In its ongoing free trade talks with Europe, Ottawa is reportedly offering to lift foreign investment restrictions on takeovers by European firms: Deals worth less than $1.5 billion would no longer be up for government review. This comes after its omnibus budget bill that raised the threshold for reviewing foreign takeovers to those worth over $1 billion, up from $344 million. All this suggests that Canada is more open than ever to foreign ownership, as it should be: it brings more competition and more investment dollars into the economy. But Ottawa’s actual track record tells a very different story.
Last week, the Globe and Mail reported the government is trying to delay the takeover of the wireless carrier Wind Mobile by VimpelCom. The deal would create a Russian controlled firm that uses Chinese infrastructure. That, it seems, is way more foreign ownership than the government bargained for when it declared last year (in the interest of boosting competition in the sector) that carriers with less than 10 per cent of the market could be wholly foreign owned. The big telecoms, Telus, Bell and Rogers (which owns this magazine), are still limited to 46.7 per cent foreign ownership.
Before that, there was Ottawa’s handling of the $15-billion takeover of Nexen by China’s state-owned CNOOC. The deal was approved this year, but the government said it would be the last of its kind—a decision it may regret as the oil sands industry searches for more capital. And before that, the Tories nixed BHP Billiton’s $40-billion bid to buy Potash Corp. in 2009. The result: BHP decided to start building a rival mine, which would be the world’s biggest if it opens (potash prices have since collapsed, raising questions about the project). There are plenty of other sectors where Ottawa still bans foreign competition outright. Like the airline industry, a consumer-unfriendly duopoly between West-Jet and Air Canada where foreign ownership is limited to 25 per cent.
Since taking power, the Tories have made a show of declaring Canada open for business. But their patchwork of rules and seat-of-the-pants decisions sends a much more powerful message, one Europe won’t ignore as free trade talks continue.