Canada-China Investment Protection Agreement Ratified

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On September 12, 2014 the Canadian government announced that the foreign investment promotion and protection agreement (FIPA) between Canada and China has been ratified and will come into force on October 1, 2014.

The Foreign Investment Promotion and Protection Agreement

The FIPA, which was signed in 2012 and has been under negotiation since 1994, is expected to facilitate bilateral investment flows by providing a more stable and secure investment environment. It 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 by enhancing predictability of a market’s policy framework, the FIPA will allow investors to invest with greater confidence. The FIPA also allows for international arbitration in cases of disputes.

Significance of the Agreement

The FIPA represents a culmination of an ongoing process of economic engagement between Canada and China which has seen very significant growth in bilateral trade and investment in recent years. It provides Chinese and Canadian investors with the confidence needed to further their investments in Canada and China, respectively, by mandating increased transparency, stability and nonpartisan dispute resolution. We note that the United States does not yet have a bilateral investment treaty with China. The ratification of the FIPA by the Canadian government, ahead of Prime Minister Stephen Harper’s expected state visit to China later this fall, provides a clear signal of Canada’s commitment to its growing bilateral economic relationship with China.

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