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Harper is approving selling Canada's wealth to foreigners day by day. Can wait for the next election to vote for people who care about Canada and its future.
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Chinese bid for Nexen raises big questions about Canada’s future
September 25, 2012
TORONTO, ON, Sep 25, 2012/ Troy Media/ – The Chinese state company CNOOC’s $15-billion bid for Nexen, a major Canadian oil and gas company, raises major issues about the future of Canada’s economy.
Whether or not the government approves the bid – it is currently being reviewed under the Investment Canada Act – there are many questions that should be asked about the deal, including:
Should the government allow our resources to be owned by whoever pays the highest price to shareholders of a Canadian company?
By extension, do we want stock markets to decide how best to protect Canadian interests?
The issues become especially important because the Harper government has put most of Canada’s economic eggs in the resource sector instead of manufactured exports.
Some commentators have maintained that the criteria for review – whether it is deemed a ‘net benefit’ to Canada – are too vague, but by using a broad test the government does retains flexibility when seeking conditions for a takeover or blocking it outright.
Under the usual laissez-faire approach, favoured by the government, Canada should be wide open to foreign investment. We should not care about country-of-origin or about whether the buyer is state-owned or private. Let the bidding begin, all offers welcome. Maximize the benefits for shareholders.
But do we want to ensure that our resources are exploited according to Canadian priorities? And do we expect governments to play a role? If so, the government needs to ensure a minimum threshold of Canadian ownership in key sectors. With ownership comes control; with Canadian ownership comes a range of options to ensure Canadian interests are protected.
Chinese ownership, on the other hand, gives China an ability to frustrate policies in Canada. The issue could be jobs or value-added business. It could be environmental protection or aboriginal rights. It could be foreign affairs or national security. The point is, governments in Canada and by extension all of us will have less of a say.
Those who ask government to regulate foreign investment are often demeaned, including by the Prime Minister, as ‘protectionist’. Yet governments of other major countries take a more active role in protecting nationally-owned firms. In contrast, the Harper government has thrown open the doors to foreign takeovers and foreign influence.
All sorts of foreign takeovers (including, we can assume, by Chinese companies) are no longer subject to the usual review process under the Investment Canada Act because the Harper government raised dramatically the threshold for review of proposed takeovers. It ceded its powers to review bids for any Canadian company worth less than $1 billion.
As a result, many foreign takeovers of Canadian firms fly under the radar of the government and the public. The economic ramifications will emerge gradually and be very difficult to reverse.
Reviews under the Investment Canada Act are limited in other ways. For example, they apply only to takeovers of existing Canadian companies. Foreign investment in new businesses – so-called greenfield investment, which Canadians support and prefer in opinion polls – are not subject to review.
Second, the Prime Minister recently raised the stakes of Chinese ownership in Canada. By inking an investment deal with China last month, his government laid a footing for Chinese companies to sue Canada for any law or regulation that we introduce. The lawsuits would be decided, not by Canadian courts, but by international arbitrators who often operate in private and lack the independence of a judicial process. U.S. companies have sued Canada more than 30 times under a similar NAFTA process. The U.S. and Canadian governments at least took steps to make the arbitrations public.
The terms of the Canada-China investment deal are not public. But the government’s announcement that a deal was struck should heighten concerns about Chinese ownership in Canada’s resource sector.
The CNOOC bid poses a conundrum for the government. Its laissez-faire approach, and its allegiances to shareholders in the oil patch, are pitted squarely against the risks of putting Canada’s economic future in foreign hands. Undoubtedly, the takeover would enrich Nexen’s shareholders. But is it good for Canada?
Most importantly, are all of these foreign takeovers eroding our ability to ensure that Canada’s resources are exploited based on Canadian priorities? It is not protectionist to ask this question.
Gus Van Harten is a professor at Osgoode Hall Law School. He specializes in international investment law.
This column is FREE to use on your websites or in your publications. However, Troy Media, with a link to its web site, MUST be credited.
Editor's suggestions
August 15, 2012
By Gerry Angevine
and Fred McMahon
The Fraser Institute
VANCOUVER, BC, Aug 15, 2012/ Troy Media/ - The proposed sale of Nexen Inc. to China National Offshore Oil Company (CNOOC) is ...
READ MORE
August 7, 2012
By Laura Dawson
and Charles Shapiro
Macdonald-Laurier Institute
OTTAWA, ON, and SAN DIEGO, CA, Aug 7, 2012/ Troy Media/ - The difference couldn't be more striking.
In 2005 Chevron was set to ...
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August 3, 2012
Read more Bruce Stewart
TORONTO, ON, Aug 3, 2012/ Troy Media/ - Canadians have backed themselves into a corner, thanks to low interest rates.
The global economy, already fairly anemic, ...
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June 22, 2012
OTTAWA, ON, Jun 22, 2012/ Troy Media/ - Research in Motion (RIM) is known around the world for its BlackBerry mobile phones. However, amid mounting troubles, RIM is ...
READ MORECNOOC’s takeover of Nexen will be costly for Canada
Future bleak for Canada, and Canadians
© Troy Media
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10 comments
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Get out of our country, China! Nothing against the Chinese people, just don't trust their government buying control of our resources. I do however welcome all Chinese who wish to flee their government.
@JustinFlontek It goes both ways, if you start banning Chinese companies, Canadian companies will be banned in China too.
We're not just talking about a Chinese company, we're talking about a state owned Chinese company.
How many Canadian companies operate in China? Maybe if China kicked some companies out, we'd have more jobs here.
There's a difference between engaging in trade with Chinese companies and selling control of our natural resources to their government.
What's going to happen is, China is going to take our crude oil, take it back to their country to process it, then they're going to sell it back to us and make all the money. We already pay too much for gas. The jobs should stay in Canada and the money.
@JustinFlontek I agree, the Chinese government is by no means perfect, but neither are our Southern neighbours. If you look at the Chinese government from a holistic perspective, they are vast improvement over what the Chinese have had the last 200+ years. With over a billion people, sudden regime change in China is not an option ... Think of it this way, we in Canada have trouble keeping together a nation of 30 million - a single city in China has MORE people than all of Canada (Guangzhou - 41 million!). Radical change in China would lead to chaos like we have seen in Iraq, Russia, Libya, etc. Slow and steady change seems to be a successful strategy for the Chinese. I believe engagement is a better strategy than isolation... which has not worked in Cuba. Canada is in an envious position, we are rich in natural resources, something China desperately wants - this gives Canada more leverage with China than some other countries.
Again I question doing business with a government like China's. It's nice to know you'd sell your soul to the devil for some money, but most of Canada is opposed.
If you wanted to make lots of money, you should consider supporting processing the oil in Canada. keeping more of the jobs in Canada and Canadian, plus keeping more of the profits in Canada. Just because one Canadian company failed doesn't mean the next will.
@JustinFlontek Canada has not been entirely successful breaking into Chinese market - partly due to our government's lack of engagement with the Chinese until recently. However, if you check the China Canada Business Council, almost all major Canadian companies are represented - they all know there is gobs of money to be made in China. So we sell a failing oil company to China, it opens many more doors for our companies to make money in China (and hopefully bring back home to Canada).
yes , lets burden our tax payers even more with even more illiterate unemployable immigrants - good call .
1 Like
Can I ask how you and your family came to be in Canada?
Besides you miss the point of the statement, I'm not advocating we let every one who wants into the country in. I'm just simply welcoming those that are coming anyways and those already there. I didn't want any Chinese Canadians thinking that I have beef with them, when I only have beef with their corrupt government.
If you're so concerned about immigrants maybe you should consider opposing the Chinese take over of Nexen. Considering China will likely want to bring in their own workers, like they have done in the past.
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