On September 9th, 2012, Canada’s Minister of International Trade and Minister for the Asia-Pacific Gateway, Ed Fast, and China’s Minister of Commerce, Chen Deming, signed a Foreign Investment Promotion and Protection Agreement (FIPA) between Canada and China (see News Release: PM announces signing of new investment agreement with China). Prime Minister Harper and President Hu Jintao of China presided over the signing ceremony, which followed the announcement of the conclusion of negotiations for the FIPA in February 2012, during the Prime Minister’s visit to China (see News Release: PM announces agreement that will facilitate investment flows between Canada and China ). Both Canada and China are now moving forward with their respective domestic ratification processes to bring this Agreement into force.
Canada and China began negotiation of a Foreign Investment Promotion and Protection Agreement in 1994. Negotiations were put aside until the completion of China's accession to the WTO, and then resumed in September 2004. The last formal round took place in January 2012 in Beijing. With the conclusion of negotiations, Canada has secured a high-standard agreement with comprehensive scope and coverage and substantive obligations pertaining to national treatment (post-establishment), most-favoured-nation treatment (pre- and post-establishment), minimum standard of treatment, transparency, performance requirements, transfers and expropriation. Additionally, this Agreement will grant investors access to investor-state dispute settlement that is governed by detailed rules in the Agreement on standing, procedural requirement and enforcement. While the FIPA may be a positive and important factor in investors’ decisions on whether to invest in the territory of the other party, it will be but one of many factors. The main purpose of a FIPA is to ensure greater protection to foreign investors against discriminatory and wholly arbitrary practices, to provide adequate and prompt compensation in the event of an expropriation and to enhance predictability of the policy framework affecting foreign investors and their investments. The FIPA will preserve the right of both Canada and China to regulate in the public interest.
Given China’s rapidly expanding economy and increasing opportunities for foreign direct investment (FDI), the potential of China as a destination for Canadian investment is significant. Canadian investors have expressed interest in a broad range of sectors in China, including transportation, biotechnology, education, finance, information technology, manufacturing, and natural resources. Chinese firms have also expressed a strong interest in investing in Canada, including in the natural resources, renewable energy, information and communication technology, food processing, pharmaceuticals and natural medicine, and advanced manufacturing sectors. The stock of Canadian Direct Investment in China was valued at nearly C$4.5 billion at the end of 2011. The stock of FDI into Canada from China was C$10.9 billion at the end of 2011.
If you have questions or comments, please contact Foreign Affairs and International Trade Canada at:
Investment Trade Policy Division (TNI)
Foreign Affairs and International Trade Canada
Lester B. Pearson Building
125 Sussex Drive
Ottawa, Ontario K1A 0G2