On Oct. 24th, Taiwan and Canada jointly announced the completion of negotiations over a Foreign Investment Promotion and Protection Arrangement. This is the first bilateral investment agreement to be completed since Canada revised its model investment agreement in 2021. It also represents yet another pivotal step in the strengthening of ties between the two countries since the signing of the Arrangement for the Avoidance of Double Taxation in 2016, and will be sure to provide invaluable support to Taiwanese businesses seeking to expand their presence in the global market.
In fact, as a high-standard agreement consisting of more than 70 provisions, the Foreign Investment Promotion and Protection Arrangement provides some of the most comprehensive levels of protection, predictability, inclusiveness, and convenience among the numerous investment agreements recently signed by countries worldwide, demonstrating that both Taiwan and Canada are able to meet the high-standard rules of the global economy.
Taiwan and Canada are important economic and trade partners. In 2022, bilateral trade between the two amounted to US$ 5.8 billion, making Taiwan Canada’s 6th largest trading partner. As of 2022, Taiwan’s accumulated investment in Canada also totaled around US$ 600 million, while Canada has invested almost US$ 1 billion in Taiwan.
As Taiwanese investment in Canada continues to grow in numerous industries, including IC distribution, renewable energy, information and communication, biotechnology, pharmaceuticals, transportation, finance, and retail, the Foreign Investment Promotion and Protection Arrangement should further encourage such growth while expanding the footprint of Taiwanese SMEs in Canada. It should also help encourage Canadian companies like Northland Power and the Quebec Deposit and Investment Fund to increase their investment in Taiwan’s offshore wind power projects, providing the financing and technology necessary to develop the country’s burgeoning wind power sector while helping achieve its renewable energy goals.
As the chair of the CPTPP Commission for 2024 and a major partner in both the CPTPP and the USMCA, Canada plays a leading role in spearheading discussions on a wide range of international economic and trade topics. It also places great emphasis on inclusiveness and diversity by ensuring that the benefits flowing from the agreements with its partners are more widely shared, including with such under-represented groups as women, Indigenous peoples, and SMEs. As the 10th largest economy and a member of the G7, Canada has distinguished itself as a trade and investment hub with swift population growth, exceptional financial stability, and some of the most competitive tax rates for new business investments.
In February 2023, Taiwan’s Trade Representative and Minister without Portfolio John Chen-Chung Deng and Canadian Minister of Minister of Export Promotion, International Trade and Economic Development Mary Ng jointly announced the launch of formal negotiations over the Foreign Investment Promotion and Protection Arrangement. Before commencing negotiations, the two parties had engaged in exploratory discussions on the proposed content for an entire year so as to confirm that they were on the same page, which allowed the negotiation process to proceed smoothly and results to be achieved within less than a year. Over the course of this process, Taiwan also held numerous forums and video conferences with the business community and other industry stakeholders, all of whom expressed their support.
With an eye towards the future, the two countries’ negotiating teams will now engage in legal scrubbing. Since the Arrangement will be equally valid in Mandarin, English, and French, they will also complete translations of the agreed-upon text and proceed with the internal approval process, after which the Arrangement can be signed and enter into effect.
