CANADA: Calls for New National Security Test for Foreign Canada Takeovers

Tuesday March 27 2012

The author of a report on Chinese investment in Canada has called for the federal government to adopt a new national security test for proposed foreign Canada takeovers of Canadian companies. Dr. Theodore Moran`s paper, “Chinese Foreign Direct Investment in Canada: Threat or Opportunity”, is being published today by the Canadian Council of Chief Executives (CCCE) as part of a series of reports and articles examining the impact on Canada of Asia’s growing economic power. In the report, Dr. Moran considers two issues of central interest to Canada as Chinese foreign direct investment (FDI) grows to be a major force in the global economy:

* How does Chinese FDI affect the structure of natural resource industries around the world?

* When does the foreign acquisition of an existing firm constitute a national security threat to that home country?

On the first question, Dr. Moran rejects the suggestion that Chinese investments in the natural resource sector have the effect of “locking up”; the world`s resource base. On the contrary, a review of several dozen recent Chinese acquisitions and procurement arrangements shows that most of them actually help to expand and diversify resource production and increase competition within the affected industry.

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