The Indelible Bonobo Experience

Canada and China are about to become, if not economic bedfellows, then a serious courting couple, given to public displays of affection. Are we ready for this? With a population of 1.4 billion and gross domestic product of $7.2-trillion, the latter growing at nine per cent annually, China is on track to surpass the United States as the world’s pre-eminent economic power by 2020. Canadian firms have barely begun to tap the immense Chinese market. The reverse does not apply. (via Conservative plan would tie Canada to China in hush-hush elopement | Full Comment | National Post)

• In 2011, according to foreign affairs department data, Canadian firms exported $16.8-billion worth of goods and services to China. Chinese exports to Canada were worth three times that. The lopsidedness extends to investment: Canadian direct investment in China was worth about $4.5-billion in 2011. Chinese investment in Canada was more than twice that, at $10.9-billion.
• This explains the Harper government’s zeal to ease and secure Canadian business access to the Chinese market. And it’s not enough that we be in the market, goes the argument: We need protection from the vagaries of the Chinese system, which, from a governance standpoint, is a horror show.
• It’s a fair point: whatever one may think of China’s politics, its rise is locked in. China requires raw materials and energy and Canada has them in abundance. To ignore this, particularly given the economic quagmire in Europe and fitful growth in the United States, would be foolish.
• Here’s where things get sticky. This deal has not been debated in the House, let alone more broadly across Canada. There has been thus far, a total of one hour of committee time devoted to its study. Yet once in place, it cannot be abrogated for fifteen years. Once notice is given, it expires within one year – in theory. Article 35 states that, as regards any investments made “prior to the date of termination,” the agreement remains in place for an additional 15 years – extending its practical span to 31 years, at minimum.
• Another clause that jumps out: A signatory “may not require that an enterprise of that Party… appoint individuals of any particular nationality to senior management positions.” Forget about requiring Canadian representation, for example, in the executive suite of Calgary-based Nexen Inc., following a proposed $15.1-billion takeover by China’s state-owned energy firm China National Offshore Oil Co.
• For the dispute-resolution process may occur behind closed doors, at the discretion of the “contracting parties.” Tribunal awards, reads Article 28, “shall be publicly available, subject to the redaction of confidential information.” But “to the extent necessary to ensure the protection of confidential information, including business confidential information, the Tribunal may hold portions of hearings in camera.”
• I remember the great Canada-U.S. Free Trade debate of 1988. The country was transfixed by it for months and an election was fought over it. That deal involved a friendly democracy and our greatest ally. This one, which is potentially as far-reaching, has been concluded with virtually no public debate. It involves the rising strategic adversary of our greatest ally. And it is already creating pressure on the Harper government to approve the Nexen deal, which polls show a majority of Canadians oppose.

Will Canada resist state corporatism or get engulfed by it?