HomeReportsInvestment Climate Statements...Custom Report - a679b6de13 hide Investment Climate Statements Custom Report Excerpts: Canada Bureau of Economic and Business Affairs Sort by Country Sort by Section In this section / Canada 1. Openness To, and Restrictions Upon Foreign Investment 13. Foreign Direct Investment and Foreign Portfolio Investment Statistics Canada 1. Openness To, and Restrictions Upon Foreign Investment Policies Towards Foreign Direct Investment Canada actively encourages FDI and maintains a sound enabling environment (23 out of 190 countries on the World Bank’s 2020 Doing Business Report). Investors are attracted to Canada’s proximity to the United States, highly skilled workforce, strong legal protections, and abundant natural resources. Once established, foreign-owned investments are treated equally to domestic investments. As of 2019, the United States had a stock of USD 402 billion of foreign direct investment in Canada. U.S. FDI stock in Canada represents 47 percent of Canada’s total investment. Canada’s FDI stock in the United States totaled USD 496 billion. The USMCA modernizes the previous NAFTA investment protection rules and investor-state dispute settlement provisions. Parties to the USMCA agree to treat investors and investments of the other Parties in accordance with the highest international standards, and consistent with U.S. law and practice, while safeguarding each Party’s sovereignty and promoting domestic investment. Invest in Canada is Canada’s investment attraction and promotion agency. It provides information and advice on doing business in Canada, strategic market intelligence on specific industries, site visits, and introductions to provincial, territorial, and municipal investment promotion agencies. Still, non-tariff barriers to trade across provinces and territories contribute to structural issues that have held back the productivity and competitiveness of Canada’s business sector. Limits on Foreign Control and Right to Private Ownership and Establishment Foreign investment in Canada is regulated under the provisions of the Investment Canada Act (ICA). U.S. FDI in Canada is also subject to the provisions of the World Trade Organization (WTO), the USMCA, and the NAFTA. The ICA mandates the review of significant foreign investments to ensure they provide an economic net benefit and do not harm national security. Canada is not a party to the USMCA’s chapter on investor-state dispute settlement (ISDS). Ongoing NAFTA arbitrations are not affected by the USMCA, and investors can file new NAFTA claims by July 1, 2023, provided the investment(s) were “established or acquired” when NAFTA was still in force and remained “in existence” on the date the USMCA entered into force. An ISDS mechanism between the United States and Canada will cease following a three-year window for NAFTA-protected legacy investments. The Canadian government announced revised ICA foreign investment screening guidelines on March 24, 2021. The revised guidelines include additional national security considerations such as sensitive technology areas, critical minerals, and sensitive personal data. The new guidelines are aligned with Innovation, Science, and Economic Development Canada’s April 2020 update on greater scrutiny for foreign investments by state-owned investors, as well as investments involving the supply of critical goods and services. Foreign ownership limits apply to Canadian telecommunication, airline, banking, and cultural sectors. Telecommunication carriers, including internet service providers, that own and operate transmission facilities are subject to foreign investment restrictions if they hold a 10 percent or greater share of total Canadian communication annual market revenues as mandated by The Telecommunications Act. These investments require Canadian ownership of 80 percent of voting shares, Canadians holding 80 percent of director positions, and no indirect control by non-Canadians. If the company is a subsidiary, the parent corporation must be incorporated in Canada and Canadians must hold a minimum of 66.6 percent of the parent’s voting shares. Foreign ownership of Canadian airlines is limited to 49 percent with no individual non-Canadian able to control more than 25 percent by mandate of the 2018 Transportation Modernization Act. Foreign banks can establish operations in Canada but are generally prohibited from accepting deposits of less than USD 112,000. Foreign banks must receive Department of Finance and the Office of the Superintendent of Financial Institutions (OSFI) approval to enter the Canadian market. Investment in cultural industries also carries restrictions, including a provision under the ICA that foreign investment in book publishing and distribution must be compatible with Canada’s national cultural policies and be of net benefit to Canada. Other Investment Policy Reviews The World Trade Organization conducted a trade policy review of Canada in 2019. The report is available at: https://www.wto.org/english/tratop_e/tpr_e/tp489_e.htm . The Organization of Economic Development completed an Economic Forecast Summary and released the results in March 2021. The report is available at: http://www.oecd.org/economy/canada-economic-snapshot/ Business Facilitation Canada ranks 3 out of 190 countries on starting a business in the 2020 World Bank’s Ease of Doing Business rankings. The Canadian government provides information necessary for starting a business at: https://www.canada.ca/en/services/business/start.html . Business registration requires federal or provincial government-based incorporation, the application of a federal business number and corporation income tax account from the Canada Revenue Agency, the registration as an extra-provincial or extra-territorial corporation in all other Canadian jurisdictions of business operations, and the application of relevant permits and licenses. In some cases, registration for these accounts is streamlined (a business can receive its business number, tax accounts, and provincial registrations as part of the incorporation process); however, this is not true for all provinces and territories. Outward Investment Canada prioritizes export promotion and inward investment. Outward investment has been identified as a tool to enhance future Canadian competitiveness and productivity. Canada does not restrict domestic investors from investing abroad except when recipient countries or businesses are designated under the government’s sanctions regime. 13. Foreign Direct Investment and Foreign Portfolio Investment Statistics Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy Host Country Statistical source* USG or international statistical source USG or International Source of Data: BEA; IMF; Eurostat; UNCTAD, Other Economic Data Year Amount Year Amount Host Country Gross Domestic Product (GDP) ($M USD) 2019 $1,783,788 2019 1,736,000 www.worldbank.org/en/country Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data: BEA; IMF; Eurostat; UNCTAD, Other U.S. FDI in partner country ($M USD, stock positions) 2019 360,895 2019 402,255 BEA data available at https://apps.bea.gov/ international/factsheet/ Host country’s FDI in the United States ($M USD, stock positions) 2019 500,874 2019 $495,720 BEA data available at https://www.bea.gov/international/ direct-investment-and-multinational- enterprises-comprehensive-data Total inbound stock of FDI as % host GDP (USD) 2019 1,037,092 2019 59.7% UNCTAD data available at https://stats.unctad.org/handbook/ EconomicTrends/Fdi.html * Source for Host Country Data: Host Country Source: Office of the Chief Economist, State of Trade 2020, Global Affairs Canada. Host Country Source: Statistics Canada Note: Data converted to U.S. dollars using yearly average currency conversions from IRS Table 3: Sources and Destination of FDI Direct Investment from/in Counterpart Economy Data From Top Five Sources/To Top Five Destinations (US Dollars, Millions) Inward Direct Investment Outward Direct Investment Total Inward 745,399 100% Total Outward 1,044,549 100% United States 348,475 47% United States 483,636 46% The Netherlands 94,847 13% United Kingdom 81,927 8% United Kingdom 47,744 6% Luxembourg 77,505 7% Luxembourg 42,899 6% Bermuda 48,627 5% Switzerland 39,627 5% Barbados 38,117 4% “0” reflects amounts rounded to +/- USD 500,000. Table 4: Sources of Portfolio Investment Portfolio Investment Assets Top Five Partners (Millions, current US Dollars) Total Equity Securities Total Debt Securities All Countries 1,982,923 100% All Countries 1,516,210 100% All Countries 466,713 100% United States 1,269,152 64% United States 945,000 62% United States 324,151 69% United Kingdom 102,468 5% United Kingdom 80,839 5% United Kingdom 21,629 5% Japan 73,560 4% Japan 64,298 4% Australia 10,584 2% France 48,556 2% France 40,619 3% Japan 9,262 2% Cayman Islands 43,436 2% Cayman Islands 38,097 3% Germany 8,485 2% Edit Your Custom Report