January 7, 2011 - Government of Newfoundland and Labrador

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Protecting the Labour Rights of Newfoundlanders and Labradorians in a Globalized World Official data on the Industry Canada website shows it has approved 1,637 acquisitions from 1985 through the 3 rd quarter of 2010 – and turned down only 1 (MDA). (The 2 nd one turned down, Potash Corp., was in the 4 th quarter and hence isn’t included in those stats.) This doesn’t include the 12,204 takeovers that weren’t even renewed since they didn’t meet the ICA size thresholds. 7 The recent refusal to allow Australian-based BHP to takeover Saskatchewan Potash Corp. because it did not, according to Industry Minister Tony Clement, provide a “net benefit” to Canada is only the second foreign takeover ever turned down under the Investment Canada Act. The only other case was Ottawa’s refusal to allow the sell-off of the space assets of MDA to a U.S. armaments giant in 2008. Ironically, it has been the Stephen Harper Conservative government, arguably the most pro-business government in our history, that blocked both takeover bids. The Investment Canada Act is supposed to ensure that each takeover provides net benefits to Canada, but in practice the test has been applied so loosely it has become meaningless. Most takeovers aren’t even reviewed because they do not meet thresholds under the Act. When reviews do occur, as was the case when Vale announced it intentions to take over Inco in 2006 (approved by shareholders in 2007), they are perfunctory, secretive and unenforceable. Neumann of the USW says “our greatest single challenge in holding companies to their commitments under the Act is that we do not know what these commitments are. We have frequently demanded that they be made public and propose amending the Act to require such transparency.” The philosophical presumption behind the Investment Canada Act is that foreign investment is generally a good thing and Canada wants as much of it as we can get. The labour movement is not opposed to foreign investment on principle. After all, our entire auto sector is foreign-owed as are many other high-value sectors from 7 Industry Canada, http://www.ic.gc.ca/eic/site/ica-lic.nsf/eng/lk-51030.html Newfoundland and Labrador Federation of Labour Page 21
Protecting the Labour Rights of Newfoundlanders and Labradorians in a Globalized World computers to aerospace. Foreign investment can bring something to Canada we don’t have (such as technology or engineering and design capabilities). A company which actually builds a business here rather than just taking over one that Canadians built is the kind of foreign investment which is beneficial. Better still would be foreign investment which did not simply remove the natural resources of our country for processing and manufacture elsewhere. But clearly investment has its drawbacks. It results in an outflow of profits and interest to foreign owners, dragging down Canada’s national balance of payments to the tune of about $40 billion per year, according to Statistics Canada. 8 Of course crucial decisions about the future of Canadian operations, expansion or closure of those operations, are made somewhere else. It has been clear from the kind of takeovers that have occurred that foreign investors are more interested in our natural resources than anything else, reinforcing our backwards evolution as a resource supplier to the rest of the world. We have learned the hard way from the huge takeovers that Investment Canada rubberstamped during the last commodities upswing (including Inco, Falconbridge, Stelco and Alcan) that Canadian facilities and Canadian jobs will be jettisoned by foreign executives the minute they need to cut capacity or reduce debt. All of these takeovers supposedly promised a “net benefit” to Canada. Yet they have all hurt us. In the case of the Vale takeover of Inco, hundreds of jobs at its Sudbury operation have been lost since the deal was approved by Investment Canada. Indeed an investigation by The Globe and Mail showed that “the record of global mining companies in keeping their promises, however, might give the government second thoughts. The newspaper reported that commitments made under the Investment Canada Act are not only difficult to enforce but also provide ample room to be breached, amended or even rescinded. “Most foreign companies that have taken over major Canadian metals and mining firms in the past decade have been able to avoid living up 8 Statistics Canada, http://www40.statcan.ca/l01/cst01/econ01a-eng.htm Newfoundland and Labrador Federation of Labour Page 22
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January 7, 2011 - Government of Newfoundland and Labrador

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