Winnipeg Free Press - PRINT EDITION

PM defends restricting foreign control of Canadian assets

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TORONTO -- The prime minister defended his government's prerogative to restrict which foreign state-owned companies can bring their business to Canada, saying Friday it would be "foolish... to provide absolute clarity" when it comes to investment guidelines.

Critics say Canada needs clearer rules for foreign investors, particularly in light of the Conservative government's oft-repeated refrain the country is open for business.

But when it comes to large, state-owned investment proposals, Stephen Harper said there has to be a "margin for the government to exercise its judgment."

"I think it would be foolish for the Canadian government to provide absolute clarity," Harper told a Toronto audience on Friday.

"It is absolutely necessary when the investor is a foreign government, for the government of Canada to be able to exercise its discretion and have direct conversations with those foreign investors."

Since the Conservatives came to power in 2006, the Harper government has repeatedly tweaked the Investment Canada Act, making it more restrictive with a recent virtual ban on majority acquisitions in the oil patch by state-owned enterprises.

The government also rejected two major takeovers -- that of Macdonald, Dettwiler and Associates Ltd. by an American firm, and of Potash Corp. by Australia's BHP Billiton.

And recently it rejected the sale of Manitoba Telecom Service's Allstream division to the Egyptian investment group Accelero Capital, citing "national security" concerns.

Last fall, the government kept China's CNOOC and Malaysia's Petronas on the hook for months before finally approving their acquisitions in the oil and gas sector, while also amending the rules so such deals would be unlikely in the future.

Meanwhile, a report released this week from the Asia Pacific Foundation of Canada, in Vancouver, found while Canada is on the radar for Chinese investors, it is not seen as a destination of choice.

Yet Harper launched a smooth defence Friday.

Calling his government "more interventionist," Harper said Canadians don't want to see entire sectors of the economy belong to another country.

"We welcome foreign direct investment of all kinds... but I don't think as Canadians we would want to see entire sectors of the Canadian economy become predominantly state owned by a foreign country,"he said.

-- The Canadian Press

Republished from the Winnipeg Free Press print edition November 9, 2013 A25

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