By John ManleyA great deal has been said and written in recent days about the proposed Canada-China Foreign Investment Promotion and Protection Agreement, or FIPA for short. Unfortunately, the critics have gone overboard in their assessment of the deal. Its time to dispel the myths and set the record straight.Myth: The Canada-China FIPA is lopsided in Chinas favour.Reality: The agreement contains reciprocal obligations that will ensure both Canadian and Chinese investors receive greater protection against discriminatory and arbitrary practices. For example, Canadian investors will be guaranteed to receive the same treatment provided to other foreign investors and, once established in China, would be entitled to the same treatment as domestic investors. In the event of expropriation, Canadian investors would be entitled to compensation.Myth: Chinese investors in Canada will enjoy enclave legal status, allowing them to bypass Canadian laws.Reality: All foreign investors in Canada, from China or anywhere else, are subject to the same laws and regulations as Canadian firms. A FIPA does not exempt a foreign investor from Canadian laws. Nor does it in any way restrict federal, provincial or territorial governments from implementing new laws and regulations in areas such as health and safety, labour protection, education and the environment.Myth: The agreement includes a Trojan horse loophole that would allow Chinese companies already in Canada to buy any asset they wish without foreign investment review.Reality: The Investment Canada Act applies to any acquisition of a Canadian company by a foreign-controlled company, regardless of whether the purchaser is already operating in Canada. In addition, even acquisitions of companies that are too small to qualify for foreign investment review can be blocked by Canada on national security grounds.Myth: The FIPA will give Chinese companies control over Canadas natural resources.Reality: Under Canadas Constitution, natural resources belong to the provinces. Provincial governments have the authority to establish royalty and regulatory regimes that govern how, when and at what pace those resources are developed. The Canada-China FIPA will not in any way grant foreign investors special access to Canadas natural resources.Myth: Canada would never have signed a deal like this with any other country.Reality: The Canada-China FIPA is consistent with every one of the 24 foreign investment treaties that Canada has implemented with other countries. (Another six have been negotiated but have yet to take effect.)The agreement is at least as strong, and in some areas stronger, than the investment agreements that China has signed with more than 100 other countries, including Germany and the Netherlands. The United States and China are currently negotiating an investment treaty that would include many of the same provisions that can be found in the Canada-China FIPA.Myth: The agreement includes an arbitration mechanism that is secretive and therefore worthless.Reality: By agreeing to establish and abide by a dispute resolution process, China is giving Canadian investors important new protections. All decisions made by the arbitration tribunals will be made public. The hearings themselves may also be open to the public, provided that the government whose decisions are being challenged determines that it is in the public interest to do so. Canadas long-standing policy has been to permit public access to such hearings, and there is no reason to expect that will change. As for China, this is the first bilateral investment treaty in which Beijing has accepted language dealing with the transparency of proceedings. Its not perfect, but it is a start. And it is more than any other country has been able to negotiate.Myth: Canadas business community does not support this agreement.Reality: Over the past 30 years, Canadian direct investment abroad has increased rapidly. These investments have opened up new markets and stimulated export growth, employment, and investment in Canadian operations. Canadian companies that operate abroad stand behind this agreement because it will provide them with greater protection against discriminatory treatment in one of the worlds largest and fastest-growing markets.Canada is a relatively small player in the global economy, with an enormous need for more capital. Over the past 40 years, Canadas share of the global stock of foreign investment has declined from almost 16 per cent to just over three per cent.We need to reverse that trend. In the energy sector alone, Canada will need more than $600 billion to develop the resources, get product to market, and research new technologies that will allow us to meet tomorrows needs in any environmentally responsible, sustainable way.Chinas growth offers huge benefits for Canada. Lets not squander this opportunity. John Manley is president and chief executive officer of the Canadian Council of Chief Executives. He wrote this for the Ottawa Citizen.
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