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Canada Needs Foreign Ownership Curbs
by Barry Artiste | June 21, 2008 at 10:23 am | 333 views | 7 comments | 17 recommendations
Opinion
Barry Artiste, Now Public Contributor
Certainly Canadians and Americans have witnessed foreign ownership in our prospective countries.
Statistics posted the left of this story from US Government agencies can serve as an example if we follow the USA lead. Certainly their present economic misfortunes attest to this.
More so in the United States, where everything from Banks to US port and security are Saudi owned.
Certainly as anyone knows trying to takeover a company or establish a company in foreign countries like Russia, Africa, China and the Middle East with unstable ethics is an effort in futility as MacDonalds Restaurants learned when setting up shop in China, only to have their new restaurants closed down to make way for a chinese connected developer, or a Canadian whose oil firm was sent packing out of Russia, thus bankrupting his Alberta business. Certainly North Americans investment in foreign countries versus them investing in us in not on a level playing field.
Countries who take over North American companies and outsource to low wage third world countries for labour, still enjoy tax perks in our country much to the detriment of the North American labour force.
Canada needs to learn from lessons, learned too late in the United States, and not rely on other countries such as the United States who rely on foreign investment and borrowing trillions of dollars from China and the Saudi's to prop the US economy, thus controlling the US economy as it is shown paying down those foreign debts has turned the American economy into a tailspin in which it may take years to recover.
Recently China was looking at buying mines in British Columbia and bringing their own Chinese miners over to Canada, leaving nearby towns of unemployed miners to wonder what their Tax dollars are paying for in subsidizing a foreign country like china to buy a Mine of which Canadians will not benefit from, as the mined goods will be in raw form and not processed here in Canada and will be exported back to China.
Yep, we all have a lesson to learn from our US family south of the border, better to control your own country's financial house and neighbourhood resources before strangers walk in and buy it with some of your money, with them owning it outright from under you.
Foreign investment review
Let’s hope the Tories do their international and market homework before coming up with foreign ownership guidelines for Investment Canada.
Many of us oppose sovereign capital buyouts as well as the targetting of Canada that has taken place by the Russians and Arab regimes. In fact, Canada's best and brightest could be picked off in no time.
But restricting foreign ownership in Canada is tricky, given free trade agreements and the aggressive acquisitions made by Canadian multinationals around the world. In absolute dollars, Canadian businesses now have more foreign direct investment outside the country than foreigners have in total invested in Canada.
But this can change if we become a pushover nation. There is $2 trillion in sovereign capital out there and it's growing rapidly due to oil and commodity prices.The solution
So Ottawa must adopt an elegant solution which would adhere to what I call the principle of investment reciprocity. This is a way to keep undesirables out of ownership in our economy – such as Russians or Middle Eastern oil despots – and yet retain the principles of free trade, liberalization and access here to worthy foreigners so that Canadians can continue to invest abroad.The global economy upholds the principle of trade reciprocity exists but no one has enshrined investment reciprocity. Take the case of Prime Energy Trust, one of three Canadian oil companies picked off in weeks by the potentates of Abu Dhabi.
Those deals were unjust because Canadians cannot invest in Abu Dhabi’s oil sector, in its stock market or in the entity that bought the Canadian assets. That meant, Canadian targets could not do a reverse takeover to fend off the purchase and their Canadian owners could not follow the assets by taking shares in the takeover artist’s company.
The entity was also able to outbid Canadian rivals because it is subsidized.
June 21, 2008 at 10:23 am by Barry Artiste, 333 views, 7 comments
Crowd Power
Barry Artiste
Vancouver, Canada
Most RecentMost Recommended Comments (7)
at 11:34 on June 21st, 2008
Apparently in Thailand, non-Thais can't own businesses without some sort of local co-ownership (51-49 in favor of the local, I think), and can only buy property on up to a 99-year lease.
at 11:47 on June 21st, 2008
I am all for foreign investment and a 49-51% company ownership, as long as Canadians own majority shares, which is our current mandate, but other countries do not play by the rules when it comes to us,
thanks for the insight as well Jordon, much appreciated. BTW you get my email this morning?
at 12:24 on June 21st, 2008
It is interesting to note that there are more than 580 US companies operating in the Republic Of Ireland and they are investing at at rate of about $2.3 billion per year (the population of the Republic is less than 5 million). There are also 43 Canadian companies in Ireland.
The USA is the major economic power because it believes in free trade and one consequence of this is that foreign ownership needs to be tolerated especially if you want the right to set up and sell abroad. Having problems setting up in unstable parts of the World is not a business justification for banning foreign ownership (even by so called undesirables).
Despite claims about the power of China, Russia or Japan the USA really makes the rules and this situation is likely to continue for a long time. China and Russia are not stable economies and much of the gains made in recent years are likely to be negated by the resulting social problems. I first visited the US in 1979 and everyone was predicting that Japan would overtake the United States as the leading economic power in the World ... this did not happen.
The real problem for the North America is the competition for raw materials and it is in this area that China poses a major problem. I am also afraid that China may do a lot of damage to the environment.
There is little point banning the Saudis from owning US or Canadian companies as they need to invest their money somewhere and if North America does not want their money then there are plenty of other places only too willing to accept their money so that they can secure raw materials for economic growth.
at 12:28 on June 21st, 2008
Barry Artiste, I like this story. It's good stuff.
Despite my comments "sovereign capital" could prove to be a major problem in the future. Correct me if I am wrong but little Norway is the biggest source of such capital and they own 1% of all European stocks.
at 12:37 on June 21st, 2008
Thanks for the visit and comments, Norway being almost exclusively a resource export driven economy with little manufacturing except shipbuilding. So though it is ripe for foreign takeover , countries more diverse in resources, manufacturing, banking etc are more lucrative to countries looking to buy BIG. Norway seems to small to make a real dent on the world markets,hence less profit for takeover companies. Norway is also frugal in social programs, good economy hence are not desperate enough to borrow from foreign capital, and have the natural resources in which to make money and invest in other countries.
at 15:14 on June 21st, 2008
Barry Artiste, I like this story. It's good stuff.
Putting on my tin hat, it seems as though our elected officials in Canada and USA are participating in the selloff to middle east and asian (mostly China) investors.
By allowing companies to "offshore" and relocate internationally, they avoid US taxes, eliminate US and Canada jobs, which results in more housing foreclosures and medium- and small-business bankruptcies ..... opening the door for foreign investors.
Some of my tin-hat friends point to this as evidence of the "One World Order" strategy. It's getting harder to dispute that belief ..... as hard as it is to believe.
at 18:33 on June 21st, 2008
Thanks Felton,. it certainly looks like a one world order