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Much has been said about Ottawa's decision to approve the controversial sale of Nexen and the foreign takeover rules that will apply from now on. Rightly so. Making life harder for state-owned enterprises while easing acquisitions for private sector companies will shape deal-making in Canada for years to come.

Already the new rules have irritated some countries, namely India, a democracy that is quite unhappy to be sitting in the company of China and other dictatorial regimes. They have also had a chilling effect on share prices in the oil patch, as state-owned enterprises or SOEs are, in effect, persona non grata in Alberta.

But little has been said about what the Nexen decision and the new foreign investment framework don't do. For Canadian companies that are barred or restricted from entering China, it won't make life any easier.

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Roger Martin, dean of the University of Toronto's Rotman School of Management, and others had hoped that Ottawa would use Nexen as a bargaining chip to secure wider access to the Chinese market.

Nexen might have been the country's 22nd-largest oil and gas producer, and in a poor shape at that, but its sale was still highly sensitive. About two out of three Canadians were dead against it. And China, which was rebuffed when it attempted to buy American oil producer Unocal in 2005, knew that full well.

So Canada could have used Nexen as leverage to conclude an investment treaty based on reciprocity. If a Canadian company is barred from acquiring a sizable Chinese company, then Ottawa could turn down a comparable acquisition, Mr. Martin reasoned.

Stephen Harper chose another route altogether. While tit-for-tat horse-trading may serve the interests of a specific bank, insurer or engineering firm, it doesn't do much for its industry as a whole. It is through international trade agreements, not by the case-by-case review of individual transactions, that Canada will negotiate a better market access, the Prime Minister explained.

"It remains the goal of the government … to secure greater access," Mr. Harper said, noting that Canada's investment relationship with China was "very much imbalanced in their favour."

Senior federal officials also believe that the new foreign investment rules will give Canada a little bit more leverage in wrestling with what is the economic equivalent of an 800-pound gorilla. Ottawa will have more discretion when it examines acquisitions from Chinese SOEs. Knowing this, Beijing would have to weigh Canadian business requests a little more carefully. Or so the thinking goes.

Mr. Martin is quick to dismiss this reasoning. "It is foolish to think that they will be more open," he says. "There are always ways to use arbitrary measures when there are no spelled-out criteria and no recourses."

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But even if you believe like Mr. Harper that a free-trade agreement is the way to go, the real issue is getting a deal done. And that is no small thing.

It took 18 years to conclude the controversial foreign investment protection agreement (FIPA). And by the looks of things, it could take as long to negotiate a free-trade deal with China.

Last September, China's ambassador to Canada, Zhang Junsai, made a rare overture to Ottawa. "It's time to open each other's markets," he said. "It's high time to do the exploratory work on the possibility of a free-trade agreement."

For Yuen Pau Woo, president and CEO of the not-for-profit Asia Pacific Foundation of Canada, it is "unusual" for the Chinese to make such an offer. But to Mr. Woo's dismay, Ottawa still hasn't responded. "Why aren't we already negotiating? Why aren't we prioritizing this over a free-trade deal with Thailand – population 70 million?"

But that would mean fighting the fear of China. That would mean defending the project for years.

Facing the heat over the discreetly negotiated FIPA is one thing. But even approving the $15.1-billion (U.S.) sale of Nexen to CNOOC would be small fry in comparison to the stir free-trade talks with China could create.

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Free-trade talk is cheap. Having the political courage to follow into Brian Mulroney's FTA's footsteps is another story. And if the rejection of BHP Billiton's acquisition of Potash Corp. has told us anything, it is that the electoral calendar matters a great deal to Mr. Harper's Conservatives.

And so it is that when eyeing the Chinese market, Canadian firms still face the Great Wall.

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