Investment Chapter

Investment is a key driving force for economic growth and competitiveness in Canada. It plays a crucial role in spurring innovation and linking Canada to global value chains. Canada has a clear interest in ensuring the stability, transparency, predictability, non-discrimination and protection of Canadian individuals and companies that invest abroad. Canada does not have any existing agreements with investment obligations with Australia, Brunei, Japan, Malaysia, New Zealand, Singapore or Vietnam. Through the TPP, Canada has secured commitments in investment liberalization from these countries.

A comprehensive TPP Investment Chapter establishes a strong, rules-based framework, including provisions on expropriation. This provides Canadian investors with a stable, predictable investment environment in TPP countries. The Agreement also contains provisions to treat investors from Canada and TPP countries in a non-discriminatory manner. In short, TPP investment provisions, including access to international arbitration for dispute settlement, can help to build Canadian investor confidence in TPP markets.

Technical Summary of Negotiated Outcomes: Investment Chapter

  • Sets out strong and predictable investment rules, including a requirement that Canadian businesses be treated fairly, equitably and in a non-discriminatory manner in TPP countries.
    • This will reduce the risks associated with investing abroad and help ensure that Canadian investors can compete on an equal footing with other investors.
  • Includes protection from expropriation without prompt and adequate compensation.
  • Provides access to an independent international investor-state dispute settlement (ISDS) mechanism that is prompt, fair and transparent, and subject to appropriate safeguards.
  • Preserves the full rights of governments to legislate and regulate in the public interest, including for public health and environmental reasons.
  • Preserves Canada’s ability to review certain foreign investments pursuant to the Investment Canada Act.
  • Includes reservations under Services and Investment for existing and future programs and policies for key sensitive sectors, including with respect to cultural industries that aim to support, directly or indirectly, the creation, development or accessibility of Canadian artistic expression and content.

Protecting Canada’s interests

International arbitration does not restrict any level of government from legitimately regulating in the public interest. This includes regulations with respect to health, social, environmental and national security issues. Disputes are a normal part of every trade relationship. However, they represent a very small portion of the billions of dollars in investments that Canada attracts and the billions of dollars that Canadian companies invest abroad.

Attracting investment in Canada

Canada has always been open to investment, welcoming and encouraging foreign companies to invest in Canada. Canada’s foreign-investment policy framework provides a welcoming environment that maximizes the benefits of foreign direct investment for Canadians while preserving other public policy interests.

The Investment Canada Act (ICA) is a part of this framework. The ICA provides for the review of significant investments in Canada by non-Canadians in a fast-changing global investment landscape. The TPP recognizes the importance of the ICA and, similar to all of our other free trade agreements, Canada maintains the ability to review certain foreign investments.

The TPP also includes rules to protect investors. These rules ensure that foreign investors will be treated equally as domestic investors or other foreign investors in TPP countries operating in similar situations. These rules include ISDS procedures, which provide for independent access to an impartial and timely conflict-resolution process.

ISDS rules have been a standard feature of Canada’s comprehensive free trade agreements since NAFTA and assure investors that their investments will be protected from discriminatory or arbitrary government actions.

Nothing in the TPP prevents the Parties from regulating in the public interest. Nothing allows foreign companies to force a government to change its laws or regulations. Foreign investors are subject to the same laws and regulations as Canadian investors, including those aimed at protecting the environment and ensuring high labour, health and safety standards.

Greater certainty for investors

A small business owner produces a line of cell phone and tablet cases. The products sell very well in Canadian stores and online to American consumers. The owner would like to expand into Asia, and thinks the best way to do this is to invest in a small manufacturing facility in Malaysia.

This is a big step for a small-business owner. Fortunately, the Trans-Pacific Partnership’s investment rules provide greater certainty, transparency and protection to Canadians who want to invest in TPP markets such as Malaysia. The Agreement will ensure that the Malaysian government treats this company no less favourably than it treats Malaysian businesses. Investing abroad can be a risky undertaking, but the Agreement reduces the risk for Canadians investing in TPP countries.