Page 106 - Azerbaijan State University of Economics

Bryan Davis: State owned enterprises: Chinese fdi in Canada via the lenses of perceptual, political,
economic and social considerations

The Chinese mandate mirrors that of Canada. For instance, securing and diversifying energy

supply and developing technical expertise in unconventional resources are major goals.

Comparatively, Canada is looking at diversifying resource export markets as the United States,

currently accounts for the majority of Canadian energy exports. This is a threat for Canada as

the United States is poised to become, possibly, the world’s largest producer of oil and energy

self-sufficient. With two very closely aligned mandates Canada and China present themselves as

excellent partners for future FDI endeavors. The logical first step has been 18 years in the

making: the Sino-Canadian Foreign Investment Promotion and Protection Agreement.

Foreign Investment Promotion and Protection Agreement

A major element of Canada’s trade overtures to China has been the Foreign Investment

Promotion and Protection Agreement (FIPA) brokered by the Harper government. There has

been significant criticism of the Agreement. Diane Francis calls attention to what she perceives

as the “one-sidedness” of the document: the lack of reciprocity, missing transparency within the

dispute resolution mechanisms, and potentially open-ended legal awards if Chinese firms can

prove they have been harmed by any Canadian branch of government.

Ultimately, reciprocity appears to be the most contentious element of the Chinese FIPA.

For instance, the premise that the $15.10 billion Nexen deal can potentially take place, yet

Scotiabank’s $0.726 billion desired acquisition in China remaining paralysed for over a year is

considered galling by many observers. Yet, reciprocity consideration may be a somewhat

premature and out of scope at this given time. Professor Edy Wong questions if “Canadian

companies [are] ready to confront the difficult and highly regulated Chinese market.”Ultimately,

the coolest heads will likely prevail. Diane Francis appeared to offer a somewhat emotional

response to the FIPA deal despite her stature as a respected journalist in the Financial Post. Ms.

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