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How the Conservatives are fumbling foreign trade

James Cowan explains how Harper has made things worse


 
Harper v. The Judges

Sean Kilpatrick/CP

It’s hard to say what is more remarkable about the Conservative government’s record on foreign investment—the variety of ways they’ve fumbled the file, or the sheer volume of blundering. The blooper reel is long: the will-they-or-won’t-they reality show surrounding BHP Billiton’s scuttled bid for Potash Corp.; the minutes-before-midnight rejection of Petronas’s bid for Progress Energy (eventually reversed); and the long-delayed approval of the China National Offshore Oil Co.’s (CNOOC) purchase of Nexen. As the government lurched from one muddle to the next, they promised clearer rules and a more transparent process. They haven’t delivered.

Instead, each reform just makes things murkier. Witness the new rules for takeovers by “state-owned enterprises” —companies owned by a foreign government—recently unveiled in the budget omnibus bill. The legislation is stricter and offers far less clarity than expected: it expands the definition of state-owned enterprises (SOEs) to include any company that is “influenced, directly or indirectly” by a foreign power or, for that matter, any person under government direction. This could mean companies that would traditionally fall outside the guidelines—like Vale SA, which is publicly traded but partly owned by the Brazilian government, or China’s Huawai, which is privately owned but closely associated with its national government—would suddenly be branded as SOEs. Further, the minister of industry has discretion to decide who’s state-owned and who’s not. Pinning global trade deals to the whims of a single minister is the opposite of what was promised. In their analysis of the new legislation, lawyers at McCarthy Tétrault warned its “broad concepts and elements of uncertainty” could “place a heavy burden” on foreign companies looking to invest in Canada; the risk of a meddlesome minister torpedoing a deal is just too high.

At a time when Canada should be wooing foreign investment, we actively seem to be chasing it away. Merger and acquisition activity in the oil and gas sector dropped to less than $1 billion in the first quarter of this year—the lowest since 1994, according to figures recently published in The Globe and Mail.

That the government has placed a clear drag on industry is only the second-most-dispiriting part of this issue. Even worse is that the Harper government—self-proclaimed protectors of the economy—don’t appear to have any clear principles guiding these policies. We welcome foreign investment—but not if there’s the slightest chance it comes from a country we don’t like. We want to spur economic growth—but we’ll burden companies with onerous and muddy rules. Rather than the incremental fiddling that has occurred since the embarrassing Potash fiasco three years ago, the government needs to start again with a coherent policy vision and clear rules.

But after seven years in power and with the next election years away, Stephen Harper’s government is tired and listless. Its last major announcement was the budget, nearly three months ago. It now spends its time tamping down senatorial expense scandals. Faced with the lapses of Mike Duffy and others, Harper retreated to what should be a safe topic for him. “The world we are in remains a deeply uncertain place,” he told his caucus. “Canadians are looking to us to protect them—their jobs, their families, their communities.” He cited “expanding trade” and a “focus on jobs, growth and long-term prosperity” as two means to that end, which is hard to square with his government’s convoluted positions on foreign investment.

The Tories take considerable credit for steering Canada through a global recession, and deservedly so. But now it must prepare the country for a new reality, with newly powerful players like China and Brazil. Drifting to the next election based on past economic success would be damaging to the country and foolhardy for the Conservatives. Better to start articulating a new economic vision—one that corrects past mistakes and gives us a clear rule book for the foreign investments yet to come.

James Cowan is deputy editor of Canadian Business where this column first appeared.


 
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How the Conservatives are fumbling foreign trade

  1. This is what happens when you take bumpkins who’ve been just a settin’ and a rockin’ on their back porch while they talked about politics in far off Ottywaw……and put them in the real world.

    And instead of having the brains to bring in top negotiators and trade leaders and diplomats who are multilingual……they just blunder through it. Bulls in a china shop.

    We should have been prepared for China and Brazil years ago. We have too many farmers or people with farmer attitude running the country.

    • Why the slur on farmers? The cabinet is full of, and the party run by, city slickers Harper, Flaherty, Baird, Moore, Clement, Kenney, Nicholson, van Loan, Kent, Oliver, MacKay … Law is the predominant pre-politics occupation of the current cabinet. Are you saying Gerry Ritz runs Conservative economic and foreign policy?

      • I said ‘attitude’……the image is there because of the back porch settin’ and rockin’. We don’t really have an exact word….cranky ole white guys etc.

        They are uneducated, unworldly, untravelled…..bumpkins.

        Would you prefer ‘Crackers’?

        • I’d prefer that you identify the behaviour rather than promote a stereotype that isn’t accurate generally, and is not true in this specific instance of the highly educated urban idiots who control our country momentarily. The CPC worked hard to create a west vs. east and rural vs. urban wedge and you’re just buying into it when you use a farmer stereotype to complain.

          • Mmm well most of the ‘urban idiots’ aren’t educated at all, much less highly

            Ont has farmers too btw

            At one time Canada was 98% farmers, and 2% everyone else….and the country was set up to cater to farmers. Ridings, institutions, laws, rituals etc

            Even when I was a kid, news on TV was about the crops and the Farm Reports…..farmers went to Florida in the winter because they were hauling in the money…..and yet this was after WWII.

            Favorite saying of the time ‘if the farmers ain’t happy, ain’t nobody happy’

            Eventually the country changed, upgraded etc…..but farmers still think they’re running it

            Cons didn’t create wedges…..they promoted one culture over another…..and it doesn’t work

    • This is what happens when you take bumpkins who’ve been just a settin’
      and a rockin’ on their back porch while they talked about politics in
      far off Ottywaw….

      Get with the times there, E1. These are cosmopolitan bumpkins. They don’t do their political talking while “a settin’ and a rockin’ on their back porch” anymore – they do it at Tim Horton’s.

      • LOL yeah Timmies is a hot bed of settin and rockin’.

      • “These are cosmopolitan bumpkins.”

        Paul Wells – Harper’s Single White Males:

        ” But for this crucial time in Harper’s career, when he enjoys a firmer grasp on power than ever before, here’s the starting lineup …

        The four men contrast in their styles and priorities, but they also have a few things in common. All four are bachelors …. ”

        http://www2.macleans.ca/2011/09/12/harper%E2%80%99s-single-white-males/

    • You stupid ignorant bigot

      • Speak of a bumpkin, and one appears! LOL

  2. Whenever the words “foreign investment” are mentioned, there are always some Canadians (not sure what percent of the population, but I believe it to be significant enough) that make noise about selling our resources to foreigners, placing our companies in the hands of foreign interests, not enough Canadian content, etc etc…
    This government, as with any previous government, is trying to walk a fine line on foreign investment. Just to give an example not mentioned in the blog post: The wireless spectrum auction, and the fact that Wind Mobile is largely foreign-owned. The CPC had to bend over backwards to make an exception for them… but why? Why not allow greater foreign ownership of the smaller telcos, and yes, also of the bigger ones like Bell, Rogers and Telus?… It all goes back to those who believe that “our” Canadian companies should remain Canadian, and be “protected” from foreign interference/ownership.
    This country needs an adult conversation on foreign ownership, Canadian content rules, and the like. As long as that does not happen, this government, just like previous and future ones, will continue to muddle around, making things up as they go along concerning foreign ownership/investment rules.

    • Agreed. Comes from a long-standing fear of the Americans.

    • Reason – 4 Boneheaded Biases of Stupid Voters:

      Anti-Foreign Bias –

      A shrewd businessman I know has long thought that everything wrong in the American economy could be solved with two expedients: 1) a naval blockade of Japan, and 2) a Berlin Wall at the Mexican border.

      Like most noneconomists, he suffers from anti-foreign bias, a tendency to underestimate the economic benefits of interaction with foreigners. Popular metaphors equate international trade with racing and warfare, so you might say that anti-foreign views are embedded in our language. Perhaps foreigners are sneakier, craftier, or greedier. Whatever the reason, they supposedly have a special power to exploit us.

      There is probably no other popular opinion that economists have found so enduringly objectionable. In The Wealth of Nations, Adam Smith admonishes his countrymen: “What is prudence in the conduct of every private family, can scarce be folly in a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry.”

      http://reason.com/archives/2007/09/26/the-4-boneheaded-biases-of-stu/1

    • We already have the highest rate of foreign-owned companies in the developed world and least number of international headquarters.

      The time for an adult conversation was 30 years ago. The traitorous corporate parasites and sell-outs won that battle.

  3. Essentially the Conservatives treat the Canadian economy like a fire-sale.

    Rather than trade on the excellent positioning Canada has relative to markets like the US and using the $100 Billion they’ve blown on the “action plan” to invest in our business infrastructure while laying out clear, concise and predictable FDI rules… they give cut-rate bargains on business taxes, use the investment canada act willy-nilly (failing to enforce its provisions at every turn) while pushing to dig up every last bit of anything one can sell before we have the infrastructure in place to get a good price for it.

    I cannot for the life of me understand how ANYONE thinks these conservatives are good at managing finances. I mean holy crap people!

  4. Harper and his minions are putting the fortunes of the Conservative Party ahead of Canadian consumers interests. Delayed trade deals, scary language about ChiComs, canceling purchase of private companies because they don’t meet some notional test… these are all decisions to advance the interests of Conservative Party.

    Conservative Party, Conservative Party über alles,
    Über alles in der Welt,
    Wenn es stets zu Schutz und Trutze
    Brüderlich zusammenhält.

  5. James cowan must have money invested in foreign companies…

  6. Does nobody else find it strange and hypocritical that after decades of damning Crown Corporations the business elite in this country is now embracing state-owned firms with open arms? It is flat out absurd to make an argument for “freeing markets” when you are talking primarily about state capital.

    What is our underlying neurosis as a nation state that our elites have to request others to socialize resource extraction and processing for us in their interest? Shouldn’t we be learning from the successful leads of countries like Brazil and China that actually a neo-mercantilist mixed economy is the more stable and successful model than letting the national economy fluctuate with the global market?

  7. Wonder where the cuts to Science and Environment went?

    TO THE “TRUTH”

    – $4.2 Million to the Newman Theological College

    – $3.2 million to Youth for Christ in Winnipeg

    – $192,000 to the world of Truth Christian Center

    – $495,600 to Wycliffe Bible Translators

    -$357,146 to Chakam School of the Bible Inc.

    – $198,951 to National Evangelical Spiritual Baptist Faith International Centre of Canada

    – $84,110 to Eastside Church of God

    – $2.9 million to Redeemer University College

    – $2.614 million to Trinity Western University

    – $1,0 million to Global Kingdom Ministries Community Center, Toronto

    – $544,813 to Crossroads Christian Communications

  8. The euphamistic language of “foreign investment” for “foreign take-over and profit draining” really made me laugh. Satire at its finest. Thanks for the smile!

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