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Just Because They're Communists Doesn't Mean We Can't Do Business With Them

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Canadians woke up last week to the news that China National Offshore Oil Corporation (CNOOC) had entered a definitive agreement to buy Canada-based Nexen Inc. for $15.1 billion. No longer content with minority stakes in Canadian oil companies and -- hungry for resources -- China, through CNOOC, is looking to take their investment in Canada's resource industry to the next level.

Protectionists and hardline China critics will oppose the deal, hoping Ottawa's heavy hand will scuttle the deal in a similar fashion of BHP Billiton's attempt to buy Potash Corp. What will Nexen's shareholders do when they vote on the deal this fall? The cash offer of $27.50 (US) per share is a 60 per cent premium to what Nexen's stock closed at on Friday. If you were selling your home and asking $150,000, would you accept a $240,000 offer from the buyer? Would you still accept the offer if it was the Chinese government wanting to buy it? That's what is on the table with the sale of Nexen to CNOOC, and all indications are that shareholders will say yes.

The Chinese government has a deplorable human rights record, but that has not stopped Canada from doing business with China while standing up for our values. As John Ibbitson noted, the mix of state-capitalism with Western capitalism is the way of the world today. In 2011 Canada imported $48.1 billion worth of goods and services from China, while only exporting $16.8 billion in return. Direct foreign investment is a win-win for our economy and projects like the Northern Gateway Pipeline could potentially double the value of our exports to China and cut our present $31 billion trade deficit with them in half.

What would a Chinese company owning an oil sands mine mean for Canada? A foreign state-owned company producing Canadian oil may seem like an affront to our values at first blush. They're communists! It will be argued that this is selling out, but if you are looking at this deal through a moral lens in the context of the world's reality, surely China using part of their nearly $3 trillion in foreign currency reserves to invest in Canada's ethical oil industry is better than Chinese money propping up Omar al-Bashir in Sudan or the theocratic dictators in Iran.

The investment by CNOOC in Canada will increase Canadian prosperity and will allow our industry to grow. The oil reserves leases they are acquiring will have to be produced here in Canada. It is not whose name is on the share certificates that matter when looking at the ethics of oil, it is how the oil is produced and where it comes from.

Whoever owns an oil company operating in Canada, be they Canadian, American, French or Chinese, they must abide by Canadian laws and regulations. In Canada we protect human rights, we have safety rules, we have labour laws, we have environmental laws, and we have regulators and independent courts to enforce them all. This ensures Canadian values and our standards are upheld. That is what makes oil produced in Canada ethical. It is what makes it the ethical choice over conflict oil from OPEC's tyrants.

Regulators in Canada, the U.S., and the U.K. will all have to approve this free market deal, including proving to Minister Paradis that this deal will result in a "net benefit to Canada." Unlike the manufacturing sector, the jobs at Nexen will remain right here in Canada. The oil sands mine will remain in Canada and Canadians will continue to be the ones that are employed in good paying jobs to remove the oil from the ground. CNOOC has also stated they will invest more to increase the mine's productivity and establish their hemispheric headquarters in Calgary. Perhaps most importantly, the oil being produced will be to Canada's ethical standard.

As Canadians learn about the deal and what it means for Canada in the coming weeks, let's stay true to our values, the same free market and cultural values that have made us prosperous and free for generations.