Canada's Party Caucus Round-Up: Liberals Open Up the Leadership Vote; NDP Plots for 2014; Conservatives Push Trade Agreements and Voice Concern Over China's Acquisition of Nexen Conditions

By Keith Edmund White

Two of Canada's national parties--the Liberals and NDP--are wrapping up caucus meetings today, with the Conservatives on deck to chart of their paraliamentary strategy for the next year.  In short, the Liberals are looking for a leader; the NDP is trying to keep their lead in the polls; and the Conservatives are pushing a economic strategy emphasizing energy and trade-liberalization while they can still hold onto power.

Now's the season for Canada party conferences.  For the out-of-power Liberals, their ongoing three-day meeting is dominated by an internecine leadership battle.  Of particular note:  the Liberals will be releasing today the voting rules for their April leadership race, which will expand the voting base to non-dues paying Liberal "supporters."  Why is this important?  When you change the rules of the game, results tend to change too.  Clearly, the Liberals are trying to ensure whoever their leader is, they'll enjoy a boarder base of popular support.  Whether this gets Liberals back in power--or even back as the official opposition--has yet to be seen.

On the other hand, the NDP--as the official opposition--will be focusing on how to challenge the Conservative's agenda, and how to prepare for an election they suspect will occur in Fall 2014.  The PQ's victory in Quebec's provincial elections could complicate NDP efforts hold on the seats they won in Quebec last year.

And then there are the Conservatives, who's caucus meeting will focus on policy details.  The Hill Times (subscription--but try the free trial) reports that the planned takeover of Alberta's Nexen, Inc.--an oil and natural gas generator--by the state-controlled Chinese Company Cnooc is getting the Conservative's attention.  Naturally, as Canada's #1 energy purchaser, America is watching too--and hoping to use the planned purchase to push China to (1) allow U.S. companies to buy Chinese companies, (2) make U.S. foreign investment in China easier, and (3) enforce intellectual property infringements.

From The HillTimes:

The “high stakes” CNOOC-Nexen deal will be one of the Conservative Party’s top priorities when the caucus meets for a half-day session on Sept. 17 on the Hill, says a political insider. 

“This is the largest acquisition ever in Canada by an offshore state-owned enterprise, and this kind of thing always generates some degree of debate and or unease,” Earnscliffe Strategy Group principal Yaroslav Baran told The Hill Times in an email. “You can bet there will be discussion about this—all the different angles, from populist sentiment to reciprocity to the market signals that the final decision will send.”

Industry Minister Christian Paradis (Mégantic-l’Érable, Que.) said last week in a statement that he will take the time needed “to carefully examine CNOOC’s proposed acquisition of Nexen Inc. and determine whether it is likely to be of net benefit to Canada.”

And for the U.S. perspective, MarketWatch.com reports:

Chinese energy giant Cnooc Ltd.’s $15.1 billion deal to buy Nexen Inc. is under increasing political scrutiny in the U.S. even as it faces a long regulatory review in Canada.

“It is rare that we have so much leverage to exert upon China. We should not let this window of opportunity pass us by. At some point, we have to put our foot down over China’s refusal to play by the rules of free trade,” U.S. Sen. Charles Schumer, a New York Democrat, wrote Friday in a letter to Treasury Secretary Timothy Geithner.

Geithner and the Treasury Department chair the Committee on Foreign Investment in the U.S., or CFIUS, an interagency board that reviews deals for national security implications. Cnooc, or the China National Offshore Oil Corp., is a government-owned company.

The deal is subject to CFIUS review because Calgary, Canada-based Nexen has substantial drilling operations in the U.S. portion of the Gulf of Mexico.

It is expected that the Cnooc-Nexen (CA:NXY) deal will be reviewed by CFIUS in Washington and by securities regulators and courts at the federal level in Ottawa, Canada

But of the most interest to me, is the Conservatives push for additional free trade pacts.  From The HillTimes:

Mr. [Yaroslav] Baran, who previously worked as a Hill staffer to the government House leader, said the Conservative Party policy planks such as economic management, international trade, and resource development will also likely be topics of discussion for the party in the lead up to the fall legislative session.

“The new catchphrase is that trade is the new stimulus,” Mr. Baran noted, identifying the progress on the Canada-EU free trade agreement and the Trans-Pacific Partnership as key priorities for the government this fall.

“Diversifying trade relationships has been a key government objective over the past six years, with nine free trade agreements concluded to date—albeit with smaller countries—and [more than] 50 other negotiations underway,” he said.

This trade focus is important, especially when viewed through the Canada-U.S. bilateral relationship.  Pushing a resource-heavy strategy incentivizes Canada to implement policies that help the natural resource trade, which can disadvantage Canadian manufacturers.  Furthermore, the Conservative push for ever more trade-pacts could speed up the declining--but still very dominant role--American contribution to Canada's GDP.

In any case, the likely election in 2014 will bring with it a big question of economic policy:  Can Canada's manufacturing sector compete on the world stage, and--if so--should Canada return to a more balanced monetary and trade policy to support it?  And, if Canada does so, could that lead to decline in the resource-heavy trade that has supported Canada through the last decade?  Or will the NDP--pushing a "balanced" approach to Canadian economic growth--for the first time ever take control of Parliament and successfully navigate Canada through economic waters--that in the long-term--don't look all that smooth.