They say history tends to repeat itself. Forty years ago, Prime Minister Pierre Elliot Trudeau formally acknowledged the People’s Republic of China. At the time, Canada was one of the initial Western countries that sought trade relations with China. Forty years later, his son Justin Trudeau, a contender to lead the Liberal Party of Canada, is advocating the necessity of an alliance with Beijing, and more specifically, the importance of the Nexen-CNOOC deal.
Nexen is a Canadian company located in Calgary, Alberta, which produces oil and gas. It conducts business across the world, namely in Mexico, the North Sea, as well as in Colombia. Recently, talks of a possible buyout by China’s National Offshore Oil Company (CNOOC) have been looming. Such a deal would entail a $15.1 billion bid to take over Nexen Inc. Investors within the company eagerly approve such a deal, voting in favour of the buyout.
The deal propagates much concern and controversy, however. The fact that the CNOOC is a state-owned enterprise brings into question the reliability of the company. Prime Minister Harper specified that China is required to prove that its state owned enterprises are capable of abiding by Canadian rules and values. Human rights concerns immediately surface as well. The rule of law guarantees the protection of Canadian citizens, but the same assurance is not reciprocated, and is even questionable in Beijing and its surrounding areas. Those against the deal feel that it poses a threat to Canadian sovereignty, claiming that it undermines nationalism and endangers security.
Perhaps the Investment Canada Act can help pacify such worries. This act enables the Canadian Government to disapprove of any foreign investment transaction if it does not see it as a “net benefit” for Canada. More specifically, this “net benefit” includes the repercussions of such deals including whether it is economically profitable, conducive to national efficiency, favorable to the industry, and beneficial to trade and competition. Efforts have supposedly been made by the CNOOC who agreed to have the head office stationed in Calgary and acknowledged the need to maintain the principles by which Nexen was founded upon.
Unsurprisingly, not all parties of Canada see the deal as favorable, nor do they agree to its acceptance: the NDP has expressed its discontent with such a transaction. American government personnel also expressed concerns, advising Harper to be cautious while embarking on such a deal with a state-owned company.
Canada’s foreign policy is geared towards promoting a transparent and rule-oriented international investment system. One of its priorities is to ensure that foreign policy outcomes benefit all Canadians, while upholding Canada’s global interests. Many say Canada-China relations are solidified with the establishment of the Foreign Investment Protection and Promotion Agreement (FIPPA). It is a significant stride in Canada’s relationship with China, which happens to coincide with the timing of the Nexen-CNOOC deal.
One of the advocates encouraging the development of the FIPPA alliance is Justin Trudeau. He strongly believes in a partnership with the world’s fastest growing economy, and in its potential for job creation for the middle-class Canadians. But, this is not to say that things should not be taken with a grain of salt. He asserts that overseas investors must adhere to the principles that the Canadian labour force represents, respect environmental laws, and follow legislation pertaining to immigration.
Within Asia lies the opportunity for leadership. China is currently not only the lender of last resort, but is also brimming with economic possibilities, business transactions, and trade alliances. Other countries might well start to follow in Canada’s footsteps and reshape their foreign policy with respect to China.
December 10th is fast approaching, and the deadline for approval of the Nexen-CNOOC deal is a few days away. The political world is closely watching the unfolding of the deal and its international repercussions. The economic world is watching too, both curious and uncertain of what the future has in store for trade relations. The social and legal world’s remain concerned about the possible clash of Western ideals with ones that are questionably democratic.
– Chloe Giampaolo
(Featured photo: Investors Europe, Creative Commons, Flickr)