Canada’s Global Trade and Investment Instruments

Tools to Unlock Africa-Canada Economic Cooperation

Africa-Canada Policy Innovation Lab
| 2025

Context

Canada has various tools in its trade, investment, and economic cooperation toolbox to engage economically with developing nations, including those in Africa. These tools include unilateral preferential tariffs, bilateral investment agreements, and commercial support services designed to facilitate trade, attract investment, and promote inclusive growth.

Although these tools are not exclusive to Africa, they serve as a key framework for Canada’s economic engagement with the continent. As African economies strive for greater global integration and seek development-oriented partnerships, the importance of these tools continues to grow. A clear understanding of how these instruments function is essential to unlocking the full potential of trade and investment cooperation between Africa and Canada.

Canada’s Trade & Investment Toolbox at a Glance

Least Developed Countries Tariff (LDCT)

Canada uses preferential tariff programs to promote trade with developing countries, especially the Least Developed Countries (LDCs). The LDCT provides duty-free access to the Canadian market for almost all goods from countries designated as LDCs by the United Nations, although Canada retains discretion over which countries qualify. Established in 1983, the LDCT aims to foster development in LDCs by providing duty-free and quota-free access to the Canadian market for their exports, thereby supporting economic growth.  

The LCDT has three main objectives:

• Reduce poverty in the world's poorest countries.

• Promote investment and development.

• Enhance economic development by reducing trade barriers and providing increased opportunities for access to the Canadian market. 
  

In addition to the country eligibility, the products being exported must satisfy three important legal requirements, including:

• Rules of origin;

• Certification of origin, and

• Direct shipment.
  

As of 2024, 40 African countries can access the Canadian market duty-free for almost all goods. This makes the LDCT a potential resource for African exporters aiming to enter the Canadian market. However, utilization is often limited by factors such as limited productive capacity, infrastructure deficiencies, or lack of awareness among exporters and trade officials. 

Though the LDCT is a unilateral preference scheme, its success depends on complementary actions such as trade facilitation, value chain development, and institutional strengthening in partner countries.

General Preferential Tariff (GPT)

The General Preferential Tariff (GPT) is another of Canada’s tariff preference programs. Established in 1974, it aims to support exports from developing countries through reduced tariffs or duty-free access for most imported goods. Unlike the Least Developed Country Tariff, which targets the world’s poorest economies, the GPT applies to a broader set of developing countries, including those with higher income levels or more diversified economies.

The GPT is designed to support economic development through trade by enabling eligible countries to compete more effectively in the Canadian market. It covers over 80% of tariff lines for goods, with the exception of some apparel and textile products, footwear, and certain agricultural goods. Similar to the LDCT, goods must meet rules of origin and certification requirements to qualify for preferential treatment.

Currently, around 43 African countries benefit from the General Preferential Tariff (GPT). This list includes eligible countries on the LDCT list as well as those that are not eligible, often due to relatively higher income classifications or structural economic differences. Typically, these are emerging markets or regional economic hubs playing an increasingly significant role in Africa’s trade ecosystem.

Canada has recently updated the GPT to reflect shifts in global development and trade competitiveness, including updates to income-based eligibility thresholds. As African economies evolve, the GPT remains a vital tool for fostering trade relations with middle-income partners across the continent.

For African exporters and trade policymakers, understanding GPT eligibility and its associated administrative requirements is crucial for maximizing Canada’s preferential market access. Increased awareness, targeted outreach, and improved trade facilitation could help unlock greater benefits under the program.

Foreign Investment Promotion and Protection Agreements (FIPAs)

FIPAs are bilateral treaties designed to create a stable and predictable legal framework for investment between Canada and its partner countries. The primary objective of these agreements is to enhance investor confidence by providing legally binding commitments that protect investments from both countries. Key provisions typically include:

• Principles of national treatment ensure that investors from the partner country are treated no less favorably than domestic investors in similar circumstances.

• Most-favored-nation treatment guarantees that investors receive treatment comparable to that granted to investors from any other third country.

• Fair and equitable treatment protects against unlawful expropriation without adequate compensation and the free transfer of funds related to investments.

• Investor-state dispute settlement mechanisms grant investors the right to pursue international arbitration against the host government if they believe their rights under the agreement have been violated.
  

While FIPAs may not guarantee an automatic increase in investment flows, they promote a more stable, predictable, and reciprocal protective business environment for long-term investment relationships. Canada has signed FIPAs with eight African countries.

• Benin

• Burkina Faso                                         

• Cameroon

• Côte d’Ivoire

• Egypt

• Mali

• Nigeria

• Senegal

These agreements, including several ongoing FIPA negotiations with African nations, reflect growing recognition of Africa’s investment opportunities and align with broader efforts to strengthen Africa-Canada trade and investment while supporting private sector development across the continent.

FIPAs serve as signaling mechanisms that demonstrate Canada’s readiness to engage in economic partnerships and foster the conditions essential for attracting investment. For African businesses and investors, understanding the details of these agreements is crucial for effectively leveraging them, particularly in sectors prioritized for economic diversification and job creation.

As Canada strengthens its economic ties with Africa, Foreign Investment Promotion Agreements are set to play a crucial role in bilateral investment relations. Their importance is especially relevant in the context of regional integration efforts within the African Continental Free Trade Area, where investor confidence will be essential for success.

Trade Commissioner Service (TCS) in Africa

The Canadian Trade Commissioner Service (TCS), part of Global Affairs Canada, helps Canadian businesses access global opportunities by providing market insights, facilitating partnerships, and assisting with regulations in over 160 markets.

 In the African context, the TCS plays a vital role in connecting Canadian companies with essential resources, including funding opportunities, various support programs, and a wide array of international business prospects. Beyond assisting Canadian firms, the TCS also serves as a crucial link for African partners seeking to identify and access high-quality Canadian products, innovative services, and cutting-edge technologies. Apart from direct support, the presence of TCS in Africa contributes to fostering trust, building institutional connections, and promoting long-term cooperation.

As of 2024, Canada has made a significant investment in this service across the African continent, with a dedicated team of 50 Canadian and locally engaged trade commissioners operating from 22 strategic offices. These offices are situated in regional centers such as Accra, Nairobi, Abuja, Addis Ababa, Johannesburg, and Rabat, offering both local support and regional insights. This substantial presence highlights the importance Canada places on nurturing strong bilateral trade and investment ties with African nations.  

FinDev Canada

FinDev Canada operates as Canada's bilateral development finance institution, with a clear mandate to foster sustainable development and alleviate poverty in developing countries through private sector investments. Its primary activities include offering financial support, such as loans, equity, and guarantees, to private sector projects that demonstrate significant development impact. FinDev Canada strategically targets sectors vital for sustainable growth, such as renewable energy infrastructure. It focuses on three key areas: women’s economic empowerment, climate action, and market development, aiming to contribute to poverty reduction and sustainable development.

Africa is a key focus of FinDev Canada’s operations. It invests in businesses and financial intermediaries that have the potential to expand inclusive models, create employment opportunities, and contribute to long-term economic development. Its portfolio includes equity and debt investments in sectors such as agribusiness, clean energy, financial services, and manufacturing.

FinDev Canada also collaborates with other development finance institutions, private investors, and international organizations to co-finance projects and encourage additional investment. This approach aims to mitigate risk, strengthen local capital markets, and promote private sector participation in key areas.

As Canada enhances its economic engagement with the continent, FinDev's role is expected to grow, particularly in supporting private sector solutions to development challenges.

Conclusion and Policy Recommendations

Canada's trade and investment engagement with Africa is supported by a range of instruments, including market access, investment protection, commercial facilitation, and development finance. While each tool operates independently, together they create a framework for promoting economic relations that are inclusive, sustainable, and mutually beneficial.

As African economies continue to develop, and frameworks like the African Continental Free Trade Area and the African Union’s Agenda 2063 shape plans for integration and transformation, there is potential for Canadian stakeholders to engage in strategic ways.

The Trade Commissioner Service (TCS) directly supports businesses by facilitating market entry and partnership development. Foreign Investment Promotion and Protection Agreements (FIPAs) help create a reciprocal and stable investment climate. Preferential tariff programs offer tangible benefits to African exporters, driving increased trade flows. FinDev Canada plays a crucial role in mobilizing private sector investment for sustainable development. In addition to these trade instruments, the newly launched Canada’s Africa Strategy can further bolster these efforts by fostering collective economic prosperity, strengthening health systems, and promoting peace and security.

Policy Recommendations

To strengthen the developmental impact and relevance of Canada’s global trade and investment instruments in advancing Africa-Canada cooperation, three priority areas stand out:

1. Adapt FIPAs to reflect Africa’s evolving opportunities, constraints, and regulatory contexts.

   Canada’s Foreign Investment Promotion and Protection Agreements have raised important policy considerations, particularly regarding their alignment with the development goals, investment priorities, and regulatory context of African partner countries. In particular, the inclusion of Investor-State Dispute Settlement (ISDS) mechanisms has raised questions about how to best safeguard regulatory flexibility in areas such as public health, labor, and environmental protection. For example, Tanzania’s decision to terminate its FIPA with Canada, citing national laws that prioritize domestic adjudication of mining disputes, illustrates the need to accommodate diverse legal and policy contexts. Strengthening transparency, inclusivity, and developmental alignment in the negotiation and review of FIPAs can help ensure they support long-term, mutually beneficial investment relationships.
   
   

2. Adapt trade preference programs such as the GPT and LDCT to better reflect Africa’s unique trade realities.

   The General Preferential Tariff and Least Developed Country Tariff offer important pathways for tariff-free or reduced-duty exports to Canada. However, as these instruments were not specifically designed for Africa, their broad, standardized structures, particularly in terms of product eligibility and rules of origin, can limit practical accessibility for many African countries. As a result, these programs are often underutilized. In the context of Canada’s evolving strategic engagement with Africa, there is an opportunity to tailor these tools more closely to the continent’s trade capacities and priorities. Enhancing technical assistance, simplifying procedures, and deepening outreach to African exporters could significantly improve utilization and outcomes.
   
   

3. Strengthen institutional partnerships for research, innovation, and evidence-based engagement.

   A resilient and forward-looking Africa-Canada trade and investment relationship requires deeper partnerships with African research institutions, private sector organizations, and policy think tanks. Investing in collaborative research and innovation ecosystems would generate tailored, evidence-based insights to inform the design and ongoing improvement of instruments such as FIPAs, FinDev Canada investments, the Trade Commissioner Service, and Canada’s preferential tariff schemes. Strengthening institutional collaboration in this way would anchor trade policies in local contexts and contribute to more adaptive, inclusive, and sustainable engagement.                                         

To learn more about Africa-Canada trade and investment relations, read our pillar policy brief, which explores key policies, economic opportunities, and strategies shaping stronger economic partnerships between the two regions.

Additional Resources

For further information or to access technical documentation, the following resources may be useful:

• Export Development Canada

• Trade Commissioner Service

• FinDev Canada

• Canada’s unilateral tariff preference programs

Need guidance on Africa-Canada trade policy?

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