Canada applies new guidelines to foreign investment

Canada applies new guidelines in attracting foreign investment, highlighted the Report on the State of Investments in Canada 2021, released by the State Department.

The stock of Canadian direct investment abroad increased 4.2% to C $ 1 trillion 469.3 billion at the end of 2020.

Meanwhile, the stock of foreign direct investment in Canada rose 2.7% to C $ 1.046.3 billion.

Canadian direct investment abroad, by industry of the Canadian parent, 2020

The Canadian government announced last March revised foreign investment screening guidelines, under the Canadian Investment Act (ICA).

These include additional national security considerations, such as areas of sensitive technology, critical minerals, and sensitive personal data.

The new guidelines follow an April 2020 ICA update, which provides for increased scrutiny of foreign investments by state investors, as well as investments that involve the provision of critical goods and services.

Foreign investments

The purpose of the ICA is to review significant foreign investments to ensure that they provide a net economic benefit and do not harm national security.

Despite a generally welcoming foreign investment environment, Canada maintains stifling investment bans in the telecommunications, airlines, banking and culture sectors.

Ownership and corporate board restrictions prevent significant foreign investment in telecommunications and aviation, and there are deposit acceptance limitations for foreign banks.

Investments in cultural industries, such as book publishing, are required to be consistent with national cultural policies and to be of net benefit to Canada.

In addition, non-tariff barriers to trade between provinces and territories contribute to structural problems that have held back the productivity and competitiveness of Canada’s business sector.

Canada and the United States have one of the largest and most comprehensive investment relationships in the world.

According to the State Department, US investors are attracted to Canada’s strong economic fundamentals, its proximity to the US market, its highly skilled workforce, and its abundant resources.

Canada encourages foreign direct investment (FDI) by promoting its stability, access to the global market and infrastructure.

The United States is Canada’s largest investor, accounting for 47% of total FDI.