Independent thought alert

By Aaron Wherry - Wednesday, January 30, 2013 at 8:00 AM - 0 Comments

The CBC reports that three Conservative MPs put their concerns about the Nexen deal in writing.

A third Conservative MP, LaVar Payne of Medicine Hat, Alta., wrote to Paradis Aug. 21, 2012 to raise “grave” concern about the human rights record of China — calling it “far from stellar.” “It is my belief that Canadian laws must prevail, and that if we were to allow a state-owned company of a foreign nation that brutally represses its own citizens to buy a strategic asset here, we would be setting a very dangerous precedent,” he wrote. He also flagged potential problems with the “lack of environmental concern” by the regime in Beijing.

“I do believe that the Chinese administration has little to no regard for environmental preservation, and this is another area of concern,” he said.

That actually makes four MPs who are on record as objecting after James Bezan’s objections were disclosed last November.

Nexen, CNOOC agree to extend takeover deadline

By The Canadian Press - Monday, January 28, 2013 at 5:37 AM - 0 Comments

CALGARY – The closing date of Chinese oil giant CNOOC’s US$15.1-billion takeover of Calgary-based oil and gas producer Nexen has been extended by 30 days to March 2.

Nexen (TSX:NXY) announced Sunday the two companies agreed to extend the deadline as they were still awaiting U.S. regulatory approval.

However, it stressed that the closing can only be extended a maximum of 75 business days beyond the original deadline of Jan. 31.

The federal government approved the takeover in December. China, Britain and the European Union have also given their go ahead for the agreement.

But U.S. approval is needed to complete the deal because Nexen has operations in the Gulf of Mexico.

Nexen, meantime, says it will postpone the release of its fourth-quarter and annual results because of the delay.

Econowatch

By Colin Campbell - Wednesday, December 19, 2012 at 8:40 AM - 0 Comments

Stephanie Kuykendal/The New York Times

In approving the $15-billion takeover of Nexen Energy by China’s CNOOC, Stephen Harper cautioned that the sale was “the end of a trend.” Foreign ownership in the oil sands is okay, this time, but in the future, state-owned enterprises (SOEs) must be kept at bay, Ottawa ruled. The move was politically astute, but may prove economically dangerous. While attention has focused on whether we should fear SOEs like CNOOC and Malaysia’s Petronas (which also won approval to buy Progress Energy), the really scary question is: what will become of Canada’s oil sands without them?

As investors go, SOEs might not seem ideal. Critics argue they open the door to foreign governments dictating where our oil is sold and at what price. But Canada holds the trump card in the relationship through its ability to dictate royalty and tax rates, as well as labour and environmental laws that SOEs have to follow just like anyone else. Even if they decided to sell oil to China at less than market prices, the loss would be theirs, not ours.

The fact is that SOEs, not just in China but across Asia and the Middle East, rank among the few with the kind of money needed to fuel Alberta’s oil sands, where capital spending alone is expected to climb to more than $200 billion by 2025. They control 70 per cent of the word’s oil reserves, and 13 of the 20 biggest oil companies are state-run. This week, Natural Resources Minister Joe Oliver told the oil sands industry that investment will still flow into Alberta despite the recent ruling. Yet SOEs have been providing the bulk of the funding recently. Chinese SOEs have now sunk more than $25 billion into Canada’s energy sector since 2009. Ottawa is stressing that investment by SOEs is still welcome, just not ownership—not exactly an arms-open invitation.

Continue…

Q&A with Thomas Mulcair

By Aaron Wherry - Friday, December 14, 2012 at 2:38 PM - 0 Comments

I sat down with NDP leader Thomas Mulcair in the leader of the opposition’s office yesterday. Here is a transcript of our conversation, slightly abridged and edited.

How do you see the last year for you and the NDP? Do you feel you’re winning? Do you feel you’re getting somewhere?

We’re doing well. And the Abacus poll was confirmation of that … I dare say that we’ve been through a rough 18-month cycle. I mean, we started off in 2011 with a huge high, May 2. We realized then … It was interesting. I don’t think I’ve told too many people this story. I sat down with Jack shortly after, like two, three days after the election and when we became official opposition, he was asking me to become opposition House leader, it was a great feather in my cap. And then he said something to me that was quite interesting, he said, you know, this is a huge challenge. And I was just expecting him to be so effusive with the breakthrough and everything and he said, no, no, this is going to be a huge challenge. So then the huge challenge became all the bigger with his loss. And then we had to really work hard through a long, seven-month leadership  where we were missing a lot of our frontbenchers who were in the campaign and then we had to rebuild.

When I held the little press conference up in Toronto after the leadership, the next day, I used an expression that came to spontaneously, I said, we’re going to have a cascading transition under the sign of continuity. So I was so lucky, like somebody like [chief of staff to Jack Layton] Anne [McGrath] stayed with me long enough to hand off to [current chief of staff] Raoul [Gebert], overlapped with Raoul … So a couple of the other changes that took place were like that. We brought in a few people, the core team you still recognize when you see them around us. And so it’s been a huge challenge in terms of the structure and the organization, but some of the good points for me after becoming leader: in August I was doing my parish visit in Quebec, I would be in places like Vercheres—Les Patriotes, where Sana Hassainia is our MP, and be in a community hall on a Sunday morning with several hundred people who had all paid as part of a fundraiser, but she had municipal officials there, you know the mayors and the councillors, she had community groups, she had the schools and stuff like that. They’re getting settled in, they’re putting down roots. The same day I was at a corn roast for Helene LeBlanc and she had about 600 people and a lot of the cultural communities, so they’re setting down roots, they’re doing their fundraising, they’re getting well known in their communities, they’re in their local papers, so that part’s coming together.

Come this spring, we’re pivoting, right? We’re going to be entering the third year. And so the consolidation phase has to be finished. We’ve got to start the preparatory phase for the next campaign. Continue…

We mean it about the F-35s. Except when we don’t

By Paul Wells - Thursday, December 13, 2012 at 3:30 PM - 0 Comments

A F-35 Joint Strike Fighter in the hangar waiting for an announcement by Defence Minister Peter MacKay in Ottawa on July 16, 2010. (Adrian Wyld/CP)

The other day Stephen Harper’s government announced it will support an NDP bill that will require officers of Parliament to be fluent in French and English. “Our support for this bill,” said Industry Minister Christian Paradis, “sends a clear message that the promotion of the two official languages, now more than ever, guides the actions of the federal government.”

Paradis’s comment was accurate. But it would have been more precise if, instead of “now more than ever,” he had said, “now more than in October 2011, when we appointed an auditor general who couldn’t speak French and spent months insisting that was no big deal.” In short, the government is now preparing to require, by law, that it not do what it just did.

It has been that kind of month. More or less explicit repudiation of previous acts and stances has been the theme of the year-end for Stephen Harper and his colleagues. One of the questions we are left with is how Harper, notoriously a risk-averse, control-freak incrementalist, managed to leave hundreds of feet of skid marks around a bunch of big files.

Take the new jet fighters. We used to call them F-35s, but now we are less sure. In the office of Rona Ambrose, the public works minister, there is a jar. I am told in all seriousness that if anyone involved in finding a replacement for Canada’s aging F-18 fighter fleet calls that replacement “the F-35,” the minister has them put a dollar in the jar. That’s how adamant Ambrose is that the choice of the F-35 not be locked in.

Of course for two years the government was adamant that the choice of the F-35 was locked in. It’s a little cruel to dig up old quotes on this. But just one. On March 10, 2011, the Prime Minister said: “This is the option that was selected some time ago, because it is the only option available,” he said. “This is the only fighter available that serves the purposes that our air force needs.” Hope you have a dollar for the jar, big guy.

Of course what happened is that times changed. The government’s costing of the F-35 was optimistic and short-term to begin with. Optimism worked out the way it usually does when you’re buying something big and untested. The old talking points grew stale, then ludicrous, and the government stuck with them until the government looked stale and ludicrous, and now it denies saying what it once said. None of this is a tragedy: the jets haven’t been bought, no purchase order has been cancelled, there is still time to choose a more realistic course. But it’s all been a bit awkward.

Take energy. A year ago Harper pronounced the nation’s energy sector open for business, shed a tear for the newly reluctant Yankee customer who had blown whatever right he might once have had to our bounty, and looked eastward, which means westward across the Pacific, to new markets. These markets included China, which was new only in the sense that Harper had spent five years hoping he could find some other market as ravenous as China but less, well, Communist. The Chinese welcomed our new-found willingness to sell them things, and responded with new-found eagerness to buy Canadian things. Things like Alberta. Harper faced another conundrum.

At the beginning of the month he announced his solution: state-owned enterprises would be permitted to buy Canadian firms just this once, and then not again. His stated reason was that if too many state-owned enterprises from one country bought up parts of the oil patch, it would constitute foreign government ownership of an entire industry. So he would permit two proposed takeovers, including the purchase of Nexen by China’s CNOOC, then no more.

Got it. State-owned industry bad, oil sands sensitive. None of this explains why the government rejected the purchase of Potash Corp., which is not in the oil sands, by Australia’s BHP Billiton, which is not state-owned. Nor does it explain why the government first blocked the takeover of Progress Energy by Malaysia’s Petronas, before accepting it later.

(Full disclosure: my spouse, Lisa Samson, is a registered lobbyist for Progress and Petronas.)

The likeliest answer is that Harper was surprised by the antipathy the CNOOC-Nexen bid stirred up. His candidate and visiting party dignitaries heard an earful about it from voters on the doorstep during the recent Calgary Centre by-election campaign. So he improvised an adjustment to earlier plans, and left himself tons of wiggle room for next time. Further energy-sector takeovers by state-owned companies will be accepted “in exceptional circumstances,” which means: “We’ll tell you when it happens.”

None of this is a pretty sight, but neither does it spell trouble for Harper in the short term. As long as he usually moves from more trouble to less, he is moving the way Conservative voters want him to. The PM has had a messy year, but on jets, language politics and energy, he has stopped digging himself deeper. Jan. 23 will mark the seventh anniversary of his election.

Brent Rathgeber Maverick Watch

By Aaron Wherry - Tuesday, December 11, 2012 at 10:53 AM - 0 Comments

The Conservative MP approves of the CNOOC and Petronas takeovers, but questions the idea of the federal government judging “net benefit.”

The further reality is that it is not entirely clear to me that governments and not shareholders are in the best position to make these decisions.  Certainly, if you own a small business, you would be able to sell that enterprise to whomever you chose to.  Why should stock certificates in a larger enterprise notionally be any different??    Absent some extraordinary security rationale, shareholders should be able to sell their personal property (shares) to whomever they choose.  Why, in a free market, should they be forced to sell their stock at a discount in a smaller pool of government approved purchasers??

It is for this very reason that, in my view, the net benefit test has an inappropriate reverse onus.  Absent an investment injurious to national security, deference should be given to markets and to the owners of property.  If there is not “Net Harm” to national security, the transaction should be allowed to proceed. The issue of state ownership poses further issues, although more perceived than real.  It is acknowledged that states will occasionally pursue political rather than economic objectives.  That is why I am generally suspicious of Crown Corporations.  But in the case at hand, the costs of bad decisions are bourne by the citizens of China and Malaysia, while the benefit accrues to Canada.  The precious resource, while in the ground, does not belong to the extractor—it belongs to, and is regulated by, the provincial government. I see no net harm by allowing Asian State Owned Enterprises to pay royalties to the Province of Alberta and taxes to the Government of Canada.

Develop the oil sands, or make life difficult for foreign investors

By Stephen Gordon - Monday, December 10, 2012 at 11:36 AM - 0 Comments

(Jason Lee/Reuters)

The proper context for thinking about the CNOOC-Nexen and the Petronas-Progress takeovers is what I described  here: the real economic story of the oil sands is the investment in physical capital—structures and equipment—that is required before production can even start.

These investment numbers are very, very large. The oft-cited estimate of $650 billion in the next decade should be taken with a grain of salt, because we don’t know the assumptions that went into it. Even so, the fact that the costs of a single oil sands installation is measured in billions of dollars suggests that estimates in the hundreds of billions of dollars are at least plausible. (To give you an idea of how big these numbers are, current Canadian GDP is around $1.8 trillion a year.)

A national accounts identity tells us that all investment expenditures must be financed out of the savings of someone, somewhere:

Investment = Private domestic savings + Public domestic savings + Foreign investors’ savings

Let’s look at each component in turn.
Continue…

CHART: Nexen’s assets in Canada and around the world

By Erica Alini - Friday, December 7, 2012 at 6:48 PM - 0 Comments

Although Nexen is headquartered in Calgary, it has extensive operations in the U.K. North Sea and the U.S. Gulf of Mexico, which is why CNOOC’s takeover bid triggered governmental reviews there too. In Europe, the deal was subject to scrutiny by both the European Commission, which gave it the green light today, and the U.K. government, which hasn’t signed off on it yet. The jury is still out in Washington as well, where CNOOC and Nexen have pulled and refiled their application for government approval last week.

Some have suggested that Nexen’s holdings in the U.K. and the U.S. could be just as interesting for CNOOC as Canada’s oil patch.

The U.K. is where Nexen currently gets its lion’s share of daily barrels, though production in the North Sea peaked years ago. Still, one Reuters analyst suggested that Nexen’s British oilfields would grant CNOOC “a critical role at the heart of the world oil pricing system.”

The U.S., on the other hand, doesn’t account for very much of Nexen’s current production but exploration potential in the Gulf of Mexico is “significant” and U.S. assets are “critical component” of growth strategy, according the company. The Wall Street Journal reported that ”Cnooc executives aim to use [these] assets as a platform for further deals, according to people familiar with the situation.”

‘All investments are not equal’

By Aaron Wherry - Friday, December 7, 2012 at 5:50 PM - 0 Comments

The Prime Minister’s remarks this evening on the CNOOC and Petronas acquisitions.

“Today the Minister of Industry rendered decisions respecting two foreign investment proposals.

“These decisions will be closely studied.

“It is therefore important that Canadians, and also foreign investors, understand how the government will approach such decisions in the future.

“In particular, Canadians generally, and investors specifically, should understand that these decisions are not the beginning of a trend, but rather the end of a trend.

“Investment is critical to our Government’s focus on jobs and growth.

“And, Canadians expect that we shall approve foreign investments that are of net benefit to Canada.

“But, all investments are not equal.

Continue…

Nexen and Progress Energy takeovers timeline

By Chris Sorensen - Friday, December 7, 2012 at 5:27 PM - 0 Comments

In this Aug. 24, 2011 file photo, China National Offshore Oil Company Ltd. Chairman Wang Yilin attends a company announcement in Hong Kong. (Kin Cheung/AP)

June 28, 2012: Progress Energy Resources reveals that it has agreed to a friendly takeover by Malyasia’s Petronas in a deal valued at $5.5 billion

July 23, 2012: Nexen announces that it has agreed to be bought by CNOOC (China National Offshore Oil Company) in a deal valued at $15.1 billion. The proposed takeover was immediately viewed as a test of both Prime Minister Stephen Harper’s policy on China and Canada’s foreign investment rules.

July 30, 2012: Some U.S. lawmakers call on the Obama administration to block the deal in the U.S., where Nexen own assets in the Gulf of Mexico. “I believe this merger could lead to a massive transfer of wealth from the American people to the Chinese government,”  writes Edward Markey, a senior Democrat in the House of Representatives, in a letter to Treasury Secretary Timothy Geithner. Political opposition in the U.S. similarly stymied CNOOC’s attempt to buy Unocal, a U.S. energy company, in 2005.

Aug. 21, 2012: CNOOC slashes its dividend payments by 40 per cent to save cash to pay for the Nexen deal.

Sept. 6, 2012: Prime Minister Stephen Harper promises more clarity on Canada’s foreign takeover rules, which have been criticized for being opaque and susceptible to politics.

Sept. 13, 2012: Alberta Premier Allison Redford indicates her support for foreign investment during a trip to China, where she met with CNOOC officials. “We have always believed foreign investment assisted us with growing our economy so we are encouraging that,” she says.

Sept. 20, 2012: Nexen shareholders vote in favour of the CNOOC takeover.

Oct. 11, 2012: Ottawa extends its deadline to review the Nexen takeover by 30 days.

Oct. 19, 2012: Industry Minister Christian Paradis rejects Petronas’s proposed takeover of Progress, saying in a statement issued just before midnight, the deal failed a “net benefit” test. Progress responds the next day by promising to find a solution to the government’s concerns. “The long-term health of the natural gas industry in Canada and the development of a new LNG export business are dependent on international investments such as Petronas’, ” CEO Michael Culbert says in a statement.

Nov. 2, 2012: Ottawa extends the deadline for its Nexen decision by 30 days. The new deadline is Dec. 10.

Nov. 20, 2012: Petronas says it has extended the date for its takeover of Progress until Dec. 30, and has taken additional steps to win Ottawa’s approval.

Dec. 7, 2012: While announcing new guidelines for foreign investment in Canada, the government says both the Nexen-CNOOC deal and the Petronas-Progress Energy Resources Corp. deal will be permitted.

CNOOC and Petronas deals approved

By Aaron Wherry - Friday, December 7, 2012 at 5:07 PM - 0 Comments

The breaking news is here.

Harper government approves CNOOC and Petronas deals

By Aaron Wherry - Friday, December 7, 2012 at 4:59 PM - 0 Comments

In this April 25, 2012 photo, Nexen chief executive Kevin Reinhart addresses the company's annual meeting in Calgary. (Jeff McIntosh/CP)

The Harper government has approved both CNOOC Limited’s $15.1-billion acquisition of Nexen Inc. and Petronas’ $5.2-billion acquisition of Progress Energy Resources Corp., while announcing new guidelines for foreign investment in Canada.

In separate statements released after North American markets closed on Friday, Industry Minister Christian Paradis said he was satisfied that the acquisitions by Malaysia’s Petronas and China’s CNOOC were likely to be of net benefit to Canada. Paradis said both companies had “made significant commitments to Canada in the areas of: governance, including commitments on transparency and disclosure; commercial orientation, including an adherence to Canadian laws and practices as well as free market principles” and “employment and capital investments, which demonstrate a long-term commitment to the development of the Canadian economy.” Initially, Malaysia’s Petronas $6-billion bid for Progress Energy was rejected by the federal government and the company later revised its proposal.

“Our statements today will not satisfy everybody,” Prime Minister Stephen Harper said shortly after the announcements were made. “Some believe you are either ‘for’ foreign investment under all circumstances, or that you must be ‘against’ foreign investment under any circumstance. Practical government rarely permits such simplicity.”

Prime Minister Stephen Harper delivers a statement regarding the federal government review of takeovers on Dec. 7, 2012. (Fred Chartrand/CP)

Under the new guidelines, the acquisition of oil sands companies by foreign state-owned enterprises will only be found to constitute a new benefit for Canada in “exceptional circumstances.” And, despite today’s decision on Nexen, the prime minister seemed eager to draw a line on such investments, saying these decisions marked “not the beginning of a trend, but rather the end of a trend.”

“To be blunt, Canadians have not spent years reducing the ownership of sectors of the economy by our own governments, only to see them bought and controlled by foreign governments instead. That was never the purpose of the Investment Canada Act. It is not an outcome that Canadians would ever support. It is not an outcome any responsible government of Canada could ever allow to happen,” the Prime Minister explained.

Beyond the oil sands, acquisitions by state-owned companies will be reviewed to consider the control or influence to be exerted on the Canadian business, the control or influence likely to be exerted on the larger industry and the control or influence likely to be exerted by the foreign government over the state-owned company.

“In light of growing trends, and following the decisions made today, the government of Canada has determined that foreign state control of oil sands development has reached the point at which further such foreign state control would not be of net benefit to Canada,” Harper said. “When we say that Canada is open for business, we do not mean that Canada is for sale to foreign governments.”

The Conservative government’s decisions drew mixed reviews.

David Detomasi, a professor of international business at Queen’s University, said the two deals forced Ottawa to clarify the Investment Canada Act’s “net benefit” test, which was used to quash the takeover of Potash Corp. of Saskatchewan two years ago. “I think the Harper government was caught a little bit flat-footed when these bids were made,” he says. “I think they realized that whatever precedent they set was going to be something they were going to have to live with. And that’s because there are likely other deals in the offing.”

Even so, it will be a tough balance for Ottawa to strike, according to Detomasi. Recovering crude from the oil sands is a massively capital-intensive business and there aren’t enough deep-pocketed Canadian companies capable of making the necessary investments. And many foreign companies—particularly those in China—are state-owned. “Unfortunately, they’re the ones with the cash.”

The opposition New Democrats declared themselves “profoundly disappointed” with the Nexen deal, suggesting that proper public consultation did not occur before the decision was made. “Canadians should be very apprehensive about the long-term economic and environmental consequences,” Peter Julian, the NDP’s natural resources critic, said in a release. “In the past, these kinds of takeovers have resulted in job losses. In October, the NDP called for the government to reject the CNOOC acquisition.

While saying that the Liberals welcome investment—”we do need investment in the oilsands and in other industries”—Liberal trade critic Wayne Easter also expressed concerns. “There’s still really no clarity. We still don’t know the details. We have no idea what those rules really are,” he said. “Are all state-owned enterprises being handled the same, whether it’s China or any other country? Should there be different criteria, given the strategic planning of some countries versus others? Is there reciprocity here? I’m led to believe there’s not. There should be reciprocity in terms of how Canadian investment in China is handled in a similar way to Chinese investment in Canada.”

Alberta Premier Alison Redford said her government was “pleased” with the Harper government’s decisions, but that Alberta would be seeking clarity on how “exceptional circumstances” will be defined.

A decision on Nexen?

By Aaron Wherry - Friday, December 7, 2012 at 3:22 PM - 0 Comments

Industry Canada has summoned reporters to a meeting on the Hill for a briefing at 4pm. The embargo on that briefing lifts at 5pm and then the Prime Minister is due to deliver a statement in that same room at 5:15pm.

The CNOOC-Nexen review process explained

By Erica Alini - Friday, December 7, 2012 at 1:15 PM - 0 Comments

A Nexen oil sands facility seen from a helicopter near Fort McMurray, Alberta, Canada. (Jeff McIntosh/AP Photo/CP)

Update: The Harper government has approved both CNOOC Limited’s $15.1-billion acquisition of Nexen Inc and Petronas’ $5.2-billion acquisition of Progress Energy Resources Corp. Read the full story here.

The Harper government has until Dec. 10 to allow or block the proposed $15-billion takeover of Calgary-based energy oil and gas producer Nexen by China National Offshore Oil Company. In September, Nexen shareholders approved CNOOC’s bid by an overwhelming 99-per cent margin. The government is reviewing the deal under the Investment Canada Act, which mandates public scrutiny of foreign takeovers worth over $330 million. Normally, the decision would sit with the minister of industry, who is charged with assessing whether the investment is of “net benefit” to Canada. CNOOC’s case, though, is more complicated than that, for two reasons. First, the Chinese energy behemoth is a so-called “state-owned enterprise,” for which the government has set out additional guidelines. Second, earlier this year, the Canadian Security Intelligence Service warned that firms “with close ties to their home governments have pursued opaque agendas or received clandestine intelligence support for their pursuits here.” So the Nexen takeover might also have triggered review under national security parameters, even though CSIS never specifically mentioned CNOOC. Under the Investment Canada Act, a national security review would be in the hands of the cabinet, not just the Minister of Industry.

Below is our Q&A on the matter with Debra Steger, a law professor at the University of Ottawa and senior fellow at the Centre for International Governance Innovation. Steger, a former senior WTO official and trade negotiator for the Canadian government, explains what we do and don’t know about the ongoing review, how our process stacks up to that of the U.S. and other countries and why all this matters:

Continue…

Stephen Harper seems to have read that Justin Trudeau op-ed

By Aaron Wherry - Tuesday, November 20, 2012 at 4:36 PM - 0 Comments

The Prime Minister does not often bother with any questions beyond the initial opposition leaders’ rounds. Today though, after Bob Rae had finished his three questions, Mr. Harper stood to respond to a query from the NDP’s Peter Julian. But he did so not just to respond to the official opposition (emphasis mine).

Peter Julian: Mr. Speaker, today Canadians found out through anonymous leaks that CNOOC has agreed to meet the federal government’s request. What request? This is the first time Canadians have heard of any request coming from the federal government on CNOOC. The government refuses to be transparent, refuses to be accountable, refuses to have respect for Canadians, so what is the government respecting of CNOOC and why is it doing it in secret? Why is it doing it behind closed doors?

Stephen Harper: Mr. Speaker, let me just address that very briefly. The Minister of Industry has been very clear. The government’s policy on these matters, while we welcome foreign investment, is to scrutinize every individual foreign investment to make sure they are in the bests interests of this country. On the one hand, the position of the NDP, as we know, is to be against all of these investments. The position of the Liberal Party, as reiterated yesterday, is to rubber-stamp every single one of them. We think Canadians expect us to examine these investments carefully and make sure they are in the best interests of Canada.

See previously: ‘It is in Canada’s interest’

‘It is in Canada’s interest’

By Aaron Wherry - Tuesday, November 20, 2012 at 9:00 AM - 0 Comments

Justin Trudeau makes the case for approving the CNOOC takeover of Nexen.

Why is the CNOOC-Nexen deal good for Canada? Because Chinese and other foreign investors will create middle-class Canadian jobs. Foreign investment raises productivity, and hence the living standards of Canadian families. More fundamentally, it is in Canada’s interest to broaden and deepen our relationship with the world’s second-largest economy.

Of course there should be conditions attached. All foreign investors must obey the letter and the spirit of Canadian labour, environment, corporate governance and immigration laws. In certain sectors, national security concerns will be real. However, in the CNOOC case, Chinese ownership of three percent of oilsands leases hardly constitutes a national security issue.

Justin Trudeau’s Pacific overture

By Paul Wells - Tuesday, November 20, 2012 at 8:16 AM - 0 Comments

(Paul Chiasson/CP)

As a rule of thumb, any position that gets a politician called “brave,” “courageous” and full of “guts” in a single column is going to be awfully attractive to most politicians. Say hello to Justin Trudeau, who wants the CNOOC-Nexen deal approved and, as he heads back to Calgary this week, is eager to say so.

Readers are encouraged to debate the wisdom of the policy choice among themselves. I’m here to offer a little further information.

First, if we’re going to start whistling slowly and exclaiming that this Trudeau sure isn’t much like his father, it’ll be handy to get his father right from time to time. Pierre Trudeau was (a) the most China-friendly prime minister in history before Jean Chrétien and, well, Stephen Harper and (b) despite his carefully tended reputation as a haughty ascetic, highly prone to compromise in the interest of furthering long-term goals. Let’s take those in order. Continue…

‘I stand by comments opposing the CNOOC purchase of Nexen’

By Aaron Wherry - Wednesday, November 7, 2012 at 9:52 AM - 0 Comments

James Bezan issues a statement Nexen and this week’s iPolitics story about the situation at the Selkirk Record.

“The dismissal of a reporter from the Selkirk Record was an independent decision made by her publisher.”   

“The story in iPolitics is misleading and has taken my replies to Ms. Winzoski out of context.  The fact is that Ms. Winzoski’s correspondence was specifically about the Canada-China Foreign Investment Partnership and Protection Agreement (FIPA).  Inadvertently, my office forwarded her my reply on the China National Offshore Oil Co. (CNOOC) and Nexen deal.  When my staff realized they had sent the wrong reply, they issued a recall and sent her my response on FIPA.”

“These are two different issues.  My reply on Canada-China FIPA was taken out of context and implied that I had changed my position on CNOOC.  I fully support FIPA and ensuring Canadian businesses and their investments in China are protected.    I stand by my comments opposing the CNOOC purchase of Nexen and have expressed my concerns to Minister Paradis and cabinet.   Minister Paradis will make his decision in due course based upon Canadian laws and what’s in the best interest for Canada.”

James Bezan Maverick Watch

By Aaron Wherry - Monday, November 5, 2012 at 10:21 AM - 0 Comments

Within this tale of small town politics, is the news that James Bezan briefly objected CNOOC’s proposed acquisition of Nexen.

I would like to note that I am strongly opposed to this deal, and I have raised my concerns directly with Cabinet as well as with the Prime Minister. As I have stated to my colleagues in Cabinet, due to China’s dismal record on human rights and freedoms, I take particular exception to allowing a state-owned company from China to purchase a Canadian company…

As a Conservative, I am in favor of keeping markets open in Canada, however I do not support allowing state-owned and state-controlled enterprises to take over publicly traded Canadian companies, as these state-owned and controlled business [sic] are not on the same level playing field as other free enterprising corporate entities.

Friday night special

By Aaron Wherry - Friday, November 2, 2012 at 7:27 PM - 0 Comments

Christian Paradis announces that the Harper government is extending the review period for the CNOOC/Nexen acquisition. The new deadline is December 10.

After the Harper government announced a first extension three weeks ago, a decision was supposed to be due next week.

China’s America problem

By Chris Sorensen - Monday, October 29, 2012 at 10:31 AM - 0 Comments

Jason Reed/Reuters

As the U.S. election looms, President Barack Obama and Republican challenger Mitt Romney have been eager to blame China for America’s economic woes. Both are running ads that paint China as a job-stealer, an intellectual property thief and a currency manipulator. Romney’s campaign has called China a “cheater” in international trade, while Obama has accused Romney of offshoring American manufacturing jobs while running his private equity firm.

The rhetoric is amplified by concerns about the $1.15 trillion worth of U.S. Treasury bills that China holds, ostensibly threatening Washington’s financial independence. “I love Big Bird,” Romney said during the first debate, spawning a torrent of Twitter jokes. “But I’m not going to keep spending money on things to borrow money from China to pay for it.” Beijing hasn’t found the campaign threats nearly as funny. A spokesperson for China’s foreign ministry urged both candidates to “do more things conducive to China-U.S. mutual trust and co-operation,” while China’s official news agency, Xinhua, called the China-bashing an election-year ritual that “leaves Americans with the impression that China is responsible for their country’s decline.”

The war of words highlights how high tensions are running on both sides. That’s because both countries are under intense economic pressure. America is trying to pull out of a crushing recession (and a debt of more than $16 trillion) and put millions back to work. China is desperate to maintain economic growth, the glue holding the country of 1.3 billion together, while in the midst of a difficult leadership transition (tarred by the Bo Xilai corruption scandal). Caught in the middle is a $503-billion trade relationship that’s emerged as a cornerstone of the global economy.

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China can’t buy Albertans’ love

By Charlie Gillis - Wednesday, October 24, 2012 at 5:25 PM - 0 Comments

Photograph by Jeff McIntosh/CP

China’s thirst for oil is Alberta’s insurance policy—a guarantee of investment and jobs amid economic turmoil in the U.S. and Europe. Small wonder, then, that Albertans have been reliably sanguine when it comes to forging close economic ties with China. More sanguine, at least, than other Canadians.

That might be changing.

In an Alberta-only poll released today, 64 per cent of respondents said they disapproved of Chinese investment in the province if it took the form of full ownership of assets; a lukewarm 37 per cent said they found partial ownership acceptable. That’s a sharp break from one year ago, when a healthy majority agreed with the proposition that they should welcome Chinese investment.

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The NDP and Nexen

By Aaron Wherry - Thursday, October 4, 2012 at 11:37 AM - 0 Comments

Barring further information, the NDP is apparently compelled to oppose the CNOOC takeover of Nexen. Here was Thomas Mulcair’s assessment on Tuesday.

What we’ve been saying from the start is that we should have public consultations.  That’s our position.  That’s allowed under the Act and we should consult with Canadians.  This is fundamental. This is about whether or not Canadians are going to control their own natural resources. The government says it’s going to have new criteria for looking at investments from other countries.  They added a couple of things today.  They’re starting to talk about security issues.  They’re starting to talk about control over our natural resources when it’s a takeover by a foreign government through a state-owned enterprise of a foreign government.  So we think that those things should have been on the table since the beginning.  They’ve been talking for years about updating those criteria. They’ve never done it.  So that’s the conversation we want to have with Canadians.  We think that those are valid issues. 

If you listened to Don Davies’ question today, he went a little bit further with regard to the fact that there’s protection for Chinese investing in Canada but there’s not reciprocity. Canadian investors would never be allowed to buy the raw natural resources of China.  So there’s something terribly wrong with a government that keeps signing these deals where we pass for chumps, where they get something that we don’t get. 

Stephen Gordon considers Pat Martin’s suggestion of “economic treason.”

NDP MP Pat Martin, ‘economic treason’ and anti-foreign bias

By Stephen Gordon - Thursday, October 4, 2012 at 9:01 AM - 0 Comments

(Adrian Wyld/CP)

The conflict among nations that so many policy intellectuals imagine prevails is an illusion; but it is an illusion that can destroy the reality of mutual gains from trade. (Paul Krugman)

In The Myth of the Rational Voter, Bryan Caplan argues that the most important obstacles to implementing sound economic policies are not lobby groups or the ability of other special interests to influence politicians, but certain systemic, irrational beliefs of the electorate. This is hardly an encouraging conclusion, but if we needed any more evidence for at least one aspect of his thesis, the CNOOC-Nexen takeover is providing it.

One of the prejudices identified by Caplan is what he calls anti-foreign bias: “a tendency to underestimate the economic benefits of interaction with foreigners.” According to popular (mis)perception, dealing with foreigners is to be mistrusted: if they want something from us, then they must perceive some benefit from the exchange. And if foreigners are gaining, then Canadians must be losing.

This is nonsense, of course: the gains from trade are not zero-sum. But once you’re locked into anti-foreign bias, a Canadian who sees nothing wrong when foreigners benefit from trade is the same thing as a Canadian who wants Canadians to lose from trade. And so words such as “disloyal” (apparently a favourite epithet among those opposing reciprocity in 1911), “betrayal”, “traitor” and “treason” tend to get thrown around like so much confetti. NDP MP Pat Martin’s accusation of “economic treason” on the part of those who don’t see why the government should forbid a freely negotiated exchange of an asset is simply the latest in a long line of similarly overblown rhetoric.

Now, blocking the deal might well prove popular: anti-foreign bias is widespread, and understanding why it’s wrong sometimes requires a significant intellectual investment. It’s hard to shake the notion that another country’s gain must be Canada’s loss.