On 12 September 2014, the Government of Canada announced it had ratified its Foreign Investment Promotion and Protection Agreement (FIPA) with China. The ratification occurred against a backdrop of continuing rapid growth in China’s economy and Canadian’s increasing interest in investing there. Canadian direct investment in China was valued at CDN$4.9 billion for 2013, with China’s investment into Canada valued at about CDN$16.6 billion. China is currently Canada’s second-largest trading partner (second only to the United States), with two-way bilateral trade of approximately CDN$73.2 billion for 2013.
Canada and China began negotiating the FIPA over twenty years ago in 1994. These slowed as China prepared for accession to the World Trade Organization. Negotiations resumed in earnest in 2004. On 9 September 2012, Canada’s Minister of International Trade and Minister for the Asia-Pacific Gateway, Ed Fast, and China’s Minister of Commerce, Chen Deming, signed the FIPA. China ratified the deal almost immediately, but the Canadian Government did not, due to political opposition and a Court challenge by a First Nations group. Two years later, however, Canada has now ratified the FIPA.
In short, FIPAs are bilateral agreements entered into to protect and promote foreign investments by nationals of the country parties. They set out the respective rights and obligations of the signatory countries with respect to the treatment of foreign investment. FIPAs aim to ensure foreign investors are afforded treatment not worse than similarly situated domestic investors. In general, FIPA’s provide that foreign investors: (i) cannot have their investments expropriated without prompt and adequate compensation; and (ii) will be treated equitably and fairly in accordance with the minimum standard set by customary international law. FIPA’s set out a clear set of rules under which investments are made and investment disputes will be resolved.
Like the majority of Canada’s other FIPAs, the FIPA with China includes core rights, obligations and protections (which are essentially those found in the NAFTA, Chapter Eleven). Those include rights, obligations and protections relating to national treatment (post-establishment), most-favoured nation treatment (pre-and post-establishment), minimum standard treatment, transparency, performance requirements, transfers and expropriation obligations and direct access to investor-state dispute settlement for foreign investors. Canada now has more than thirty FIPAs and Free Trade Agreements, like the NAFTA, in force. Canada’s FIPA with China will enter into force on 1 October 2014.