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How a First Nation is holding up the Canada-China investment treaty

A rally outside Vancouver courthouse against the Canada-China deal was urged to make FIPPA ‘a household word.’

DARRYL DYCK/The Globe and Mail

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Vancouver Island's Hupacasath First Nation has all of 300 members, but for the past year it has put the freeze on Canada's investment treaty with the world's most populous nation, China.

The tiny community's court challenge has prevented the Harper government from ratifying a deal that it touted as a key economic step between the two countries. The challenge has provided time – time enough for opposition to develop on the political left, but also for some of the people who used to think an investment deal was a good idea to start to harbour doubts, too.

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If the Hupacasath actually win their legal case against Ottawa, it would have a major impact on the negotiation of major trade deals like NAFTA, and the economic partnership with the European Union that Canada is currently negotiating.

Prime Minister Stephen Harper signed the foreign investment protection agreement with China last September, and touted it as a key step forward in the economic relations with a rising power.

But the Hupacasath argue that the federal government had a constitutional duty to consult them when striking a treaty that could have an irrevocable impact on their unresolved claims of title to lands.

And because that's a thorny and important legal matter for the Crown, Ottawa couldn't rush ahead with ratifying the treaty until a court decides who's right. Federal Court of Canada Chief Justice Paul Crampton said he'd expedite the case, and there's an expectation the government wouldn't act until he issues a decision, possibly within a month or two.

The government‎ doesn't officially acknowledge that the case is the reason it has delayed ratification, but that's the reason it gave the Chinese.

Canada chased this deal for the better part of 20 years. Canadian companies doing business in China worried about the arbitrary nature of China's powerful authorities. They might invest millions in a deal there, in a plant or a joint venture, and see a local court or Communist poobah make a decision that negatively affected their business or investment. The Canada-China Foreign Investment Protection and Promotion Agreement gives Canadian investors the right to challenge decisions, and take them to arbitration. But by the time Mr. Harper signed the deal, one major thing had changed – Chinese companies were making more investments in Canada than the other way around.

Now, there's more concern about how China might use the FIPPA to challenge decisions made by Canadian authorities – not just the federal government, but provincial ones, or even First Nations – to secretive arbitration panels. And the treaty, once it's ratified, is locked in for at least 15 years – and the investments made in that period will be covered by the deal for up to 30.

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Brenda Sayers, the Hupacasath spokesman on the issue, said the First Nation worry that aboriginal land claims will be squeezed by the deal. If they object to a project by a Chinese-owned company because it uses a sensitive site, the company might sue the government of Canada – taking them to arbitration – for compensation. And then Hupacasath will be caught between the interests of two countries.

"Our First Nation right and title would become a trigger in the investment-state arbitration process," she said.

She said their beef is with Ottawa, not with Beijing, but it's also China's heft that worries them. It has money, and many of the resource investors are state-owned, so the influence of the world's second-biggest economy can be brought to bear.

Ms. Sayers argues that Hupacasath's interests are at stake, but other Canadians should have the same concerns. Some former advocates of investment treaties are starting to wonder if their benefits should be reconsidered against the potential costs. Australia has decided not to sign them anymore.

But here in Canada it's the First Nations rights that are the legal issue. The Supreme Court has established that the government does have a Constitutional "duty to consult" with First Nations when it makes a decision that could have a major impact on their title to lands.

The question in this case is whether it can apply to something so broad as an investment treaty, forcing Ottawa to consider how those agreements – included in big free-trade talks with the EU – could impact aboriginal land title across the country.

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Campbell Clark writes about foreign affairs from Ottawa.

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About the Author
Chief political writer

Campbell Clark has been a political writer in The Globe and Mail’s Ottawa bureau since 2000. Before that he worked for The Montreal Gazette and the National Post. He writes about Canadian politics and foreign policy. More

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