As reported by Barrie McKenna in today's Globe and Mail, "With the high loonie putting stress on the economy, the time is ripe for Ottawa to eliminate lingering curbs on foreign ownership that are sapping productivity, two major international economic agencies say. Economists at the International Monetary Fund and the Organization for Economic Co-operation and Development have reached remarkably similar conclusions in separate reports released this week - namely, that excessive regulation is holding Canada back."

The article reports, "The IMF said Ottawa should make it a 'top priority' to remove any remaining impediments to investment, including restrictions on foreign ownership in banking, airlines, telecommunications, utilities and media...Canada, for example, limits foreign ownership in telecommunications and broadcasting companies to 46.7 per cent. And foreigners can't own more that 25 per cent of a domestic airline. The IMF singled out barriers to foreigners in the banking industry."

Additionally, "Two economists at the Paris-based OECD suggest in a report to be released today that regulatory barriers are keeping Canada from enjoying the surging productivity gains of the United States and other major developed countries...The authors said liberalization has been much slower in sectors such as electricity, railways, postal services, retailing and professional services than in other OECD countries."

While Finance Minister Jim Flaherty apparently did not comment directly on the issue of curbs to foreign investment, he did say,

"While the IMF report over all is very positive, it highlights the fact that we still have work to do to improve our productivity and competitiveness...Our government agrees, and in fact is taking significant steps to meet that challenge."

The Globe and Mail had reported on October 9 that Industry Minister Jim Prentice "staked out Ottawa's position on the growing debate over foreign takeovers, making it clear that Ottawa does not intend to create major new hurdles for foreign investors despite concerns about 'hollowing out' in key sectors of the economy."

The next day the Canadian Council of Chief Executives (CCCE) says the "best defence against (the) hollowing out" of Canada by foreign takeovers is to "redouble efforts to strengthen our relationship with the United States in order to keep our shared border open and efficient." The CCCE says,

"The government already has set in motion processes for addressing these issues...At their August Summit in Montebello, Quebec, the Leaders of Canada, the United States and Mexico endorsed the ongoing work of the North American Competitiveness Council (NACC), which includes recommendations for investment in infrastructure at key border crossings, more efficient and secure border processes and greater cooperation on regulatory issues."

Mel Hurtig wrote for the Canadian Centre for Policy Alternatives in April 2006 that, "To the end of December 2005, 11,501 companies in Canada were taken over by non-resident-controlled corporations (since Brian Mulroney declared Canada 'open for business' and dumped the Foreign Investment Review Agency). The total dollar amount monitored by Investment Canada was an enormous $620.7 billion. Of this amount, 97.1% was for takeovers, and only a pathetic 2.9% was for the hoped-for new business investment! Since Investment Canada began keeping track, (30 June 1985), some 64% of these foreign direct investments have been attributed to American firms...And, contrary to all the nonsense in our newspapers about Canadian direct investment in the U.S. exceeding U.S. direct investment in Canada, the American ownership of Canada was over $63.5 billion higher and of course represented a much greater percentage of assets and GDP."

Editor's Note: The statement by the CCCE is intended to capitalize (literally) upon existing fears that the average Canadian has regarding the foreign takeover of our economy. Who they think they are fooling with their promotion of the NACC and the SPP (the Security and Prosperity Partnership that was being discussed in Montebello) is anyone's guess. The idea that we will be saved from further "hollowing out" of our economy by becoming more integrated with the country that is most responsible for the hollowing in the first place is a classic case of pretzel logic. If you follow the Canadian Hansard (record of parliamentary debates), you will find that the "Security" issue is primary to the further hollowing of the Canadian economy. The U.S. is using the post-9/11 "security environment" as a pre-text for hollowing Canadian sovereignty by threatening the flow of trade at the border in the name of Homeland Security. Some people might call this a form of economic terrorism.

Brent Patterson
Director of Campaigns, Organizing,
and the Blue Planet Project
The Council of Canadians
700-170 Laurier Avenue West
Ottawa, Ontario K1P 5V5
Tel: 1-800-387-7177 ext.291
www.canadians.org