IN THE NEWS ~ China's bid for Canadian oil firm raises ownership fears
October 5th, 2012 - 10:00am
CNOOC takeover attempt raises 'difficult policy questions,' says PM Harper
Bruce Cheadle, The Canadian Press
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A $15-billion bid by China's state-owned offshore oil company for Canada 's Nexen Inc. "raises a range of difficult policy questions," Prime
Minister Stephen Harper said Thursday.
But Harper says cautionary signals from the United States about the takeover bid will not be a factor in whether the deal ultimately gets the green light.
"I don't think it's a surprise for me to tell you the government of Canada will take its own decision, irrespective of
what the government of the United States does," the prime
minister said at a joint availability with the visiting president of
"We don't, obviously, follow their judgments in these matters."
Nexen , a Calgary-based oil and gas
company, is Canada 's 10th biggest revenue generator
in the industry and there are widespread concerns about it falling under the
control of the Chinese National Offshore Oil
Those concerns have spread as far as the U.S. Congress due to Nexen 's
considerable American operations.
In July, the ranking Democrat on a congressional natural resources
committee requested the takeover be blocked by U.S. Treasury Secretary Tim
"Giving valuable American resources away to wealthy multinational
corporations is wasteful but giving valuable American resources away to a
foreign government is far worse," Congressman Ed Markey wrote to Geithner.
A spokeswoman with Energy Department subsequently stated that "regulators
are looking closely at this deal," and last month, CNOOC formally asked the
American government to review its Nexen
proposal for national security concerns.
The same debate is taking place north of
the border, with the Harper government under sharp attack from
its political opponents for a Foreign Investment Review Act that critics
characterize as opaque and unclear.
The prime minister acknowledged Thursday
his government is wrestling with the CNOOC- Nexen review.
"This particular transaction raises a range of difficult policy questions,
difficult and forward-looking issues," Harper
"Those things will all be taken into account under the act in assessing
the net benefit of this investment to this country, before we take a decision.
And obviously we continue to gather information and opinion on that."
Harper was responding after the NDP finally declared itself formally against the
takeover Thursday, following weeks of calling for a full public airing of the
And while the official Opposition doesn't get a say in the matter - not
even a parliamentary vote - New Democrats claim to have public opinion winds at
their back as they make the case for rejecting the CNOOC takeover, citing
everything from national security and environmental concerns to CNOOC's human
rights and employment record.
"We've certainly seen the opinion polls moving over the last month, as
well, showing more and more opposition by Canadians to this takeover," said Peter Julian , the NDP natural resources critic.
Industry Canada 's current review period for the
proposal ends Oct. 12 but can be extended by up to a month.
At issue is a "net benefit test" for Canada under the Investment Canada Act, a list of parameters that have been
widely criticized as being open to political manipulation.
"The task is to make those factors much better defined and more specific
and less arbitrary and open-ended," Lawrence Herman of Cassels Brock and
Blackwell wrote in a report last autumn for the University of Calgary's School
of Public Policy.
It is that process - as much as the specifics of state-owned CNOOC - that
the NDP is attacking.
"By studying this transaction behind closed doors and not specifying what
criteria they used to determine what represents a net benefit for the country,
the Conservatives have given us no choice,"
said Helene LeBlanc, the party's industry critic.
"When in doubt, it's best to back off."
Industry Minister Christian Paradis
responded with a news release calling the NDP
"reckless and irresponsible."
"By attempting to politicize the review process they are creating the kind
of uncertainty that scares off the investment Canadian companies rely on to create jobs, innovate
In an effort to counter Conservative
claims that New Democrats are anti-business and anti-trade, Julian said the
party welcomes foreign investment.
"What we're saying is there needs to be a level playing field for
investors, that this is absolutely absurd," said Julian.
"What we have is an industry minister with nebulous criteria basically
drawing up a response on a napkin based on what the public response is.
"It's not fair to investors. You need to put the criteria out front."
That the NDP should cite public opinion
for rejecting the CNOOC takeover, while simultaneously criticizing the
government for pandering to public opinion highlights the current problems with
the investment act.
A government-commissioned report on competitiveness in 2008 recommended
Ottawa raise the threshold for review under the act to $1 billion from $312
million, a move the Conservatives followed
through on last spring.
The system now requires an investor to show a net benefit for Canada in a
takeover, but report author Red Wilson recommended the onus be reversed, so that
the government has to show net harm for Canada
in order to reject a transaction. That hasn't happened.
The Conservative government shocked
investors in 2010 when it blocked the hostile takeover of Saskatchewan's Potash
Corp., by BHP Billiton - a takeover that was unpopular in the province and
likely to cost the Conservatives seats in the
At the time, Saskatchewan Premier Brad
Wall said the investment act needed clearer rules about what's
considered a strategic national asset.
"I think it goes to the amount of reserves and we'll have to talk about
what amount of reserves or known quantity of a natural resource constitutes a
strategic interest," said Wall. ILLUS: The Canadian Press / NDP Industry critic Helene LeBlanc and Natural
Resources critic Peter Julian held a news
conference in Ottawa Thursday criticizing the review process for a proposed
foreign takeover of one of Canada 's biggest oil companies.;