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Joseph Caron is former ambassador to China, Japan and high commissioner to India, and a distinguished fellow with the Asia Pacific Foundation of Canada. He is also Special Advisor, Asia Pacific with Heenan Blaikie LLP.
Petronas, CNOOC will have big impact on how Canada is seen
The Canadian government’s interim determination, announced last Friday, that the proposed Petronas takeover of Progress Energy does not provide an as-yet-undefined “net benefit” to the country, has elicited more interest in Canada and internationally than would normally be the case for any other mid-sized and otherwise run-of-the mill foreign-investment transaction. Petronas is not well known in Canada beyond the oil patch.
(True, it is a state-owned enterprise, but who’s afraid of Malaysia?) Its failure — so far, that is, as the determination remains subject to appeal — has ramifications beyond whatever shadow it projects on the upcoming decision regarding CNOOC’s Nexen takeover proposal. The Petronas-Progress and CNOOC-Nexen issues demonstrate the dominant role that resource and energy continue to play in the perception, more than the reality, of the Canadian economy. Statistics Canada has called this “the return of the old economy.”
And not just in Canada. Our approach to foreign direct investment (FDI) in natural resources defines to an important, perhaps overwhelming, extent what foreign interests and governments think of the openness of the Canadian economy, and that well beyond the energy and resources sectors.
It shapes views about the seriousness of our commitment to broaden our global footprint beyond North America.
This is a perception that Canada cannot afford.
The profile of our mining and energy sectors in Canada is way beyond their share of our total economy: about 15% of GDP, a third of manufacturing.
But its international profile is much bigger. In 2010, resources, energy and forest products accounted for 46% of our commodity exports. According to a recently released study on resource economies conducted by the Canadian International Council, “the top Canadian merchandise export to every one of [our] major trading partners was a natural resource:” crude to the U.S., wood pulp to China, coal to Japan and South Korea.
Our largest exports to Europe are precious metals and alloys. Every province except P.E.I. is a mining, energy and forest-products producer, and therefore exposed to the global economic winds affecting natural-resource supply and demand.
For the rest of this column, please go to the National Post website: http://opinion.financialpost.com/2012/10/23/rejecting-asia/?__lsa=d2d66bc0