Matthew Seddon

There is significant, well-founded public ire against the Canada-China Foreign Investment Promotion and Protection Act (Canada-China FIPPA), signed on November 1 in Russia (Mackinnon 2012), and it shows no sign of tapering (Trew 2012).  Of course, some outrage accompanies any policy change, especially one that has not faced an iota of public scrutiny (Scoffield 2012) but how this treaty will affect Canadian federalism has garnered an unusually significant amount of attention.  I would like to go where Professor Van Harten—the Osgoode Law professor who questions the constitutionality of the Canada-China FIPPA (Van Harten 2012)—doesn’t and assess the treaty’s effect on Canadian federalism and trade policymaking without addressing the legality of the Canada-China FIPPA.

Despite international relations being exclusively under federal jurisdiction, since the Canada – US Free Trade Agreement provinces have had institutionalized input into international trade negotiations (Skogstad 2008).  This practice has culminated in the Canada European Union Comprehensive Economic and Trade Agreement (CETA), where provinces have enjoyed an exulted position in regard to other free trade negotiations and are involved in at least half of the agreement’s negotiating groups (Kukucha 2010).  However, this trend has been ignored for the negotiation of the Canada-China FIPPA (Van Harten 2012).

Is it necessary that the provinces be consulted on what is constitutionally a purely federal jurisdiction?  I argue yes. International trade is responsible for 60% of Canadian GDP (Foreign Affairs and International Trade Canada 2012); it is too important to risk making a mistake.  Not only is trade a large part of the Canadian economy, it can have adverse effects on employment levels, labour productivity, consumer choice, worker displacement, worker earnings, firm competition, price levels, and human capital investment (Trefler 2004, 1-3).

I’m not arguing that trade is bad; trade is an enormously important part of the Canadian economy and an essential component of continued economic growth.  However, because of the risk inherent in increased trade it is not unreasonable to posit that large-scale agreements such as the Canada-China FIPPA should be designed transparently and thus require a large amount of study by the jurisdictions that implement them and public input by those affected.  Not consulting with provinces results in deficits of legitimacy, knowledge and access, which can result in severe adverse economic effects (Hocking 2004, 8-10).

Disregarding that consultation with the provinces is poor policymaking, it is also an affront to Canadian federalism. While excluding the provinces from foreign policymaking is consistent with Harper’s “open federalism” (Office of the Prime Minister of Canada 2006) it is also inconsistent with his record on other trade deals such as the CETA (Kukucha 2010), Panama, Columbia & Peru, and recently the Trans-Pacific Partnership.

Therefore, it is unfair to exclude the provinces from an extremely significant trade deal, while including them in many others, even ones of comparable size like CETA and the Trans-Pacific Partnership.  To depart on the long-standing practise of consulting with the provinces on trade policy is a huge step backward in Canadian federalism and the development of effective trade policy making.

Matthew Seddon is a 2014 MPP candidate at the School of Public Policy and Governance.  He holds an Honours Bachelor of Arts in Public Policy and Economics from the University of Toronto. He has held contract positions at the Ministry of Energy, Ministry of Correctional Services and Community Safety and Electricity Distributors Association.  His interests include economic growth, energy, trade, monetary policy and Canadian federalism.

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Works Cited

Foreign Affairs and International Trade Canada. Minister MacKay Highlights Benefits of Canada-EU Trade Agreement for Nova Scotia. October 28, 2012. http://www.international.gc.ca/media_commerce/comm/news-communiques/2012/10/28a.aspx?view=d.

Hocking, Brian. “Changing the terms of trade policy making: from the ‘club’ to the ‘multistakeholder’ model.” World Trade Review, March 2004: 3-26.

Ipsos North America. Overall, Eight in Ten (81%) Support a Free Trade Agreement Between Canada and the European Union. September 16, 2012. http://www.ipsos-na.com/news-polls/pressrelease.aspx?id=5772 (accessed November 1, 2012).

Kukucha, Christopher J. “Provincial Pitfalls: Canadian Provinces and the Canada-EU Trade Negotiations.” CPSA Annual Conference 2010. Montreal: Canadian Political Science Association, 2010.

Mackinnon, Mark. Canada-China trade agreement to protect investors: Harper. September 9, 2012. http://www.theglobeandmail.com/report-on-business/canada-china-trade-agreement-to-protect-investors-harper/article4530337/.

Office of the Prime Minister of Canada. Prime Minister promotes open federalism. April 21, 2006. http://pm.gc.ca/eng/media.asp?id=1123.

Scoffield, Heather. Opposition, activists in last-minute push for more scrutiny of Canada-China treaty. October 30, 2012. http://www.theglobeandmail.com/news/politics/opposition-activists-in-last-minute-push-for-more-scrutiny-of-canada-china-treaty/article4762814/ (accessed November 1, 2012).

Skogstad, Grace. “Canadian Federalism, International Trade and Regional Market Integration in an Era of Complex Sovereignty.” In Canadian Federalism: Performace, Effectiveness and Legitimacy, by Herman Bakvis and Grace Skogstad, 223-245. Toronto: Oxford University Press, 2008.

Trefler, Daniel. “The Long and Short of the Canada-U.S. Free Trade Agreement.” University of Toronto, Febrary 2004: 1-52.

Trew, Stuart. Harper again rejects debate on China investment treaty – But public pressure is having an impact. October 26, 2012. http://canadians.org/blog/?p=17555.

Van Harten, Gus. What if the Canada-China investment treaty is unconstitutional? October 23, 2012. http://www.theglobeandmail.com/commentary/what-if-the-canada-china-investment-treaty-is-unconstitutional/article4629972/.