Canada and China Deepen Economic Relationship

Canada and China have recently committed to several important joint initiatives intended to deepen and expand their economic relationship. These initiatives were adopted during Canadian Prime Minister Stephen Harper’s visit to China in early February. Prime Minister Harper commented that the agreements "in such a wide range of areas, are further testimony that we are taking relations to the next level and further strengthening our strategic partnership."

Foreign Investment Promotion and Protection Agreement

One of the most important outcomes of the visit was the conclusion of negotiations toward a Foreign Investment Promotion and Protection Agreement (FIPA) between Canada and China. The FIPA, which has been under negotiation since 1994, is expected to facilitate bilateral investment flows by providing a more stable and secure investment environment.

The FIPA is designed to protect and promote Chinese investment in Canada as well as Canadian investment in China through legally binding provisions. By ensuring greater protection against discriminatory and arbitrary practices, and enhancing predictability of a market’s policy framework, the FIPA will allow investors to invest with greater confidence. The FIPA is also expected to allow for international arbitration in cases of disputes.

The agreement must still be legally reviewed and then signed and ratified by both countries before it can come into force.

Other Areas of Cooperation

A number of other key agreements in a wide range of areas were also announced during Prime Minister Harper’s visit to China:

  • The completion of substantive negotiations on a protocol that will allow for increased exports of Canadian uranium to China for civilian purposes, such as nuclear power generation.
  • A Memorandum of Understanding on Sustainable Development of Natural Resources intended to provide a platform to promote the sharing of expertise, technologies and services in the natural resources sector.
  • Renewal of the Memorandum of Understanding on Energy Cooperation, which is expected to attract Chinese capital investment to Canada and improve access to Chinese markets for Canada’s energy resources, technology and related services.
  • Initiatives on agriculture, science and technology, research and educational cooperation.

Bilateral trade and investment flows between Canada and China have experienced significant growth in recent years. The new initiatives are expected to further encourage and strengthen the countries’ strategic economic partnership.

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This publication is a general discussion of certain legal and related developments and should not be relied upon as legal advice. If you require legal advice, we would be pleased to discuss the issues in this publication with you, in the context of your particular circumstances.

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