Related News
Home » Business » Biz Commentary
China-Canada deal to boost investment and benefit trade
By Tom Byrne |
September 19, 2012, Wednesday
|
Print Edition
Print Edition
ON September 8, during the Asia-Pacific Economic Cooperation summit in Vladivostok, Russia, China and Canada signed a Foreign Investment Protection Agreement (FIPA), the culmination of an 18-year negotiation that began in 1994.
If ratified, the FIPA would be credit positive for both China and Canada because measures that boost investment and trade will help offset the negative effect of weak global growth.
Liberal investment regimes that protect investor rights and enhance predictability shield commercial interests from political pressures, and support the economic growth that underpins sovereign creditworthiness.
Although the exact wording and content of the agreement will only be released after ratification, a spokesperson for China's Ministry of Commerce said that the agreement is the most comprehensive FIPA that China has signed so far. It includes 41 provisions aimed at promoting both countries' domestic markets as an investment destination and protects investors from arbitrary or discriminatory government actions when investing in the other country.
China currently has nine Free Trade Agreements, including Closer Economic Partnership Arrangements with Macao and Hong Kong, and an FTA with ASEAN. Canada currently has 21 FIPAs in place, with another six whose negotiations have been concluded but are not yet in force because they await legislative ratification.
Foreign investment
The FIPA ties in with recent pledges by Chinese leaders to step up efforts to attract foreign investment as the country's growth and foreign direct investment inflows are showing signs of slowing.
China already has become Canada's second-largest trade partner after the US, accounting for more than 7 percent of total trade. Canada has also become an increasingly important destination for Chinese direct investment in recent years, although the stock of Chinese FDI in Canada was only US$2.6 billion, or about 1 percent of China's total outward FDI.
Over the past years, Chinese companies have shown strong interest in investing in Canada's mining sector and have invested in the country. CNOOC Limited's US$15 billion bid to take over Canada-based Nexen Inc demonstrates the size of China's appetite.
The new FIPA would also provide China with another venue to settle disputes related to its commercial interests abroad. Rising trade friction between China and advanced economies during the economic slump has driven up the number of WTO disputes to 20 cases between January and August 2012, versus seven a year earlier.
Tom Byrne is the Senior Vice President of Sovereign Risk Group at Moody's Investors Service Singapore Pte Ltd.
If ratified, the FIPA would be credit positive for both China and Canada because measures that boost investment and trade will help offset the negative effect of weak global growth.
Liberal investment regimes that protect investor rights and enhance predictability shield commercial interests from political pressures, and support the economic growth that underpins sovereign creditworthiness.
Although the exact wording and content of the agreement will only be released after ratification, a spokesperson for China's Ministry of Commerce said that the agreement is the most comprehensive FIPA that China has signed so far. It includes 41 provisions aimed at promoting both countries' domestic markets as an investment destination and protects investors from arbitrary or discriminatory government actions when investing in the other country.
China currently has nine Free Trade Agreements, including Closer Economic Partnership Arrangements with Macao and Hong Kong, and an FTA with ASEAN. Canada currently has 21 FIPAs in place, with another six whose negotiations have been concluded but are not yet in force because they await legislative ratification.
Foreign investment
The FIPA ties in with recent pledges by Chinese leaders to step up efforts to attract foreign investment as the country's growth and foreign direct investment inflows are showing signs of slowing.
China already has become Canada's second-largest trade partner after the US, accounting for more than 7 percent of total trade. Canada has also become an increasingly important destination for Chinese direct investment in recent years, although the stock of Chinese FDI in Canada was only US$2.6 billion, or about 1 percent of China's total outward FDI.
Over the past years, Chinese companies have shown strong interest in investing in Canada's mining sector and have invested in the country. CNOOC Limited's US$15 billion bid to take over Canada-based Nexen Inc demonstrates the size of China's appetite.
The new FIPA would also provide China with another venue to settle disputes related to its commercial interests abroad. Rising trade friction between China and advanced economies during the economic slump has driven up the number of WTO disputes to 20 cases between January and August 2012, versus seven a year earlier.
Tom Byrne is the Senior Vice President of Sovereign Risk Group at Moody's Investors Service Singapore Pte Ltd.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
