomes more difficult to control and regulate under Canada’s free trade and investment deals and should be reason enough to cancel the purchase.”