Canadians should be concerned about CNOOC’s $15-billion takeover bid for oil and gas company Nexen, but there are rules in place to ensure the Chinese firm meets the guidelines for foreign investors, an Ottawa audience was told on Wednesday.
“All foreign investment is welcome,” says Thomas D’Aquino at a Canada2020 panel discussion on state-owned enterprises.
The former head of the Canadian Council of Chief executives and a self-described “serial free trader” calls CNOOC “a wonderful example of what you want in a state-owned enterprise. The Nexen deal will be largely beneficial for Canada.”
The controversial deal must meet six criteria under the Investments Canada Act (ICA). The federal government recently extended the deadline for a final decision on CNOOC-Nexen.
“The ICA is not perfect, but I take exception to those who say it’s vague,” says Laura Dawson of Dawson Strategic. “The net benefits test is fairly clear. I think having state-owned enterprises meet national securities criteria is absolutely essential. We have the tools we need to review foreign investment.”
Wenran Jiang of the University of Alberta said the deal shouldn’t be of concern at all, pointing out Chinese investment in Canada constitutes less than 2% of Canada’s foreign investment. Nexen represents just 1% of Canada’s current oil production.
“The issue is not whether we have too much Chinese investment, the issue is that we have too little,” he says.
Charles Burton of Brock University, the lone naysayer, notes the CNOOC deal does not fulfill certain criteria in the ICA, such as ensuring Canadian participation in the larger company and allowing the transfer of technology to China from Canada.
Dawson says Canada is a relatively small economy and our traditional trading partners, the U.S. and EU, are shrinking. “We need to find a way to engage with growing Asian markets in a way that’s forwardly looking and aggressive. We can’t be a big fish but we can be a fast fish.”
Still, Dawson insists that foreign investors must abide by the laws of the land. “Make sure that they are abiding by labour, environmental and resource rules and any other rules we want to impose on them.”
Jiang dismissed concerns that Chinese state-owned enterprises don’t play by the rules, pointing out the three biggest Chinese oil companies all have Canadian subsidiaries that have been here since the 1990s.
“They’ve been operating under our rules,” he said. “So if you think they are pursuing covert activities for the Chinese state, that’s simply not true.”
Burton says if the CNOOC deal goes ahead, other Chinese state-owned firms will be looking to expand their investments in Canada. “What percentage of our energy natural resources do we want to have controlled by the government of China?”
Dawson disagrees. “The notion that the Chinese are coming to steal our resources sounds a lot like the debate in the 1960s, when the Americans were coming to steal our natural resources,” she says.
“Operating in a climate of fear didn’t help us then, and it won’t help us now.”