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No China-Canada investment deal without a real environmental assessment, says Council of Canadians

Ottawa – The environmental assessment of the proposed Canada-China Foreign Investment Protection and Promotion Agreement (FIPA) is insufficient and must be done again to account for the changing nature and volume of Chinese investment in Canada, recent investor-state case law that undermines the right to regulate for environmental protection, changes to Canada’s environmental regulations affecting major resource projects, and the government’s failure to actively engage the public in the earlier assessment process, says the Council of Canadians.

“The environmental assessment is completely inadequate and confusing,” says Stuart Trew, trade campaigner with the Council of Canadians. “The government can’t even make up its mind if the FIPA will encourage investment or not. Yet the assessment says that even if there is an influx of investment, for example the nearly 100 per cent increase in Chinese investment into Canada in the past four years, there will be no environmental impact. If only life were so easy. We need to take it back to the drawing board right now.”

The Council of Canadians rejects the federal government’s demonstrably false claims in the environmental assessment that both Canada and China will “retain the ability to regulate in the public interest, including with respect to environmental issues,” that “the FIPA will not inhibit Canada’s ability to develop and implement environmental policies,” and that, “all foreign investors in Canada are subject to the same laws and regulations as domestic investors, which includes laws aimed at protecting the environment.”

“Just because an environmental policy affects Chinese and Canadian investors equally does not mean it cannot be challenged under the FIPA as a violation of a Chinese firm’s right to profit,” says Trew. “Under NAFTA’s FIPA-like investment protections, Canada has faced and lost disputes relating to non-discriminatory environmental measures. It’s up to private arbitrators outside Canada’s court system to decide whether a policy or other measure is a form of ‘regulatory expropriation,’ or whether it upsets the arbitrator’s, not the law’s, broad definition of ‘minimum standards of treatment.’”

A further failing of the government’s environmental assessment of the Canada-China FIPA is that it does not take into account recent changes to Canada’s environmental regulations and policy. Chinese firms, as well as firms from other countries with which Canada has a FIPA-like treaty, will be able to claim these lower standards as the new normal. Any future improvements to environmental policy by a federal or provincial government will be vulnerable to foreign investor claims that their right to a stable and predictable regulatory environment has been breached.

“The treaty as a piece of paper does not have much of an environmental impact, but the rights the treaty gives to foreign investors to challenge environmental policy can, and more and more often do, undermine policies to protect the environment, public health or to conserve resources,” says Trew. “The Harper government should not be allowed to ratify this FIPA with China without recognizing that in a new environmental assessment of the treaty.”

The Council of Canadians, Canada’s largest grassroots social justice organization, elaborates on these points in a submission it will make this week to the Department of Foreign Affairs and International Trade’s final draft environmental assessment of the Canada-China FIPA. The DFAIT assessment was quietly posted to the government website in the middle of October. The deadline for comments is this Sunday, November 11.

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