In view of the recent controversy surrounding the Chinese takeover of Nexen, it is clear that there are divergent views about the desirable limits on foreign ownership of Canadian companies.
This is proof that there now must be a clear policy on this critical problem. Our politicians must speak responsibly on this matter; drift is not a good option.
It must be recognized that today most operating revenues from manufacturing and oil and gas go to foreign owners. In fact, dozens of key sectors of the Canadian economy are majority foreign owned and controlled. In contrast, in the United States not one industrial sector is majority foreign owned.
Virtually all other developed countries resist foreign ownership of their economies.
Most are aware that foreign corporations use sophisticated transfer prices and debt loading programs shifting profits to their own countries or to tax havens before they are taxable in the host country.
Foreign firms import much higher levels of parts, components and services such as accounting, than equivalent domestic companies. As a result, employment ratios to sales are well below domestic counterparts.
As Jim Stanford, economist with the Canadian Auto Workers Union, has written, “Takeovers tend to eliminate high-value jobs in head office, research and development, and even in secondary manufacturing and development … fewer important decisions affecting Canada’s economy are made in Canada. And they commit us to an ongoing payment of profit and dividends to foreign owners … entailing a long-term drain on our balance of payments.
It has been stated erroneously that our government does not suffer much by a limitation on its capacity to legislate effectively, even if a portion of the economy is subject to the laws of other nations. We have seen that in the past; our exports have been curtailed to Cuba, for instance, by “dictation from the U.S. government.
To attain access to our water and mineral resources, the U.S. seems intent on infringing on our sovereignty in northern passageways. Too, our monetary policy has become tied to U.S. interests.
Foreign control of our steel industry was permitted if employment and operations remained here, but those pre-conditions have not been met. We can do nothing about that now.
It is obvious then that strict limits on foreign control of our companies are long overdue. Let us make clear that changes must occur.