Question Period Note: Foreign Investment Promotion and Protection Agreements

Canada negotiates Foreign Investment Promotion and Protection Agreements (FIPAs) to ensure a stable investment environment for Canadian investors abroad and to attract investment capital to Canada.

• Clear, balanced and enforceable rules provide investors with a stable and attractive investment environment.
• Investor-State dispute settlement (ISDS) offers a neutral mechanism, de-politicizing disputes while preserving governments' right to regulate in the public interest.
• Effective investment protection rules complement Canada's broader trade-diversification and FDI-attraction agenda.
• Canada has implemented 39 FIPAs with other countries. The government is also currently engaged in eight FIPA negotiations (Argentina, Georgia, Qatar, Pakistan, Tanzania, United Arab Emirates, Uruguay, and Zambia).

Canada is a significant net exporter of capital and Canadians hold roughly $2.47 trillion in direct investments abroad. Canada has supported those investments through standalone FIPAs, as well as investment chapters in free trade agreements (FTAs). These agreements provide legally binding rights and obligations that are designed to ensure investors are treated in a fair and non-discriminatory manner based on internationally recognized standards. These rules are enforced by an ISDS mechanism, which provides a neutral, apolitical mechanism to resolve investment disputes.

Based on standing policy authority to negotiate FIPAs, Canada has implemented 39 FIPAs, and one foreign investment promotion and protection arrangement with Taiwan. The government is currently engaged in eight FIPA negotiations and is exploring future negotiations with several countries.

In 2021, the government released a modernized and inclusive FIPA model, including clearer ISDS rules and enhancing access to benefits for women, Indigenous peoples and SMEs, following a comprehensive three-year review process. This included broad public engagement, consultations with other government departments, provinces and territories, experts and stakeholders, and an internal departmental technical review. The reaction from stakeholders and partners to the new model has been broadly positive, with experts praising it as an example of a high quality, modern treaty.

In most FTA negotiations, the government has looked to include an investment chapter generally based on the FIPA model.

Under Canadian FIPAs, Canada has faced two claims by foreign investors, one under the Canada-Egypt FIPA (won by Canada) and the other under the Canada-USSR FIPA (currently ongoing). Canadian firms are heavy users of ISDS being the 6th most frequent user in the world ahead of France, Switzerland and China. Canadian firms have won at least 12 ISDS awards worth about US $3.2 billion under FIPAs and other trade agreements.

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