The prepared text of Thomas Mulcair’s speech to the Calgary Chamber of Commerce this afternoon.
Thank you very much, Adam.
And thank you to the Calgary Chamber of Commerce for this invitation to speak today about the New Democratic approach to foreign investment and resource development.
I think you’ll find over the next 20 minutes that the Calgary Chamber and the New Democratic Party actually hold quite a few similar views on the topic.
And so I’d like to re-assure you—right off the top—that the sky is not falling.
Canada is a nation built, in part, on trade.
With an abundance of our natural resources in high demand, it is only natural that other markets will look to us as a place to invest.
That arrangement is reciprocal, of course.
As other nations rely on Canadian resources, Canada relies on foreign investment to grow our economy and develop our resources.
Over the last decade, resource-hungry Asian nations have become major players in the global market.
In the past two years alone, state-owned Chinese companies like PetroChina and CNOOC have invested more than $10-billion in the Canadian oil and gas sector.
That trend is only expected to grow.
In fact, according to the Conference Board of Canada—by 2020—China will be Canada’s second largest investor, largely in oil and gas.
This presents both an incredible opportunity—and an incredible challenge—for Canadian firms and legislators alike.
If done well, foreign direct investment can be a boon to Canada’s economy in the 21st century.
But it requires a coherent and strategic vision that creates the right environment for foreign investment… while ensuring Canada’s interests.
Unfortunately, what we have seen from the federal government is not only a lack of vision or understanding of this reality… but an abundance of sheer incompetence.
It seems, quite frankly, that the Conservative government doesn’t understand the situation at hand, or is simply unprepared for it.
Remember that it was in 2010 when the Conservatives unanimously supported a New Democratic motion in Parliament calling for a clearer “net benefit” test and a more transparent investment review process.
Both the Prime Minister and the Industry Minister at the time, Tony Clement, promised to clarify the meaning of “net benefit” within the Canada Investment Act.
Yet two years after making that promise, to this day, the Conservatives are simply making the rules up as they go along.
Of course, it hasn’t just been the New Democrats calling for more clarity.
The fact is thay Canada’s foreign investment rules haven’t received an in-depth review in nearly 30 years.
Investors and Canadians alike have long complained that the ambiguity of the Investment Canada Act simply doesn’t meet the needs of 21st century trade and investment.
In December, Ben Brunnen—this Chamber’s own chief economist—said, and I quote: “It’s important that we get our rules up to date and done right… because if we don’t we’re going to be scaring off some significant potential trade partners and investors.”
Yet instead of clarity and vision, Canada’s foreign investment regime continues to be plagued by indecision and delay.
What we see are announcements made in the dead of night… investors left scrambling… and markets thrown into chaos.
That is no way to run a G8 country, especially one that has identified trade and investment as a pillar of growth in the 21st century.
This incompetence reached its peak late last year with the takeover bids by Petronas and CNOOC.
Here we have a pair of state-owned foreign enterprises bidding for a stake in one of Canada’s most vital sectors.
In CNOOC’s case, its bid was the largest by a state-owned firm in our country’s history… with immense implications.
When these offers were first announced, New Democrats immediately called for public consultations on both deals, as well as for a full and transparent review of the Investment Canada Act—as the Conservatives promised in 2010.
What we received instead were deliberations in secret—with no clear rules or guidelines—and in Petronas’ case, an initial rejection announced in the middle of the night.
It should come as no surprise—yet great concern—that Petronas’ Chief Executive expressed regret in November for not having any information on how his company’s bid would be evaluated.
He told the Wall Street Journal that: “At this point, the whole industry has no clue.”
Yet just a few weeks later—after a much-delayed press conference—the Prime Minister reversed his position and approved both the Petronas and CNOOC bids.
Remarkably, he stood at the podium and warned of the dangers of state-owned investments into Canada’s key sectors, then approved two such investments.
Instead of clarifying the term “net benefit,” Mr. Harper only added to the confusion.
The Prime Minister claimed that future takeovers by state-owned firms would not be allowed, except in what he called “exceptional circumstances.”
Of course, Mr. Harper failed to specify what those circumstances might be.
So instead of providing more clarity to guide investors through the Canadian market… we now have even less.
The fact is that the Petronas and CNOOC bids were approved under the old investment review rules, with no new conditions.
There were no consultations… no public deliberations… and any commitments made by the purchasers may never be made public, much less enforced.
The Conservative government even ignored Alberta’s request to ensure the CNOOC deal guaranteed that:
50 percent of management positions are held by Canadians;
Workforce levels are maintained for at least 5 years;
Planned capital spending becomes a priority.
Investors hoping that these two major takeover bids would finally force the federal government to clarify its foreign investment rules were left sorely disappointed.
Now, what concerns New Democrats most are the implications of the CNOOC deal once the Canada-China Foreign Investment Promotion and Protection Agreement is ratified.
Here is an agreement negotiated by the federal government in complete secrecy—without any consultation or debate in Parliament—and that is intended to bind Canada’s hands for a full 31 years.
Under Article 6 of FIPA, once a Chinese company is established in Canada, it must receive “national treatment” for expansion and operations—meaning it must be treated as if it were a Canadian company.
This vital clause give CNOOC powerful rights to expand its ownership in Canada’s oil and gas sector… as any Canadian company would.
The treaty goes even further by providing China with a mechanism with which to sue the federal government—for potentially billions of dollars—if its rights to expand its oil sands interests are impeded in any way.
Our own resource policy, our environmental laws—and even our domestic economic policy—could be challenged in court if they interfere with CNOOC’s future expansion plans.
Under FIPA’s terms, these lawsuits would be launched in secret, in front of a binding international tribunal, and outside of the confines of Canadian law.
Of course, the implications of this go far beyond the federal government.
Natural resources, as you know, are provincial jurisdiction in this country.
So by unilaterally signing on to an international treaty in an area that falls under provincial jurisdiction, the federal government has exposed itself to potential massive legal liability—and effectively tied the hands of provinces like Alberta at the same time.
Taken together, what FIPA and the CNOOC bid do is to remove Alberta’s ability to independently control its own natural resource policy, while ceding enormous control of our natural resources to a foreign power.
Unfortunately, Conservative Ministers seemed to have misjudged this, or perhaps they simply do not understand what they have signed on to.
When questioned about these provisions in Parliament, Conservatives replied that the Investment Canada Act would
still apply to future takeovers, apparently not realizing the fundamental difference between acquisition and expansion.
It’s true that new foreign investments are still subject to Investment Canada Act, if they meet a certain threshold, but in CNOOC’s case—with its foot already in the oilsands door and armed with the rights of a Canadian company—their right to purchase to new leases will not be subject to review.
To be frank, the consequences for our national sovereignty and our system of federalism—not to mention our economic potential—are stark.
I do find it quite interesting that the Conservatives—despite their stubborn public defence of FIPA—have yet to ratify the agreement.
They’ve had since November to do just that.
I can’t help but wonder if a light’s suddenly gone on and they’ve just now realized what they’ve gotten us into.
New Democrats are ready to meet the 21st century global economy with clear principles, clear policies and clear goals.
New Democrats support breaking down trade barriers, lowering tariffs and reducing protectionism.
We believe that government has a role to play in creating the predictability and clarity that potential investors rely on.
But we also believe that our government must stand first and foremost for Canadian interests, rather than ideological purity.
As Premier Redford here in Alberta has said, we need a “national conversation” about how we develop our country’s natural resources—including on the role foreign investment will play.
As New Democrats, we believe in a vision for sustainable, long-term growth that will create wealth and prosperity here in the West…
Not just for today, but for generations to come.
That means building a diversified economy that includes value-added jobs and thriving export industries.
It means upgrading and refining our own natural resources right here in Alberta— instead of building pipelines to ship raw bitumen overseas.
It means making polluters pay for the pollution they create rather than leaving that cleanup to future generations.
And it means developing a coherent and strategic vision that creates the right environment for foreign investment… while ensuring a well-defined “net benefit” to Canada.
Industry has also begun to realize that we can no longer disconnect principles like these from the bottom line.
It may seem easier to develop resource projects when the environmental assessments and regulatory licenses are rubberstamped…
It may seem easier to develop these projects with no-strings-attached foreign investment that don’t include a net benefit…
But in the 21st century, businesses can only flourish when they have not only a regulatory licence, but a social license as well.
And it’s business leaders who are best positioned to understand these risks.
In a recent interview with the Canadian Press, TransCanada CEO Russ Girling was refreshingly frank on this subject.
He explained his company’s investment in the Keystone-XL project, saying that TransCanada was on the hook for $2.5 billion before American opposition to the pipeline threw its fate into chaos.
Acknowledging the impact of this uncertainty, Russ had the courage to be blunt. In his words: “We won’t make that mistake again.”
It would be easy to chalk this lesson up to political decisions made in the U.S.—decisions we have little control over—but let’s remember that American opposition to Keystone-XL was driven by perception.
In the 21st century, the perception—the knowledge—that resource development in Canada adheres to the basic principles of sustainable development will be key…
Not only to securing the future of our natural environment, but to securing Canada’s place in the global economic community as well.
In the next decade, Chinese firms alone will be looking to invest more than $1-trillion to acquire access to resources and related technology.
Canada has the potential to be a major beneficiary, but we have to be ready.
We must foster security, rather than sow the seeds of uncertainty.
That security must begin with stable, predictable rules for sustainable resource development.
And it must begin with a full and public review of the Investment Canada Act—something the New Democratic Party has been calling for for years.
I’m pleased to know that this is something the Alberta government and this Chamber have said they are eager to see as well.
In December, our party echoed this Chamber’s calls with another motion in the House of Commons calling on the federal government to:
Clarify the “net benefit” test;
Include parameters around reciprocity;
Improve transparency of decisions;
Set specific criteria for state-owned companies that want to invest.
It’s time to have a serious conversation about what constitutes a net benefit, with an emphasis on the impact of foreign investment on jobs, pensions and new capital investments.
New Democrats have vigorously opposed dramatic Conservative increases to Canada’s foreign investment review threshold.
Under the Conservatives’ new threshold, dozens of major takeovers would be allowed every year without any evaluation of their net benefit to Canada, or their potential impact on our economy.
That is unacceptable.
New Democrats would increase transparency around takeover decisions, undertake full public consultations with affected communities and ensure that all major takeovers are subject to a clear net benefit test.
We would further ensure that commitments made by foreign investors under the net benefit are not only made public—but also enforced.
The fact is, Conservatives have a dismal track record when it comes to enforcing commitments made by foreign companies.
Takeovers at Inco, Stelco, Falconbridge and others all started with reassuring promises, but ended with mass layoffs and devastated communities.
It doesn’t have to be this way.
Today our world is more interconnected than ever.
Economic borders have all but disappeared. Information flows more freely than ever before.
But if we are clear about what we require of potential investors—with a vision of what we require for ourselves—we increase our ability to be competitive and to attract good foreign investment…
The kind of investment that will strengthen our economy and position Canada as a global leader in the 21st century.
What’s lacking in Ottawa is not solutions to the challenges we face, but the political will to face them.
New Democrats will continue to be fierce advocates for economic development… as long as it’s sustainable development.
We will be ardent supporters of more robust trade… as long as it’s fair trade.
And, of course our, team will continue to work with all those who share our vision for a fairer, greener, more prosperous Canada…
As long as it’s more prosperous for all.