OTTAWA—Stephen Harper’s carefully crafted approval of a huge Chinese acquisition in Canada’s oil industry is the first step in the Prime Minister’s attempt to recalibrate Ottawa’s approach to the Chinese economic juggernaut.Last winter Harper travelled to China to throw open the door to investment from China but the bid by Chinese state-owned CNOOC Ltd. to grab Calgary-based petroleum producer Nexen Inc. for $15 billion set off alarm bells across the political spectrum back home.
The Conservatives, some of whose MPs openly opposed the sale of Canadian natural resources to a company controlled by a communist state, had little enthusiasm for the Nexen buyout. But it was impossible to slam the door on CNOOC without affronting Beijing and undermining Canada’s reputation as a reliable destination for foreign investment.
“We cannot go with a retrospective approach,” Industry Minister Christian Paradis said Saturday.
“We have a hard-won reputation here. Canada is a stable place. We are serious in terms of predictability,” Paradis told CBC’s The House as he explained the decision to approve CNOOC’s takeover of Nexen.
But Paradis pointed out that under the new rules announced Friday by Harper, companies like CNOOC will be barred from buying Canadian oilsands assets except in exceptional circumstances.
This will prevent a wave of buyouts of Canadian oilsands producers by state-owned corporations in China and other energy-hungry countries, Paradis said.
The decision was a difficult balancing act for Harper, whose cabinet ministers have often stressed the need to expand trade with China and bring in foreign investment to help fund development of the oilsands.
“He was threading a political needle on this one,” said Fen Hampson, director of global security at the Waterloo, Ont.-based Centre for International Governance Innovation. “There was a lot of opposition in the Conservative caucus to Chinese investment — certainly some fairly public opposition around the cabinet table.
“But at the same time, the PM recognizes that China and other emerging markets where you have sovereign wealth funds and state-owned enterprise are going to be major players in the resource sector,” Hampson said.
The decision drew mixed reviews: some observers welcomed the go-ahead for CNOOC’s acquisition while others said the restrictions on investment by state-controlled firms will set back relations with Beijing.
Looking ahead, Canadians will have to wait to see how the government’s approach to China evolves.
Harper’s critics say his tough talk about barring control of natural resources by foreign governments is only a smokescreen.
A crucial issue in the weeks ahead revolves around Ottawa’s plan to proceed with a bilateral investment rights treaty — the Canada-China Foreign Investment Promotion and Protection Agreement (FIPA) — with Beijing. The treaty is intended to guarantee fair treatment of each country’s investors when doing business in the other nation.
Opponents of these types of agreements say they hand foreign companies undue power to sue federal, provincial or local governments in Canada over regulations meant to protect the environment, public safety or other concerns.
Opponents of the treaty say it will give Chinese companies operating in Canada advantages that will make Harper’s new restrictions on oilsands buyouts seem negligible.
“That’s the big one, that’s essentially the big gift for China,” said Stuart Trew, trade campaigner for the Ottawa-based Council of Canadians. “That’s the deal that’s going to let the CNOOC’s of the world, or other Chinese investors, expand without any limit.
“If the treaty is signed, there’s virtually nothing they can do to stop CNOOC from buying anything it wants in the tarsands,” Trew said.
CNOOC, as an established company operating in Canada, could sue Ottawa for unfair treatment if its investment activities were treated differently from those of Canadian firms, he warned.
The government says the planned investment treaty with China is designed to ensure Canadian companies have better access to the Chinese market. The Conservatives deny that these bilateral treaties make governments in Canada vulnerable to aggressive legal actions by foreign corporations.
For now, the agreement with China is sitting on Harper’s desk. It has not yet been officially enacted, and Trade Minister Ed Fast said Saturday he isn’t sure when it will come into force.
Original Article
Source: the star
Author: Les Whittington
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