HomeReportsBureau of Economic and Business Affairs2017 Investment Climate Statements...Canada

# 					2017 Investment Climate Statements: Canada			

 In this section										/

													Executive Summary											

                -  Executive Summary 
                -  1. Openness To, and Restrictions Upon, Foreign Investment   
                -  2. Bilateral Investment Agreements and Taxation Treaties   
                -  3. Legal Regime   
                -  4. Industrial Policies   
                -  5. Protection of Property Rights   
                -  6. Financial Sector   
                -  7. State-Owned Enterprises   
                -  8. Responsible Business Conduct   
                -  9. Corruption   
                -  10. Political and Security Environment   
                -  11. Labor Policies and Practices   
                -  12. OPIC and Other Investment Insurance Programs   
                -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                -  14. Contact for More Information   

## Executive Summary

Canada and the United States have one of the largest and most comprehensive investment relationships in the world. U.S. investors are attracted to Canada’s strong economic fundamentals, its proximity to the U.S. market, its highly skilled work force, and abundant resources. The United States accounts for over 50 percent of Canada’s total stock of foreign direct investment (FDI). U.S. stock of foreign direct investment in Canada reached USD 291 billion in 2015; while Canada’s foreign direct investment stock in the United States totaled USD 337 billion. The stock of global foreign direct investment in Canada stood at USD 578 billion at the end of 2015.

U.S. foreign direct investment in Canada is subject to the provisions of the Investment Canada Act (ICA), the World Trade Organization (WTO), and the 1994 North American Free Trade Agreement (NAFTA). Chapter 11 of NAFTA contains provisions such as “national treatment” designed to protect cross-border investors and facilitate the settlement of investment disputes. NAFTA does not exempt American investors from review under the ICA, which has guided foreign investment policy in Canada since its implementation in 1985. The ICA provides for review of large acquisitions by non-Canadian investors and includes the requirement that these investments be of “net benefit” to Canada. Fewer than 10 percent of foreign acquisitions are subject to ICA review, and the Canadian government has blocked investments on only three occasions.

Although foreign investment is a key component of Canada’s economic development, restrictions remain in key sectors. Under the *Telecommunications Act*, Canada maintains a 46.7 percent limit on foreign ownership of voting shares for a Canadian telecomm services provider. However, a 2012 amendment exempts foreign telecom carriers with less than 10 percent market share from ownership restrictions in an attempt to increase competition in the sector. While the government announced a plan in November 2016 to allow 49 percent foreign ownership of Canadian carriers, current law limits foreign ownership of Canadian air carriers to 25 percent of voting equity. 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. Canada is open to investment in the financial sector, but barriers remain in retail banking.

*Table 1*

							1. Openness To, and Restrictions Upon, Foreign Investment					

**Policies Towards Foreign Direct Investment**

With few exceptions, Canada offers full national treatment to foreign investors within the context of a developed open market economy operating with democratic principles and institutions. Canada reviews investments under the Investment Canada Act (ICA). Foreign investment is prohibited or restricted in several sectors of the economy. The United States and Canada agree on important foreign investment principles, including right of establishment and national treatment.

The United States has long been Canada’s primary source for foreign investment, and Canada is the fifth largest source of foreign direct investment in the United States after the United Kingdom, Japan, Luxemburg, and the Netherlands.

Over 50 percent of Canada’s foreign direct investment comes from the United States. At the end of 2015, the most recent year available, Canada’s stock of U.S. FDI was USD 291 billion. The United States’ share of FDI Canada has declined considerably since 2005 when it was 63.2 percent of Canada’s total FDI stock. U.S. investors with large direct investments in Canada include major automakers (GM, Ford, Fiat-Chrysler), integrated energy, chemical and mineral producers (e.g., ExxonMobil, ChevronTexaco, ConocoPhillips), financial services firms (e.g., Citibank), and retailers (e.g., Wal-Mart). U.S. retailers have recently had poor results in Canada with Best Buy closing its Future Shop outlets; Target closing all of their 133 stores in Canada in early 2015; and Sears being forced to close stores and consolidate locations. However, high-end retailers like Nordstrom and Whole Foods have seen positive results from their expansion into the Canadian market and Lowe’s Home Improvement recently purchased Canada’s Rona home improvement stores. According to the United Nations Conference on Trade and Development (UNCTAD), Canada attracted 3.3 percent of the world’s FDI in 2015.

Canadian residents have become increasingly active as worldwide investors. The United States is the top destination for Canadian Direct Investment Abroad (CDIA). CDIA stocks in the United States rose 9 percent (USD 28 billion) in 2015 to USD 337 billion. The United States’ share of CDIA in 2015 increased to 44.6 percent from 42 percent in 2014.

Other major destinations for Canadian FDI are the United Kingdom, Barbados, Luxembourg, the Cayman Islands, and other European Union countries.

**Limits on Foreign Control and Right to Private Ownership and Establishment**

*Commercial Aviatio**n:*Canada limits foreign ownership of Canadian air carriers to 25 percent. In addition, foreign interests may not control a Canadian air carrier. One Canadian airline has put a special procedure in place for foreign share-transfers which reclassifies its stock as variable voting shares. This allows non-Canadians to own more than 25 percent of the equity while reducing foreign voting rights and allowing the airline to remain Canadian with at least 75 percent of its voting interests owned and controlled by Canadians. The Canada-EU Aviation Agreement, signed in December 2009, envisions changes to Canadian legislation that will allow up to a 49 percent foreign stake in Canadian airlines, but they have yet to take place. A government review of the Canada Transport Act released in February 2015 recommended that foreign ownership limits for commercial airlines be increased to 49 percent to foster competition. Canada also passed an amendment to the Canada Transportation Act in March 2009 that provides the Governor in Council (appointed by the Governor General) with authority to increase foreign ownership of Canadian airlines to a maximum of 49 percent. The current government has not taken action on the recommendations of the review panel and the Governor in Council has not exercised his power to raise ownership limits to date.

*Electric Power Generation and Distribution:*Regulatory reform in electricity continues in Canada in expectation that increased competition will lower costs of electricity supply. Province-owned power firms are interested in gaining greater access to the U.S. power market. Since power markets fall under the jurisdiction of the Canadian provinces, they are at the forefront of the reform effort. Several Canadian provinces have introduced initiatives to encourage the development and implementation of renewable sources of electricity.

A wind power company owned by a New York-based investment group filed a NAFTA Chapter 11 notice of arbitration against Canada in January 2013 in response to Ontario’s February 2011 moratorium on all new offshore wind projects. The company maintains that the moratorium breached Canada’s obligations under NAFTA to protect U.S. investors from expropriation without compensation and violates NAFTA’s minimum standard of treatment provision.

Note: See http://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/disp-diff/gov.aspx?lang=eng  for more information.

*Energy:*Canada continues to encourage additional foreign investment in its energy sector to develop its vast oil and gas resources. In Quebec, calls for tender for energy projects vary between 30 and 60percent of local content. (See paragraph 7 for more information on SOE’s in the energy sector.)

Canada has faced several investment disputes involving energy in recent years. U.S. oil and gas company filed a notice of arbitration under NAFTA Chapter 11 in September 2013, following the Government of Quebec’s announced suspension of oil and gas exploration beneath the Saint Lawrence River in June 2011. The U.S. company filed an additional Memorial in April 2015 stating that Quebec’s provincial legislation effectively destroyed the economic potential of its investment and deprived it of the ability to real any economic benefit from the investment. The USD 118.9 million damages claim case is still active and the government of Canada filed a counter-memorial in January 2016. Further, the company claims the suspension breached NAFTA expropriation and minimum standard of treatment provisions.)

*Fishing:*Foreigners can own up to 49 percent of companies that hold Canadian commercial fishing licenses.

*Financial Services:* Chapter 14 of the NAFTA deals specifically with the financial services sector, and eliminates discriminatory asset and capital restrictions on U.S. bank subsidiaries in Canada. The NAFTA also exempts U.S. firms and investors from the federal “10/25” rule so that they will be treated the same as Canadian firms. The “10/25” rule prevents any non-NAFTA, nonresident entity from acquiring more than ten percent of the shares (and all such entities collectively from acquiring more than 25 percent of the shares) of a federally regulated, Canadian-controlled financial institution. The limit for single, non-NAFTA shareholders is 20 percent. Several provinces, however, including Ontario and Quebec, have similar “10/25” rules for provincially chartered trust and insurance companies that were not waived under the NAFTA.

The requirement that bank ownership be “widely held” with no more than 25 percent of its shares owned by a single shareholder is said to prevent ownership concentration without discriminating against foreign investors; however, Canadian influence is still exerted through certain requirements of the Bank Act:

- the head office of a bank must be located in Canada;
- shareholders’ meetings are required to be held in Canada;
- two-thirds of the directors must be resident Canadians;
- the chief executive officer of the bank must ordinarily be resident in Canada;
- important corporate and transactional documents must be kept in Canada;
- certain administrative changes require ministerial approval.

*General Aviation:*No non-Canadian (other than permanent residents) may register a general aviation aircraft for commercial or personal use in Canada.

*Mining:*Generally foreigners cannot be majority owners of uranium mines. On March 17th, 2015 the NAFTA tribunal found Canada liable for having breached its obligations under Articles 1105 and 1102 to Bilcon of Delaware, the parent company of Bilcon of Nova Scotia, for rejecting a project in part because it didn’t meet “community core values.” The company argued it was treated unfairly when it was forced to go before a federal-provincial environmental review panel that ultimately recommended rejecting the company’s planned basalt quarry and marine terminal development project in White Point (near Digby Nova Scotia). On June 16, 2015, Canada filed a notice of application in the Federal Court of Canada for the set aside of the Tribunal’s award. Arbitration has moved on to the damages phase where Bilcon is seeking damages of as much as C300 million.

*Real Estate:*Primary responsibility for property law rests with the provinces. Prince Edward Island and Saskatchewan put limitations on real estate sales to out-of-province parties. Government authorities can expropriate property after paying appropriate compensation. British Columbia began a 15 percent tax on foreign buyers of residential real estate in the Metro Vancouver area in August 2016. In early 2017, the province announced that foreign buyers with work permits would be exempt from the tax.

*Telecommunications:*Under provisions of Canada’s Telecommunications Act, foreign ownership of transmission facilities is limited to 20 percent direct ownership and 33 percent through a holding company, for an effective limit of 46.7 percent total foreign ownership. Canada also requires that at least 80 percent of the members of the board of directors of facilities-based telecommunications service suppliers be Canadian citizens.

Canada amended the Telecommunications Act in June 2012 to rescind foreign ownership restrictions on carriers with less than 10 percent share of the total Canadian telecommunications market. Foreign-owned carriers are permitted to continue operating if their market share grows beyond 10 percent provided the increase does not result from the acquisition or merger with another Canadian carrier. The policy change was part of the Canadian government’s strategy to facilitate more competition in the telecom sector. Canada’s three largest telecomm providers acquired the majority of spectrum licenses sold at its 700 MHz spectrum auction in February 2014, and the auction did not feature any new foreign buyers. In March 2015, Canada announced results of an AWS-3 spectrum auction in which 60 percent of the spectrum was set aside for new entrants. No foreign companies received spectrum in this auction. Canada held a 2500MHz spectrum auction on April 14, 2015 with Canadian companies winning all of the licenses offered.

Canada defines cultural industries to include: the publication, distribution or sale of books, magazines, periodicals or newspapers, other than the sole activity of printing or typesetting; the production, distribution, sale or exhibition of film or video recording, or audio or video music recordings; the publication, distribution or sale of music in print or machine-readable form; and any radio, television and cable television broadcasting undertakings and any satellite programming and broadcast network services.

The Investment Canada Act requires that foreign investment in the book publishing and distribution sector be compatible with Canadian national cultural policies and be of “net benefit” to Canada. Takeovers of Canadian-owned and controlled distribution businesses are not allowed. The establishment of new film distribution companies in Canada is permitted only for importation and distribution of proprietary products. Direct and indirect takeovers of foreign distribution businesses operating in Canada are permitted only if the investor undertakes to reinvest a portion of its Canadian earnings in Canada.

The Broadcasting Act sets out the policy objectives of enriching and strengthening the cultural, political, social, and economic fabric of Canada. The Canadian Radio-television and Telecommunications Commission (CRTC) administers broadcasting policy. When a Canadian broadcast service is licensed in a format competitive with that of an authorized non-Canadian service, the commission can drop the non-Canadian service if a new Canadian applicant requests it to do so. Licenses will not be granted or renewed to firms that do not have at least 80 percent Canadian control, represented both by shareholding and by representation on the firms’ board of directors.

The CRTC denied a major Canadian broadcaster’s bid to acquire a leading Canadian media company in October 2012. The CRTC maintained that it did not believe the transaction would provide significant benefits to the Canadian broadcasting system and said the deal raised competitiveness concerns.

Canada allows up to 100 percent foreign equity in an enterprise to publish, distribute and sell periodicals but all foreign investments in this industry are subject to review by the Minister for Canadian Heritage, and investments may not occur through acquisition of a Canadian-owned enterprise. No more than 18 percent of the total advertising space in foreign periodicals exported to Canada may be aimed primarily at the Canadian market. Canadian advertisers may place advertisements in foreign-owned periodicals, and may claim a tax deduction for the advertising costs, including in cases where the periodical is a Canadian issue of foreign-owned periodical.

This regime is the result of a 1999 U.S.-Canada agreement, which balanced U.S. publishers’ desire for access to the Canadian market against Canada’s desire to ensure that Canadian advertising expenditures support the production of Canadian editorial content.

**Other Investment Policy Reviews**

Canada has not conducted an Investment Policy Review through the Organization for Economic Co-operation and Development (OECD), WTO, or UNCTAD in the past three years.

**Screening of FDI**

Canada amended the ICA in June 2012 to allow the Innovation, Science and Economic Development Minister (ISED, formerly Industry Canada) to publicly disclose why an investment proposal failed to satisfy the net benefit test, so long as disclosure will not harm the Canadian business or investor. Another amendment allows the Industry Minister to accept security of payment from an investor when a court finds the investor to be in breach of its ICA undertakings. Canada also introduced guidelines that provide foreign investors with the option of a formal mediation process to resolve disputes when the ISED Minister believes a non-Canadian investor has failed to comply with a written undertaking.

In April 2015, the Act was amended to introduce the concept of “enterprise value” as compared to “asset value.” Asset value is based on the value of the assets according to the business’ financial statements (book value) where enterprise value takes into account market value, debt and cash. As a result of the amendments, direct investments resulting in the acquisition of control of a Canadian business by non-state-owned, WTO investors are measured by enterprise value. In contrast, establishments of new businesses, direct investments resulting in the acquisition of control of a Canadian business by state-owned or non-WTO investors, and indirect investments by any investor are measured in asset value.

In fiscal year 2015–16, there were 641 investments processed under the Act with a total value of C30.51 billion in asset value plus C26.20 billion in enterprise value. Investors from the United States made 386 investments, totaling C19.86 billion in asset value plus C18.69 billion in enterprise value.

Canada has only turned down investment offers three times since the ICA came into force 25 years ago. Canada blocked a Cairo-based investment and management company’s proposed USD 520 million acquisition of Manitoba Telecom Services’ Allstream Division under the national security provisions of the ICA in October 2013. The Canadian government did not elaborate on the reasons behind its decision. Canada blocked a proposed USD 38.6 billion purchase of a potash producer in Saskatchewan by an Australian-based company in November 2010, claiming the hostile takeover failed to be of “net benefit” to Canada under the ICA. The third instance occurred in April 2008 when Canada denied the sale of Canadian communications company MacDonald Dettwiler’s satellite operations to a U.S. buyer over security concerns.

Canada reviewed several other high-profile investment cases in recent years. The announced merger of Canada’s largest stock exchange and a major London-based stock exchange in February 2011 sparked an ICA review. The deal failed to draw sufficient support from the Canadian stock exchange’s shareholders and the deal was dropped before the ICA review process was completed. A rival bid for the Canadian stock exchange by a consortium of major Canadian banks, pension plans, and financial firms, was a significant factor in the merger’s eventual failure.

**Business Facilitation**

ISED works with Global Affairs Canada (GAC) to encourage foreign companies to invest in Canada and to promote an open, rules-based global investment regime. The Canadian Trade Commissioner Service has a comprehensive website “Invest in Canada” with the needed information for starting and registering a business in Canada. It can be found at the following website . The process is complete, and while the website is available in several languages, navigation can be complex. In addition to Federal registration, businesses may also be required to register with the provincial, territorial, municipal and revenue agencies (http://www.cra-arc.gc.ca/tx/bsnss/tpcs/bn-ne/bro-ide/menu-eng.html ) Canada ranks 22nd on the 2016 World Bank’s Doing Business Scale. For more general information on the Canadian business climate, see:

- http://iab.worldbank.org 
- http://ger.co/how-it-works/information-portals  .
- http://www.doingbusiness.org/data/exploretopics/starting-a-business 

Canada defines business enterprises as follows:

**Outward Investment**

Canada does not restrict domestic investors from investing abroad. Canadian companies are encouraged to invest abroad through the Export Development Canada (EDC), which created the Canadian Direct Investment Abroad (CDIA) program. CDIA offers Canadian businesses a range of solutions to obtain financing and research international markets in support of long-term business objectives.

							2. Bilateral Investment Agreements and Taxation Treaties					

**Bilateral Taxation Treaties**

The 1989 Canada-US Free trade Agreement (CUSFTA) and the NAFTA guide investment relations between Canada and the United States. Investment relations with other states are governed by Foreign Investment Protection Agreements (FIPAs). These are bilateral treaties that promote and protect foreign investment through a system of legally binding rights and obligations based on the same principles found in the NAFTA. Canada has 30 FIPAs in force with countries in Central Europe, Latin America, Africa, and Asia. Canada is actively pursuing FIPAs with ten countries including India, Pakistan, and Kosovo. Canada views China as an increasingly important trade and investment partner and ratified a FIPA with China in September 2014. Canada signed a FIPA with Hong Kong in February 2016 and with Burkina Faso and Guinea in 2015. In February 2016 Canada and the EU completed the legal review of the Comprehensive Economic and Trade Agreement (CETA). CETA was signed in October 2016 and ratified by the Canadian House of Commons and EU Parliament in February 2017. It is currently in the Canadian Senate for final ratification. The final text included changes to the investment chapter that significantly modified the investment dispute settlement mechanism by creating a permanent 15-person tribunal to hear disputes. The permanent dispute body differs from Canada’s previous trade agreements, including NAFTA.

							3. Legal Regime					

**Transparency of the Regulatory System**

The transparency of Canada’s regulatory system is similar to that of the United States and legal, regulatory, and accounting systems are transparent and consistent with international norms. Proposed legislation is subject to parliamentary debate and public hearings, and regulations are issued in draft form for public comment prior to implementation. While federal and/or provincial licenses or permits may be needed to engage in economic activities, regulation of these activities is generally for statistical or tax compliance reasons. The Bureau of Competition Policy and the Competition Tribunal, a quasi-judicial body, enforce Canada’s antitrust legislation.

Canada and the United States announced the creation of the Canada-U.S. Regulatory Cooperation Council (RCC) on February 4, 2011. This regulatory cooperation does not encompass all regulatory activities within all agencies. Rather, the RCC is focused on areas where benefits can be realized by regulated parties, consumers, and/or regulators without sacrificing outcomes such as protecting public health, safety and the environment. The initial RCC Joint Action Plan set out 29 initiatives where Canada and the United States sought greater regulatory alignment. On May 28, 2015, the United States and Canada released Regulatory Partnership Statements and Work Plans that, collectively, outline major objectives for bilateral cooperation over the next three to five years in specific areas of regulatory activity. The U.S. Department of Agriculture and the Canadian Food Inspection Agency are working together on changes and updates to their slaughter and processed meat inspection policies and procedures in an effort to achieve closer alignment between inspection system requirements and eliminate unnecessary or duplicative requirements. On May 4, 2016, the U.S. Food and Drug Administration and Health Canada’s Canadian Food Inspection Agency signed an U.S.-Canada Food Safety Systems Recognition Arrangement. Through this arrangement the countries intend to better align their food safety regulatory systems, reduce unnecessary duplication, enhance information sharing, and to the extent possible, leverage resources so that the agencies can better meet their public health objectives. The countries will also work together to identify areas of mutual interest and collaboration based on the best available science and technological advances in our respective meat inspection systems and modernization approaches. On plant health, the Canadian Food Inspection Agency and U.S. Department of Agriculture’s Animal and Plant Health Inspection Service are collaborating to facilitate safe bilateral trade and protect Canada and the United States from risks posed by plants and plant products arriving from third countries. This will include aligning phytosanitary import requirements and allow countries to utilize information from phytosanitary inspections conducted by one country to the other.

Other areas of engagement include efforts to develop a common approach to marine safety and security; energy efficiency standards and labeling; natural gas transportation; locomotive, vehicle, and engine emissions; chemicals management; crop protection products (pesticides); food safety; pharmaceutical and biological products; aquaculture; connected (self-driven) vehicles; dangerous goods transportation; developing joint rail, aviation, and motor vehicle safety standards; fostering greater symmetry and access with respect to agriculture production, increasing fairness and effectiveness of agricultural trade, and aligning marine transportation security requirements to facilitate more secure and efficient cross-border trade.

The World Bank published in-depth information on regulatory transparency for 185 economies. For information on Canada, see the World Bank website .

**International Regulatory Considerations**

Canada is not part of a regional economic block and does not incorporate regional standards into its economic system. However, Canada and the United States work together through the RCC to develop like standards and streamline product certification on both sides of the border. Canada, with the United States and Mexico, is a member of the NAFTA.

Canada is a member of the WTO and notifies draft technical regulations to the WTO Committee on Technical Barriers to Trade (TBT).

**Legal System and Judicial Independence**

Canada’s legal system is based on English common law, except for Quebec, which follows civil law. Canada has both a federal parliament which makes laws for all of Canada and a legislature in each of the provinces and territories that deals with laws in their areas. When Parliament or a provincial or territorial legislature passes a statute, it takes the place of common law or precedents dealing with the same subject. The judicial branch of government is independent of the executive branch and the current judicial process is considered procedurally competent, fair, and reliable. The provinces administer justice in their jurisdictions. This includes organizing and maintaining the civil and criminal provincial courts and civil procedure in those courts.

Canada has both written commercial law and contractual law and specialized commercial and civil courts. Canada’s Commercial Law Directorate provides advisory and litigation services to federal departments and agencies whose mandate includes a commercial component and has legal counsel in Montréal and Ottawa.

Parliament and provincial and territorial legislatures give government organizations the authority to make specific regulations. As of June 1, 2009, all consolidated Acts and regulations on the Justice Laws Website (http://laws-lois.justice.gc.ca/eng/ ) are “official”, meaning they can be used for evidentiary purposes.

**Laws and Regulations on Foreign Direct Investment**

Foreign investment policy in Canada has been guided by the Investment Canada Act (ICA) since 1985. The ICA liberalized policy on foreign investment by recognizing that investment is central to economic growth and key to technological advancement. The ICA provides for review of large acquisitions by non-Canadians and imposes a requirement that these investments be of “net benefit” to Canada. For the vast majority of small acquisitions and the establishment of new businesses, foreign investors need only notify the Canadian government of their investment. Fewer than 10 percent of foreign acquisitions are subject to ICA review. The threshold for investments subject to ICA review for 2016 is C600 million for WTO Members. (Indirect control acquisitions by WTO Members do not have to be reviewed.) New regulations that come into effect on April 24, 2017 will implement revised review thresholds for WTO investors, other than SOEs, and will increase the review threshold to C800 million, and ultimately to C1 billion in 2019. Thereafter the review amount will be subject to indexation. Additionally, the time periods for the security review process will be increased from 130 days to 200 days. For non-WTO Members, the threshold remains at USD 5 million for direct control and USD 50 million for indirect control acquisitions.

In 2015, Canada amended its National Security Review of Investment Regulations to provide the government with the flexibility to extend time periods for the review of investments that could be injurious to national security.

Canada announced new SOE guidelines in December 2012, which included the statement that future SOE bids to acquire control of a Canadian oil-sands business will only be approved on an “exceptional basis.” Canada altered the definition of an SOE in its 2013 Budget Implementation Bill to an entity or individual that is *influenced directly or indirectly* by a foreign government. The Bill also established a separate threshold review for SOE acquisitions of control, and allows Canada’s Industry Minister to review minority SOE investments for the first time. SOE investments from WTO member countries over USD 375 million are subject to review.

Investment in specific sectors is covered by special legislation. Foreign investment in the financial sector is administered by the Finance Department. Investment in any activity related to Canada’s cultural heritage or national identity is administered by the Heritage Department. Foreign ownership of Canadian telecommunications firms is governed by the Telecommunications Act, while the Broadcast Act governs foreign investment in radio and television broadcasting.

The Canadian Trade Commissioner Service has a comprehensive website “Invest in Canada” with the needed information for starting and registering a business in Canada. It can be found at the following website .

Investment in Canada is also subject to provincial jurisdiction. Restrictions on foreign investment differ by province, but are largely confined to the purchase of land and to provincially-regulated financial services. Provincial government policies relating to culture, language, labor relations or the environment, can be a factor for foreign investors.

U.S. foreign direct investment in Canada is subject to provisions of the ICA, the WTO, and the NAFTA. Chapter 11 of the NAFTA ensures that regulation of U.S. investors in Canada and Canadian investors in the United States results in treatment no different than that extended to domestic investors within each country, i.e., “national treatment.” Both governments are free to regulate the ongoing operation of business enterprises in their respective jurisdictions provided that the governments accord national treatment to both U.S. and Canadian investors.

Existing U.S. and Canadian laws, policies, and practices were “grandfathered” under the NAFTA except where specific changes were required. The “grandfathering” froze various exceptions to national treatment provided in Canadian and U.S. law, such as foreign ownership restrictions in the communications and transportation industries. Canada retains the right to review the acquisition of firms in Canada by U.S. investors at the levels applicable to other WTO members and has required changes before approving some investments.

Under the NAFTA, Canada is free to tax foreign-owned companies on a different basis from domestic firms, provided this does not result in arbitrary or unjustifiable discrimination. The governments can also exempt the sale of Crown (government-owned) corporations from any national treatment obligations. The Canadian government retains some flexibility in the application of national treatment obligations and need not extend identical treatment, as long as the treatment is “equivalent.”

Canada-U.S. trade in services is largely free of restrictions and has doubled over the past decade. U.S. services exports to Canada totaled more than USD 54 billion in 2016, while Canada’s services exports to the United States totaled over USD 54 billion. The NAFTA ensured that restrictions on bilateral services trade would not be applied following the agreement. Preexisting restrictions, such as those in the financial sector, were not eliminated by the NAFTA. The NAFTA services agreement is primarily a code of principles that establishes national treatment, right of establishment, right of commercial presence, and transparency for a number of service sectors specifically enumerated in annexes to the NAFTA. The NAFTA also commits both governments to expand the list of covered service sectors, except for the financial services covered by NAFTA Chapter 14.

**Competition and Anti-Trust Laws**

The Bureau of Competition Policy and the Competition Tribunal, a quasi-judicial body, enforce Canada’s antitrust legislation.

**Expropriation and Compensation**

Canadian federal and provincial laws recognize both the right of the government to expropriate private property for a public purpose, and the obligation to pay compensation. The federal government has not nationalized any foreign firm since the nationalization of Axis property during World War II. Both the federal and provincial governments have assumed control of private firms, usually financially distressed, after reaching agreement with the former owners.

**Dispute Settlement**

*ICSID Convention and New York Convention*

Canada ratified the International Centre for Settlement of Investment Disputes (ICSID) Convention on December 1, 2013 and is a signatory to the 1958 New York Convention, ratified on 12 May 1986. Canada signed the United Nations Convention on Transparency in Treaty-based Investor-State Arbitration (known as the Mauritius Convention on Transparency) in March 2015.

*Investor-State Dispute Settlement*

Canada accepts binding arbitration of investment disputes to which it is a party only when it has specifically agreed to do so through a bilateral or multilateral agreement, such as a Foreign Investment Protection Agreement (see below). The provisions of Chapter 11 of the NAFTA guide the resolution of investment disputes between NAFTA persons and the NAFTA member governments. The NAFTA encourages parties to settle disputes through consultation or negotiation. It also establishes special arbitration procedures for investment disputes separate from the NAFTA’s general dispute settlement provisions. Under the NAFTA, a narrow range of disputes dealing with government monopolies and expropriation between an investor from a NAFTA country and a NAFTA government may be settled, at the investor’s option, by binding international arbitration. An investor who seeks binding arbitration in a dispute with a NAFTA party gives up his right to seek redress through the court system of the NAFTA party, except for proceedings seeking nonmonetary damages. Canada does not have a history of extrajudicial action against foreign investors.

A list of current NAFTA Chapter 11 Arbitrations is below:

- Resolute Forest Products Inc. v. Government of Canada 
- CEN Biotech Inc. v. Government of Canada 
- Lone Pine Resources Inc. v. Government of Canada 
- Windstream Energy LLC v. Government of Canada 
- Clayton/Bilcon v. Government of Canada 
- Mercer International Inc. v. Government of Canada 
- Mesa Power Group LLC v. Government of Canada 
- Murphy Oil Corporation vs Government of Canada 
- Mobil Investments Canada Inc. vs Government of Canada 

*International Commercial Arbitration and Foreign Courts*

The CUFTA and NAFTA recognize that a hospitable and secure investment climate is necessary to achieve the full benefits of reduced barriers to trade in goods and services. The agreements establish a framework of investment principles sensitive to U.S., Canadian, and Mexican interests while assuring that investment flows freely and investors are treated in a fair and equitable manner. The NAFTA provides higher review thresholds for U.S. investment in Canada than for other foreign investors, but the agreement does not exempt all U.S. investment from review nor does it override specific foreign investment prohibitions, notably in “cultural industries” (e.g., publishing, film, music). The NAFTA investor-state dispute settlement mechanism creates the right to binding arbitration in specific situations.

**Bankruptcy Regulations**

Bankruptcy in Canada is governed by the Bankruptcy and Insolvency Act (BIA) and is not criminalized. Creditors must deliver claims to the trustee and the trustee must examine every proof of claim. The trustee may disallow, in whole or in part, any claim of right to a priority under the BIA or security. Generally, the test of proving the claim before the trustee in bankruptcy is very low and a claim is proved unless it is too “remote and speculative.” Provision is also made for dealing with cross-border insolvencies and the recognition of foreign proceedings. Canada is ranked number 15 for ease of “resolving insolvency” by the World Bank.

							4. Industrial Policies					

The Canadian Trade Commissioner Service manages the Advanced Manufacturing Fund (AMF) and the Industrial Research Assistance Program (IRAP). The AMF promotes continued growth of Ontario’s advanced manufacturing sector by supporting efforts to develop cutting-edge technologies and large-scale activities that will improve processes and increase productivity, establish clusters or global supply chains and collaborate with private sector, and research and post-secondary institutions. The IRAP program assists firms to develop, adopt and adapt technologies and incorporate them into competitive products and services to be commercialized in the global marketplace. IRAP provides advisory services and funding to help SMEs undertake innovation projects.

**Investment Incentives**

Federal and provincial governments in Canada offer a wide array of investment incentives that municipalities are generally prohibited from doing. None of the federal incentives are specifically aimed at promoting or discouraging foreign investment in Canada. The incentives are designed to advance broader policy goals, such as boosting research and development or promoting regional economies. The funds are available to any qualified Canadian or foreign investor who agrees to use the monies for the stated purpose. For example, Export Development Canada can support inbound investment under certain specific conditions (e.g., investment must be export-focused; export contracts must be in hand or companies have a track record; there is a world or regional product mandate for the product to be produced).

Several provinces offer an array of incentive programs and services aimed at attracting foreign investment that lower corporate taxes and incentivize research and development. The Province of Quebec officially re-launched its “Plan Nord” (Northern Plan) in April 2015, a 20-year sustainable development investment initiative that is intended to harness the economic, mineral, energy, and tourism potential of Quebec’s northern territory. Quebec’s government created the “Société du Plan Nord” (Northern Plan Company) to attract investors and work with local communities to implement the plan. Thus far, Plan Nord has helped finance mining projects in northern Quebec and began building the necessary infrastructure to link remote mines with ports. The provincial government is actively seeking other foreign investors who desire to take advantage of these opportunities. Quebec holds an annual meeting of mining industry stakeholders, known as “Quebec Mines,” every year in November where it is possible to get more information about potential claims and the mining investment climate as a whole. According to the Fraser Institute, a Canadian public policy think tank, Quebec is ranked as the number 8 jurisdiction worldwide for mining investments.

Quebec also seeks to attract foreign investment through its Maritime Strategy. The province has designated 16 ports where maritime industrial zones will be developed or improved. The provincial government has pledged to invest C300 million annually for the next five years and intends to pursue this strategy until 2030. The plan aims to develop the St. Lawrence valley region and coastal Quebec by developing industrial zones near ports, supporting shipyards, modernizing maritime tourism, and protecting the environment.

Provincial incentives tend to be more investor-specific and are conditioned on applying the funds to an investment in the granting province. For example, Ontario’s Jobs and Prosperity Fund provides USD 2.5 billion over 10 years to enhance productivity, bolster innovation and grow Ontario’s exports. To qualify, companies must have substantive operations (generally three years) and at least C10 million in eligible project costs. Alberta offers companies a 10 percent refundable provincial tax credit worth up to USD 400,000 annually for scientific research and experimental development encouraging research and development in Alberta as well as Alberta Innovation Vouchers worth C15,000 to C50,000 to help small early-stage technology and knowledge-driven businesses in Alberta get their ideas and products to market faster. Newfoundland and Labrador provide vouchers worth 75 percent of eligible project costs up to C15,000 for R&D, performance testing, field trials, and other projects.

Provincial incentives may also be restricted to firms established in the province or that agree to establish a facility in the province. Government officials at both the federal and provincial levels expect investors who receive investment incentives to use them for the agreed purpose, but no enforcement mechanism exists.

Incentives for investment in cultural industries, at both the federal and provincial level, are generally available only to Canadian-controlled firms. Incentives may take the form of grants, loans, loan guarantees, venture capital, or tax credits. Provincial incentive programs for film production in Canada are available to foreign filmmakers.

**Foreign Trade Zones/Free Ports/Trade Facilitation**

Under the NAFTA, Canada operates as a free trade zone for products made in the United States. U.S. made goods enter Canada duty free.

**Performance and Data Localization Requirements**

Data localization is an evolving area in Canada. Privacy rules in two Canadian provinces, British Columbia and Nova Scotia mandate that personal information in the custody of a public body must be stored and accessed only in Canada unless one of a few limited exceptions applies. These laws prevent public bodies such as primary and secondary schools, universities, hospitals, government-owned utilities, and public agencies from using non-Canadian hosting services.

The Canada Revenue Agency stipulates that tax records must be kept at a filer’s place of business or residence in Canada. Current regulations were written over 30 years ago and do not take into account current technical realities concerning data storage.

							5. Protection of Property Rights					

**Real Property**

Foreign investors have full and fair access to Canada’s legal system, with private property rights limited only by the rights of governments to establish monopolies and to expropriate for public purposes. Investors from NAFTA countries have mechanisms available to them for dispute resolution regarding property expropriation by the Government of Canada. The recording system for mortgages and liens is reliable. Canada is ranked number 43 for 2017 in the World Bank’s “Ease of Registering Property” rankings. About 89 percent of Canada’s land area is Crown Land owned by federal (41 percent) or provincial (48 percent) governments; the remaining 11 percent is privately owned.

A 2014 Supreme Court decision recognized the existence of aboriginal title on land in British Columbia, which has ramifications for aboriginal land claims across Canada. While stopping short of giving aboriginals a veto on projects, the decision gives them increased influence on the economic development of any land with a colorable (potentially invalid) aboriginal title claim.

**Intellectual Property Rights**

Canada remained on USTR’s Watch List in 2016. Canada amended its Copyright Act to extend protection for sound recordings to 70 years from the date of the recording and made adjustments to its Patent Medicine regulations to allow for fixed-dose patent registration. Canada implemented notice and notice procedures for internet service providers and, as part of 2015 anti-Counterfeiting legislation, began accepting requests from rights holders to register with the Canadian Border Services Agency (CBSA Canada acceded to the WIPO Marrakesh Treaty on June 30, 2016, bringing the treaty into force. Canada has now completed the ratification of the WIPO Internet Treaties. There are ongoing concerns over Canadian courts’ strict utility standards that have been used to overturn patents, and broad discretion allowed Canada’s Health Ministry to release confidential business information. Industry is concerned with uneven application of new notice and notice regulations requiring ISPs to notify (and address) sites of trademark or copyright infringements. While Canada is working to prevent retail counterfeit goods coming into Canada by encouraging banks to shut down counterfeit retailers’ merchant accounts, Canada continues to exclude shipments of goods in-transit to the U.S. from counterfeit inspection.

The Combatting Counterfeit Goods Act came into effect January 1, 2015 and amended the Copyright Act, the Trade-marks Act, and the Customs Act, to give the CBSA and rights-holders new tools to stop counterfeit goods into and out of Canada. As of January 1, 2015 Canadian customs officers have ex officio authority to target and detain counterfeit goods for up to 20 days. Rights holders may formally request CBSA assistance by filing a Request for Assistance (RFA). RFAs are valid for two years and may be renewed.

The Canadian government does not regularly report on seizures of counterfeit goods. However, the RCMP publishes periodic totals for counterfeit goods seizures. The last report on Feb 20, 2013 noted that “the total retail value of seizures of counterfeit and pirated goods has increased from over USD 24 million in 2010 to over USD 38 million in 2012.” Provided counterfeit goods are not needed to be held as evidence by the government for criminal proceedings, rights holders are responsible for storage, handling, and destruction of counterfeit goods. If a court proceeding finds the counterfeit goods claim to be invalid, the rights holder is also responsible for any damages sustained by the owner of the goods due to continued detention. Counterfeit goods are not prevalent, but are present in Canada.

The United States has expressed strong concerns about the availability of rights of appeal in Canada’s administrative process for reviewing the regulatory approval of pharmaceutical products, and has also expressed concerns regarding the heightened utility requirements for patents that Canadian courts have been adopting recently. One U.S. pharmaceutical company filed a Notice of Intent under NAFTA Chapter 11 in June 2013 after its patent was invalidated on two of its drugs. In September 2013 the company filed a Notice of Arbitration Memorial and the hearing on jurisdiction and the merits took place from May 30 to June 8, 2016. On March 17 a NAFTA court dismissed the USD 500 million challenge. The firm will likely be required to pay most of the Canadian government’s estimated USD 5 million in legal costs.

*Resources for Rights Holders*

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

Embassy point of contact:

- Jonathan Nellis
- Deputy Director, Economic Affairs
- 613-688-5227
- nellisjj@state.gov

Local lawyers list: http://canada.usembassy.gov/consulates/ottawa/ottawa-attorneys.html

							6. Financial Sector					

**Capital Markets and Portfolio Investment**

Canada’s capital markets are open, accessible, and without onerous regulatory requirements. Foreign investors are able to get credit in the local market. Canada has its own stock market, the Toronto Exchange and there is sufficient liquidity in the markets to enter and exit sizeable positions. The World Economic Forum ranked Canada’s banking system as the “most sound” in the world from 2008 to 2015, and the third most sound for 2016. Canadian banking stability is linked to high capitalization rates that are well above the norms set by the Bank for International Settlements. The Canadian government and Bank of Canada do not place restrictions on payments and transfers for current international transactions.

**Money and Banking System**

Canada is open to foreign investment in the banking, insurance, and securities brokerage sectors, but there are barriers to foreign investment in retail banking (see below). Foreign financial firms interested in investing submit their applications to the Office of the Superintendent of Financial Institutions (OSFI) for approval by the Finance Minister. U.S. firms are present in all three sectors, but play secondary roles. U.S. and other foreign banks have long been able to establish banking subsidiaries in Canada, but no U.S. banks have retail banking operations in Canada. Several U.S. financial institutions have established branches in Canada, chiefly targeting commercial lending, investment banking, and niche markets such as credit card issuance.

The Canadian banking industry is dominated by five major domestic banks, but includes a total of 28 domestic banks, 24 foreign bank subsidiaries, 27 full-service foreign bank branches and three foreign bank lending branches operating in Canada. The five largest banks account for approximately 90 percent of total assets among Canada’s federally regulated deposit taking institutions. These institutions manage close to USD 4 trillion in assets. The remaining 10 percent of Canadian banks’ assets are held by smaller banks with niche focuses such as mortgage lending or credit cards. Many large international banks have a presence in Canada through a subsidiary, representative office or branch of the parent bank.

In Canada, the regulation of defensive tactics against hostile takeovers is handled by provincial securities regulators rather than the courts. Provincial authorities refer to the Canadian Securities Administrators’ National Policy 62-202 regarding takeovers that seeks to encourage open and unrestricted auctions to maximize target company shareholder value and choice between competing alternatives. The nationality of the bidding entity is not considered by the provincial securities regulators but triggers a federal review under the Investment Canada Act.

While cross-shareholding arrangements are permitted in Canada, the extent of foreign investment and cross-border merger and acquisition activity suggests that they do not pose any practical barriers.

The Ontario Securities Commission extended the set time for a targeted company to answer a take-over proposal/offer in 2016. Under the new regime, bids are generally open for a minimum deposit period of 105 days, the minimum tender is more than 50 percent of the outstanding securities that are subject to the bid and a 10-day extension applies if the minimum tender requirement is met. The change was made to enhance the ability of shareholders to make better informed and coordinated decisions while providing boards with additional time and discretion to respond to takeover bids.

**Foreign Exchange and Remittances**

*Foreign Exchange*

The Bank of Canada is the nation’s central bank. Its principal role is “to promote the economic and financial welfare of Canada,” as defined in the Bank of Canada Act. The Bank’s four main areas of responsibility are monetary policy, promoting a safe, sound and efficient financial system, issuing and distributing currency, and being the fiscal agent for Canada.

*Remittance Policies*

The Canadian dollar is fully convertible and the central bank does not place time restrictions on remittances. Canada provides some incentives for Canadian investment in developing countries through programs offered by Global Affairs Canada.

**Sovereign Wealth Funds**

Canada does not have a sovereign wealth fund but the province of Alberta has the Heritage Savings Trust Fund established through province’s share of petroleum royalties. The fund’s value was C19.1 billion on December 31, 2016. It is invested in a globally diversified portfolio of public and private equity, fixed income and real assets. The fund follows the voluntary code of good practices “Santiago Principles” and participates in the IMF-hosted International Working Group of SWFs. Close to 50 percent of the Heritage Fund is currently held in equity investments, 19 percent of which are Canadian equities. The fund is currently heavily invested in the U.S. dollar (16 percent of total currency) with more than USD 2.8 billion in reserves.

							7. State-Owned Enterprises					

Canada has more than 40 state-owned enterprises (SOEs) at the federal level, with the majority of assets held by three federal crown corporations: Export Development Canada; Farm Credit Canada; and Business Development Bank of Canada. Canada also has over 100 SOEs at the provincial level that contribute to a variety of sectors including, finance; power, electricity, and utilities; and transportation. The Treasury Board Secretariat provides an annual report to Parliament regarding the governance and performance of Canada’s federal crown corporations and other corporate interests.

The Canadian government list SOEs as “Government Business Enterprises” (GBE). A list is available at http://www.osfi-bsif.gc.ca/Eng/fi-if/rtn-rlv/fr-rf/dti-id/Pages/GBE.aspx  and includes both federal and provincial enterprises.

There are no restrictions on the ability of private enterprises to compete with SOEs. The functions of most Canadian crown corporations have limited appeal to the private sector. The activities of some SOEs such as VIA Rail and Canada Post do overlap with private enterprise. As such, they are subject to the rules of the Competition Act to prevent abuse of dominance and other anti-competitive practices. Foreign investors are also able to challenge SOEs under the NAFTA and WTO.

Canada is party to the Government Procurement Agreement (GPA) within the framework of the World Trade Organization (WTO). SOEs are not addressed in the agreement.

**Privatization Program**

Federal and provincial privatizations are considered on a case-by-case basis, and there are no overall limitations with regard to foreign ownership. As an example, the federal Ministry of Transport did not impose any limitations in the 1995 privatization of Canadian National Railway, whose majority shareholders are now U.S. persons.

							8. Responsible Business Conduct					

Canada encourages Canadian companies to observe the OECD Guidelines for Multinational Enterprises in their operations abroad and provides a National Contact Point for dealing with issues that arise in relation to Canadian companies. Canadas Corporate Social Responsibility strategy, “”Doing Business the Canadian Way: A Strategy to Advance Corporate Social Responsibility in Canada’s Extractive Sector Abroad” is available on the Global Affairs Canada website: http://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/other-autre/csr-strat-rse.aspx?lang=eng .

Despite the increased level of official attention paid to Responsible Business Conduct, the activities of Canadian mining companies abroad remain the subject of some critical attention and have prompted calls for the government to move beyond voluntary measures. Canada is a supporter of Extractive Industries Transparency Initiative (EITI).

Canada’s National Contact Point for the OECD Guidelines for Multinational Enterprises

- International Trade Portfolio Division
- Foreign Affairs, Trade and Development Canada
- 125 Sussex Drive
- Ottawa, Ontario K1A 0G2
- Tel: (1-343) 203-2341
- Fax: (1-613) 944-1574
- Email:  ncp.pcn@international.gc.ca
- Web:  www.ncp.gc.ca   /  www.pcn.gc.ca 

							9. Corruption					

On an international scale, corruption in Canada is low and similar to that found in the United States. In general, the type of due diligence that would be required in the United States to avoid corrupt practices would be appropriate in Canada. Canada is a party to the UN Convention Against Corruption. Canada is a party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, as well as the Inter-American Convention Against Corruption.

Canada’s Criminal Code prohibits corruption, bribery, influence peddling, extortion and abuse of office. The 1998 the Corruption of Foreign Public Officials Act prohibits individuals and businesses from bribing foreign-government officials to obtain influence and prohibits destruction or falsification of books and records to conceal corrupt payments. The law’s extended jurisdiction permits Canadian courts to prosecute corruption committed by companies and individuals abroad. Canada’s anti-corruption legislation is vigorously enforced, and companies and officials guilty of violating Canadian law are being effectively investigated, prosecuted and convicted of corruption-related crimes. In March 2014, Public Works and Government Services Canada revised its Integrity Framework for government procurement to ban companies or their foreign affiliates for 10 years from winning government contracts if they have been convicted of corruption. In August 2015, the Canadian government revised the Framework to allow suppliers to apply to have their ineligibility reduced to five years where the causes of conduct are addressed and no longer penalized a supplier for the actions of an affiliate in which it had no involvement. Canadian firms operating abroad must declare whether they or an affiliate are under charge or have been convicted under Canada’s anti-corruption laws during the past five years in order to receive help from the Trade Commissioner Service. U.S. firms have not identified corruption as an obstacle to foreign direct investment in Canada.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Canada signed the UN Anti-corruption Convention May 21, 2004 and ratified it on October 2, 2007.

The OECD Anti-Bribery Convention went into force in Canada on February 15, 1999.

*Resources to Report Corruption*

Mary DawsonConflict of Interest and Ethics Commissioner (for appointed and elected officials, House of Commons)Office of the Conflict of Interest and Ethics CommissionerParliament of Canada66 Slater Street, 22nd FloorOttawa, Ontario

(Mailing address)Office of the Conflict of Interest and Ethics CommissionerParliament of CanadaCentre Block, P.O. Box 16Ottawa, OntarioK1A 0A6Lyse RicardOffice of the Senate Ethics Officer (for appointed Senators)

Thomas D’Arcy McGee BuildingParliament of Canada90 Sparks St., Room 526Ottawa, ON K1P 5B4

							10. Political and Security Environment					

Political violence occurs in Canada to about the same extent as in the United States. For example, protests over proposed austerity measures in the Quebec budget led to generally peaceful confrontations between police and protesters throughout 2015.

							11. Labor Policies and Practices					

The federal government and provincial/territorial governments share jurisdiction for labor regulation and standards. Federal employees and those employed in the railroad, airline, and banking sector are covered under the federally administered Canada Labor Code. Employees in most other sectors come under provincial labor codes. As the laws vary somewhat from one jurisdiction to another, it is advisable to contact a federal or provincial labor office for specifics, such as minimum wage and benefit requirements.

Canada’s unemployment rate stood at 6.8 percent in January 2017, a decrease from 6.9 percent twelve months earlier. Analysts note that Canada’s labor story varies significantly by province, with resource-dependent provinces affected more adversely than non-resource dependent provinces as a result of lower oil and other commodity prices. Still hurt by the 2014–15 decline in oil prices, Canada’s largest oil producing province, Alberta, saw its unemployment rate increase from 8.5 percent in January 2016 to 8.8 percent in January 2017. However, the unemployment rate in Newfoundland & Labrador, another oil dependent province fell from 15.1 percent to 13.8 percent over the same time period. In contrast, Ontario’s unemployment remained at 6.4 percent in January 2016 and 2017. Ontario, which is home to much of Canada’s manufacturing sector, continued to benefit from a lower Canadian dollar and increased demand from the United States.

Canada faces a labor shortage in skilled trades professions, such as carpenters, engineers, and electricians. However, the demand for skilled trade labor has diminished in resource dependent provinces, as lower commodity prices have forced many Canadian energy companies to cease hiring and/or cut staff over the course of the past two years. Canada launched several initiatives in past years including the Global Skills Visa, announced in November 2016, to address its skilled labor shortage, including through immigration reform, the inclusion of labor mobility provisions in free trade agreements, including the Canada-EU CETA agreement, and the Temporary Foreign Worker Program (TFWP).

The TFWP is jointly managed by Human Resources and Skills Development Canada (HRSDC) and Citizenship and Immigration Canada (CIC) and is divided into two categories: the International Mobility Program (IMP), which primarily includes high skillhigh wage professions, and the TFWP which refers to primarily low skilled workers. The majority of U.S. temporary workers fall under the more highly skilled IMP stream. The number of temporary foreign workers a business can employ is limited. For more information, see the TFWP website: http://www.cic.gc.ca/english/resources/publications/employers/temp-foreign-worker-program.asp 

Canadian labor unions are independent of the government. Canada has labor dispute mechanisms in place and unions practice collective bargaining. In Canada less than one in three employees belonged to a union or was covered by a collective agreement in 2015, the most recent year available. In 2015, there were 776 unions in Canada. Eight of those unions – five of which were national and three international – represented 100,000 or more workers each and comprised over 45 percent of all unionized workers in Canada. While the number of dues-paying union workers rose in 2015 to 31.8 percent, overall union membership down from 37.6 percent in 1981.

Canada’s labor unions have clashed with the federal government on several occasions in recent years. Eighteen unions and labor organizations announced their intention in December 2013 to take legal action against the Canadian federal government over provisions included in the government’s 2013 budget bill (Bill C-4). The unions maintained that Bill C-4 undermined their right to collective bargaining by allowing the federal government to determine which federal workers will be permitted to strike and which collective agreements will be settled through arbitration. Canada passed “back-to-work” legislation in March 2012 and May 2012 to end labor disputes involving a Canadian airline and rail companies. Canada justified introducing the legislation on both occasions as a necessary action to protect the Canadian economy. When railroad unions threatened a work stoppage during December 2014 contract negotiations, parliament pre-emptively introduced back to work legislation; however, an agreement was reached before the bill was required.

							12. OPIC and Other Investment Insurance Programs					

The U.S. Overseas Private Investment Corporation does not operate in Canada.

							13. Foreign Direct Investment and Foreign Portfolio Investment Statistics					

*Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy*

*T**able 3: Sources and Destination of FDI*

Source: Host Country Source, Office of the Chief Economist, 2015 FDI Stats, Global Affairs Canada.Note: Data converted to U.S. dollars using yearly average currency conversions from IRSUSG Source: US BEA

*Table 4: Sources of Portfolio Investment*

Source: Statistics Canada, 2015 figuresNote: Data converted to U.S. dollars using yearly average currency conversions from IRS

							14. Contact for More Information					

Jonathan NellisDeputy Economic Counselor490 Sussex Drive, Ottawa OntarioEmail: nellisjj@state.gov

## View report by:

### On This Page

                    -  Executive Summary 
                    -  1. Openness To, and Restrictions Upon, Foreign Investment   
                    -  2. Bilateral Investment Agreements and Taxation Treaties   
                    -  3. Legal Regime   
                    -  4. Industrial Policies   
                    -  5. Protection of Property Rights   
                    -  6. Financial Sector   
                    -  7. State-Owned Enterprises   
                    -  8. Responsible Business Conduct   
                    -  9. Corruption   
                    -  10. Political and Security Environment   
                    -  11. Labor Policies and Practices   
                    -  12. OPIC and Other Investment Insurance Programs   
                    -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                    -  14. Contact for More Information   

Tags

Bureau of Economic and Business AffairsBureau of Western Hemisphere AffairsCanada

Back to Top

01 / Select a Year

02 / Select Sections	

                  -  Select All Sections 

03 / Select Countries You can add more than one country or area.

                - White House
                - USA.gov
                - Office of the Inspector General
                - Archives
                - Contact Us

follow us
FacebookXInstagramYouTubeFlickrGovDelivery

              - Privacy Policy
              - Accessibility Statement
              - Copyright Information
              - FOIA
              - No FEAR Act

## U.S. Department *of* State

#### The Lessons of 1989: Freedom and Our Future