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OTTAWA— Ottawa is promising to tell Canadians a lot more about foreign takeovers – the ones it reviews and the ones it rejects. That’s a good thing.
But it’s still well short of what the Conservative government pledged in late 2010 after abruptly killing BHP Billiton’s hostile bid for Potash Corp. of Saskatchewan.
Prime Minister Stephen Harper and then-industry minister Tony Clement promised two things. They said they would clarify the key test used to judge foreign takeovers – the so-called “net benefit” determination. And secondly, they said they would get the House of Commons industry committee to review the Investment Canada Act.
Neither of these things has happened. Instead, the government is giving the Industry Minister new powers to disclose more information about takeovers without betraying commercial secrets. The bill also allows the government to compel would-be foreign acquirers to put up bonds to backstop their commitments to create jobs or invest in Canada. Presumably, that’s to prevent a repeat of Ottawa’s lengthy legal fight with U.S. Steel Corp. over commitments it made after acquiring Stelco in Hamilton.
Again, positive steps. But not enough.
The changes fall short of what’s needed to “bring our investment policy into the modern era,” according to Daniel Schwanen, associate vice-president of international and trade policy at the C.D. Howe Institute.
The problem with the current regime is that “net benefit” has become a moving target. Mr. Schwanen said the criteria seem to change depending on the investment because the rules aren’t obvious.
“We are missing an opportunity to be a lot clearer about what we require of investors, and as a result, we’re missing a chance to be more competitive in terms of attracting good foreign investment,” he said.
Particularly troubling is that a year and a half after the Potash Corp. decision, Canadians are still in the dark about why the government thought BHP was unfit to buy the company.
It’s not like Canada has something against foreign investment in Saskatchewan’s potash industry, or even BHP Billiton’s cash. BHP, an Anglo-Australian mining powerhouse, has begun site work at its proposed $12-billion Jansen potash mine, 100 kilometres north of Regina.
K+S AG of Germany is pushing ahead with the $3.2-billion Legacy potash project near Moose Jaw, Sask.
And Anglo-Australian miner Rio Tinto PLC is teaming up with the Canadian subsidiary of Russia’s JSC Acron to explore for potash in Saskatchewan.
For the rest of this artilce, please go to the Globe and Mail website: http://www.theglobeandmail.com/report-on-business/commentary/barrie-mckenna/changes-to-reviews-of-foreign-takeovers-still-miss-mark/article2424348/