A Rule of Reason for Inward FDI: Integrating Canadian Foreign Investment Review and Competition Policy

30 Pages Posted: 17 Nov 2016  

Grant Bishop

University of Toronto - Faculty of Law

Date Written: October 27, 2016

Abstract

The Investment Canada Act (ICA) needs an overhaul. This reform must include a paradigm shift in thinking to a much less restrictive view about the benefits of foreign direct investment in Canada. Currently, the ICA operates under the presumption that foreign firms behave detrimentally to the Canadian economy: foreign acquirers are required to show “net benefit” to Canada and may need to make onerous commitments for maintaining output or employment. This attitude, a holdover from the ICA’s predecessor, the Foreign Investment Review Agency, has created an atmosphere which fosters protectionism and relies on economically incoherent factors to assess the merit of proposed transactions. It is time to shed that archaic attitude and adopt a more reasoned perspective.

Rather than requiring each proposed transaction to provide proof for the specific benefit to Canada, the ICA should assume that foreign acquisitions benefit Canada unless there is proof to the contrary. A more welcoming, balanced and rational perspective would be that foreign acquisitions actually improve the productivity of Canadian companies and contribute to the well-being of Canada’s economy.

Keywords: ICA, Investment Canada Act, Foreign Investment, Economy, Canadian Economy

Suggested Citation

Bishop, Grant, A Rule of Reason for Inward FDI: Integrating Canadian Foreign Investment Review and Competition Policy (October 27, 2016). SPP Research Paper, Volume 9, Issue 34, October 2016 . Available at SSRN: https://ssrn.com/abstract=2871592

Grant Bishop (Contact Author)

University of Toronto - Faculty of Law ( email )

78 and 84 Queen's Park
Toronto, Ontario M5S 2C5
Canada

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