By Keith Edmund White, Editor-in-Chief
There are plenty of anecdotal examples of cyberespionage in the energy sector and some consider it part of the business.
“One of the companies we deal with makes power plants,” said a source familiar with the Canadian energy sector. “They built a power plant in China and all the intellectual property was stolen.”
CNOOC-Nexen Deal In the Greater Canada-China Economic Context. Conventional wisdom says that the CNOOC-Nexen deal will be approved. But the real story, at least according to Asia Pacific Foundation President and CEO Yuen Pau Woo, is what strings Canada puts on future Chinese acquisitions of Canadian companies. What I find surprising? Woo’s advocacy for ‘smart’ state economic planning in Canada. From The Globe and Mail:
An opportunity was missed a few years ago when there was a bidding war for Inco. At the end of a convoluted series of offers and counteroffers, two bidders were left standing – Vale of Brazil and Teck Resources of Vancouver. Vale was the much bigger player, and Teck’s offer came as a surprise. Since the acquisition was subject to government review, Ottawa had a chance to weigh in. Support for Teck would have resulted in a much enlarged Canadian company ranking in the top five of global mining giants.
But Vale prevailed, and another Canadian icon went into foreign hands. To be sure, Teck is Canada’s largest diversified mining company and still a global player, but an opportunity for a “national champion” to enter the top tier of mining companies was missed.
The point of this example is not to bemoan foreign ownership but to bring clarity to the goal of building national champions. Blocking foreign investment in and of itself won’t create globally significant Canadian companies. By the same token, a purely hands-off approach to market transactions is no guarantee of success. If this sounds complicated, it’s because economic statecraft is complicated. Beware of those who would boil it down to just a few easy rules.
Detroit-Windsor Crossing: Harper’s Hard Press & Michigan’s Messy Ballot Battle. The Harper government, in their proposed 2013 budget, is exempting a second-planned bridge crossing between Windsor and Detroit from environmental review. We’ll see if that sticks, or if the NDP or Liberals can make political hay out of it. But, perhaps more importantly, Michigan voters may decide the pace any new international crossing is made—and it’s bringing out colorful local politics. The owner of the Ambassador Bridge, Manuel ‘Matty’ Moroun, is pushing Proposal 6, which—if passed—could create legal hurdles for the planned construction of the Detroit River International Crossing Project. And he seems happy to deal for votes from both ends of the political spectrum. Will an international bridge crossing be tangled by an unlikely coalition of ballot voters this November? And how is this issue, unlike the Keystone XL pipeline, not getting any national political attention? From The Windsor Star:
Critics say Moroun already has a deal in play with the group Americans For Prosperity, buying the group’s support on Proposal 6 by bankrolling its campaign on Proposal 5 — a ballot initiative to limit taxes.
Last week, the Detroit Free Press reported on Moroun bartering with the United Auto Workers for the union’s support on Proposal 6 in exchange for Moroun financially backing Proposal 2 — the union’s ballot initiative on collective bargaining.
Reportedly under pressure, UAW leadership backed away from the deal, with union president Bob King saying the UAW would remain neutral on Proposal 6.
The UAW’s recent hints of support for Proposal 6 were made all the more embarrassing by the revelation that earlier this summer, King wrote a letter to the U.S. federal government extolling the benefits of a new bridge crossing.
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.
By Keith Edmund White
Editor-in-Chief
A recent poll finds that the NDP would win, albeit only with a minority government, if a federal election were now held in Canada. Is Canada's Liberal Party gone? In any case, the NDP--whose charismatic leader Jack Layton only died last year--is continuing to gain strength and might just be Harper's main worry at the ballot box in 3-4 years.
There might be a reason Harper is pushing for quick economic growth: his approval rating is in the 30s. But, perhaps, even more troubling is this: a recent poll not only gives the NDP leader Tom Mulcair an approval rating in the 40s, but finds if a federal election were held now in Canada the NDP, yes the NDP, would win with a minority government.
So, no idea who Tom Mulcair is? Well, here's an provocatively titled MacCleans piece (Mr. Mulcair is Mr. Angry) and quick rundown from the Huffington Post. Some interesting highlights: Mulcair's short-fuse has cost from $95K, he's voted in French elections, and was a one-time Liberal party member. I think more prescient are these concluding paragraphs from the Macleans piece:
Beyond ephemeral questions about the NDP’s reason for being, Mulcair, as leader, would have to grow into the new role as the face of the party, becoming both a unifying, consensus-building presence within, and a strong, assertive figure on the public stage. Concerns about his aggressive style will have to be assuaged. Former Winnipeg North NDP MP Judy Wasylycia-Leis wouldn’t comment on Mulcair’s temperament. “We had a good working relationship,” said the long-time Manitoba MP, who resigned in 2010. When asked why she is supporting Brian Topp, the former MP said, “Brian Topp can take on Harper in a style similar to Jack, that is not personal, ugly or distasteful.”
But the case for Mulcair is that however controversial his presence, he is also the most obviously ready to fill the chair directly opposite Stephen Harper in the House of Commons. “Leaders have to carve our their own way of doing things,” says Davies. “And I think Tom’s ability to be smart and articulate and direct and to present a clear alternative—and he’s absolutely got steely resolve to take us to government—I think is carrying on Jack’s tradition in a different sort of package.”
Clearly, in only two months on the job, Mulcair--short-fuse or not--is gaining on Prime Minister Harper, whatever murmurings he makes about shifting Canada more towards European welfare model. Then again, when the number one issue in Canada is healthcare and not jobs, perhaps this line doesn't hurt poll numbers as much as it would in the United States.
In any case, the once-dominant Liberal Party has a tough--but perhaps not insurmountable--path to political relevancy.
In fact, if the country’s assorted Liberal parties are in the mood for advice from the “department of easier said than done,” they should waste no more time seeking to present themselves as the middle ground between extremes. Instead they should find some extreme worth defending. What social end is so important that it’s worth taxing to achieve? What fights are worth fighting?
Detroit-Windsor Crossing: Harper’s Hard Press & Michigan’s Messy Ballot Battle. The Harper government, in their proposed 2013 budget, is exempting a second-planned bridge crossing between Windsor and Detroit from environmental review. We’ll see if that sticks, or if the NDP or Liberals can make political hay out of it. But, perhaps more importantly, Michigan voters may decide the pace any new international crossing is made—and it’s bringing out colorful local politics. The owner of the Ambassador Bridge, Manuel ‘Matty’ Moroun, is pushing Proposal 6, which—if passed—could create legal hurdles for the planned construction of the Detroit River International Crossing Project. And he seems happy to deal for votes from both ends of the political spectrum. Will an international bridge crossing be tangled by an unlikely coalition of ballot voters this November? And how is this issue, unlike the Keystone XL pipeline, not getting any national political attention? From The Windsor Star:
