Investment Canada: NAFTA replaced by CUSMA

Summary#

These final amendments update the Investment Canada Regulations to replace references to NAFTA with CUSMA (the Canada–United States–Mexico Agreement) and add matching definitions. The changes were published in the Canada Gazette on April 29, 2020 and come into force when section 111 of the Canada–United States–Mexico Agreement Implementation Act comes into force (or on the day they are registered if that is later).

What it does#

• Replaces uses of the term NAFTA with CUSMA throughout the Investment Canada Regulations.
• Removes NAFTA-specific definitions and adds equivalent definitions for a CUSMA investor and for being “controlled by a CUSMA investor.”
• Updates the application forms and schedules to ask whether an investor is a WTO investor, a CUSMA investor or a trade agreement investor.
• Requires forms to indicate, where relevant, whether the Canadian business (or its prior controller) is linked to a WTO, CUSMA or other trade-agreement investor, and whether the business is a cultural business.
• Sets the coming-into-force rule tied to section 111 of the Canada–United States–Mexico Agreement Implementation Act (or the registration date if later).

Who's affected#

• Foreign investors and potential buyers who must file notices or notifications under the Investment Canada Regulations.
• Canadian businesses that receive foreign investment or are being sold.
• Lawyers, accountants and advisors who prepare filings with Investment Canada.
• Government staff who review and process investment notices.

Why it matters#

• The change is mainly a technical update to align wording with the new trade agreement name (CUSMA).
• It does not create new costs or new filing burdens, according to the government’s regulatory statement.
• In practice, the wording matters when deciding an investor’s status under the screening rules — and that status can affect whether a transaction is subject to review and whether special rules for cultural businesses apply.