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Amazon to open Canada warehouse

Online retailer will also establish fulfillment business

TORONTO -– As expected, Ottawa has cleared Amazon.com to open a warehouse and start a new business in Canada.

Ignoring the objections of domestic book sellers and publishers, the federal government said the U.S. online retailer had agreed to invest around $20 million to establish its own fulfillment business here after using Canada Post for product delivery since 2002 to serve a Canadian version of its U.S. Web site, Amazon.ca.

Heritage minister James Moore in a statement added that "Amazon has shown its willingness to promote Canadian cultural products, and we are pleased it is continuing to demonstrate this through this new investment."

Ottawa approved Amazon's application to enter the Canadian market under the Investment Canada Act. That reversed a 2002 decision that ruled that the Investment Canada Act did not apply to Amazon.com, despite existing laws aiming to protect the Canadian book industry from foreign competition, as long as it operated without a physical presence in the country.

Allowing Amazon to establish a physical presence in Canada follows Ottawa in March signaling that Canadian foreign ownership rules could eventually be relaxed, or even scrapped, to allow more foreign investment in Canada's communications industry (HR, March 4).

Ottawa also recently OK'd the entry of upstart Globalive Communications into Canada's mobile phone market, despite being mostly backed by an Egyptian company.