Canada needs takeover debate

Économie - Québec dans le monde

Is it unreasonable to expect Parliament to pay attention when some senior business leaders voice alarm that our economy is being hollowed out by foreign takeovers? Hardly.
Canadians only need read the financial pages to learn that a recent American bid to buy Alcan, Canada's giant aluminum producer, brought to almost 600 the number of announced foreign takeovers in the past 16 months, worth $156 billion.
Corporate concern over this wave of takeovers has been expressed by such respected figures as Onex Corp. chief executive officer Gerry Schwartz, Peter Munk of Barrick Gold Corp., Manulife Financial Corp.'s Dominic D'Alessandro, Royal Bank of Canada CEO Gordon Nixon and Alberta oil and gas mogul Dick Haskayne.
Yet Parliament Hill seems largely oblivious to these voices as lawmakers contemplate their long summer break.
Prime Minister Stephen Harper's Conservatives have tried to dismiss concern by arguing that Canadian business is being "thickened up," not hollowed out, as our domestic companies acquire foreign firms at a faster rate than foreign companies take over firms here.
Yet no other industrialized country in which Canadian firms have invested, including the United States, would tolerate the degree of foreign ownership that we accept. No other country, especially the U.S., would cede control of key industries to the extent that we have.
Careful to protect its strategic industries and resources, the U.S. has restrictions on foreign involvement in fields as diverse as coal, oil and gas mining, air travel, defence industries, power generation and shipping.
Canadians, too, should care. When foreigners take control of a domestic company, they often take with it high-paying head office jobs, research and the potential wealth it creates. They can eliminate work for suppliers, lawyers, accountants and financial institutions. They control key decisions: where jobs are located and whether Canadian facilities are used to serve export markets, or whether production is outsourced. These factors must be considered, along with the potential benefits of foreign ownership, including investment and the introduction of new technology.
Yet while New Democrat Leader Jack Layton has tried to spark a debate on the issue he sounds like a voice in the wilderness. And Liberal Leader Stephane Dion has had little of substance to say.
Meanwhile, the takeover spree continues.
On top of last year's loss of Canadian mining icons Inco and Falconbridge, foreign bidders this year have targeted LionOre Mining International and Palmarejo Silver and Gold, as well as Alcan.
Canada has also lost most of its steel industry. In the past year, Ontario-based companies Dofasco, Algoma Steel and Harris Steel Group were all taken over, while Saskatchewan lost Ipsco.
In alcoholic beverages, names once synonymous with Canada - John Labatt, Molson and Seagram - are now American and Belgian. Sleeman Breweries is Japanese. And Canada's Number 1 winemaker, Vincor International, with its popular Inniskillin brand, went to a U.S. buyer.
In a drug industry already dominated by foreign multinationals, the Canadian-based presence has been eroded with the sale of BioChem Pharma, ID Biomedical and Novopharm, the Number 2 generic drugmaker.
And in information technology, two of Canada's major players, Newbridge Networks and ATI Technologies, are now foreign-owned.
This list just goes on and on.
Yet the Tories have managed to dodge a serious debate.
Finance Minister Jim Flaherty has made only the smallest concession to growing public concern. In a speech in Toronto last week, he said Industry Minister Maxime Bernier would soon be launching a "competitiveness panel" to study a variety of areas, including "hollowing out." When Flaherty first announced his plan "to undertake a comprehensive review of Canada's competition policies" in his March 19 budget, there was no mention of potential hollowing out. So this is progress of a sort.
But there's no guarantee a Conservative-appointed panel will deliver a thorough airing of the issue.
Dion should join ranks with Layton and together they should insist that the House of Commons standing committee on industry, science and technology conduct hearings, paying close attention to how other countries handle foreign takeovers, and the costs and benefits of foreign ownership. The Tories, with a minority government, would be hard-pressed to block a review.
And Canadians who care about the country's economic well-being would have some reassurance that Parliament is alert to the issue.

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