A report was issued recently by a government-appointed group to assess the issue of foreign takeovers of Canadian companies. It also was to consider the elimination of restrictions on non-Canadian stock ownership of certain domestic businesses.
At the present time, there is a curb on bank mergers as well as a limit on all foreign takeovers if they exceed $1-billion in value. That panel of experts was to deliberate on withdrawing the 10-year ban on bank amalgamations that come under those constraints. Furthermore, there was to be an analysis of foreign ownership of the airline, telecommunications, and uranium mining sectors.
That board of authorities called for easing of those controls of foreign ownership. That review, not surprisingly, was applauded by business interests; the president of the Canadian Council of Executives stated that the proposals were a phenomenal blueprint for taking Canada into the 21st century. On the other hand, Ken Georgetti, of the Canadian Labour Congress, argued that those suggestions “only reflected business interests, not what is good for Canadians in general.”
Statistics Canada revealed that Canada unexpectedly has fallen back into net debt on its foreign investment account. Consequently, once again foreign companies own more Canadian business than the other way around.
Two years ago Canada had a $75-billion surplus in that account. The public has started to become alarmed, given the foreign takeover of Inco, Dofasco, Stelco, and the Hudson’s Bay Company.
Foreign companies, more often than not when taking over a Canadian operation, eliminate crucial and high-paying executive-level jobs held by Canadians and cut back on domestic research and development. Those moves entail a check on Canadian insurance, legal, and other secondary aspects of our economy. All that eventually means a drain on our foreign balance of payments.
Our trade balance is being eroded over the long term as foreign-held businesses usually provide that the manufacturing of goods, say from our nickel, aluminum, or steel, is taken on by the parent company, which means Canadians are shut out. Also, foreign purchases of our companies push up the Canadian dollar, pricing us out of world markets for our manufactured goods. The loss of Canadian manufacturing of appliances is an good example of that.
Jim Sanford, a far-sighted economist associated with Canadian labour, has claimed that blocking foreign takeovers would reduce the external value of the Canadian dollar by 20 cents.
Prime Minister Brian Mulroney, always a defender of American interests, said that Canada was open for business (by foreign takeovers). Clearly, that policy should be reversed. Furthermore, the proposals of the recently appointed commission on this subject should be rejected straight away. We simply must stand up for Canada and limit the foreign acquisition of Canadian companies.