Taiwan and Canada on Friday signed a bilateral investment deal, boosting the Taiwanese government's efforts to bolster business ties with like-minded democratic partners and possibly easing the island's entry into a major pan-Pacific trade pact.

Self-ruled Taiwan has been seeking greater diplomatic and moral support from major Western democracies, such as Canada, as it faces growing military and political pressure from China to give in to Beijing's sovereignty claims over the island. As part of that, Taiwan has been seeking more trade deals with Western countries.

The Foreign Investment Promotion and Protection Arrangement is part of Canada's plan to increase trade and influence in the Indo-Pacific region.

Taiwan's Office of Trade Negotiations said the deal, on which the two sides completed talks in October, was a milestone of "great historical significance".

"In the future, the Taiwan-Canada investment agreement will further strengthen supply chain links and resilience, highlighting the importance of our country in the global supply chain," the office cited Taiwan's de facto ambassador to Canada, Harry Tseng, as saying at the signing ceremony.

Canada was represented by its top diplomat in Taiwan, Jim Nickel, the office added.

The Canadian Trade Office in Taipei - the formal name of the de facto embassy - said it was a "great day" for Canada and Taiwan.

"This Arrangement will inject more predictability into business dealings between Canada and Taiwan, and contribute to the mutual prosperity of our two economies," it said on its Facebook page.

Taiwan has said it hopes the agreement will help with Taipei's bid to join a major pan-Pacific free trade pact, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP.

Canada holds the rotating chair of the CPTPP next year, a grouping China has also applied to join.

Taiwan's Office of Trade Negotiations said the content of the investment agreement incorporates high standards on things such as environmental protection and governance goals.

"This will help drive CPTPP countries to recognise that we meet high standard trade norms," it added.

Taiwan has been lobbying CPTPP members such as Canada to back its application, saying that unlike Beijing, Taipei supports transparency and rule of law in its own economy and in doing business with other countries.

China, which views democratically governed Taiwan as its own territory, has sour relations with Canada. Taiwan strongly rejects China's sovereignty claims.

Canada, like most countries, has no formal diplomatic ties with Taiwan, but the two maintain de facto embassies in each other's capitals.