Michigan's Right to Work Legislation Sends Ripples into Ontario

It looks like Michigan, in less than 4  7 days, will go from a union-state to a right-to-work state. 

While you can check out coverage of the controversial move by the Michigan GOP, iPolitics offers an interesting Canadian labor take on the news:

As key auto industry jurisdictions, Ontario and Michigan are already in competition for jobs and investment. Now, from the perspective of companies looking to open or expand, Michigan will have an advantage.

This could bolster Ontario PC leader Tim Hudak’s case to implement right-to-work in the province, Moffatt said

...

Lewenza intends to speak with his UAW counterpart, Bob King, about the developments and added that the CAW would participate in any mass demonstrations in Michigan.

“I know that I would be the first one to respond to a call and ask CAW members to participate because I do believe an attack on workers, regardless of border, is an attack on the labour movement more generally.”

CNOOC Nexen Bid Part 3: Macleans Talks With Debra Steger

Check out Erica Alini's great Q&A with UOttawa professor, and former trade negotiator for Canada, Debra Steger.

Two main Steger snippets:

Compared to the U.S. and Australia, Canada’s Act, with the two review processes for “net benefit” and “national security,” is confusing and difficult to apply in practice, as in this case involving CNOOC. The “national security” process is also highly non-transparent in that there are no criteria specified for a review and no decisions are ever made public. The U.S. has one test for direct acquisitions: national security, with a list of 12 factors. These are wide-ranging and include: domestic production for national defence requirements, potential effects on U.S. technological leadership in areas affecting national security, potential effects on critical infrastructure in the U.S., long term projection of U.S. requirements for energy and other critical resources and materials. The U.S. approach is more specific, transparent, and integrated than the Investment Canada scheme. The U.S. CFIUS model also requires nine agencies to work together to carry out reviews. This would appear to allow for a broad range of views and better decision making than the Canadian approach in which Industry Canada plays the lead role.

...

My prediction is that the government will allow the investment, albeit with a requirement for undertakings designed to ensure that the resulting business operates in a transparent and commercial manner in accordance with Canadian corporate governance norms and likely to provide net benefit to Canada.

CNOOC's Nexen Bid: North Sea Oil Chinese Concentration? And Waiting for Canada's New 'Net Benefit' Test Parameters

By Keith Edmund White, Editor-in-Chief

If Nexen bid is approved, would China have a worrisome extent of control over Canada's largest North Sea oil field?

Owing to the surge of interest in CUSLINexus's last post on Canada's "net benefit test" and it's impact on CNOOC's takeover bid of the Canadian energy company Nexen, readers may be interested in (1) an update on revisions to Canada's "net benefit" rule and (2) a news exclusive regarding CNOOC's Nexen bid.

What to really watch for in a new Canadian "net benefit" test

WSJ reports on suspicions that changes to Canada's "net benefit" rule test will be very similar to Austrailia's approach.  But huge missing link in the article:  whether Canada adopts an Austrailian-like "net benefit" test or keeps its own, both are basically subjective tests.   The one seemingly change:  the national security review and "net benefit" review may be combined into one process, though if they are run by two different agencies that wouldn't be a huge reform.  

From WSJ:

Charles St-Arnaud, foreign-exchange strategist and economist at Nomura, said in the report that Canada’s new guidelines are likely to mimic Australia’s template in how that resource-rich economy judges foreign investments. The Australian criteria include: national security, which is already incorporated as part of Canada’s foreign-investment review; antitrust issues; the impact on tax revenue; jobs and a possible “fair return” for the local community; and the “character” of the investment, which is a catch-all category that considers the investor’s transparency and corporate structure.

Mr. St-Arnaud noted that Australia has a special provision governing state-owned enterprises, such as Cnooc and Petronas, in which policymakers consider whether the planned investment is of a commercial nature or done for “political or strategic objectives.” Matters that could support a SOE-led takeover in Australia include the investor’s willingness to list shares on the local stock exchange. As it happens, Cnooc promised to do just that when it unveiled its initial bid for Nexen in July.

Nomura’s suggestion that Canada might follow the Australia example comes after a Calgary think tank, the Canadian Defence and Foreign Affairs Institute, warned Ottawa not to follow the path of another resource-rich nation–Mongolia–that scared off international investors when it introduced new foreign investment guidelines last spring.

Instead of obsessing over name-changes to Canada's open ended "net benefit" test, the key is to look at whether (1) the test becomes more objective and (2) if the "net benefit" test and national security review are streamlined into one test, or if fewer federal agencies are responsible for foreign takeover bid reviews.

Would Approving CNOOC's Bid for Nexen Give China to Much North Sea Oil Control? 

And, while Canada is still reviewing the CNOOC bid under its current "net benefit" test, Bloomberg obtained a briefing memo prepared for Prime Minister Harper on the Nexen bid that emphasizes the considerable amount of control China would have over Canada's North Sea oil operations.

Courtesy of iPolitics, but from Bloomberg:

CNOOC Ltd.’s $15.1 billion takeover of Nexen Inc. would give the Chinese company the largest stake of an oil field in the North Sea that “has increasingly influenced” global oil prices, according to a memo sent to Prime Minister Stephen Harper by Canada’s top government worker.

...

It also cites the commitments CNOOC promised at the time, including establishing Calgary as its North and Central American head office, maintaining Nexen’s employment level and management, and enhancing Nexen’s capital spending.

The memo says the bid would mean the Chinese government would own a 16 per cent share of Syncrude, Canada’s biggest oil- sands project in production, with China Petroleum and Chemical Corp., known as Sinopec, owning 9 per cent and CNOOC acquiring Nexen’s 7 per cent.

From previous reports, it still appears the Nexen bid will be approved.  But, as reported in yesterday's Montreal Gazette, Canada has no problem extending (for a third time) the review process, and it's clear Alberta's provincial government wants its voice heard in the "net benefit" review process.

Don't Trust the Arbitrators? Pt. 2

By Keith Edmund White, Editor-in-Chief

So, international trade arbitrators are getting a bad wrap from the Belgium-based, anti-corporate lobbying organization Corporation Europe Observatory (the appropriately acronym-ized "CEO").

My twitter friend, Marek Krasula, who first alerted me to the report, shot me over a very helpful blog posting last night.  In short:

• There are 20-year old IBA Rules for International Arbitrators exist [More IBA guidelines, including conflict of interest guidelines, are available here.];
• a very helpful, if a bit short on readability, 2010 Wolters Kluwer blog posting exists on the subject;
• and, the post can be summed up best as:  While the IBA gives ethical guidelines, there is no uniform, international "mechanism to control an arbitrator's behavior," but some arbitral bodies that have done this themselves.

From the 2010 Philipp Peters et al blog post:

Initiatives like the ABA-AAA Code of Ethics for Arbitrators in Commercial Disputes should therefore be welcome. On a broader international level, the IBA Rules of Ethics for International Arbitrators are now more than twenty years old, and even though the discussion about ethics is far from being dead, it seems to have shifted more towards questions of counsel ethics while codes of conduct for arbitrators focus mostly on the questions of impartiality and independence. While it is perfectly understandable that these issues are of utmost concern, keeping alive the discussions on the broader subject of “arbitrators’ ethics” seems to be desirable.

More recently, some arbitral institutions have taken up the challenge of creating codes of conduct for arbitrators acting under their auspices, most of them in Eastern Europe. Examples include the Court of Arbitration at the Polish Chamber of Commerce, the Permanent Court of Arbitration attached to the Chamber of Commerce and Industry of Slovenia or the Latvian Chamber of Commerce and Industry. While some of these codes are no more than general, moral guidelines, others go further and regulate specific situations which typically arise during an arbitration. Sometimes, these rules of ethics are enforced. For example, under the rules of the Permanent Court of Arbitration attached to the Chamber of Commerce and Industry of Slovenia, an arbitrator violating the code of ethics is explicitly considered to have failed to fulfill his or her duties. On the basis of this, the institution “may” terminate the arbitrator’s mandate either upon request of a party or, in exceptional circumstances, on its own accord. This regime makes the code of ethics more than just a guideline, creating a mechanism to control an arbitrator’s behaviour beyond just the adherence to fundamental principles.

It remains to be seen whether arbitral institutions will follow this path of regulating arbitrators’ conduct in the future. For the moment, the major institutions seem to be satisfied to leave this issue to the international arbitral community. On an international level, there should be no reason not to aim for an updated broad consensus, except, maybe, for the difficulties typically associated with achieving such consensus. After all, the consolidation of an international ethical standard for arbitrators might be a part of the recipe that could help to reduce the number of instances in which parties find themselves having an “arbitration hangover”.  [Source:  Philipp Peters et al, Can I Do This? Arbitrators Ethics, Kluwer Arbitration Blog, Nov. 9, 2010] 

Keystone XL: The Roar of 2012, Now the Yawn of 2013?

"Canada needs pipe – and lots of it..."  -Andrew Potter, managing director, Equity research, CIBC

"[I]t [Keystone XL] looks… well, not irrelevant, but certainly much less important."  -Erica Alini, Macleans

Erica Alini blogged yesterday on the "much less important" Keystone XL pipeline project.  From her post:

Just over a year later, though, it looks… well, not irrelevant, but certainly much less important. “Even if the current Obama administration gives its final assent to the Keystone XL pipeline this will not resolve Canada’s export challenge,” notes a new CIBC report that came out yesterday. And it’s not just because we should really stop depending on a single buyer of our most prized export and diversify by catering to oil-thirsty Asian countries. It’s also because “US energy production is increasing at a pace that few, if any, saw coming,” reads a foreword penned by none other than Jim Prentice.

Instead, pipeline politics will be Pacific Canada's chief cause of concern, writes Alini.  From the excellent BIBC Alini links to in her post:

2013 WILL BE A DEFINING YEAR FOR CANADIAN PIPELINE POLITICS

Pipeline capacity out of western Canada is adequate for the short term, but substantial progress must be made on this front in 2013.  Progress (or lack thereof) will have a big impact on sentiment towards Canadian oil producers. we estimate that pipeline capacity out of the western Canadian sedimentary Basin (wCsB) could effectively be full in the 2014 time frame (our production forecasts are higher than consensus), suggesting little room for error/politicking in bringing on new pipeline capacity. 

There are ~2.9 mmbbl/d of long-haul pipeline proposals on the table (out of western Canada). that sounds like a lot until one considers that two of the largest (the proposed  525,000 bbl/d Gateway and 450,000 bbl/d tmX expansion through BC) face ever-increasing political risk; we assign no better than 50/50 odds that these pipes are built before the end of the decade. the proposed transCanada mainline conversion (estimated ~600,000 bbl/d) is compelling but very early stage and could also provoke some political backlash in Québec.  We also note that the 2.9 mmbbl/d proposed capacity is quickly depleted given our forecast of 100,000 bbl/d per year growth in Canadian conventional oil and 230,000 bbl/d per year growth in oil sands (or ~300,000 bbl/d when blended).  Canada needs pipe – and lots of it – to avoid the opportunity cost of stranding over a million barrels a day of potential crude oil growth.   [Source: A Look to the Future 2013 Edition, CIBC, Page 42]

A Maritime Union for Three Canadian Provinces? A Smart Move, But Don't Hold Your Breath

By Keith Edmund White, Editor-in-Chief

Three Conservative Senators are pushing for New Brunswick, Nova Scotia, and Prince Edward Island to merge, hoping that a merger will ease the fiscal pressures facing this Atlantic trio.

From Aly Thomson's HuffPoCAN: 

The age-old idea of merging the three Maritime provinces has been resurrected despite an overwhelming lack of political will from an array of government levels. A trio of Conservative senators — John Wallace of New Brunswick, Mike Duffy of Prince Edward Island and Stephen Greene of Nova Scotia — are making a plea to consolidate the Maritime provinces, an idea that has intermittently reappeared over the past century. But several political figures — including Nova Scotia Premier Darrell Dexter and Robert Ghiz of P.E.I. — have denounced the idea in recent days, saying the provinces are already working co-operatively. Donald Savoie, Canada research chair in public administration at the University of Moncton, said the fiscal challenges facing the Maritime provinces and an aging population are what have brought the idea to the floor once again.

 The National Post adds a historical wrinkle Atlantic province merger proposals: 

The idea of a Maritime union, however, is not new. It predates Confederation: the Charlottetown Conference in 1864 was supposed to see representatives from the three Maritime colonies discuss a union but it was reworked to accommodate what is now Ontario and Quebec. It became a grander union — Canada — and the more modest idea of a Maritime union never happened. For 1.8 million people we are terribly over-governed. But the bigger part of this is working in concert … to create economic development The idea periodically gets new wind in its sails. In the 1960s a commission studied it, in the ’70s renewed debate over the Constitution sparked union talk anew. In 1996, at a conference on the idea by the Institute of Island Studies [ISS] at the University of Prince Edward, it was referred to as the “always-the-bridesmaid of an idea.”

[Additional note:  Check out ISS's 2008 Land Use Conference here.] 

And there's this 1941 article on a Royal Commission report pushing a Maritime Union and Alberta, Saskatchewan, and Manitoba.

And for those wanting to learn about one of the Atlantic provinces in-depth, check out Donald Savoie’s July 2010 e-publication, Invest More, Innovate More, Trade More, Learn More:  They Way Ahead for Nova Scotia.

Tussle in Parliament!

From The Globe and Mail reports on a tussle "over the finance minister's attendance during a light night budget vote" after hours of being stuck in Parliament over the budget-voting battle.

Full video of the incident can be seen here, courtesy of CTV.