Harper's Limit on Foreign Investment Reviews a Huge Economic Step Backwards
May 28, 2012, 2:00 PM EST
The Harper government's decision to further limit reviews of foreign investment and takeovers over the next four years is totally counterproductive to Canada's economic development, CAW President Ken Lewenza says.
Lewenza said the federal government's plans to raise the threshold for review of a foreign takeover of a Canadian company to $1 billion from the current $330 million will weaken Canada's control over its own economy.
"This announcement is a slap in the face to the former workers at Caterpillar's Electro-Motive Diesel plant in London, Ontario who by the hundreds paid the price of lost jobs. This situation has been repeated across the country as a result of the already weak foreign investment rules currently in place," Lewenza said. Canadians have already painfully experienced the aftermath of takeovers of Inco, Falconbridge, Alcan and Stelco, he said.
"Instead of weakening the rules governing foreign investment, Harper should be pushing tighter scrutiny of foreign takeovers of Canadian companies," Lewenza said. "Industry Canada's decision to preserve the loophole which allows already foreign owned companies to escape review when being bought by another foreign company is a lost opportunity."
In a February 9, 2012 letter to Industry Minister Christian Paradis, Lewenza outlined five key areas of the Investment Canada Act which required reform to prevent further cases like Electro-Motive, where 465 CAW Local 27 members were locked out and then a month and a half later announced it was closing its London plant.
Lewenza slammed the Harper government for not strengthening the act with these improvements:
Tighten up Loopholes: The idea that a $330 million acquisition (the current threshold for WTO investors) is "too small" to matter, and therefore should not be reviewed, is not credible - especially given a complete lack of transparency or independent verification regarding how that value is measured. The exemption of "indirect acquisitions" is an especially dangerous loophole, one that proved disastrous in the Electro-Motive Canada case.
Defining and Measuring Canadian Costs and Benefits: The concept that a foreign investment must provide a "net benefit" to Canadians in order to be allowed to proceed, is in principle a valid one. The current ICA provides no detail, transparency, or verification regarding how the costs and benefits of incoming foreign investments are to be contemplated, measured, and compared.
Stakeholder Input: Other stakeholders must have a legislative ability to provide their input to the foreign investment review process, through public hearings or other consultative mechanisms. This is a fundamental prerequisite for economic democracy.
Improved Transparency: Right now the review process is entirely secretive, with Investment Canada refusing to even divulge whether an application has been received, let alone the terms and effects of that acquisition. This leaves other stakeholders (including workers, communities, and lower levels of government) entirely in the dark regarding an acquisition and its significance.
Imposing and Enforcing Commitments and Conditions: In the course of reviewing and approving foreign investments, a pro-active government would have many opportunities to negotiate commitments from the incoming investor that would enhance the net benefits to Canada. These could and should include commitments regarding its future Canadian production footprint, technology transfer, minimum employment and training commitments, and targets for investment and innovation activity.