Canada's Prime Minister Stephen Harper shakes hands with Chinese Premier Wen Jiabao (R) after a signing ceremony at the Great Hall of the People in Beijing February 8, 2012.
Credits: REUTERS/Diego Azubel/Pool
BEIJING - After 18 years of negotiations, Canada and China have reached an agreement on an important trade deal that will protect investments by Canadian companies in China.
The two countries announced they had successfully concluded negotiations of a Foreign Investment Protection Act (FIPA). Both countries will now conduct a legal review of the agreement and then ratify.
Ratification in Canada will include a review by Parliament.
"Investment flows between Canada and China are at an all-time high, contributing significantly to jobs and economic growth in both countries," Harper said in a statement. "Today's landmark agreement will further facilitate these flows by providing a more stable and secure environment for investors on both sides of the Pacific."
Canadian companies have long complained that their investments in China can sometimes be subject to arbitrary changes by the Chinese government. The Canadian government says that the FIPA will allow new investment in China to take place "in a stable, secure manner."
Canada and China first began working on an investment protection agreement in 1994. There have been 12 rounds of negotiations.
"This lack of openness is an obvious source of frustration for Canadian investors, particularly given the recent dramatic increase in Chinese investment in Canada," John Manley, CEO of the Canadian Council of Chief Executives, said in a speech here in November. "Canadian investors ought to be afforded the same access to China that Chinese investors are afforded."
Financial services firms like Manulife and manufacturers like Bombardier have been keen to to put more money into China but have been worried that they had little legal protection if they got into disputes with Chinese businesses.
An investment protection agreement is expected to ease those concerns and help right a lopsided investment balance between the two countries.
At the end of 2010, Canadian companies have invested almost $5 billion in Chinese enterprises, while Chinese companies have invested $14 billion.
The FIPA announcement was one of several trade, technology and scientific agreements the two countries made here Wednesday.
The others include:
- An agreement to allow for expanded access to the Chinese market for Canadian producers of beef and tallow
- Seven joint research and development projects valued at $10 million and a call for proposals for an additional $18 million worth of science and technology projects
- A memorandum of understanding for energy co-operation
- A memorandum of understanding for both countries to participate in protecting parks and forests in each country
- A memorandum of understanding on sustainable development to allow government departments, scientists and companies to exchange information in the areas of clean energy, earth sciences and mineral resources
- A memorandum of understanding on joint canola research