China-Canada Trade Agreement - Environmental Assesment

Comments on the Final Environmental Assessment of the Canada-China Environmental Assessments of Trade Agreements Trade Agreements and NAFTA Secretariat Foreign Affairs and International Trade Canada 125 Sussex Drive, Ottawa, Ontario K1A 0G2 Fax: (613) 992-9392 E-mail: EAconsultationsEE@international.gc.ca Re: Comments on Final Environmental Assessment of the Canada-China FIPA agreement. (http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/chinachine/finalEA-pub-EEfinale.aspx?lang=eng&view=d&fb_source=message) November 8, 2012 To Whom It May Concern, ForestEthics Advocacy is disappointed by the lack of detail and information presented in the Final Environmental Assessment (EA) for the Canada-China Foreign Investment Promotion and Protection Agreement (FIPA). The information presented in these documents do not constitute anything like a science based or environmentally relevant EA. Initial EA (2008): The initial environmental assessment on the Canada/China FIPA was conducted in 2008.

At this time, Chinese direct investment in Canada was around $1.3 billion and represented 0.3% of total Foreign Direct Investment in Canada. It is noted in the EA that there were three mining investments in Canada: two in Alberta’s oil sands and one in Vancouver. The EA noted that these industries (oil sands and mining), despite having adverse environmental impacts (high GHG emissions, water usage and quality, habitat destruction and questionable land reclamations), are regulated by federal and provincial statutes.

The initial EA, at 13-pages, is both cursory and dated given the significant changes in Chinese investment patterns from 2008 to today, as well as significant changes to Canadian environmental legislation.

Final EA (2012): The results of the initial EA assumed that there would be no significant changes to Chinese investment in Canada. However, between 2008 and 2011, there was a 92.4% increase in Chinese investment in Canada, and that foreign direct investment from China

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into Canada reached $11 billion at the end of 2011. It is noted in the Final EA that this investment is predominantly happening in natural resources.

Several assumptions are made in the final FIPA, including that “it is not feasible to establish direct causal link between changes in investment patterns and the presence of a FIPA”. The Final EA noted that by ensuring greater protection against discriminatory and arbitrary practices, enhancing predictability of market’s policy framework, a FIPA allows investors to invest with greater confidence, and this “indirectly encourages investment”. This conclusion contradicts the statement in the Explanatory Memo that accompanies FIPA which states that FIPA’s purpose is “to protect and promote investment” – essentially facilitating new investment.

The final EA also assumes that there “can be no causal relationship found between the implementation of such a treaty and environmental impacts in Canada.” This assumption is questionable given the trend of increased investment from China, a preference from Chinese investors to invest in natural resources and energy projects, and the known environmental impacts that can arise from such projects (some of which are noted in the initial EA).

At only 7 pages, the Final EA is even more cursory than the Initial EA. Moreover, half of the document (sections IV and V) does not relate specifically to FIPA, but instead to Corporate Social Responsibility and environmental cooperation activities that are not directly linked with FIPA. Strategic environmental assessments are meant to be forecasting tools, and there is little forecasting in this Final EA for the China/Canada FIPA. The Final EA does not consider even some of the basic questions such as: -­‐ What is the impact of Chinese investment in Canada in terms of development pace and scale? Does Chinese investment increase the rate and scale of development that would otherwise happen?

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Will the increased investment associated with FIPA bring added pressure from Chinese investors on the regulatory framework for certain industries, such as natural resources and energy, especially given their opportunity to comment on measures any level of government in Canada may be considering?

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While it is recognized that Chinese investment will occur mostly in natural resources and energy project, there is no discussion in either the initial or Final EA of forestry or natural gas development.

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The Initial EA notes that there are “a number of legislations in place, at the federal and provincial level, linked to the industrial development in the boreal, such as the Fisheries Act, the Canadian Environmental Protection Act and the Species at Risk Act. These legislations aim to protect fisheries habitat, wildlife populations and habitat and the sustainability of forests”. The above finding was made within the context of the old CEAA and Fisheries Act, pre-Bill C-38 and 45.

The Final EA does not recognize and does not appear to review the FIPA under the new environmental laws – specifically CEAA, NEB and Fisheries Act.

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It states under FIPA that “it is inappropriate to encourage investment by relaxing domestic health, safety or environmental measures”. However, the Canadian government has made significant changes to its environmental legislation through Bills C-38 and C-45, as well as currently amending the Species-at-risk Act. This weakening of policies, regulations and legislations for protection of the environment has take place prior to the enactment of FIPA. What will occur in the event these Acts are strengthened again to provide adequate environmental protection? Is it foreseeable that China would challenge laws passed or decisions made by Canada as being “arbitrary” and “unjustified”, or disguised restrictions and therefore in breach of FIPA?

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Is it foreseeable that China might use its rights under FIPA and its ability to sue for damages under FIPA to pressure Canada to take, or not take, certain measures relating to the environment?

The Final EA did not consider potential cumulative impacts resulting from FIPA and the commensurate trend of increased investment from China (as stated in the Cabinet Directive notes at page 2 where it states that “departments and agencies will be better able to:…2. Consider potential cumulative environmental effects.”). Nor did the Final EA consider any potential liabilities to Canada arising from potential breaches of FIPA (as stated in the Cabinet Directive notes at p. 2 that states: “by addressing potential environmental considerations when developing policy, plan and program proposals, departments and agencies will be better able to:…4. save time and money by drawing attention to potential liabilities for environmental clean-up and other unforeseen concerns.”). Nor does the Final EA consider alternatives to FIPA or to the specific terms within it, as pointed out by the Cabinet Directive (pages 4-5) that states that they should exam alternatives, and accountability.

Within the short final EA, there is an entire section on Corporate Social Responsibility, although there are no provisions requiring CSR action in the FIPA. It is difficult to understand the relevance of including these in a strategic environmental assessment.

Lastly, it is unclear what the public consultation process was on either the FIPA or the EAs. The Initial EA noted that it posted their EA and received no comments. But what measures were made to inform and engage the public and solicit comment? Were provinces, whose jurisdiction will be adversely impacted, consulted on either the FIPA or EAs? Were First Nations, whose rights and territories may be adversely impacted by the FIPA and environmental impacts, consulted and adequately engaged? An agreement that would lock us into 31-years to protect Chinese foreign investment, and include challenges to our democratic decisions to improve environmental standards, deserves public scrutiny, debate and opportunities for comments and recommendations.

In conclusion, this Final EA is not a standard environmental assessment whose scope includes science-based analysis and the forecasting of potential impacts. The notion that there is no causal relationship between the FIPA and environmental impacts is very weak. The whole purpose of FIPA is to provide investor reassurance with resulting

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expansionist effects. Certainly increasing the scope and pace of development, especially of our natural resources, will only worsen environmental and public health impacts. In addition, there is a huge gap in reality between the Initial EA, when Chinese foreign investment was low and presumed to remain so, to the Final EA, where Chinese foreign direct investment has expanded by over 90 per cent and expected to continue to grow.

The impacts of this growth (real and projected), as well as addressing the assumptions outlined above, need to be addressed in order for an EA of the FIPA to be relevant and an adequate assessment of environmental implications under this agreement.

Given the lack of public engagement on the Canada-China FIPA, we appreciate the opportunity to provide the comments above on the Final EA of the agreement. We hope that you will take them into consideration.

Sincerely,

Nikki Skuce Senior Energy Campaigner ForestEthics Advocacy Box 3022, Smithers, BC V0J 2N4 nikki@forestethicsadvocacy.org

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