What is FIPA and How does it protect investors
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The document provides an overview of the Foreign Investment Protection Act (FIPA) in Canada. It discusses how FIPA aims to protect foreign investors and encourage foreign direct investment. Foreign direct investment is important for Canada's economy as it provides capital for growth and jobs. However, some criticize FIPA for making Canada vulnerable to lawsuits from investors under trade deals. The presentation gives context on globalization and Canada's rates of foreign direct investment inflows and outflows.
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What is FIPA and How does it protect investors
- 1. What is FIPA (Foreign Investment Protection Act) ? By: Paul Young, CPA, CGA Date: March 6, 2016
- 2. Agenda • FIPA • Globalization • Foreign Direct Investment • Lawsuits
- 3. Disclaimer • This presentation is on view of trade data for Canada. It is up to individuals to do their own research as part evaluating government polices and their impact on the markets.
- 4. Paul Young - Presenter Bio • CPA/CGA • 25 years of experience in Academia, Industry and Financial solutions • Youtube Channel - https://www.youtube.com/channel/UCAArky1bAXPSuV2NLtUnyLg
- 6. Why is FIPA Important
- 8. Foreign Direct Investment • A foreign direct investment (FDI) is an investment made by a company or entity based in one country, into a company or entity based in another country. Foreign direct investments differ substantially from indirect investments such as portfolio flows, wherein overseas institutions invest in equities listed on a nation's stock exchange. Entities making direct investments typically have a significant degree of influence and control over the company into which the investment is made. Open economies with skilled workforces and good growth prospects tend to attract larger amounts of foreign direct investment than closed, highly regulated economies.
- 9. Why is FDI important to Canada • Canada has limitation on access to capital (small market) • Foreign companies want to invest in countries with stable government • Foreign companies want to expand their business opportunities as way to provide better shareholder value. • Shareholder value impacts the stock market which then impacts pension funds
- 10. FDI – Inflow/outflow Canada
- 11. Government Policies • Trade/Investment Deals • Regulatory Environment (Environmental assessments, health and safety, etc.) • Innovation funds (Aerospace, Automotive, Forestry, Southern Ontario Development and other funds) • EDC (Export Development Corporation) • Provides funding/support to export driven companies
- 12. Lawsuits/FIPA/Trade • In two decades Canada has lost lawsuits, however, the money is peanuts in terms of the overall spending. http://www.huffingtonpost.ca/2015/01/14/canada-sued-investor- state-dispute-ccpa_n_6471460.html. I quoted Huffington Post as way to show the LPC bias towards the lawsuit. This article says 20 years as such it goes to show with all the trade over the past 20 years the value of the lawsuits is peanuts. Let’s say exports are $400B on average for 20 years then that means 8 trillion of exports and only $175M in lawsuits. I think that is a pretty good loss ratio, right?
Notas del editor
- Government of Canada
- http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/fipa-apie/fipa-apie.aspx?lang=eng
- http://www.globalization101.org/what-is-globalization/
- http://www.investopedia.com/terms/f/fdi.asp?layout=infini&v=4B&adtest=4B
- http://www.statcan.gc.ca/daily-quotidien/150424/dq150424a-eng.pdf