Canada ratifies China deal, may help smooth relations

By Randall Palmer OTTAWA (Reuters) - Canada has finally ratified a foreign investment protection agreement with China after a two-year delay in a step that may help ease tensions between the two countries and smooth the way for a possible visit to China by Prime Minister Stephen Harper. International Trade Minister Ed Fast announced the ratification on Friday and said the agreement, designed to give investors greater legal certainty, would come into effect on Oct. 1. It was signed in September 2012. Relations between Ottawa and Beijing have been strained by China's detention last month of Canadians Kevin and Julia Garratt on suspicion they stole state secrets and for threatening national security. The Garratts, who ran a coffee shop in Dandong on the border with North Korea, deny the charges. The Canadians were detained less than a week after Canada accused Chinese hackers of breaking into a government computer network, a charge Beijing denied. A Canadian government official, however, dismissed any connection between the Garratts and the foreign investment protection agreement (FIPA), noting that the agreement was important on its own merits for promoting trade. "Announcing the FIPA, and consular issues, are separate things that are dealt with separately," said the official, speaking on condition of anonymity. The Chinese embassy declined to say whether the ratification could lead to freedom for the Garratts or to a Harper tour. "The Chinese side is willing to work with the Canadian side to promote economic and trade cooperation to a new level, and further advance the development of China-Canada strategic partnership," said embassy spokesman Yang Yundong. The Chinese ambassador, Luo Zhaohui, said in an article last month that there were no difficulties that could not be overcome. What China watchers are looking for is whether Harper will make a bilateral visit to China for a few days after attending a Nov. 10-11 Asian regional summit in Beijing, an idea both sides had informally discussed. "Seeing as we've ratified this thing in good faith, one would hope that the Chinese would see their way clear to resolving our concerns over the arrest of the Garratts, which would then make it possible for the prime minister to have the three-day tour in China," said Brock University professor Charles Burton, a former Canadian diplomat who served two tours in China. "The prime minister appears to have taken a personal concern in this matter and really feels that it's important to be resolved, or otherwise he's unlikely to spend time with the Chinese leadership." Canada's main opposition New Democratic Party criticized the agreement, saying it would give Chinese companies in Canada the right to sue if federal or provincial governments legislated environmental standards that affected their investments. Paul Evans, a professor at the University of British Columbia, said that for all the talk about what the Chinese firms might do, it gave Canadian companies important protection in China. "Almost everyone who's looked at it (says) it's the best (such agreement) anybody's negotiated with China and is likely to be the template for some other negotiations," he said. The Canadian government says the agreement ensures greater protection against discriminatory and arbitrary practices and provides prompt compensation in the event of expropriation. It says the deal preserves the right of both sides to regulate in the public interest. (Editing by Amran Abocar and Grant McCool)