A Guarded Welcome for State-Owned Enterprises: C.D. Howe Institute

A Guarded Welcome for State-Owned Enterprises: C.D. Howe Institute 
TORONTO, Nov. 26, 2012 /CNW/ - If Canada wants to benefit from Asia's 
long-term growth potential, there is no getting around the need to do 
business, carefully, with state-owned enterprises (SOEs), according to a 
report released today by the C.D. Howe Institute. In "Speed Dating or Serious 
Courtship? Canada and Foreign State-Owned Enterprises," author Daniel Schwanen 
discusses how Canada can address concerns about the potential impacts of 
investment by foreign SOEs in Canadian companies. 
The proposed acquisitions of Nexen, a medium-sized Canadian oil and gas 
producer, by CNOOC, majority-owned by the Chinese state, and of Progress 
Energy by Malaysia's state-owned Petronas, have put Canada's "net benefit" 
test for foreign acquisitions of Canadian businesses back in the spotlight, he 
notes. Together, they have raised fresh concerns about the impact of foreign 
state-owned enterprise (SOE) investment in Canada, ranging from worries about 
national security and governance standards to reciprocal access to markets. 
While Ottawa's current screening rules and guidelines are likely adequate to 
address most concerns, says Schwanen, mechanisms should be created to more 
explicitly address possible anti-competitive impacts of SOE investments and to 
review whether SOEs keep their good governance commitments. For example, 
Canada could draw on its competition law, and straightforwardly clarify that 
related entities controlled by a single foreign state will not be allowed to 
dominate its oil and gas or other sectors. Governance undertakings could be 
subject to follow-up audits. To promote reciprocity, Schwanen counsels the 
launch of a formal governmental dialogue to address barriers to Canadian 
investments in SOE home countries. 
Canada needs to facilitate trade and investment deals other economies where 
the state currently plays a determining role, including China, concludes 
Schwanen, and that means learning to engage with economies that do not 
function like ours, while enforcing and promoting pro-competitive rules of the 
game in Canada. 
For the report go to: 
Daniel Schwanen, Associate Vice President, International and Trade  Policy, 
C.D. Howe Institute. 416-865-1904; email:cdhowe@cdhowe.org 
SOURCE: C.D. Howe Institute 
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CO: C.D. Howe Institute
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-0- Nov/26/2012 15:00 GMT
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