Saturday, August 26, 2006

Selling out Canada

If Globe and Mail headline writers (and its readers) are to be believed, those pernicious Conservatives are at it again. They have put up a great big sign: "Canada is for sale."

Ottawa urged to push foreign takeovers
Outside investment has a 'net benefit,' internal files suggest


OTTAWA — Federal officials have told Industry Minister Maxime Bernier that Ottawa should encourage more foreign takeovers and other investment from abroad, despite public concern that corporate Canada is being gutted by a flurry of acquisitions.

Not quite.

Internal government documents, prepared earlier this year for the Harper government, say takeovers and other foreign investment provide "net benefit" to Canada and that the government should consider further reducing restrictions.

This may be too fine a point for Simon Tuck and his editors, but there is a world of difference between removing restrictions on foreign investment and encouraging the foreign takeover of our industrial base.

It does beg the question, however, as to why federal bureaucrats would even suggest such a thing, particularly when it was the previous Liberal administration to which the report was initially presented.

Foreign-based multinational corporations are on average more innovative, invested in new technology and focused on cross-border trade, say the documents, obtained through federal access-to-information legislation.

Contrary to the myth of the "hollow out" left by foreign takeovers, the government officials argued, multinational giants also tend to pay better than domestic companies and offer advantages in trying to create better trade ties with China and other emerging markets.

But don't let that give you the wrong impression. These companies are not innovative because they are foreign owned, they are innovative because they are open to the world.

Some parts of the documents were blacked out by government officials before they were released, but the Jan. 11 document concludes that Canada needs more multinational corporations, whether they're foreign-owned or not. One document cites a recent OECD study that found that Canada has the second-highest level of foreign ownership restrictions among the group's countries, after Iceland.

Clearly, the economic policies that have coddled Canadian business and insulated them from international competitive pressures have not served us well. What we need is more multinationals – foreign and domestic – that can compete with the world. It must be a refreshing change, then, for federal economists to actually have their analysis and recommendations taken seriously.

To be sure, given the tone of many of the comments on the thread, a virulent undertone of anti-American (and anti-Conservative) sentiment will be a big obstacle to introducing some sense into this debate. But tell me, does it really make any difference if your telephone or internet provider is Canadian owned? What is the point of preventing foreign telcos such as British Telecom or Verizon from selling their services in Canada? What are we really afraid of?