Why I think we are absolute idiots if we approve CNOOC take-over of Nexen

By Elizabeth May on 18 September 2012 - 9:35pm

 http://www.greenparty.ca/blogs/7/2012-09-18/why-i-think-we-are-absolute-idiots-if-we-approve-cnooc-take-over-nexen

It is hard to know how else to put it. I don’t want to get anyone freaked out or overly alarmed, but are we paying any attention?
Attention should be paid to the fact that the Prime Minister has signed a deal with President Hu of China that promises investor protection. The text of said deal is not yet before the House of Commons, but everything I read about it (including from business analysts at Heenan Blaikie and Osler, Hoskin and Harcourt) anticipates the deal will include investor-state provisions similar to those in Chapter 11 of NAFTA.
Chapter 11 of NAFTA allows corporations from Mexico or the USA to claim damages against Canada if any level of Canadian government (municipal, provincial or federal) causes them to experience less profits than they had anticipated. Canada has actually repealed a law limiting a toxic gasoline additive when the US-based manufacturer sued under Chapter 11 — and we paid $10 million plus in damages. This outrage only gets more outrageous if the claims for multiple millions in damages come from a non-democratic enormous economy to which we have hitched our wagon as a compliant resource colony.
When will Mr. Harper share the text of this investor agreement with Parliamentarians? When will it be shared with Canadians? It was signed on September 8th when both Harper and Hu were in Russia. It must now be ratified. Assuming all the Conservative MPs who are worried about selling out our country to China do what they always do and submit to the will of the Boss, it will become a trade obligation. China will, if offended by any new health, labour, or environmental law, be able to make a claim for damages. I have already witnessed the chilling effect of Canada knowing a US based corporation can sue under Chapter 11. It was rumoured that former Liberal Health Minister Allan Rock refused to ban cosmetic use of pesticides for fear of Chapter 11 claims by US pesticide manufacturers.
What happens when Canadian laws, passed democratically, are struck down in hotel room arbitrations launched by the Communist Party of China?
I pay attention to things that CNOOC’s CEO says in public. In the August 29, 2012, Wall Street Journal, CNOOC CEO Wang Yilin said, “Large-scale deep-water rigs are our mobile national territory and a strategic weapon.” OK, so the bitumen isn’t mobile – until you mix it with diluents and stick it in a pipeline. But the oil sands do become Chinese territory. What did he mean about “strategic weapon?”
Are there national security implications?
I would love to trust in a national security review under the 2009 amendments to the Investment Canada Act, except that Stephen Harper specifically rejected the advice of the blue ribbon panel (struck after the Minmetal attempt to buy Noranda) that Canada needed a clear, objective definition of “national security.” The experts thought we should have a definition and use it to assess any takeovers of Canadian companies by foreign interests — particularly state-owned enterprises. Our PM rejected the advice. Instead the Canada Gazette for the 2009 amendments says that “national security” cannot be defined. It is, apparently, a fluid term.
Smart people I respect, like Andrew Coyne, say “don’t worry — there’s no national security threat when you cannot take the resource out of the country.” But then I run into stories like this:

Beijing hints at bond attack on Japan

Jin Baisong from the Chinese Academy of International Trade – a branch of the commerce ministry – said China should use its power as Japan’s biggest creditor with $230bn (£141bn) of bonds to “impose sanctions on Japan in the most effective manner” and bring Tokyo’s festering fiscal crisis to a head.

Writing in the Communist Party newspaper China Daily, Mr. Jin called on China to invoke the “security exception” rule under the World Trade Organisation to punish Japan, rejecting arguments that a trade war between the two Pacific giants would be mutually destructive.

Separately, the Hong Kong Economic Journal reported that China is drawing up plans to cut off Japan’s supplies of rare earth metals needed for hi-tech industry.

- The Telegraph, September 19, 2012

OK, maybe he’s just threatening to destroy Japan’s economy. Maybe he doesn’t mean it. Maybe the WTO wouldn’t let him do it…. but then there was the Sino-Forest fraud, busted by the Ontario Securities Commission:

OSC puts the spotlight on Sino-Forest gatekeepers

In its allegations Tuesday, the OSC noted that auditors Ernst & Young “were not made aware” of Sino-Forest’s “systemic practice of creating deceitful purchase contracts and sales contracts.” The commission makes no further comment on the audit firm’s work. A spokeswoman for Ernst & Young could not be reached for comment Tuesday.

The OSC issued a report in March calling on boards, underwriters, auditors and stock exchanges to improve the practices for listing foreign companies on Canadian stock exchanges, saying there has been a broad lack of “skepticism” about business practices in emerging companies like China.

- Globe and Mail, May 22, 2012

There’s a beautiful term: “broad lack of skepticism.”
It makes me nervous that Chinese companies are merely branches of the Chinese government. The Communist Party hierarchy appoints the boards of directors of CNOOC, Sinopec and Petro-China.
When I read in the business pages that Petro-China wants to bid on construction of the Enbridge pipeline, and read in the same story that Chinese companies are very competitive in their bids because of low labour costs, I picture the labourers who built the national dream of Pierre Berton’s imaginings… with a brutal and nasty history. We have a temporary foreign workers programme. It could happen. And the bitumen going through the proposed pipeline is to go to Chinese supertankers to Chinese refineries.
Losing sovereignty to China makes me nervous. I don’t want to be intolerant. But I want us to trade items made in Canada, by Canadians, to China. I don’t like the idea of China owning Canada. It makes it hard for us to point out to the Chinese government that it must start respecting human rights. We need to be really forceful in advocating for religious and political freedom in China. How do we do that when they have veto power over Canadian laws? And then there are issues of global tensions. Mr. Harper and John Baird are talking tough to Iran. But what about the fact that, while we claim we are exerting sanctions on anyone doing business with Iran, Sinopec, now a major stake-holder in Syncrude, is Iran’s number one customer for oil? Or, that Chinese oil money helps prop up Bashar al-Assad?
So, bottom-line, the Nexen-CNOOC deal doesn’t have me nearly as freaked out as the investor deal Stephen Harper signed in Russia. But when I think about the idea of “net benefit” I just don’t see any answer but “no.”