The National Post is Canada’s second largest national paper. This column was originally published in the Financial Post on January 15, 2011.
“A new Canadian foreign investment policy need involve only four pillars: investor reciprocity, resource protection, reverse onus and a veto for any affected provinces.” Diane Francis (January 15, 2011)
The Potash Corporation of Saskatchewan Inc. rejection hasn’t abated interest in takeovers in Canada. Just look at this week’s contest to buy two iron-ore plays or news that China’s sovereign fund is opening a Toronto office.
It also hasn’t harmed Potash Corp.’s stock price either, which is trading much higher than BHP Billiton PLC said it was worth.
The point is that the come-and-get-it Canada mentality has to end. The open-door mindset is ideological and rooted in the misconception that globalization and free markets exist. They do not and the world’s economic players have been cherry-picking naive nations like Canada for as long as our government has let it happen.
The mentality, by the way, is fiercely propagated by banks, and their mergers and acquisitions departments seeking fat fees, which would have happily sold Potash Corp. to foreigners and denied untold billions of dollars in head office benefits to Canada.
A new Canadian foreign investment policy need involve only four pillars: investor reciprocity, resource protection, reverse onus and a veto for any affected provinces.
Reciprocity works this way: No country or its corporations should be allowed to buy anything, resources or otherwise, in Canada if Canadian governments and companies cannot buy in their economies.
A list of countries like China, with economies closed to foreign investors, should be drawn up. This would eliminate confusion or lobbying and pestering by outfits that want us to open our economy to them while theirs remains rigged against ours.
Investor reciprocity is moral and is the principle behind trade and the World Trade Organization.
The need for reciprocity first dawned on me after an Abu Dhabi entity snapped up two Calgary oil companies in days for a few billion and its CEO told me they planned to spend another $20-billion in Canada.
I asked him if the shareholders of these two Canadian companies could follow the assets and swap for shares in the Abu Dhabi entity. No dice. He said foreigners were not allowed to invest in their stock exchange, companies or assets. He used some excuse about Abu Dhabi being a young economy.
By the way, the usual suspects — China, Russia, the Middle East — wouldn’t be the only ones on the list. New Zealand entities should be banned as non-reciprocals after its government a couple of years ago nixed an attempt by the Canada Pension Plan Investment Board to invest in a new airport there. Not fair.
For the rest of this article, please go to the National Post/Financial Post website: http://www.financialpost.com/news/need+tougher+rules+foreign+investment/4113224/story.html