Investment straitjacket

Thu, 2012-12-13 14:05Carol Linnitt
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China Investment Corporation Eyes BC Forests, Spells FIPA Danger

The China Investment Corporation (CIC), one of the world's largest sovereign wealth funds, is set to become a powerful landowner in British Columbia if a $100 million deal with Island Timberlands, the second-largest owner of private forests in the province, goes through. The Ancient Forest Alliance (AFA) is concerned that closure of the deal, especially in light of Canada's pending ratification of the Foreign Investment Protection and Promotion Agreement (FIPA), could have negative consequences for protection of BC's treasured old-growth forests, forestry jobs, and the rights of First Nations, according to an AFA press release.

“The Communist Party of China is about to become one of the biggest landowners in British Columbia if this deal goes through,” said Ken Wu, executive director of the AFA
 
“In light of the proposed Canada-China investment treaty, this could be at the expense of BC’s environment, forestry workers and First Nations,” said Wu, adding, “Chairman Mao’s spirit is seemingly being channelled by Chairman Harper these days, as it’s hard to see how this proposed agreement will be a net benefit to Canadians.”
 
Chinese investment in Canadian resources has taken on a new significance since the Harper government announced the possibility of entering into a strict trade agreement with China. The deal, an investment treaty with a 31 year lifespan, would strongly dissuade municipal, provincial and federal governments from making any decisions that might affect the profit margin of Chinese investors.
 
“The China-Canada FIPA would allow Chinese investors in Canada to sue the federal government for lost profits due to new regulations, taxes, and environmental laws enacted federally or provincially. This would undercut the ability of future federal and provincial governments to enact new regulations or policies that might result in a lawsuit by Chinese companies which are accountable to the Chinese government,” says the press release.
 
Fri, 2012-12-07 17:21Carol Linnitt
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Harper Government Approves Foreign Acquisition of Nexen, Progress Energy, Affirms FIPA Concerns

Today Prime Minister Stephen Harper announced the approval of two major acquisitions of Canadian energy companies by foreign state-owned enterprises. The Chinese National Offshore Oil Company (CNOOC) will commence the $15.1 billion takeover of Nexen Inc., a Canadian company with major holdings in the Alberta tar sands. Malaysia's Petronas will proceed with the purchase of Progress Energy Resources Corp., a Calgary company with considerable shale gas plays in British Columbia, for $5.2 billion. Petronas has plans to construct an $11 billion liquified natural gas plant in Prince Rupert to prepare gas exports for Asia. 

Prime Minister Harper announced the takeovers, which are steeped in controversy, in tandem with new takeover guidelines intended to address growing concerns of foreign ownership of Canada's resources by energy-hungry nations. He remained silent on the significance of the approval for FIPA, the Foreign Investment Protection and Promotion Agreement, also known as the China-Canada Investment Treaty.
 
“Canadians generally and investors specifically should understand that these decisions are not the beginning of a trend but rather the end of a trend,” said Mr. Harper. The full meaning of that statement, however, remains to be seen. The Harper government's decision to ratify FIPA may mean deals done with China, like today's deal with CNOOC, will carry a new significance.
 
The government previously raised the threshold for official review of foreign takeovers from $330 million to $1 billion, signaling open arms to potential foreign investors with an eye on mega projects like the Alberta tar sands. However, today that threshold was returned to $330 million for state-owned enterprises.
 
“To be blunt, Canadians have not spent years reducing ownership of sectors of the economy by our own governments only to see them bought and controlled by foreign governments instead,” Mr. Harper said
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