On November 5, 2015, the parties to the Trans-Pacific Partnership (“TPP”) concluded their last round of a 5-year, 19-round negotiation. The TPP is, ostensibly, a free trade agreement between Canada and 11 other countries, including Australia, Japan, Mexico, New Zealand, and the United States. It aims to provide duty-free trade on most goods, and to reduce tariffs between the trading parties.

Among other things, the some 6,000-page text of the TPP addresses competition policy, competitiveness and business facilitation, and foreign investment. While nothing novel was produced in the former chapters of the TPP, the later annex has the potential to significantly raise the foreign investment thresholds under the Investment Canada Act.

If ratified by Government of Canada, the TPP will more than double the review threshold of a direct “acquisition of control” of a business. In that regard the text of the TPP indicates that the review threshold will increase from C$ 600 million to C$ 1.5 billion where an investor is a national of an original signatory for which the TPP has entered into force or entities controlled by nationals of those TPP parties, as provided in the Investment Canada Act. Consistent with the current threshold regime under the Investment Canada Act, this amount is subject to adjustment in January each year.

It is important to note that this increase does not apply to a direct “acquisition of control” by a state-owned enterprise of a Canadian business. These types of acquisitions remain the subject of review by the Director of Investments if the value of the Canadian business is not less than C $369 million. Moreover, the new review threshold does not apply the acquisition of a cultural business.

Provided that the Government of Canada ratifies the TPP, such changes are expected to become effective in 2017. For businesses, foreign and domestic, these changes mean a more timely completion of transactions that would otherwise be subject to review under the Investment Canada Act.