Canada - Administration of the Foreign Investment Review Act (FIRA)
Canada FIRA (Source: GATT Analytical Index)
Products at Issue
|Products at issue||
|Type of product||
Key legal aspects
|Chairperson||T.C. O'Brien (New Zealand)|
|Other members||M. Ikeda (Japan), Johannes N. Feij (Netherlands)|
|Legal basis at issue||
|Claims at issue||
|Defences at issue||
|No of Pages (total / legal reasoning)||22|
|Request for consultations|
|Request for establishment|
|Adoption of report|
|Outcome of the proceedings||
|Additional Info||L/5504 (25/07/1983) Canada - Administration of the Foreign Investment Review Act - Report of the Panel: The dispute concerned an US challenge of the Canadian government's practice to enter into agreements with foreign investors according to which these were to give preference to the purchase of Canadian goods over imported goods and to meet certain export performance requirements. The Panel found that undertakings to purchase goods of Canadian origin without any qualification excluded the possibility of purchasing available imported products, so that the latter were clearly treated less favourably than domestic products and were not consistent with GATT Article III:4. The Panel further found that the requirements to buy from Canadian suppliers were inconsistent with Article III:4. Making such undertakings conditional upon goods being "competitively available" or "reasonably available" did not change these findings. The Panel further concluded that in relation to Article III:5, there were insufficient grounds to consider the purchase undertakings which refer to specific amounts or proportions under its provisions. Noting that purchase undertakings did not prevent the importation of goods as such, the Panel reached the conclusion that they were not inconsistent with GATT Article XI:1.
With respect to the undertaking to export specified quantities or proportions, the Panel noted that Article XVII:1(b) did not establish a separate obligation to allow enterprises to act in accordance with commercial considerations but merely defined the obligation of the enterprises, set out in Article XVII:1(a), to "act in a manner consistent with the general principles of non-discriminatory treatment" prescribed in the General Agreement. The Panel found that there was no GATT provision which forbid requirements to sell goods in foreign markets in preference to the domestic market. Therefore, when allowing foreign investments on the condition that the investors export a certain amount or proportion of their production, Canada did not act inconsistently with any of the principles of non-discriminatory treatment prescribed by the General Agreement for governmental measures affecting exports by private traders.
Turning to Article XX(d), the Panel could not conclude that the purchase undertakings were necessary for the effective administration of the Act. The Panel was in particular not convinced that investors submitting applications had to be bound to purchasing practices having the effect of giving preference to domestic products, to enable the Canadian government to determine whether the proposed investments were or were likely to be of significant benefit to Canada.