The Rush to Ratify: BC Rejected International Investment Deal in '98 and Should Do So Again

Thu, 2012-10-25 14:56Carol Linnitt
Carol Linnitt's picture

The Rush to Ratify: BC Rejected International Investment Deal in '98 and Should Do So Again

This past weekend trade investment lawyer, Gus Van Harten, spent his time in his basement, rifling through old files. He knew that somewhere, buried in piles of international investment and legal trade documents, there was the answer to this one nagging question he couldn't shake: hadn't British Columbia already refused an investor-state treaty like the China-Canada Investment Deal once before? And wasn't that rejection because the trade deal was 'unconstitutional?'

And there the answer to his question lay: in a 1998 special legislative report BC published on the OCED's then-proposed Multilateral Agreement on Investment (MAI). In this document, a BC Special Committee outlines why an investor-state mechanism like MAI - which is essentially the same as the proposed China-Canada Investment Deal - is dangerous for provinces determined to protect their jurisdictional rights when it comes to governmental sovereignty, natural resources, First Nations, environmental protection and human and labour rights. 
 
The legislative committee recommended that “when negotiating the MAI or any future investment treaty, the federal government must ensure that the agreement does not apply to matters within provincial jurisdiction, including local government measures, without the express consent of the Legislative Assembly of British Columbia…If the federal government fails to provide for such consent, then the provincial government should explore all means, including legal action, to defend vigorously its own jurisdictional rights and those of local governments to represent the interests of British Columbians.”
 
According to this logic, British Columbians and all of our elected provincial officials should be up in arms over the proposed China deal. 
 
When Van Harten found the BC legislative committee report he was surprised to see the special committee made essentially the same request in '98 as he is now: hold off on the agreement until the implications of the deal, constitutional and otherwise, can be fully assessed. 
 
What is significant about the MAI and the international review the agreement underwent in 1998, is how thoroughly it exposed the dangers of such a deal. At the time, then French Prime Minister Lionel Jospin spurned the deal, saying “it does not seem wise to allow private interests to chew away at the sovereignty of states.”
 
Another negotiating official characterized the agreement and its inherent lack of transparency as a “political time-bomb.” This sounds all too familiar.
 
 
On October 10, Van Harten urged BC Premier Christy Clark to take action against the China-Canada Investment Treaty, to put pressure on the federal government to delay the agreement's ratification until the full consequences of such a deal for British Columbia - the province at the centre of a national pipeline battle that is in part backed by Chinese investors - are known. He penned an additional letter to Prime Minister Stephen Harper and Minister Edward Fast on October 12.
 
By the time Van Harten found the 1998 report on Monday, October 22, he had received no reply. Unearthing the document - which sheds new light on BC's position in the rush to ratify FIPA - Van Harten redoubled his efforts to attract Premier Clark's attention.
 
In a follow-up letter, Van Harten outlines a number of relevant passages from the report (include the one quoted above), suggesting Premier Clark take into account the relevant insights of the past:
 
 
“It must be emphasized that provincial governments are not simply another set of “stakeholders” to be consulted by the federal government en route to treaty signature and implementation. Under the Canadian constitution, the federal government is incapable of unilaterally implementing international treaty obligations in areas that fall within provincial jurisdiction. Nor is it acceptable for the federal government to use its treaty-making powers to do an end run around the federal-provincial division of powers or in a way that diminishes Canadian federalism and democracy.
 
Investor rights of the scale and breadth contemplated in the MAI would affect many matters that fall partly or exclusively within provincial legislative jurisdiction. Some of the more important to British Columbians include: the management and conservation of natural resources; health care, education, and other social services; the regulation of property and civil rights in the province; and municipal institutions and governments.
….
 
How is it that the federal government can expose provincial measures to binding international arbitration without the province's consent? … Who will pay if a provincial measure is found to violate the federal government's treaty obligations? If the provincial government maintains an inconsistent measure, might the federal government be required to pay ongoing damages? Setting aside the jurisdictional issues, is it fiscally responsible for the federal government to negotiate an agreement that exposes it to open-ended liability for provincial government measures? And, faced with an adverse ruling, what steps might the federal government take to try to force provinces or municipalities to remove offending measures?
 
The cost to Canadian taxpayers to defend provincial and local government measures against challenge and to vet future measures for potential inconsistency also cannot be ignored. Nor, just as importantly, can Canadian ignore the cost to democracy of the chilling effect such potential threats exert on provincial and local governments' ability to govern.
….
 
… the committee's view is that if British Columbia's support is not explicitly given, then the federal government should negotiate only with respect to federal measures. In the committee's view, if the federal government fails to gain the express consent of the Legislative Assembly, then the Province must vigorously defend its authority on behalf of all British Columbians.”
 
Van Harten had this to add in his plea to Premier Clark:
On reviewing this material, I was struck by its direct confirmation of the point that the BC government must take legal action if it is to defend its constitutional position from potentially irreparable harm due to ratification of the Canada-China treaty on or about October 31. All of the questions that it raises, as highlighted above, are directly relevant to the Canada-China investment treaty. This treaty clearly requires closer study before its legal consequences are locked in by the federal government for 31 years. The federal government appears to lack constitutional authority to conclude the treaty but this will make no difference, from the perspective of international law and China's legal position vis a vis Canada, once the treaty is ratified.
 
With great respect, I urge you please to take steps to ensure that the federal government does not ratify this treaty without resolution of the constitutional implications. Other than perhaps a First Nation, it strikes me as unfeasible for any other person or organization to be able to obtain an injunction in time due to requirements of standing. If ratified, the treaty will change fundamentally the position of provincial legislative, executive, and judicial powers in relation to any Chinese-owned asset in the country. This is not just a trade and economic issue but also, fundamentally, a constitutional matter.
 
I stress that, if the federal government is unwilling to delay ratification, you would need to seek an injunction this week to delay ratification until the treaty's constitutional implications can be resolved in Canadian courts as necessary.
 
Van Harten is not the only voice demanding a democratic review of the China-Canada Investment Treaty. 
 
In this forceful one-minute clip, Green Party leader Elizabeth May outlines the details of the agreement to the house; delivering the only FIPA primer members of the house will receive.
 
 
Yesterday I asked NDP MLA Carole James what the connection was between recent Defend Our Coast actions and FIPA.
 
NDP leader Thomas Mulcair recently distributed this list of Conservative MP's who are members of The Standing Committee on International Trade to his listserv.

You can weigh in on the conversation by telling these pivotal committee members how you feel about the rush to ratify FIPA, despite the absence of provincial or First Nations consultation.
 

 

Comments

He was calm and collected as he listed off his concerns.  Specifically that arbitration panels are not beholden to law as we know it and that it supercedes Canadian law.  (In fact, you could argue that Canadian businesses are at a disadvantage compared to foreign investors.)

The fellow Gus was arguing with was simply, shrilly saying over and over that Gus was trying to stoke anti chinese sentiment.  (Not something that I actually got from Gus' statements.)

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