So where do we go from here? Everyone reading this knows that Stephen Harper rejected BHP's takeover bid for Potash on Wednesday night. While there is some speculation that another bid may come forward for Potash, I'm not sure how any responsible board of directors could approve such a move. Brad Wall is clearly calling the shots on this file and unless an offer that is truly 100 per cent "Canadian" (and I have no idea what that means anymore in this context) comes forward, Wall isn't giving his thumbs up to a Russian or Brazilian offer. Not going to happen. Given the public numbers in Saskatchewan, Potash is not being taken over any time soon. Sorry to Potash shareholders, it turns out it's not your decision what to do with the company you own.
But what about the next deal? What about the future of the Investment Canada Act? In the 2008 Speech from the Throne, the Harper government made the following commitment: "Our Government will proceed with legislation to modernize our competition and investment laws, implementing many of the recommendations of the Competition Policy Review Panel."
For those of you who didn't re-read the Competition Policy Review Panel before bed last night, its main recommendations are to raise the approval threshold to $1-billion and narrow the disallowance standard by changing it from "net benefit to Canada" to "contrary to Canada's national interest."
The panel explained the impact of the change away from the net-benefit test as follows:
A number of issues would be addressed by these changes. First, it would align the test with Canada's basic policy premise that FDI generates positive benefits for the country. Second, it would counter the negative and misleading perception that the ICA discourages - and that Canada does not welcome - FDI.
In concrete terms, the change in the disallowance standard would mean that an investment that would not have been able to meet the former net benefit test would be able to proceed without intervention from the minister, unless it was a case where the minister's concern with regard to the factors required to be considered under the ICA rose to the level of the national interest.
Of course, the Conservatives (a) didn't actually follow through on their commitment from the Speech from the Throne as they relate to Investment Canada Act changes; and (b) even under the proposed changes, Harper could have rejected Potash and claimed it was "contrary to Canada's national interest" with the determinant factor being wholly arbitrary and political.
Which brings me to Thursday's NDP motion on changes to the Investment Canada Act. The NDP is proposing the following:
That, in the opinion of the House, since the recent takeover bid for Potash Corporation raises concerns about the adequacy of the foreign investment review process under the Investment Canada Act (ICA), the Government of Canada should take immediate steps to amend the Investment Canada Act to ensure the views of those most directly affected by any takeover are considered, and any decision on whether a takeover delivers a "net benefit" to Canada is transparent by:
(a) making public hearings a mandatory part of foreign investment review;
(b) ensuring those hearings are open to all directly affected and expert witnesses they choose to call on their behalf;
(c) ensuring all conditions attached to approval of a takeover be made public and be accompanied by equally transparent commitments to monitoring corporate performance on those conditions and appropriate and enforceable penalties for failure to live up to those conditions;
(d) clarifying that a goal of the Act is to encourage foreign investment that brings new capital, creates new jobs, transfers new technology to this country, increases Canadian-based research and development, contributes to sustainable economic development and improves the lives of Canadian workers and their communities, and not foreign investment motivated simply by a desire to gain control of a strategic Canadian resource;
and that the House express its opposition to the takeover of Potash Corporation by BHP.
A few comments:
1. Since June 30, 1985, there have been 13,602 foreign acquisitions in Canada, according to Industry Canada. Of those, 1,631 were reviewed under the Act and 11,971 only required notice. If the NDP proposal had been in place, that would have averaged out at about 110 public hearings per year - or roughly two per week, every single week, no break for Christmas. If the NDP promises Pat Martin will show up at every single Investment Canada Act hearing held over the next decade, I will support this proposal. Otherwise, it is kind of ludicrous (ok, any public hearing that Pat Martin appears at is by definition ludicrous but at least there is a chance he will break out the puppets).
2. I have read clause (d) a dozen times and I still have no idea what it means. Foreign investment "motivated simply by a desire to gain control of a strategic Canadian resource" should not be allowed . What does control mean - and I'm not being flippant? What are "strategic Canadian resources"? Is there a list somewhere I can consult to see which resources are considered "strategic" and which ones are unimportant? Let me flip it around: Is there a natural resource in Canada that the NDP does not consider to be a "strategic Canadian resource" or are they proposing that no deal involving natural resources can ever be allowed under their model?
And what if a takeover is "motivated simply by a desire to gain control of a strategic Canadian resource" but it happens to create an extra 10 jobs despite this "motivation" for "control" - is the deal suddenly ok? Or is 10 jobs not enough? 20 jobs? 100? 1000? Or do you need to create 10 new jobs and bring some "new technology" as well? If you grabbed one of those new Xboxs they released today and create 10 new jobs then we don't care if you are "motivated simply by a desire to gain control of a strategic Canadian resource"?
What about RIM: Are Blackberries "strategic Canadian resources"? Is RIM takeover proof? If so, shouldn't investors - foreign and domestic - have some certainty on the issue? What other non-resource based companies cannot fall into foreign hands because they are just so darn strategic? Shouldn't we be fair to everyone, if we are going down this road, and just make a list of the Canadian Untouchables, publish it on a website so we don't have to go through this again?
Okay, now I'm being flippant.
But the flip side is after the hysteria over the Potash-BHP deal, maybe we are all social democrats now. Maybe we are all opposed to any foreign takeover of any "strategic Canadian resource" defined as broadly and as arbitrarily as that day's public opinion dictates. The world and Canada will of course go on. We're just going to be a poorer country for it.Report Typo/Error
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