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Prime Minister Stephen Harper walks down the stairs from his airplane upon his arrival at the international airport in Guadalajara, Mexico Sunday. (Dario Lopez-Mills)
Prime Minister Stephen Harper walks down the stairs from his airplane upon his arrival at the international airport in Guadalajara, Mexico Sunday. (Dario Lopez-Mills)

Ottawa says it won't block Nortel sale Add to ...

Prime Minister Stephen Harper is showing little inclination to intervene in the sale of Nortel's prime assets to a foreign buyer, saying he is reluctant to erect protectionist barriers in Canada while preaching the benefits of freer trade in the Americas.

Mr. Harper rejected a call from Research In Motion Ltd. for the government to simply block the sale of Nortel Networks Corp.'s wireless assets to Ericsson for $1.13-billion, but left open the prospect of a review under the Investment Canada Act.

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The Prime Minister, who inked a new free-trade deal with Panama Tuesday - the Conservative government's fifth such accord since taking power - was asked if Canadians should abandon hope of keeping Nortel assets in Canada.

"There's a process, a process of review of purchases by foreign companies. And we will respect this process," Mr. Harper said.

"At the same time, we do not intend to increase protectionism in investment questions when we are in a global campaign to encourage free trade."

The once-mighty Nortel is being auctioned off in pieces, despite concerns raised by RIM and others that Canada is losing a national champion that provides important leadership and spinoff benefits in the high-tech sector.

However, last night RIM praised Mr. Harper's comments.

"Through his comments today, the prime minister has acted in a way that could facilitate an outcome that serves the interests of all parties and of Canada," RIM said in statement.

"RIM urges the government during the time in which it is reviewing the transaction to convene the parties in order to try to bring about such an agreement."

The Conservatives reiterated Tuesday that federal regulators have still not decided whether to review the sale to Ericsson, which includes a commitment to continue employing 800 Canadians working at Nortel.

Nortel and Ericsson have said the book value of the assets is $149-million, which falls well short of the threshold for review. But under new amendments to the Investment Canada Act, the decision may be based on "enterprise value" - which includes the value of intellectual property and personnel - rather than simply the "book value."

A spokesman for Industry Minister Tony Clement said Tuesday that the government will be using the amendments to determine whether the sale of the wireless division should be subject to a review.

But Ottawa will wait until the possibility for appeal of the court-approved sale has expired before announcing whether it will be subject to a government approval.

Mr. Harper said there were no plans to introduce new legislation to make it more difficult for foreigners to acquire Canadian companies.

"We will certainly not be bringing forward any kind of legislation to increase protectionism in terms of foreign investment in Canada," he told reporters after signing the free-trade agreement with Panama. "At a time when we are trying to open markets globally, we obviously don't intend to go down the path of advancing further protectionism through legislation."

The opposition Liberals and New Democrats are urging the Harper government to intervene in the Ericsson sale, arguing it would put cutting-edge technology in the hands of foreigners.

Liberal finance critic John McCallum said he worries the government - which has not published regulations under the new Investment Canada Act - will defer to the old rules and refuse to review the sale.

"We've been calling for a review for two weeks now," Mr. McCallum said. "We believe that, given that this is a large Canadian companies with built with major taxpayers' investment and with a large stock of high-tech patents, it should clearly be reviewed." Mr. McCallum said he wouldn't "prejudge" the outcome of the review but that the Liberal would be happy to see the acquisition blocked outright, or to see Mr. Clement broker an agreement between Ericsson and RIM that would improve the Canadian benefits of the deal.

"There's nothing protectionist about this," he said, noting that all developed countries seek to build national champions in key sectors of the economy.

Mr. Harper initially appeared to suggest that federal regulators have already decided to review the Ericsson, saying the transaction "will be reviewed" under the Investment Canada Act.

But his office later e-mailed reporters a statement that didn't admit any error on the Prime Minister's part but told a different story.

"In a nutshell, the [Prime Minister]said that the government is reviewing whether a review of the transaction is required under the existing process, and no new process will be put in place," said Dimitri Soudas, a spokesman for the Prime Minister's Office.

Nortel has been operating under Chapter 11 bankruptcy protection in the United States, and the Companies' Creditors Arrangement Act in Canada since January.

The Conservatives aren't above interfering in private market transactions. Just last year, the Harper government blocked the sale of MacDonald Dettwiler and Associates' space division to a U.S. firm on the grounds it was against Canada's national security interests.

With a file from The Canadian Press

Follow us on Twitter: @smccarthy55, @stevenchase

 
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