Negotiations for a bilateral Foreign Investment Promotion and Protection Agreement [“FIPA”] between Canada and China have been ongoing for over a decade. They commenced in 1994, were interrupted pending China’s accession to the World Trade Organization [“WTO”], and resumed in September 2004. Final talks were held in January 2012 and a Declaration of Intent to conclude negotiations towards a FIPA was signed in February 2012 during Prime Minister Harper’s visit to China. The Canada-China FIPA [“C-C FIPA” or the “Agreement”] was signed on September 9, 2012 in Vladivostok, Russia, on the sidelines of the APEC Leaders’ Summit. This agreement represents China’s 140th bilateral investment treaty and Canada’s 25th. The C-C FIPA was tabled on September 21, 2012 for a 21-day sitting period which expired on November 1, 2012. The next step involves ratification of the Agreement by the Cabinet. Once China has ratified the agreement through its domestic legal procedures, the Agreement will come into force. This could occur as early as December 2012.
A TOOL TO PROTECT INVESTORS’ RIGHTS -
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.3 The existence of a FIPA has proven to be useful in terms of promoting the parties’ respective markets as a stable destination for investment with clearly defined and enforceable rules. Foreign investors often look to the existence of a strong investment protection agreement as a key consideration in their decision-making process.
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