Mel Hurtig - Globe and Mail Tuesday, May 6 2003

Before the House of Commons prorogues for the summer, Statistics Canada will release its annual report on foreign ownership, The Corporations Returns Act. The report will reveal an all-time record one-year growth in foreign ownership and foreign control in Canada in 2000.

Not too long ago, the Investment Review Division of Industry Canada reported a record number of foreign takeovers of Canadian companies in the same year.

After the House of Commons Industry Committee recently proposed dropping restrictions on foreign ownership of telecommunications and cable companies, our two national newspapers and some of the Asper dailies bubbled over with lavish praise. That this is happening in a country that already has such a terribly high degree of foreign ownership and foreign control is not only difficult to comprehend, but dismaying for those of us who value Canadian sovereignty and independence.

Even more dismaying is the likelihood that once Paul Martin becomes prime minister, the sale of Canada to foreign owners will accelerate. Today, over thirty-five per cent of corporate profits in Canada already go to foreign companies. Wouldn’t it be revealing for some enterprising journalist to ask Mr. Martin how much foreign ownership he thinks would be too much? “Mr. Martin, sir, would it be forty percent? Fifty percent? Or perhaps sixty percent? At what point would you say that enough is enough? And then, exactly what would you do about it? Of course, you do recognize Mr. Martin that under the investment provisions of NAFTA we must continue allowing Americans to buy up our country, whether we like it or not. What would you then do about NAFTA, Mr. Martin?”

The Globe and Mail’s April 29th editorial on the subject of foreign ownership was bizarre in the extreme. Some of the editorial’s logic backing the Industry Committee’s decision was either misleading or incomprehensible.

For example, the suggestion was made that “Canadians, it seems, have got used to the idea that we don’t have to control companies to benefit from them. After all, foreign owners pay taxes and employ thousands of Canadians too.” Moreover, while “Many Canadian energy companies have disappeared in recent years, often into the corporate arms of foreign competitors…few concerns were raised that resources critical to our economy were being sold off to foreign companies.”

The suggestion that Canadians find our unusually high level of foreign ownership acceptable is nonsense. Public opinion polls consistently show exactly the opposite. Earlier this year, a Decima poll showed that 72 percent of Canadians opposed foreign ownership in the media and telecommunications industries, 60 percent in the telephone industry and 66 per cent in newspapers. In a Maclean’s poll, 81 percent agreed that Canadian ownership of businesses operating in Canada was necessary “in order to maintain a strong Canadian identity” and in 2000 the Globe reported that 70 percent said they were opposed to more foreign control and three in five said that they were angry that the government wasn’t doing more to stop foreign takeovers.
Other recent polls have shown that 89 percent of Canadians believe that U.S. takeovers of Canadian companies is responsible for the Americanization of Canada (Ekos), three in every five Canadians say we are losing our independence from the U.S. (Maclean’s), and 75 % say Canadians should have the right to curtail and regulate foreign ownership (Vector).

Perhaps most dismaying of all, one poll showed that only a quarter of Canadians are confident that there will be an independent Canada in 25 years.

As for the Globe’s contention that Canadians are not concerned about the increasing foreign control of our natural resources, another poll shows that 83% say “it is very important that Canada remains sovereign in the area of natural resources.” As well, last year an Ipsos Reid poll showed that 80 percent of Canadians said that they were concerned about the foreign ownership of Canadian energy resources.

Perhaps someone should mention all of this to Ambassador Paul Cellucci who, according to the Globe’s John Gray, “seems baffled by the suggestion that Canadian oil and gas should, perhaps, be Canadian. He says the United States want to look on Canadian and Mexican energy as domestic, in effect as American.”

More importantly, we should remind both Jean Chrétien and Paul Martin of how Canadians feel before President Bush’s impending energy-related visit to Canada.

Today, most manufacturing and oil and natural gas operating revenues in Canada already go to foreign owners. Dozens of key sectors of the Canadian economy are majority foreign-owned and controlled. As I have indicated in the past, in the United States there’s not one single industry majority foreign owned. Not one!

Why do virtually all other developed countries resist massive foreign ownership of their economies? Here’s a quick and very partial short list. Foreign corporations employ sophisticated transfer pricing and debt-loading schemes to transfer profits to their own countries or to tax havens before they are taxable in the host country. Foreign firms import much higher levels of parts, components and services than equivalent domestic companies. As a result, employment ratios to sales are invariably well below that for domestic firms. (One recent study showed that foreign firms in Canada import five times as much as domestic firms on a comparative basis).

Excessive foreign ownership leads to hollowing out (witness the recent Globe articles about Calgary and Vancouver). Head office jobs transferred out of the country result in truncated management, and key corporate decisions are made by people who live in another country and care little if at all about the welfare of the host country.

No self-respecting country would allow foreign corporations to control so many industries and so much of their economy as we do in Canada. The greatest irony of all continues to be that our own banks, pension funds and other financial institutions have for years been putting up most of the money that foreigners use to buy up our country.

Finally, updating some figures I mentioned in my last Globe and Mail article on foreign ownership, in the years since Brian Mulroney abolished the Foreign Investment Review Agency, of all the hundreds of billions of dollars of foreign direct investment monitored by Industry Canada, 96.6 percent has been for takeovers and only a pathetic 3.4 percent has been for new business investment. During this period just under 10,500 companies in Canada have been taken over by foreign buyers.

Welcome to what will soon be the colony of Canada.

Mel Hurtig

Mel Hurtig is the former chairman of the Committee for an Independent Canada and the founder of the Council of Canadians. His most recent book is The Vanishing Country: Is it too late to save Canada?

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