FINA Committee Report

Supplementary Report of the Liberal Party of Canada

During the Committee’s study of the Renminbi trading hub, many witnesses provided compelling and important testimony on the role of the hub within the larger context of Canada’s economic relationship with the China. We were disappointed that some of these important views were left out of the Committee’s final report. In particular, the numerous calls for clarity around Canada’s foreign investment rules were ignored entirely.

Canada has developed a strong diplomatic relationship with China going back to Prime Minister Pierre Trudeau’s initiatives towards China in 1968. However in recent years, the Government of Canada has created much uncertainty in that relationship with its deliberate ambiguity around provisions in the Canada Investment Act, particularly on how they apply to state-owned enterprises. The Government’s failure of leadership on this issue was most evident during the CNOOC-Nexen deal.

Several witnesses expressed concerns to the Committee on the lack of clarity around Canada’s investment rules. Since their testimony does not appear in the main report, we would like to share it here.

Referring to the CNOOC-Nexen deal, Brian Kingston of the Canadian Council of Chief Executives testified at Committee that, “we have raised some concerns with the way that was communicated. It did create uncertainty for Chinese investors”.

Colin Hansen of Advantage BC agreed. He told committee that, “there was a chill, and I think it comes down to communication, because in anything to do with international business, international finance, companies and countries are looking for certainty and they're looking for stability.” He added that, immediately following the Nexen decision, “we certainly had Chinese companies asking whether Canada still welcomed their investment Renminbi.”

Nianbe Sun of the China Construction Bank also raised these concerns.  She testified that the Canadian government’s policy pronouncement following the Nexen decision “slowed down the investment activity from China because the message conveyed to the Chinese enterprises in the natural resources ore industry was that maybe Canada wanted to slow down investment activity and also the M&A activity from China.” Ms. Sun recommended that the Canadian government “change this message and give new information to Chinese enterprises and let them know more about the new policies and strategies of Canada”.

Janet Ecker of the Toronto Financial Services Alliance emphasized to the committee the need for clarity and transparency in Canadian policy.  “We do have national interests, which I think, quite rightly, that any government would look to protect. However, doing it within a framework of a Canada-China strategic partnership or furthering free trade agreements I think is probably the right way to go. We can set some rules so that everyone knows how we would approach this.”

The current Government’s deliberate ambiguity is creating an investment chill that is making it harder for Canadian investors to attract foreign capital. This ambiguity inevitably leads to reciprocal measures where, formally or informally, Canadian businesses lose out on opportunities in important markets like China.

The Liberal Party of Canada recognizes the undeniable link between foreign investment and a stronger middle class in Canada.  Trade and investment help strengthen our middle class by supporting economic growth and good-paying jobs here in Canada.  This is why Liberal Leader Justin Trudeau was first among the current federal leaders to come out in favour of the CNOOC-Nexen deal.

We continue to call on the government to provide clarity in Canada’s foreign investment rules. A strong Canadian economy requires clear rules that encourage greater investment in Canada.