Mining Association of Canada | 2023 Report

The Mining Association of Canada | The Canadian Mining Story: Economic Impacts and Drivers for the Global Energy Transition 2023 69 LOOKING FORWARD Free trade, investment and taxation agreements help facilitate the trade of mining products and investment flows. These agreements reduce barriers for investment, enhance transparency and advance cooperation. The reduction and elimination of tariffs increases the competitiveness of Canadian mineral products in foreign jurisdictions by levelling the playing field from a cost standpoint, thus enabling companies to capture greater market share. Investment agreements, complete with dispute resolution mechanisms, provide mining investors with greater certainty over the investments that companies make in foreign jurisdictions. Labour mobility and regulatory cooperation mechanisms enable companies to secure the key skills they need for project development and operation and promote dialogue through the complex process of obtaining regulatory approvals. Part of maintaining Canada’s global leadership is ensuring that Canadian mining and supply sectors have access to modern and comprehensive trade and investment vehicles to meet the world where it does business. Investor State Dispute Settlement Investor State Dispute Settlement (ISDS) mechanisms in trade agreements provide foreign investors with the right to access an international tribunal to resolve investment disputes. ISDS protections are critically important to the Canadian mining industry because of the unique factors that define mineral investments. Mining operations are vulnerable to state action because of the very high up front capital costs. It is common for a mine’s initial capital expenditure to exceed $1 billion before minerals are produced. After production begins, mines typically operate for several years to recover capital before any profit is realized. In the event of an interruption of mineral production beyond the miner’s control, that investment is immobile as it is grounded in the host country. MAC believes that all trade agreements should include ISDS provisions to protect Canada’s interests abroad. Foreign Investment Promotion and Protection Agreements Foreign investment gives Canadian businesses easier access to new technologies and ideas and enhances connectivity to larger markets and production chains. Ensuring that two-way flows of capital remain fair and open is essential. Negotiating safeguards for industry investment abroad, while enabling foreign investment into Canada, are key. A Foreign Investment Promotion and Protection Agreement (FIPA) is a bilateral agreement aimed at protecting and promoting foreign investment through legally binding rights and obligations. Canada has 38 FIPAs in force, has signed two others yet to come into force, concluded negotiations with five additional countries, and remains engaged in ongoing negotiations with 14 other countries. The existence of a FIPA provides foreign governments with a set of rules and expectations for fairness and transparency and gives investors additional confidence. MAC is pleased that ISDS mechanisms remain part of Canada’s model FIPA agreement.