OTTAWA - A $15-billion bid by China's state-owned offshore oil company for Canada's Nexen Inc. (TSX:NXY), "raises a range of difficult policy questions," Prime Minister Stephen Harper said Thursday.
But Harper says cautionary signals from the United States about the takeover bid will not be a factor in whether the deal ultimately gets the green light.
"I don't think it's a surprise for me to tell you the government of Canada will take its own decision, irrespective of what the government of the United States does," the prime minister said at a joint availability with the visiting president of Tanzania.
"We don't, obviously, follow their judgments in these matters."
Nexen, a Calgary-based oil and gas company, is Canada's 10th biggest revenue generator in the industry and there are widespread concerns about it falling under the control of the Chinese National Offshore Oil Company.
Those concerns have spread as far as the U.S. Congress due to Nexen's considerable American operations.
In July, the ranking Democrat on a congressional natural resources committee requested the takeover be blocked by U.S. Treasury Secretary Tim Geithner.
"Giving valuable American resources away to wealthy multinational corporations is wasteful but giving valuable American resources away to a foreign government is far worse," Congressman Ed Markey wrote to Geithner.
A spokeswoman with Energy Department subsequently stated that "regulators are looking closely at this deal," and last month, CNOOC formally asked the American government to review its Nexen proposal for national security concerns.
The same debate is taking place north of the border, with the Harper government under sharp attack from its political opponents for a Foreign Investment Review Act that critics characterize as opaque and unclear.
The prime minister acknowledged Thursday his government is wrestling with the CNOOC-Nexen review.
"This particular transaction raises a range of difficult policy questions, difficult and forward-looking issues," Harper said.
"Those things will all be taken into account under the act in assessing the net benefit of this investment to this country, before we take a decision. And obviously we continue to gather information and opinion on that."
Harper was responding after the NDP finally declared itself formally against the takeover Thursday, following weeks of calling for a full public airing of the sale.
And while the official Opposition doesn't get a say in the matter — not even a parliamentary vote — New Democrats claim to have public opinion winds at their back as they make the case for rejecting the CNOOC takeover, citing everything from national security and environmental concerns to CNOOC's human rights and employment record.
"We've certainly seen the opinion polls moving over the last month, as well, showing more and more opposition by Canadians to this takeover," said Peter Julian, the NDP natural resources critic.
Alberta Premier Alison Redford said Thursday foreign investment has contributed to her province's economic growth. She added that she has provided some advice to Ottawa on the merits of the deal, which she says contains a number of agreeable principles, though she wouldn't elaborate on specifics.
"Of course in Alberta we want to ensure that the number of jobs stay in the province, we want to ensure that economic development continues to happen in an environmentally sustainable manner, that corporate governance continues to follow the same standards as any other corporation that would operate in Alberta," she said.
Industry Canada's current review period for the proposal ends Oct. 12 but can be extended by up to a month.
At issue is a "net benefit test" for Canada under the Investment Canada Act, a list of parameters that have been widely criticized as being open to political manipulation.
"The task is to make those factors much better defined and more specific and less arbitrary and open-ended," Lawrence Herman of Cassels Brock and Blackwell wrote in a report last autumn for the University of Calgary's School of Public Policy.
It is that process — as much as the specifics of state-owned CNOOC — that the NDP is attacking.
"By studying this transaction behind closed doors and not specifying what criteria they used to determine what represents a net benefit for the country, the Conservatives have given us no choice," said Helene LeBlanc, the party's industry critic.
"When in doubt, it's best to back off."
Industry Minister Christian Paradis responded with a news release calling the NDP "reckless and irresponsible."
"By attempting to politicize the review process they are creating the kind of uncertainty that scares off the investment Canadian companies rely on to create jobs, innovate and compete."
In an effort to counter Conservative claims that New Democrats are anti-business and anti-trade, Julian said the party welcomes foreign investment.
"What we're saying is there needs to be a level playing field for investors, that this is absolutely absurd," said Julian.
"What we have is an industry minister with nebulous criteria basically drawing up a response on a napkin based on what the public response is.
"It's not fair to investors. You need to put the criteria out front."
That the NDP should cite public opinion for rejecting the CNOOC takeover, while simultaneously criticizing the government for pandering to public opinion highlights the current problems with the investment act.
A government-commissioned report on competitiveness in 2008 recommended Ottawa raise the threshold for review under the act to $1 billion from $312 million, a move the Conservatives followed through on last spring.
The system now requires an investor to show a net benefit for Canada in a takeover, but report author Red Wilson recommended the onus be reversed, so that the government has to show net harm for Canada in order to reject a transaction. That hasn't happened.
The Conservative government shocked investors in 2010 when it blocked the hostile takeover of Saskatchewan's Potash Corp., (TSX:POT) by BHP Billiton — a takeover that was unpopular in the province and likely to cost the Conservatives seats in the next election.
At the time, Saskatchewan Premier Brad Wall said the investment act needed clearer rules about what's considered a strategic national asset.
"I think it goes to the amount of reserves and we'll have to talk about what amount of reserves or known quantity of a natural resource constitutes a strategic interest," said Wall.
The potash takeover was the second time the Conservative government blocked a foreign takeover, following its decision in 2008 to bar American defence firm Alliant Techsystems Inc., from buying out MacDonald, Dettwiler and Associates Ltd. (TSX:MDA)
Note to readers: This is a corrected story. An earlier version said the deal was valued at $1.5 billion.