There are many potential obstacles on the road to implementing Canada's investment deal with China, say economists and legal analysts—yet some argue there is also a sense of momentum that has been absent in other similar deals.
During his trip to China Feb. 7 to 11, Prime Minister Stephen Harper announced the completion of talks, ongoing since 1994, on a Foreign Investment Promotion and Protection Agreement with China.
FIPAs lay out the ground rules on what actions governments are allowed to take against foreign firms operating in their country, and much hay has been made about the deal's potential benefits and drawbacks for Canadians.
But the announcement also reminded many in Ottawa circles about another major FIPA, one with India that was wrapped up almost five years ago, in June 2007, and has yet to be signed by the government or ratified by Parliament.
The Department of Foreign Affairs and International Trade maintains that in October 2009, India put the brakes on the process, saying it "had some concerns with the agreed text." This situation is still unresolved—this January, the Indian government told Embassy there is still some legal work to be done on the agreement.
Analysts say some legal issues may also be present with the China FIPA.
The negotiated text must now go through a legal review in English, French and Mandarin. The two governments would then sign the deal and make it public. The FIPA would be tabled in the House of Commons for 21 days for review and debate.
The legal scrub will involve going over the language to make sure it is consistent with Canada's undertakings at the World Trade Organization and its own laws, and that the wording means what the negotiators intended it to achieve, said Dan Ciuriak, a former deputy chief economist at DFAIT.
He said many trade and foreign investment deals spend a lot of time in review, because they often raise political sensitivities.
While the ratification process is important, ratification is not assured, he said.
The Canadian government has also indicated that the deal would include investor-state dispute settlement measures, something that could be a politically sensitive area, he said. Such measures are not a standard feature of FIPAs.
"From a standpoint of view of Canadian interests, it's advantageous to have access to legal recourse if a company were expropriated in China...[but] it's a two way street, and Chinese companies would be in a similar situation in Canada," he said.
The legal review may take up to a year, with the two sides signing the FIPA soon after, estimated John Curtis, former DFAIT chief economist and now a senior fellow at the CD Howe Institute.
But it also depends on how many other deals the two governments are juggling, and how many officials the governments can assign to do the review, he added.
The Canadian side is busy with the final stages of a free trade deal with the European Union, which has also been given a high priority by the Canadian government. Officials expect the deal to be finished by the summer.
China will also go through a change in leadership this year, and this could also have an impact on the process, pointed out Cyndee Todgham Cherniak, a trade lawyer with the Toronto-based firm McMillan LLP—although she couldn't predict which way.
The transition could slow down the process, she said, but it may also speed it up because the outgoing leadership may want to leave this as part of a legacy.
She also pointed out that either government could make amendments to the text during the legal scrubbing process, such as with the India deal.
Until the two sides release the actual text, it is difficult to know what the substance of the agreement would be, said Phil Rourke, executive director of the Centre for Trade Policy and Law at Carleton University and the University of Ottawa.
But he said this deal involves a slightly different dynamic, which could mean that different issues crop up in the actual agreement.
"A lot of the other agreements had more investment from Canada to the other country, and less investment from the other country to Canada...what's interesting in this one [is] Canadian companies are interested in investing further in China, but Chinese companies are also interested in and have been investing in Canada," he said.
Political momentum
Even so, Mr. Curtis and a former diplomat say the political about-face was more important as an indicator of how quickly a deal can be implemented.
In 2006, Mr. Harper balked at doing business with a country that he perceived as having a lack of human rights. He gave honourary Canadian citizenship to the Dalai Lama in 2006, formally met him in 2007, and declined a Chinese Olympics invitation in 2008, all moves that enraged Beijing.
But relations began to warm soon after, and top-level official visits soon followed both ways in 2009 and 2010. Over the last few years, Chinese firms have poured billions of dollars into Canadian natural resources. In July 2011, Foreign Minister John Baird called China a "friend" and "ally."
Now, especially with Mr. Harper's new push to export Canadian oil to Asia, analysts are picking up on a heightened sense of focus. Mr. Harper's second trip last week carried with it a delegation of 40 people, as well as five ministers, and churned out dozens of bilateral agreements.
Mr. Harper's efforts in renewing relations with China, and the political importance that the Chinese attach to that, means Canadians won't likely be waiting as long as with India for the final details of the Chinese FIPA, said former diplomat in China John Higginbotham.
"I assume that it would be concluded in the coming months...Canadian business would be quite disappointed if it were not concluded in a few months," said Mr. Higginbotham, who is a senior distinguished fellow at Carleton University's Norman Patterson School of International Affairs.
"China's a higher priority, simple as that," said Mr. Curtis.
Original Article
Source: embassy mag
Author: Sneh Duggal
During his trip to China Feb. 7 to 11, Prime Minister Stephen Harper announced the completion of talks, ongoing since 1994, on a Foreign Investment Promotion and Protection Agreement with China.
FIPAs lay out the ground rules on what actions governments are allowed to take against foreign firms operating in their country, and much hay has been made about the deal's potential benefits and drawbacks for Canadians.
But the announcement also reminded many in Ottawa circles about another major FIPA, one with India that was wrapped up almost five years ago, in June 2007, and has yet to be signed by the government or ratified by Parliament.
The Department of Foreign Affairs and International Trade maintains that in October 2009, India put the brakes on the process, saying it "had some concerns with the agreed text." This situation is still unresolved—this January, the Indian government told Embassy there is still some legal work to be done on the agreement.
Analysts say some legal issues may also be present with the China FIPA.
The negotiated text must now go through a legal review in English, French and Mandarin. The two governments would then sign the deal and make it public. The FIPA would be tabled in the House of Commons for 21 days for review and debate.
The legal scrub will involve going over the language to make sure it is consistent with Canada's undertakings at the World Trade Organization and its own laws, and that the wording means what the negotiators intended it to achieve, said Dan Ciuriak, a former deputy chief economist at DFAIT.
He said many trade and foreign investment deals spend a lot of time in review, because they often raise political sensitivities.
While the ratification process is important, ratification is not assured, he said.
The Canadian government has also indicated that the deal would include investor-state dispute settlement measures, something that could be a politically sensitive area, he said. Such measures are not a standard feature of FIPAs.
"From a standpoint of view of Canadian interests, it's advantageous to have access to legal recourse if a company were expropriated in China...[but] it's a two way street, and Chinese companies would be in a similar situation in Canada," he said.
The legal review may take up to a year, with the two sides signing the FIPA soon after, estimated John Curtis, former DFAIT chief economist and now a senior fellow at the CD Howe Institute.
But it also depends on how many other deals the two governments are juggling, and how many officials the governments can assign to do the review, he added.
The Canadian side is busy with the final stages of a free trade deal with the European Union, which has also been given a high priority by the Canadian government. Officials expect the deal to be finished by the summer.
China will also go through a change in leadership this year, and this could also have an impact on the process, pointed out Cyndee Todgham Cherniak, a trade lawyer with the Toronto-based firm McMillan LLP—although she couldn't predict which way.
The transition could slow down the process, she said, but it may also speed it up because the outgoing leadership may want to leave this as part of a legacy.
She also pointed out that either government could make amendments to the text during the legal scrubbing process, such as with the India deal.
Until the two sides release the actual text, it is difficult to know what the substance of the agreement would be, said Phil Rourke, executive director of the Centre for Trade Policy and Law at Carleton University and the University of Ottawa.
But he said this deal involves a slightly different dynamic, which could mean that different issues crop up in the actual agreement.
"A lot of the other agreements had more investment from Canada to the other country, and less investment from the other country to Canada...what's interesting in this one [is] Canadian companies are interested in investing further in China, but Chinese companies are also interested in and have been investing in Canada," he said.
Political momentum
Even so, Mr. Curtis and a former diplomat say the political about-face was more important as an indicator of how quickly a deal can be implemented.
In 2006, Mr. Harper balked at doing business with a country that he perceived as having a lack of human rights. He gave honourary Canadian citizenship to the Dalai Lama in 2006, formally met him in 2007, and declined a Chinese Olympics invitation in 2008, all moves that enraged Beijing.
But relations began to warm soon after, and top-level official visits soon followed both ways in 2009 and 2010. Over the last few years, Chinese firms have poured billions of dollars into Canadian natural resources. In July 2011, Foreign Minister John Baird called China a "friend" and "ally."
Now, especially with Mr. Harper's new push to export Canadian oil to Asia, analysts are picking up on a heightened sense of focus. Mr. Harper's second trip last week carried with it a delegation of 40 people, as well as five ministers, and churned out dozens of bilateral agreements.
Mr. Harper's efforts in renewing relations with China, and the political importance that the Chinese attach to that, means Canadians won't likely be waiting as long as with India for the final details of the Chinese FIPA, said former diplomat in China John Higginbotham.
"I assume that it would be concluded in the coming months...Canadian business would be quite disappointed if it were not concluded in a few months," said Mr. Higginbotham, who is a senior distinguished fellow at Carleton University's Norman Patterson School of International Affairs.
"China's a higher priority, simple as that," said Mr. Curtis.
Original Article
Source: embassy mag
Author: Sneh Duggal
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