The federal government should stop dithering and invoke the “net benefits” rule to block takeovers of oil and gas companies operating in Alberta’s oilsands.
Why is the Canadian government trying so hard to ignore the groundswell of anger that’s growing around the Chinese state-owned oil company CNOOC’s proposed takeover of Alberta’s Nexen Inc. oil company?
As Financial Post’s Diane Francis pointed out in a hard-hitting column last week, almost no one in Canada supports the deal. The only backers for the takeover are the Harper government and other Alberta oil and gas companies that would like to earn tens of billions of dollars by selling out to foreign-owned companies.
There is a general fear of China’s intentions that extend into B.C. with labour unions and others fighting off a move by Canadian Duhua International Mines Group Inc. to bring in 200 Chinese temporary workers for its coal mine. It is planning to bring in 2,000 more.
Canadian Duhua, the unions say, is offering less than half the going wage rate to Canadian workers, and then claiming that there aren’t enough Canadian workers available.
This, Francis says, is a “salami slice strategy that all Chinese companies around the world have deployed.”
It seems what we have here is an argument between some large companies that would like to maximize their ROI — take the money and run — and those who fear creeping takeovers of the largest part of the Canadian economy by Asian companies that believe they can then operate within their own set of rules.
Sound familiar? It should. We’ve had the same arguments about American takeovers in the past. They were ignored and foreign acquisition continued. According to Statistics Canada, in 2006 alone, 34 Canadian companies bought by foreign interests were worth $62 billion, nearly four per cent of Canada’s market value. Most foreign ownership in Canada is clustered in oil and gas, then manufacturing, i.e. the auto sector.
Canada does have a “net benefit to Canadians” system of measuring these kind of takeovers, but it is usually the subject of vicious political wrangling. In 2010 the takeover of Potash Corp by the Anglo-Australian company BHP Billiton was blocked by the federal government, which cited the rule.
In 2012, no country can close its doors to foreign investment. To do so would isolate it from the world and plunge it into poverty.
But at the same time, no country should be throwing its doors wide open to anyone who wants to buy up a company — or an industry.
There has to be an intelligent medium. And it appears the “net benefit” clause is it.
It’s time for the government to invoke it.