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Barrie McKenna

Investment Canada Act is as clear as mud. Or potash Add to ...

Industry Minister Tony Clement is promising to bring a little "clarity" to Canada's foreign takeover regime in the coming days.

Don't hold your breath.

In three-plus weeks since he nixed Anglo-Australian BHP Billiton's $38.6-billion (U.S.) hostile bid for fertilizer giant Potash Corp. of Saskatchewan, Mr. Clement and the Harper government have been literally running from sunshine.

On the day the deal was blocked, Mr. Clement insisted the BHP-Potash deal didn't provide a "net benefit" to Canada - the key test required under the Investment Canada Act. His comments left the impression that BHP simply didn't offer enough loot in the form of jobs, investment and opportunity for Saskatchewan and the country.

The message since has been muddled and incomprehensible. Agriculture Minister Gerry Ritz suggested that some Canadian companies or resources - he wasn't clear which - are too "strategic" to let go. Days later, Prime Minister Stephen Harper mused whether other developed countries would not have acted just as Canada did to save a company such as Potash Corp. And then Mr. Clement added to the confusion, saying strategic "is not a concept that has a home in the nomenclature" of Investment Canada.

So is Canada a let's-make-a-deal country, where everything can be bought for a price? Or are some companies off limits? Or maybe we want a regime that provides reciprocity with the countries that invest here?

The Harper government is either making this up as it goes along or it is being purposely vague. Perhaps, Mr. Clement doesn't want clarity at all. What he really wants is a fog.

Fog, of course, allows for other calculations, such as securing must-win seats in Saskatchewan or responding to sudden pangs of economic insecurity in the rest of the country. You won't find either of these tests in the Investment Canada Act - before or after Mr. Clement clarifies things.

At various times, the minister has promised a review of the Act, a "window" on Investment Canada's decision-making and a statement to help interpret the law. He has stopped well short of promising to toughen up the Investment Canada Act, as many Canadians apparently want, or even to hold Parliamentary hearings.

Murkiness could prove quite convenient for the Harper government. Leave everyone guessing.

That's essentially the way it has been in Canada since the Mulroney government dismantled the Foreign Investment Review Agency in 1985, watering down the prevailing investment review process. In its place, Ottawa passed the Investment Canada Act, leaving the mistaken impression that there's a well-defined process and a clear set of rules to acquire a Canadian company.

It's anything but. Foreign acquirers make their pitch, and behind closed doors hash out with Ottawa what they're willing to do. Throw a few jobs here, invest some over there, toss some cash at local arts and culture. And then Ottawa announces there's a deal, without disclosing the commitments made by the acquiring foreign company. Unless the foreign company chooses to make public what it's offering, only Investment Canada knows if a company is living up to those commitments.

More troubling, Canadians know very little about the reasons why Ottawa approved roughly 1,600 foreign takeovers over the past quarter-century, while blocking just two. That's a lot of promises that foreign companies have put on the table. And there's no way of knowing if they're living up to their pledges.

The status quo is convenient for the Harper government. Facing a possible election in 2011, the last thing Mr. Clement & Co. want is to stake out terra firma on foreign takeovers.

Saskatchewan Premier Brad Wall and the Conservative MPs are happy. Canadians unnerved by a wave of foreign takeovers get a bone.

At the same time, the message to foreign investors isn't that the country is closed for business. Foreign investors may not be sure what's off limits (Bombardier, Suncor, Research In Motion, Magna?). Then again, they don't know what's for sale either. And rightly or wrongly, they're left with the distinct impression that dealing with Investment Canada just got more expensive.

So we wait for Mr. Clement, the bumbling but lovable Mr. Bean of the Harper government, to explain why being unclear is really about clarity.

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Follow on Twitter: @barriemckenna

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