Investment chapter summary

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Agreement fact sheets

The objective of an investment chapter in a free trade agreement (FTA) is to establish a framework that provides investors with a predictable, stable, transparent and rules-based investment climate. It is intended to help ensure that Canadian investors are treated fairly and have an equal chance to compete for business abroad. In the Canada-United States-Mexico Agreement (CUSMA), the investment chapter was updated to bring it into line with the recent treaty practices of the three parties. The chapter contains a comprehensive and robust set of obligations similar to those found in other FTAs, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). It also includes a corporate social responsibility (CSR) provision that reaffirms the importance of encouraging businesses to respect CSR standards, such as the OECD Guidelines for Multinational Enterprises. This CSR provision provides an illustrative list of CSR areas, including gender equality and Indigenous and Aboriginal peoples’ rights.

CUSMA will not include a trilateral investor-state dispute settlement (ISDS) mechanism. Under CUSMA, the United States and Mexico have agreed to maintain a bilateral ISDS mechanism for a narrow set of disciplines and sectors. The parties have also agreed to a transitional period of three years, during which ISDS under the original NAFTA will continue to apply only for investments made prior to the entry into force of CUSMA. Apart from this transition period for existing investments, U.S. investors will not be able to launch an ISDS claim against Canada. The only recourse will be State-to-State dispute settlement if the U.S. government were to bring a claim against Canada on a U.S. investor’s behalf. However, if successful, such claims would not result in the award of any damages. This is important because, since 1994, U.S. investors have received $205 million in damages and settlement from cases brought against Canada under NAFTA.

Technical summary of negotiated outcomes: Investment

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