>X-Sender: [EMAIL PROTECTED] > > Stop selling off Canada > > Removing roadblocks to foreign investment > hasn't created jobs, just takeovers > > > Globe and Mail, Toronto (Canada's business newspaper) > http://www.theglobeandmail.com/hubs/national.html > > MEL HURTIG > > Thursday, January 20, 2000 > > See if you can guess which noted Canadian > had this to say about corporate takeovers: > "I've yet to see a takeover that has created a > single job -- except of course for lawyers and > accountants." > > The year after he said these words -- in the > midst of his campaign for the leadership of the > Conservative Party -- Brian Mulroney > became the Prime Minister of Canada. One of > his first official actions was to disband the > Foreign Investment Review Agency and > replace it with Investment Canada, an > organization dedicated to enthusiastically > soliciting more foreign investment. Later, > Investment Canada became the Investment > Review Division of Industry Canada. During > the past few years, Industry Minister John > Manley and Industry Canada have > energetically pursued as much new foreign > investment as they could manage to attract. > > The results are striking, and they go to the > heart of an issue that has been much in the > news: the transfer of private-sector power out > of the country. It's a trend that's finally starting > to alarm some of the very people who > supported free trade and more foreign > investment in the first place. > > The figures might surprise even them. From > June 30, 1985, when Investment Canada > came into being, to Sept. 30, 1999, the total > amount of foreign direct investment reviewed > by Ottawa under the Investment Canada Act > was just over $270.3-billion. Of this > enormous amount, the grand total of 5.4 per > cent was for new business investment. The > rest, 94.6 per cent, was for the takeover of > 8,337 companies in Canada. As Mr. > Mulroney himself might have observed, at > least the lawyers and accountants kept busy. > > Of these takeovers, the vast majority, 84 per > cent, were by Americans. Yet only 4 per cent > of all the takeovers were reviewed to > ascertain whether a benefit to Canada might > materialize (reviews are triggered either by the > size of the deal, currently in excess of > $192-million, or if they are in the cultural > sector). Not one single officially requested > takeover was denied. Today, some 13,000 > corporations in Canada are foreign-controlled > and that number is growing by record or > near-record amounts every year. > > When Mr. Mulroney became prime minister in > 1984, foreign-controlled assets in Canada > amounted to $252-billion. By the time he left > office in 1993, they were more than > $490-billion. The latest available figure, for > 1996, is $607.2-billion. We won't know the > official amount for 1999 for at least two more > years -- but given the recent huge growth of > foreign direct investment in the > balance-of-payment figures, it's safe to say > we've had new record years in the growth of > foreign assets in both 1998 and 1999. > > By the time Mr. Mulroney left office 33 > industrial groups (chemicals, rubber, > automobiles, textiles, electrical and electronic > products and so on) were foreign-dominated > by anywhere from 52 to 99 per cent. Except > for tiny Luxembourg, no other developed > nation in the world has an economy so > dominated and controlled by foreign interests. > > One of the best overviews of what is > happening in Canada today is readily available > on the Internet, courtesy of Industry Canada > itself, which posts a list of new monthly > takeovers on its Web site > (http://www.investcan.ic.gc.ca). > > The latest list available (for November, 1999) > shows the vast range of firms that have been > acquired by non-residents in one month. They > include manufacturing, engineering, retail, > wholesale, computers and software, research, > distributing, packaging, resources, education > technology, construction, and even bottled > water. That's just a sample of November's > eight-page list of acquisitions. > > Back in the 1970s, a majority of Canadians -- > and eventually their governments -- became > concerned about our rapidly growing levels of > foreign ownership and control. (At one point > it reached about 38 per cent of corporate > revenue). Because people took action, the > foreign share of corporate revenue in Canada > dropped to 27 per cent. But that was before > the free-trade agreement with its open-door > investment provisions came into effect in > 1989. > > By 1996, the foreign share of corporate > revenues had climbed right back up to more > than 31.5 per cent and the foreign share of > profits reached 32.6 per cent. We can only > guess what these figures are today, but we do > know that the first three quarters of 1999 > have broken records, with some $26.3-billion > in new foreign direct investment. > > By contrast, no single industry in the United > States is dominated by Canadians or indeed > by any other non-residents, and Canadian > ownership in the U.S. economy is so tiny it > generates little if any concern. In fact, the > U.S. Department of Commerce considers any firm > that is 10-per-cent foreign-owned to be > effectively foreign-controlled; in Canada the > threshold is more than three times that > amount. Does anyone, for a single moment, > seriously believe that the Americans would > allow even a small fraction of the degree of > foreign ownership and foreign control that we > now have in Canada? > > The problem for Canada is not, nor has it ever > been, foreign investment; it's the levels of > foreign ownership and foreign control that are > quickly turning us into the Puerto Rico of the > North. > > What's really interesting is that of all the > $270.3-billion invested here since things > loosened up in 1985, only about $100-billion > was a net inflow of new money. As has been > the case for decades -- this is an old story and > I hope you won't mind hearing it from me one > more time -- most of the recent takeovers of > Canadian business have been financed right > here in Canada, via our good old Canadian > banks. > > These are the figures, and they put some > people in an awkward position. Thomas > d'Aquino, president and chief executive of the > Business Council on National Issues, who has > been a staunch supporter of free trade, has > recently expressed concern over the growing > exodus of Canadian head offices to the United > States. His group is losing members: A very > large percentage of BCNI members are > foreign-owned and foreign-controlled > transnational corporations. Yet the chances of > Mr. d'Aquino actively opposing the further > expansion of foreign ownership in Canada are > about as remote as IBM, General Motors, > Shell, Mitsubishi, Cargill, or General Electric > allowing him to do so. > > So although Mr. d'Aquino has spoken out > about the loss of corporate decision-makers, > the BCNI has not adopted a nationalist > position. He made this clear when we were > both on CBC Radio's This Morning last > month. Regarding foreign direct investment, he > insisted, "We're missing the boat [by] not > attracting more." He said that he saw no > danger in U.S., Japanese and German firms > owning Canadian companies, and > commended them as "model citizens." Not to > worry, Canada, Mr. D'Aquino assured us: > The takeovers have been "primarily in the > resource sector." > > As for his comment that Canadians are > "missing the boat" -- look at the numbers. > Statistics Canada's balance-of-payments > figures for foreign direct investment in Canada > in the 1970s totalled $33-billion, and in the > 1990s will approach or exceed $140-billion > when the final numbers are in. I shudder to > imagine where we'd be if we had caught Mr. > d'Aquino's boat. > > Two years ago, on these pages, I asked > Canadians "How much of Canada do we > want to sell?" When I put this question to the > National Post's economics columnist William > Watson, who was on the same CBC radio > program as Mr. d'Aquino and me, without > hestitation Mr. Watson replied: "All of it." > > Perhaps Mr. d'Aquino would also like to > answer the same question for Canadians. > Exactly how much more foreign ownership > would the BCNI like? When would the BCNI > say that enough is enough? > > Actually, a much better question continues to > be -- how much more of Canada are Prime > Minister Jean Chr�tien, Finance Minister Paul > Martin and Mr. Manley prepared to > surrender? The answer, apparently, is a good > deal; the October, 1999, Speech from the > Throne promised "a co-ordinated effort" to > encourage even more foreign investment in the > future. In other words, don't blame the > Americans for taking over our country; blame > our inept, myopic politicians. > > A recent Maclean's/CBC annual public > opinion poll showed that 83 per cent of > Canadians said that to maintain a strong > Canadian identity we need greater Canadian > ownership of businesses operating in Canada. > With Mr. Chr�tien's government in charge, > we're very quickly heading for much less. > Does anyone in Ottawa care? > > Mel Hurtig is a former Edmonton publisher > and political activist whose most recent book > is Pay the Rent or Feed the Kids. > > > > | Copyright � 2000 Globe Information Services | > > > ............................................. > Bob Olsen, Toronto [EMAIL PROTECTED] > ............................................. > __________________________________ KOMINFORM P.O. 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