The Canada-China FIPA entered into force on October 1, 2014, after long negotiations that spanned well over a decade. This agreement represents China’s 140th bilateral investment treaty and Canada’s 25th. The main purposes of a FIPA are to establish clear investment rules and measures to protect foreign investors against discriminatory or arbitrary government practices, to provide effective compensation in the event of an expropriation and to enhance the overall predictability of the policy framework governing foreign investments. The existence of a FIPA has proven useful in terms of promoting the Parties’ respective markets as a more attractive and stable destination for investment with clearly defined and enforceable rules.
China’s continued growth as an economic superpower is significant for global investment and holds particular importance for Canadians, now that the Canada-China FIPA is in place. Foreign Direct Investment (FDI) has rapidly become an essential corporate strategy for Canadian companies competing in the global economy, allowing them to gain access to foreign markets and acquired new technologies among a panoply of other important benefits. Although the statistics show that inflows of FDI from China are increasing, they remain but a small portion of total FDI inflows into Canada, leaving much untapped potential for expansion and growth.
For investors and or/business owners in Canada and China, it is important to gain a basic understanding of the Canada-China FIPA’s implications and how they may affect your bottom line. The FIPA offers many substantive investor protections that can often be leveraged by investors and/or companies, whose investments may have been negatively affected by a Government measure, to secure proper compensation. For a preliminary overview of the Canada-China FIPA, the protections it offers to investors from both countries and its dispute settlement mechanisms (ISDS) see our presentation “The Canada-China FIPA and its Impact on Investment Relations”
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