There is no shortage of controversy on the subject of Canada’s investment relationship with China – particularly in the energy sector. Dawson Strategic landed in this issue last summer with “Potash and Blackberries,” a paper written for MLI on Canada’s foreign investment review process. The paper argues that Canada’s foreign investment review process is adequate – we don’t need different rules for different investors – but Canada could benefit from greater specificity for SOEs and security.
Foreign direct investment by China took centre-stage with the proposed takeover of Canadian energy company Nexen by CNOOC. In an August OpEd that ran in a number of papers across Canada, Charles Shapiro and Laura argue that we should not judge potential foreign investors on the basis of nationality but evaluate each case on its merits.
Laura got a chance to take this argument to a distinguished Ottawa audience at a Canada 2020 forum in Canada entitled Buying Canada: Strategic Industries, State-Owned Industries and the National Interest. Moderator Don Newman and panellists Wenran Jiang, Charles Burton, and Thomas D’Aquino, plus challenging questions from the audience, made for a lively and provocative debate.
Becoming activists in national debate on the proposed Foreign Investment Protection and Promotion Agreement (FIPA) was not planned but we were surprised by the distorted information that opponents were using to get Canadians riled up. There were claims that Canada was signing a free trade agreement with China (not true), that we could oppose no future Chinese investment (not true), and that the FIPA obligated Canada to provide unfettered access to Canadian energy reserves (also not true). A major news organization called Laura asking for a rebuttal and the result is a plain-language explanation of the agreement. Since then, a more detailed legal rebuttal has been written by veteran trade lawyer, Matthew Kronby.
Laura’s FIPA OpEd was picked up by more than 11 Canadian newspapers and 5 talk radio stations. Clearly this is a hot-button issue for Canada. It echoes the Canadian debates in the 1960s regarding US investment. However, fear did not serve as an adequate guide to public policy then and it does not now. Canada must engage with China in a forward-looking way, using rules-based frameworks to build mutual confidence and understanding.