By Jeremy Woo
Is Canada open for business? Recent evidence suggests that the nation is employing a more protectionist economic policy with little justification.
The Harper government has elected to block two bids made by foreign companies to purchase Canadian corporations. Firstly, BHP Billiton, an Australian mining conglomerate, was positioning to buy Potash Corp. of Saskatchewan Inc. in 2010. More recently, Petronas, a state-owned Malaysian company, offered to purchase Alberta-based Progress Energy Resources Corp. Both offers were unceremoniously turned down.
While some have lauded this show of nationalistic bravado, a closed-door attitude to economics is dangerous to Canada. The resource-rich nation owes much of its wealth to direct foreign investment, most prevalent in the oil, automotive and manufacturing industries that allow Canadians a healthy economy and high standard of living. Furthermore, the Canadian economy relies on the ability to invest in foreign countries, but this ability could be inhibited by our own protectionist and hypocritical stances on overseas investment.
With heavy hitters like China making bids for Canadian resources, the government must swing the doors of commerce wide open once again for the benefit of Canadians and their reputation.
Interestingly, some Canadians, like Opposition Leader Tom Mulcair, believe that self-reliance is necessary to protect Canadian interests and jobs. Yet, this stance is not supported by the true state of Canada’s economy. Foreign investment has had an overwhelmingly positive impact on Alberta’s oil sands where large overseas corporations have invested billions of dollars and have created thousands of jobs across the province. These companies have the knowledge, expertise and resources to maximize the potential of this lucrative natural resource, resulting in job creation, royalty payments and substantial increases in tax revenue.
Foreign companies have the funds and the technology that Canadian firms lack, and everyday Canadians are the prime beneficiaries of this investment as the oil and gas sector booms. Additionally, for more than 50 years, Ontario’s economy has relied on the automotive sector, which can be traced back to the acceptance of American investment, primarily by General Motors, Ford Motor Company and Chrysler. For decades, these foreign investments have provided Canadians with job opportunities at car factories, part-making plants and the service industries that support thousands of workers. Clearly, Canadians have realized the overwhelming benefits of foreign corporations.
With the sudden onset of economic protectionism, Canada is sending a confusing message to potential foreign investors. Tony Clement, the Minister of Industry for the conservative government in 2010, rejected the BHP Billiton bid for Potash Corp. under the guise of the Investment Canada Act. His rationale for doing so was that the deal would not have a ‘net benefit’ to Canada, however, Clement did not explain what measures were used to determine this. Vague reasoning to block foreign investment not only seems arbitrary, but also puts our economy at risk.
Canadian companies rely on investing in foreign countries to expand, prosper and create jobs at home, but our own government’s recent attitudes towards foreign investors might leave overseas governments wary of hypocritical Canadian investors. From banking to oil to mining, Canadian companies have injected fuel into Canada’s economic fire by expanding internationally. In 2004, Toronto-Dominion Bank became part-owner of a vast network of banks in the U.S., and this past October, Canada Pension Plan purchased oil operations in North Dakota. This has created revenue and jobs at home, but Canadians can’t expect to invest in other nations without reciprocating. Canadians benefit every day from overseas investment, so they should not be hypocrites on the international stage.
Unfortunately, there are Canadians who see foreign investment as a detriment to the Canadian economy while paradoxically realizing foreign investment benefits every day. Overseas companies may have the technology or the resources that allow citizens to benefit most from Canada’s rich natural resources or productive workforce.
Canadians are not selling their nation when they allow foreign investment — they are selling stakes in companies and receiving opportunities they otherwise may not have. Soon, the federal government will make a decision on the purchase of Canadian energy giant Nexen by China National Overseas Oil Corporation.
If Canadians would like to continue realizing the benefits of foreign investment and Canadian investment overseas, they must ask their shopkeeper to light the open sign, sweep the front walk and unlock the door to the Canadian economy.