There is little doubt that the federal government's specific CNOOC-Nexen/Petronas-Progress takeover approval decisions, as well as policy going forward on foreign State Owned Enterprise (SOE) acquisitions each met with general approval among the stakeholder groups and among the Canadian public.This appears to have been matched by broad acceptance in Alberta whose own people. This is not withstanding the China Institute's own polling in mid-2012, which indicated increased measures of unease over such takeovers, particularly by Chinese SOEs, despite Albertans' still strong continued support for expanded ties with China.
Certainly, the specific company decisions and accompanying policy measures did not please everyone.Anxiety remains among some over the scale of the China presence, real or perceived. Yet others worry about a chill effect on new investment from China - whether minority shares are sufficiently attractive or simply whether Chinese investment, the majority of it being public sector by the nature of their economy, must apparently undergo extra scrutiny which other investors do not - and Canada does have to compete with other destinations for Chinese investment.
Within Canada, there remain questions over the inclusiveness of the process of decision process involved in setting the new parameters and over whether Canadians, notwithstanding the newly-signed Foreign Investment Promotion and Protection Agreement (FIPA), are significantly closer to enjoying anything approaching comparable access to investment opportunities in China.
Nevertheless, and taken together, the announcements of December 7, 2012 were seen largely seen within Canada as a sound compromise between, on the one hand, preserving Canada's open-for-business brand and its ability to attract needed capital to the oil-sands sub-sector and, on the other,reasonable prudence to ensure national primacy in a critical sector going forward. They represented a useful, reasonable advance on the original amendments to the Investment Canada Act of 2009 seeking,inter alia, the assurance of a strong commercial orientation and transparent governance by foreign SOE-based concerns.
However, there is a case to be made that the approach taken could be taken even further. This begins with the approach taken to policy in the past, in particular the "net benefit test" under the Investment Canada Act - the manner which economic impacts are evaluated as favourable or otherwise.
One series of questions to be asked in this connection is whether assessments of net benefit based largely, so it would seem, on the origin of the investment, the ownership structure of those investments,and the level of control involved provide sufficient and balanced perspective of the jurisdictions concerned on both sides of the Pacific. Is that preoccupation potentially too narrow? Is that really the principal factor affecting the likely performance, optimal or otherwise, of an investment for the Canadian/Albertan economy? This may be worth a closer and ongoing look.
A second set of issues might be explored on the extent to which the most pressing and contemporary preoccupations of Alberta will be advanced by the new guidelines. An Alberta perspective would,for instance, require a focus on the degree to which implementation of the new guidelines - and consideration of further modifications - will take into account provincial primacy in resource development, particularly given the growing role of international investment in achieving that objective.In a world where such investment is essential, should the finer points of foreign investment policy,whether by happenstance or intention, drive resource development strategies and policies?
A third level of concern would be to ensure the new guidelines reinforce, rather than impair, the essential and increasingly urgent task of diversifying Canadian/Albertan energy and resource export opportunities. Specifically, there is merit in examining the extent to which the new SOE guidelines place constraints on our access to the enormous investment pool represented by energy and resource short Asian economies, particularly China given the scale of resources and the intrinsic prominence of the state in its energy sector structure. China shows interest in Canadian energy and resources but,as noted above, China does have alternatives in securing needed supplies. True, Canadians also may have alternatives in securing needed investment but is there, nonetheless, a "chill effect" from this pool- one costly for Canadians? Are there strategies either to mitigate that effect or to manage it to our advantage? This requires further study and, based on the conclusions, sound strategy moving ahead.
There are many vectors from which this question can be approached - and a number of players from government, business, and the academic community who can offer useful advice and insights. At a time of uncertain and likely shrinking pace of growth in the US market, considered and interdisciplinary perspectives are needed on (i) what the needs are for Canada in developing Asian markets for its resources; and (ii) the degree of need on the part of China, in particular, to develop a "Canada option" in building its long term energy security.
For its part, Alberta, and arguably any province with a largely resource-based economy, needs a fresh approach to "net benefit". Its elements can be debated but is likely one that better integrates the business of resource development, the contemporary realities of global resource marketing and finance,and the imperatives of infrastructure upgrading with foreign investment policy than the federally-centered experience of the recent past has shown. Indeed, and for the energy sector in particular,such an integrated approach may help lay the basis of a more strategic national approach in which all Canadians can participate and from which all Canadians may benefit.
Clearly, Chinese SOE investments pose issues, both real and optical, that may well not be typical of those posed by other investors - or not to the same degree, or indeed of SOEs or state-linked entities from other nations. This must be recognized. The public opinion aspect is one dimension of the challenge ahead. National security considerations remain another.Yet getting the China dimension right is paramount and urgent. It is the one which is most compelling in the potential scale of business development secured. Moreover, our way forward with China, and all the peculiarities of its governance realities and its strategic objectives, will play a key role in framing the success or otherwise of Canada's approach globally in the years ahead in a profoundly diverse and global energy and resource economy.