(Updates with other deals in final paragraph.)
Feb. 8 (Bloomberg) -- Canada and China reached an investment-protection agreement today, as the holder of the world’s third-largest oil reserves looks to deepen economic ties with Asia and lessen its reliance on the U.S.
Neither side gave details about the agreement, announced after Canadian Prime Minister Stephen Harper met Chinese Premier Wen Jiabao in Beijing. The two sides will perform a legal review of the deal before signing it, according to a statement from Harper’s office.
“Investment flows between Canada and China are at an all- time high, contributing significantly to jobs and economic growth in both countries,” Harper said, according to the statement. It said the pact will create “a more stable and secure environment for investors on both sides of the Pacific.”
The two countries began talks on an investor protection agreement in 1994, and Canada has pushed harder for a pact in recent years. Harper called diversifying Canada’s energy exports a “national priority” last month after President Barack Obama rejected TransCanada Corp.’s $7 billion Keystone XL pipeline to ship Canadian oil to the Gulf Coast.
Foreign investment protection pacts are designed to guard investors against discriminatory and arbitrary practices. Harper’s four-day visit is aimed at attracting more Chinese investment in Canada’s natural resources while winning business for Canadian companies such as Manulife Financial Corp.
Strengthening cooperation is “our shared aspiration and also serves the fundamental interests of our two countries,” Wen told Harper at a meeting in the Great Hall of the People before the agreement was signed.
Harper told Wen that the two sides can “enjoy a strategic partnership based on mutual respect and collaboration.”
Direct investment in China was C$4.8 billion ($4.8 billion) in 2010, less than 1 percent of Canada’s total, and about one- third the level of reciprocal investment by Chinese firms, Statistics Canada data show. With 99 percent of oil exports going to the U.S., Canada’s trade deficit with China was C$147.5 billion from 2006 to 2010, Industry Canada says.
At the same time, Chinese companies purchased more oil and gas assets in Canada from 2005 to 2011 than those any other country, according to Bloomberg Government.
The two sides also signed six other agreements today, including pacts on a scholar exchange program, cooperation in environmental protection and resource development, and opening the Chinese market for beef tallow to Canadian producers.
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