23 Sept 2016
Canadian Leader’s Visit to Asia Yields Discussions on Possible Canada-China FTA, Entry into Force of Investment Deal with Hong Kong
Press reports indicate that Canadian and mainland Chinese companies signed 56 agreements valued at more than US$1.2 billion as part of Prime Minister Justin Trudeau’s 30 August to 6 September official visit to mainland China, which included stops in Beijing, Shanghai and Hangzhou. According to a Canadian government press release dated 6 September, Prime Minister Trudeau’s goals for the visit were to build the foundation for a stronger, more stable Canada-China relationship and to explore how both economies could harness the untapped potential and benefits that closer relations could provide, particularly in the areas of trade, investment and environmental co-operation.
Among other achievements, the two sides agreed to deepen their trade and investment relationship in the areas of energy, clean technology, agriculture, infrastructure, transportation, financial services, innovation, and science and technology as part of a broader effort by the Canadian government to “create a stronger, more stable and long-term relationship with China.” Notably, after meeting with Trudeau Chinese Premier Li Kequiang reportedly stated that mainland China and Canada would explore the possibility of a potential free trade agreement. The first step in that process would ostensibly involve bi-lateral discussions and a subsequent study on the feasibility of such a deal.
Prime Minister Trudeau also made a stop in Hong Kong where he discussed with Hong Kong’s Chief Executive CY Leung ways to increase trade and maximise investment between the two economies. The two sides also announced the entry into force of the Canada-Hong Kong Foreign Investment Promotion and Protection Agreement, which sets a clear framework governing bi-lateral investment. Concluded in May 2015 and signed in February 2016, the agreement will help further promote investments between Canada and Hong Kong and demonstrates Canada’s commitment to deepening economic ties with Asia.
Canadian authorities indicate that FIPAs help ensure fair treatment for investors and create a more predictable and transparent business environment through reciprocal, legally binding provisions. These types of arrangements set out clear rules governing investment relations, including in the areas of dispute resolution and protection against discriminatory and arbitrary practices, giving businesses greater confidence to invest.
The stock of Canadian direct investment in Hong Kong reached CAN$7.3 billion in 2015, making Hong Kong Canada’s third most popular destination for investment in Asia. Canadian investments are in a wide variety of sectors, including financial services, sustainable technologies, professional services, agri-food, transport, education, and information and communication technologies. Hong Kong is also an important source of foreign direct investment in Canada, with its stock reaching CAN$16.4 billion in 2015.