VLADIVOSTOK, Russia – Canada and China signed a trade agreement here Sunday that Prime Minister Stephen Harper said will give Canadian companies firmer legal footing when they invest in China.

Harper and Chinese President Hu Jintao witnessed the signing of the Canada-China Foreign Investment Promotion and Protection Agreement (FIPA) after the two men held a private one-on-one meeting on the margins of the annual Asia Pacific Economic Co-operation (APEC) summit.

“This agreement with China — the world’s second largest economy — will provide stronger protection for Canadians investing in China, and create jobs and economic growth in Canada,” Harper said in a statement.

The two countries have been working on the FIPA for several months, but the signing ceremony comes as the federal government considers whether it ought approve a $15-billion bid by a Chinese state-owned company, CNOOC, for Calgary-based oil-and-gas producer Nexen.

Harper’s cabinet is believed to be deeply divided over that potential acquisition.

One of the sticking points for those who oppose the deal is the issue of reciprocity, the notion that if Chinese companies can buy up Canadian firms, then Canadian companies ought to be able to buy Chinese firms.

The Bank of Nova Scotia has an eight-month old bid outstanding for a bank in China but approval for that bid is stuck in red tape in China.

The FIPA signed by Canadian Trade Minister Ed Fast and his Chinese counterpart Sunday will give Canadian firms better protection in Chinese courts and should help Canadian firms bid on more equal terms for business contracts in China.

It also gives Chinese firms the same rights in Canada.

Though parliamentary approval is not required for this FIPA with China, the Conservatives said they will put it before Parliament for a 21-day period this fall before cabinet puts the agreement into force.