OTTAWA - The federal government is promising more disclosure on decisions to block foreign takeovers that it judges would be detrimental to Canadian interests.
Industry Minister Christian Paradis said in a statement Friday that he will introduce amendments to the Investment Canada Act that would allow him to disclose that he has sent a preliminary notice to a potential investor against a takeover and to explain his reasons.
The explanation would only occur in a manner that does not break company confidentiality or cause harm to the Canadian firm involved or the investor, the statement said.
As well, an amendment would allow Ottawa to accept security in lieu of cash in payment should a court levy penalties on a foreign investor for breaking contractual commitments.
"Canada has one of the best investment climates in the world," Paradis said in a statement. "Our businesses depend on investment to expand, innovate and create jobs."
The government gave no reasons for the changes, but they follow a 2010 non-binding motion in the Commons calling for more transparency, including public hearings, and conditions applied to a successful bidder.
As well, former industry minister Tony Clement had suggested the department would review the act after taking heat from for vetoing the takeover of Potash Corp. (TSX:POT) by Anglo-Australian mining firm BHP Billiton. At the time, the then-minority government was accused of caving in to political pressure from Saskatchewan.
Critics said Canada's reputation as an open-for-business market suffered a black eye and the issue has recently raised questions about whether the government would permit a takeover of the country's best known but troubled high-tech firm, Research in Motion.
NDP critic Peggy Nash called the proposed amendments "a very weak effort" considering the problems associated with the investment act.
The reforms are unlikely to clear up the confusion over the calculations the government makes in determining when a takeover is not considered of "net benefit" to Canada.
"This is just telling people where the process is at, but it doesn't give them any insight into what the proposals are or what the conditions are ... (so) it doesn't given them a chance to propose their views," she said.
Although the government has intervened twice to stop takeovers, Nash said the holes in the current act were revealed recently by the "outrageous" closing of the Electro-Motive plant in London, Ont., by Caterpillar Inc. in February.
The plant was shuttered, resulting in the loss of 450 jobs, only two years after it was purchased for $820 million by the Illinois-based company.
In another case, the government took U.S. Steel to court in 2009 for breaking conditions on job and production levels after taking over Stelco operations in 2007. The U.S. company eventually settled with Ottawa by making new commitments on investment.
"The Conservative government has to do much more to protect the interests of Canadians," Nash said.
Paradis was travelling in Quebec on Friday and could not be reached for comment.
Here are a few details of the major investment deal coming soon between Canada and China, as well as a list of what CBC chief political correspondent Terry Milewski calls a "small blizzard of incremental agreements," signed in Beijing. <em>With files from CBC</em>. (Diego Azubel-PoolGetty Images)
Prime Minister Stephen Harper called the foreign investment promotion and protection agreement (FIPA) between Canada and China the first "comprehensive economic agreement" between the two countries. In fact, what was signed by Harper and Chinese Premier Wen Jaibao in Beijing is not the final deal, but a declaration of intent: Now it must be legally reviewed and ratified by both governments, which for Canada will mean a debate in the House of Commons. Once both countries complete this process, it will need to be formally signed to take effect. This deal will protect Canadians investing in China, as well as Chinese investors in Canada, from "discriminatory and arbitrary practices." Once in place, investors can have more confidence that rules will be enforced and valuable business deals will be subject to predictable legal practices. Harper told reporters in Beijing he "absolutely" expected that it will make a "practical difference." "The agreement does not override existing Canadian law in regard to foreign investment and foreign investment review," Harper said. "Those laws remain in place." Negotiations for this agreement took 18 years, and key players in manufacturing, mining and the financial sectors were consulted to get to this stage. It's not unusual for Canada to have this kind of an agreement with a trading partner. FIPAs are in force with 24 other countries that trade with Canada, and active negotiations are underway with 10 other countries, according to the government's announcement. (Diego Azubel-PoolGetty Images)
(AP Photo/Valentina Petrova)
- A new protocol, building on a 2010 agreement to restore Canada's market access to the Chinese market for Canadian beef following the 2003 BSE outbreak and resulting border closures, to allow industrial beef tallow (fat) to be imported for the first time in almost a decade. China used to be Canada's top export market for tallow ($31 million in 2002), and now Canada has a shot at a share of the $400 million in tallow China imports from around the world. - A memorandum of understanding (MOU) on canola research, to address a recent fungal disease in canola and rapeseed that threatens Canada's valuable trading relationship with China in canola. - On Tuesday, Chinese aquaculture feed company Tongwei announced it will increase its purchase of Canadian canola by up to $240 million per year by 2015. (DAVID BUSTON/AFP/Getty Images)
- A MOU between Natural Resources Canada and the Chinese Academy of Sciences to collaborate on scientific research on sustainable development of natural resources. The government release touts benefits including new technologies for resource firms, carbon emissions reduction strategies, reduced environmental impacts and natural hazards from resource development, and new opportunities for Canadian suppliers of equipment and services. - A MOU spelling out a "framework" for Parks Canada and China's state forestry administration to collaborate and share scientific expertise in the management of national parks, natural reserves and other protected areas. The agreement includes language around ecological restoration, conservation measures for endangered wildlife, wetlands development, and the preservation of forests and wetlands. (<a href="http://www.flickr.com/photos/47096398@N08/" target="_hplink">Flickr: eleephotography</a>)
- A continuation of the MOU, first signed in 2001 and renewed in 2006, on energy co-operation to "engage China on energy issues" through a Canada-China joint working group on energy co-operation, chaired by Natural Resources Canada and China's national energy administration, which is responsible for Chinese energy policy. The working group oversees joint research projects, exchange of expertise, and co-operation between energy companies in both countries, including the promotion of energy efficiency and renewables. It aims to both attract capital investment and improve market access for Canadian energy resources and technology. (MARK RALSTON/AFP/Getty Images)
- Approval of seven projects, valued at $10 million, under the Canada-China framework for co-operation on science and technology and innovation, including: a diagnostic kit for acute kidney injuries, a wind energy seawater desalination system, a waste heat-recovery system to help oil refineries consume less fuel, new solar cells for renewable energy panels, a real-time multi-sensor navigational tracking device for hand-held devices, a blue-green algae bloom warning system and "next generation" large-scale geographic information systems. - Two more calls for proposals, valued at $18 million ($9 million from each country) for joint research under the same framework. These proposals are for the development of "innovations with high commercial potential" in the areas of human vaccines and clean automotive transportation. The Canada-China joint committee on science and technology, made up of individuals from industry, academia and government, sets the priorities and oversees these projects. (To date, 21 projects ranging from nuclear power to AIDS drugs, to clean technologies for pulp and paper have received some $28 million in funding.) (TOSHIFUMI KITAMURA/AFP/Getty Images)
- A renewed MOU extending and modifying the Canada-China scholars' exchange program, which has seen 900 students travel between Canada and China since 1973. New eligibility rules and scholarships will be in place for the next round of competitions in 2012, including eight to 12 Canadian scholarships for Chinese professionals and 20 awards for Canadian university students. (<a href="http://www.flickr.com/photos/plutor/" target="_hplink">Flickr: Plutor</a>)