PM Paul Martin lauds Chinese takeover of Noranda
Prime Minister Paul Martin welcomed a Chinese proposal to purchase mining giant Noranda Inc., even as his Industry Minister admitted some unease about the uncharted waters Canada might be entering in allowing such deals.
Mr. Martin told reporters Thursday that, although he sees some wrinkles in the proposal - chiefly China's human-rights record - the idea is a positive one.
"Fundamentally, I think that this is a good thing. We're investing heavily in China and I think it's a sign of China's increasing growth and maturity," Mr. Martin said after a meeting of the federal cabinet.
"...But there are issues. There obviously are issues that, in the case of China, the whole question of human rights. These are issues which we obviously, in any discussion, will take into account."
The Prime Minister made the comments in the wake of the remarks of China's Foreign Minister, Li Zhaoxing, who told The Globe and Mail this week that the $7-billion Noranda proposal is the tip of the iceberg and that the Chinese government is encouraging its corporations to invest in Canada, in particular the resource sector.
Mr. Martin said China is an important market for Canada and that individual investments like the Noranda deal need to be examined on a case-by-case basis.
For his part, Industry Minister David Emerson said having a state-owned company own Canadian resource corporations is different than private ownership.
"I reflect on that a lot. I'm not sure," Mr. Emerson said. "I think it's a qualitatively different matter when enterprises are state owned, but I need to get my mind around taking it away from the immediacy of the China connection to what kind of precedent it might set elsewhere that we might not want to face."
He added that it was important to look at the deal "with some depth and with some care.
"When Parliament does make a decision, and we as a government make a decision, we [must]do it with our eyes wide open knowing all the consequences, short-term and long-term."
Still, Mr. Emerson said Canada must be careful not to ignore the growing economic clout of the country.
"You can't complain endlessly about being too dependent on the United States and then the next-largest trading partner is China...we have to be careful we don't jeopardize that aspect of our forward-looking economic diversification," he said.
Asked if there was a limit to what the Chinese could buy, he said government can attach several conditions to any deal, including export controls.
"I don't think you should assume that somehow it's a wholesale sale of the Canadian resource base. It would not be that."
Non-Canadians who acquire a Canadian business are required to file a notification or application for review under the Investment Canada Act. Under the act, direct acquisitions by World Trade Organization members worth more than $237-million are subject to review.
It is the Industry Minister's responsibility to evaluate the proposed deal's "net benefit" to Canada. According to legislation, that assessment is to be based on six factors that include the buyer's plans for employment in Canada, plans for Canadian managers and directors, the effect on product and competition and others.
None of the factors mention anything about human rights, but an Industry Canada official said approval for a foreign takeover is at the discretion of the minister. That means the process for the decision can be challenged, but not the decision itself.
During Question Period Thursday, NDP Leader Jack Layton said federal government legislation appears to be toothless when it comes to blocking foreign takeovers.
"I find it unacceptable...that the Prime Minister is not standing up and telling us what his plan is to deal with our resource industries being bought up by foreign governments and foreign investors," he said.
Despite Mr. Emerson's concerns, the majority of his Liberal colleagues on the House of Commons industry committee voted against a motion Thursday to hold public hearings on Canada's mechanisms for reviewing foreign takeovers of domestic companies.
Brian Masse, the NDP MP who proposed the motion, said Canada's ability to review foreign investment is out of date. "I think the world has passed by our legislation."
Mr. Masse said Mr. Emerson's comments Thursday show that "he's feeling the pressure."
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