The pending takeover of Canadian oil and gas producer Nexen by the state-owned Chinese National Offshore Oil Corporation is attracting a lot of attention. There are legitimate questions regarding whether this foreign takeover is in the national interest or to the “net benefit” of Canada. By contrast, the Canada-China Foreign Investment Protection Agreement (FIPA) announced by the Prime Minister in February and signed in early September has received much less scrutiny.

This lack of debate is surprising. It is widely acknowledged that there will be a flood of foreign investment from cash-rich China in the coming decades. Given China’s prodigious appetite for raw materials, Canada’s resource sector will be a prime target. The Canada-China FIPA will govern all future Chinese investment in Canada, not just in the energy sector. The issues raised by this treaty deserve a thorough public airing.

The Canada-China deal is sometimes mistakenly referred to as a “trade agreement”. But it is concerned exclusively with foreign investment and investor rights, not international trade. The treaty, which has just been publicly released, deviates from Canada’s usual approach to investment protection agreements.

Traditionally, China has been reluctant to fully embrace powerful protections for foreign investment like those in the NAFTA’s investment chapter. For the most part, Chinese negotiators held their ground in the talks with Canada.

Unlike the NAFTA, the Canada-China FIPA applies to investments only after they have been established in either country. Foreign investors who are seeking to invest, but not yet admitted, are not protected by the agreement. This is good news for the majority of Canadians. It means that Canada remains free to review planned and future Chinese investments, like the Nexen deal, and to decide whether they are in Canada’s best interest. But it will not be welcome news to Canadian businesses seeking to set up shop in China.

China also balked at putting restrictions on the ability of governments to apply “performance requirements” on investments. This means that the Chinese government can continue to impose conditions on foreign investors, such as requirements to use local suppliers, take local business partners, train local workers and management, and transfer technology. China has used these and other interventionist strategies very effectively to build its industrial might.

The catch, however, is that Canada is not free to follow this successful Chinese playbook. Even though performance requirements are excluded from the Canada-China deal, Canada has already largely surrendered its ability to use them under the NAFTA.

It is a little-known fact that the NAFTA investment chapter prohibits Canadian governments not only from applying performance requirements on investments from the U.S. and Mexico, but also bans them on investments of any other nationality. The U.S. feared that if Canadian and Mexican governments were free to negotiate performance requirements with investors from non-NAFTA parties, then this would give foreign investors from outside North America an advantage, because they could sweeten deals with offers to boost local benefits.

As a result, the current Canada-China investment deal is not reciprocal. China can continue to use performance requirements to boost local benefits from foreign investment, while Canada cannot.

One way that the Canada-China FIPA copies the NAFTA is by including an investor-to-state dispute settlement mechanism. This powerful investor right continues to be abused under the NAFTA. To date, Canada has faced over 30 investor-state claims under the NAFTA, lost or settled five cases, been forced to pay over $157 million in damages, and incurred tens of millions more in legal costs.

Again, there is an underlying issue of balance. Given the pervasive role and influence of the Chinese state in all facets of its national economy, it would be a brave or foolhardy Canadian investor who would invoke investor-state arbitration against the Chinese government. This would be a truly desperate move. There are options already available to Canadian investors, including government-sponsored or private insurance, that are more appropriate for hedging against potential investment risks in China.

The substantive investor rights in the Canada-China deal are not as extreme as those in the NAFTA. There are stronger exceptions for environmental protection, cultural industries and financial sector regulation. But the FIPA still poses new threats, for example, to environmental regulation. If an established Chinese investor objects to stronger environmental regulation over the oil sands or shale gas fracking, it could be left up to an unaccountable arbitration tribunal - not to Canadian legislatures or the Canadian courts - to decide if these new measures are “necessary” or applied in an “arbitrary” or “unjustifiable” manner. In another nod to the Chinese government’s concerns, the FIPA’s transparency requirements for investment arbitrations are considerably weaker than under the NAFTA. So these sensitive rulings by arbitral tribunals will be made largely in secret.

The investor rights and investor-state arbitration mechanism in the Canada-China FIPA raise fundamental questions about reciprocity, accountability, transparency and the rule of law, both for Canadian and Chinese citizens. These questions ought to be answered before the treaty is ratified, but it now looks like both governments, characteristically, are pushing ahead without public or parliamentary debate.

Scott Sinclair is senior trade policy researcher at the Canadian Centre for Policy Alternatives. This op-ed was originally published in iPolitics.