HOW  MUCH  OF  CANADA  DO  WE
WANT  TO  SELL ? --- MAI ?

The Multilateral Agreement on Investment (MAI) will allow multinational corporations to sue governments even if they are buying out a nation's strategic assets. The next time you hear someone advocating more foreign investment, or read the elite supporting the MAI, remember that these people are not talking about foreign "investment." The figures are clear. What MAI supporters are talking about is much more foreign ownership and foreign control of Canada. How much of our country are they prepared to sell off, and what will be left for futureCanadians? The rules have already been changed so that foreign investors don't have to disclose key financial facts. From 1985 to 1996, some 65 per cent of foreign takeovers in Canada were financed by Canadian finance houses.

HOW MUCH OF CANADA DO WE WANT TO SELL?     In all the abundant rhetoric about the proposed Multilateral Agreement on Investment [MAI], the global investment treaty being negotiated in Paris, some important facts and questions have been missing.
    The Chretien government (Ottawa), led by Industry Minister John Manley, has been one of the strongest advocates of the MAI. In the words of University of Toronto economist Alan Rugman, "The untold story is that we're the real heroes getting it going."
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LinkExchange Member     For years Mr. Manley has wanted a relaxation of rules on foreign investment in Canada. With this in mind, his Industry Department commissioned an economic consulting company to produce a study showing the benefit of foreign investment. According to the finished document, $1-billion in foreign direct investment will create 45,000 jobs in Canada over five years. These 45,000 jobs have become a mantra for virtually every federal cabinet minister and the Prime Minister, and are cited by business columnists and editorial-writers.
    Let's set aside the fact that few Canadians have seen the study, and that a first-year economics student would have little difficulty listing the important negative-impact considerations the document failed to assess. Instead, let's look at some brand new numbers from the Investment Review Division of Industry Canada, the successor to Investment Canada, which in turn succeeded the Foreign Investment Review Agency.

THE  TORONTO  GLOBE  AND  MAIL          THURSDAY  FEBRUARY  5, 1998 By  MEL  HURTIG,  Edmonton (Former publisher Mel Hurtig is the founder of the Council of Canadians and the Canadian Encyclopedia

    In 1997, the total of new foreign investment in Canada monitored by the review division was second highest on record, some $21.2-billion. Now here's a quick one-question quiz. Take a guess what percentage of the $21.2-billion in foreign investment was for new business investment, and what percentage was for the takeover of corporations in Canada.
    In 1997, 97.5 per cent of the $21.2-billion went for acquisitions, and a meagre 2.5 per cent constituted new foreign business investment.
    But surely this is some strange anomaly, an abnormal year. After all, we've constantly been told by Jean Chretien and Mr. Manley (and by Brian Mulroney before them) that foreign investment builds new factories, creates new jobs and is highly beneficial.
    An anomaly? Dead wrong.
    Mr. Mulroney set up Investment Canada in mid-1985. Since then, to the end of 1997, 7,074 corporations in Canada have been taken over by foreign companies. In the entire 12 1/2 year period, of the $183.6 billion in total investment recorded by Ottawa, 93.4 per cent was for takeovers and only 6.6 per cent was for new business investment.
    But wait a minute: Takeovers usually reduce employment rather than create new jobs. Moreover, it has been well documented that, as a ratio to sales, foreign companies import (mostly from their parent companies) on average three times as many parts, components and services as Canadian companies. Jobs are created outside the country, not here in Canada.
    For years we were able to look at the annual special issue of Report on Business Magazine to see how many employees foreign companies had in Canada per millions of dollars in sales or profits, and then compare figures to see just how much better Canadian-based corporations performed in job creation. No longer. John Manley inexplicably changed the rules so that foreign corporations no longer have to disclose key financial figures to the public. So, the CEO of General Motors of Canada Ltd. declines to tell us the amount of her company's record-breaking 1997 profit ($2-billion?), though she has no hesitation in bluntly warning us, "Make no mistake... taxes in Canada are too high."
    Let's review Ottawa's current policy. The government wants as much foreign direct investment as it can get. But we know that means many more takeovers, with only a modest amount thrown in for new business investment. Among the companies taken over in 1997 were ones in resources, manufacturing, health, social services, accommodation, food, beverages, construction, transportation, communications, finance, insurance and real estate.
    About half the takeovers were financed in Canada by our obliging Canadian banks and by other Canadian financial institutions. Isn't it splendid that the Bank of Montreal is helping with the $3.7-billion Union Pacific Resources (of Fort Worth, Texas) take over of Calgary-based Norcen Energy Resources? From 1985 to 1996, some 65 per cent of foreign takeovers here were financed in Canada.
    How does Industry Canada feel about this? Not shy at all, Mr. Manley's department cites the following reasons that non-Canadians give for investing in Canada: "local financing... ease of financing... tax treatment and subsidies."
    In recent years, the foreign-controlled share of corporate operating revenues in Canada has increased rapidly, and the figures for 1996 and 1997 will accelerate the trend.
    So here's a question people might want to ask Mr. Chretien and Mr. Manley and (Finance Minister) Paul Martin, too. Just what percentage of corporate revenues do you want foreign corporations to have? How much of Canada are you prepared to sell?
    Here's another question. About 40 per cent of the top 500 corporations in Canada are already foreign-controlled. What is the government's target? 50 percent? 60? 90?
    The argument is made by advocates of unfettered foreign ownership and control that, after all, Canadian direct investment in the United States has been increasing and is approaching the level in absolute dollars of direct U.S. investment in Canada. The argument is specious for several reasons. Here's one: American corporations dominate more than 25 industrial groups (rubber, auto, chemicals etc.) in Canada. In the U.S. few if any industries are dominated by any foreigners, let alone by Canadians.
    So, to sum up: The next time you hear someone advocating more foreign investment, or read an editorial or business columnist supporting the MAI, remember that these people are not talking about foreign "investment." The figures above are clear. What they are talking about is much more foreign ownership and foreign control of Canada. We should ask them to spell out just how much of our country they are prepared to sell off, and exactly what they expect will be left for future generations of Canadians.
    By the way, Mr. Manley chose an American consulting firm to prepare the study referred to above. © The Toronto Globe and Mail, Mel Hurtig CLICK THESE SERVICES
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