Overview

There have been many developments in the topic of foreign investment over the past several months including:

·   A decrease in Canadian dependence on U.S. investments

·   An increase in the diversity of trade between Canada and other countries especially China.

·   Starting or completing trade ties with countries like Russia, India, Sri Lanka, Colombia, Honduras, Jordan, Panama, Japan, South East Asia, the European Union, and Peru within the past 6 years

·   Increasing foreign acquisitions of Canadian energy companies

·   Changes in foreign policy, making it less passive and more difficult to take advantage of

·   An influx of foreign retailers moving to Canada, with no signs of slowing down

·   Problems with the telecommunications industry that has discouraged foreign investment

·   Increased purchase of natural resources by emerging countries like China and India

·   Encouragement of foreign acquisitions with two major energy companies (Daylight Energy and Opti Canada) sold to foreigners

·   Possibility of joining the Trans-Pacific Partnership

·   Canadians lose beef exporting markets, like South Korea, to the United States

·    U.S. treasury markets continue to be safe haven for uneasy investors who switch from Canadian treasures to American ones

·    Possibility of easing uranium mine ownership rules so that a foreign investor can own 100% of a uranium mine

·    Keystone XL pipeline deal pushed off until 2013, with little hope of being allowed by U.S. government

·    Ruling by WTO against the U.S. country of origin labels which discouraged the purchase of Canadian cattle and hogs

·    Attempts to increase foreign takeovers and investments through the slackening of laws against complete foreign ownership

Trade between Canada and the U.S. experience such unpredictable highs and lows that it makes sense for Canadians to look into other trading partnerships. U.S. investment in Canada has fallen from 64.6 per cent in 2001 to 54.5 per cent in 2010. However, trade with Asia-Pacific has grown from 4.5 per cent in 2001 to 11.2 per cent in 2011. Trade with other countries is also on the rise with countries like Sri Lanka approaching Canada for free trade agreements for the first time since 2009. A mark of reduced Canadian dependence on the U.S. is the Keystone XL pipeline, which is set to go through no matter what. If the U.S. does not allow the pipeline, it will be built across Canada to send oil to Asian markets. Either way, the pipeline will be built.

         Since the rejection of BHP’s attempt to takeover Potash Corp, Canada has become much more open to foreign acquisitions of Canadian firms. This year alone has seen two takeovers of major energy companies. China in particular has expressed interest in Canadian energy companies. India’s energy needs will quintuple by 2015. This growing need can be filled by Canadian energy companies if the government does not slacken foreign ownership regulations too much. So far, the Canadian government has only shown interest in short-term benefits instead of thinking about the longevity of their decisions.

         The lucrative Trans-Pacific Partnership (TTP), which represents 28 per cent of the world’s GDP, is just out of Canada’s reach. Their unwillingness to compromise on the Supply Management policy led them to lose the ability to be a part of this group. Many members also are not in favour of Canada rejoining the TPP due to the Supply Management policy. Without this partnership, Canada would have to bolster trade with the Asian Pacific countries on its own. This would be much more difficult and less profitable.

  
          The natural resources industry is showing no signs of slowing down. Foreign investors in emerging markets like China and India will be investing even more in this sector as their populations grow. Unfortunately, the telecommunications sector is on the decline. Wind Mobile’s owner regrets his decision to come to Canada and encourages others not to make the same mistake. Investors will think twice before investing in the Canadian telecommunications sector and will probably choose a less volatile market like Australia or the United States.
   
          In the future, it seems that Canada will continue its search for more trading partnerships in countries other than the United States. I think that the next time there is economic problems in the U.S.; Canada will not feel the brunt of it as it is less reliant on the U.S. for investment. I also think that the deals with the European Union, India and China will go through successfully. However, I am skeptical about the Trans-Pacific Partnership. With the high opposition of many members and Canada’s unwillingness to change its Supply Management policy, it seems unlikely. I think it will boil down to Canada having to choose between the Supply Management policy and entrance into the Trans-Pacific Partnership. The endless business opportunities this market will offer Canada leaves little doubt that Ottawa will choose the Supply Management policy over the TPP. Furthermore, there are few Canadian businesses that make an impact on the global stage, so for now Canada relies on the investments of foreign businesses. They are especially interested in the commodities sector. If Ottawa slackens regulations like speculated, Canada will see a lot of its commodities end up in foreign hands. This does not leave much for the future which will definitely pose problems as Canada is heavily reliant on the commodity sector. Canada needs to create more competition to spur innovation and continue to move away from the unstable U.S. markets if it wants to see more growth and prosperity.

February Keystone deadline tied to payroll tax rider

Posted: Jan 2, 2012 11:23 AM ETThe Associated Press

President Barack Obama and Congress are starting the election year locked in a tussle over a proposed 1,700-mile oil pipeline from Canada to Texas that will force the White House to make a politically risky choice between two key Democratic constituencies.

Some unions say the Keystone XL pipeline would create thousands of jobs. Environmentalists fear it could lead to an oil spill disaster.

A law Obama signed just before Christmas that temporarily extended the payroll tax cut included a Republican-written provision compelling him to make a speedy decision on whether to build the pipeline. The administration is warning it would rather say no than rush a decision in an election year.

It's a dicey proposition for Obama, who enjoyed strong support from both organized labour and environmentalists in his winning 2008 campaign for the White House.

Environmental advocates, already disappointed with his failure to achieve climate change legislation and the administration's decision delay new smog standards, have made it clear that approval of the pipeline would dampen their enthusiasm for Obama in this November's election.

Some liberal donors even threatened to cut off funds to Obama's re-election campaign to protest the project, which opponents say would transport "dirty oil" that requires huge amounts of energy to extract.

If he rejects the pipeline, Obama risks losing support from organized labour, a key part of the Democratic base, for thwarting thousands of jobs.

Obama appeared to have skirted what some dubbed the "Keystone conundrum" last month when the U.S. State Department announced it was postponing a decision on the pipeline until after the 2012 election. Officials said they needed extra time to study routes that avoid an environmentally sensitive area of Nebraska that supplies water to eight states.

The affected area stretches just 65 miles through the Sandhills region of northern Nebraska, but the concerns were serious enough that the state's governor and senators opposed the project until the pipeline was moved.

Republican Gov. Dave Heineman, who opposed the initial route, says he supports efforts to accelerate the project, noting that provisions in the payroll tax bill allow the project developer to find a new route avoiding the Sandhills.

The new route would have to be approved by Nebraska environmental officials and the State Department, which has authority because the pipeline would cross an international border.

The pipeline would carry oil from tar sands in western Canada to refineries in Texas, passing through Montana, South Dakota, Nebraska, Kansas and Oklahoma. The project's developer, Calgary-based TransCanada, says the pipeline could create as many as 20,000 jobs, a figure opponents say is inflated. A State Department report last summer said the pipeline would create up to 6,000 jobs during construction.

The payroll tax cut law gives the Obama administration 60 days to decide whether to allow construction of the pipeline.

An "arbitrary deadline" for the permit decision would compromise the process, short-circuiting time needed to conduct required environmental reviews and preventing the issuance of a permit, the State Department warned in a written statement on Dec. 12. Obama administration officials confirmed that view after the payroll tax bill was approved.

Republicans call the threat little more than an excuse that allows Obama to placate environmental groups while not rejecting the pipeline outright.

"The only thing arbitrary about this decision is the decision by the president to say, `Well, let's wait until after the next election,' " the Speaker of the Republican-led House John Boehner said.

Boehner and other Republicans say the pipeline would help Obama achieve his top priority — creating jobs — without costing a dime of taxpayer money. They hope to portray Obama's reluctance to approve the pipeline as a sign he favors environmentalists over jobs.

Russ Girling, TransCanada's president and chief executive, said his company would do whatever is necessary to make sure the project is approved.

"We've had more than enough surprises on this," said TransCanada spokesman Shawn Howard.

In Nebraska, where the pipeline faces strong resistance, state officials are awaiting an environmental study that will determine a new route. Officials have said the review will take six to nine months.

Some landowners in the Sandhills celebrated the decision to reroute the project, but the pipeline's strongest opponents say they still have concerns about the prospect of the government using its power of eminent domain to seize land, as well as liability issues in case of a spill.

"Republicans have bullied their way to get a reckless rider attached to a bill that was supposed to be about helping middle-class families," said Jane Kleeb, executive director of the group Bold Nebraska, which opposes the pipeline.

With the bill signed into law, Obama "must do the right thing for our land, water and families' health by denying the pipeline permit," Kleeb said.

Project supporters say U.S. rejection of the pipeline would not stop it from being built. Canadian Prime Minister Stephen Harper has said TransCanada could pursue an alternative route through Canada to the West Coast, where oil could be shipped to China and other Asian markets.

"Canada is going to develop this no matter what, and that oil is either going to come to the United States or it's going to go to a place like China. We want it here," said Rep. Fred Upton, R-Mich., chairman of the House Energy and Commerce Committee.

Opponents call the West Coast option farfetched, noting that Canadian regulators have announced a one-year delay for a similar project that would carry tar sands oil to British Columbia, on Canada's western coast.

Native groups strongly oppose both the Keystone XL and the Northern Gateway pipeline proposed by TransCanada rival Enbridge. Canada's First Nations have constitutionally protected treaty rights and unsettled land claims that could allow them to block or significantly delay both pipelines.

Unions are watching closely. Unemployment in construction is far higher than other industries, with more than 1.1 million construction workers jobless, said Brent Bookers, director of construction at the Laborers' International Union of North America.

"For many members of the Laborers, this project is not just a pipeline, it is a lifeline," Bookers said, adding, "Too many hard-working Americans are out of work, and the Keystone XL pipeline will change that dire situation for thousands of them."

Roger Toussaint, international vice president of the Transport Workers Union, opposes the pipeline.

"The dangers of the pipeline are compelling, and no one should believe the claims of either the Republican leadership or the energy companies, with respect to the project being shovel ready or with respect to the number of jobs it's going to produce," he said.

http://www.cbc.ca/news/business/story/2012/01/02/keystone-pipelines-congress.html

John Baird crafts Canadian foreign policy with a hard edge

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OTTAWA— From Wednesday's Globe and Mail
Last updated Sunday, Jan. 01, 2012 6:44PM EST
By: Campbell Clark

The man rewriting Stephen Harper’s foreign policy for majority-government times makes no apologies for stepping on a few toes. From climate change to Israel, Foreign Affairs Minister John Baird is willing to shrug off the gripes.

After five years of minority government, when a focus on short-term politics meant leaving relations with some parts of the world untended, Mr. Baird now has the task of broadening Conservative foreign policy and planning for the longer term.

But it’s not a mandate to please all. The image of Canada seeking to play honest broker and likable conciliator on the world stage is being changed by a deliberate edge to Conservative foreign policy. There’s a willingness to send the military, a high priority on economics and less qualms about raising hackles.

“Stephen Harper said it and I’ve said it: ‘We don’t just go along to get along,’ ” Mr. Baird said in a year-end interview. “There’s 194 countries in the world. I don’t agree with their foreign policy on everything,” he said. “You know the Russian Foreign Minister? His job is to stand up for Russia. My job is to stand up for Canadian values and Canadian interests.”

In a year when the world shook from financial crises and Arab uprisings, Canada’s place in it was shifting, too.

Even before Canada pulled out of a ground war in Afghanistan in July, it joined an air war in Libya. When it was over, Mr. Harper touted victory, and promised a military ready for more. He blocked part of a G8 leaders’ statement urging peace talks on Israel, and bucked the UN majority in vocally opposing a Palestinian bid for statehood. The Harper government closed a deal to harmonize security with the U.S. in return for projects to speed border traffic. And Canada made itself a symbol by withdrawing from the Kyoto climate-change accord.

Mr. Baird’s public image as a partisan pit-bull might make it seem that he was chosen to make foreign policy combative. But that’s a stage persona for a politician who is affable in person. As Foreign Minister, he worked to build all-party support for the Canadian mission in Libya. Foreign diplomats give him high marks for being more accessible and engaged than his predecessors.

But he is a thick-skinned politician who doesn’t wince over disagreements or worry about a little blowback. Canada was once alone on climate change for demanding all major emitters join a new treaty, but it’s a common view now, he said, and Canada’s pro-Israel stand at the United Nations has hardly affected its relations with others.

“I don’t have many foreign ministers or many foreign governments who raise climate change with me. In eight months, maybe two or three times,” he said. “I went to the Middle East for five days. No one raised our voting record at the UN.”

In the big events of 2011, Mr. Harper’s government kept a cold, calculating eye. It reacted with caution to Arab Spring protests in Egypt, but sent fighter jets to Libya.

Mr. Baird’s first trip as Foreign Minister, to meet rebel leaders in Benghazi, marked him the most – meeting professionals and public servants risking their futures in a struggle to oust Moammar Gadhafi. Ottawa went in big with a substantial military contribution, but Mr. Baird admitted that before the stunning collapse of Gadhafi forces, he feared a long war, and a death toll of 100,000 or 250,000.

The Tories’ cooler response to uprisings in Egypt and Tunisia remains marked by the view that a “big chunk” of the revolts were protests against unemployment and cronyism, not purely a call for Western-style democracy. Amid the election of Islamists in Egypt, Mr. Baird said the goal should be to move the region to more civil society, for intellectual freedom, and less corruption – and caution is still warranted.

The harder edge isn’t universal. On a trip to Beijing, Mr. Baird looked like a man trying to get along, calling China a “friend,” as the Harper government seals a new era after a chilly start in ties – but that, too, is a function of hard-edged economic interests with a major trading partner.

Now, Mr. Baird’s task is to broaden Canada’s foreign policy beyond the few priorities of minority years, like the United States, Afghanistan, China and Israel. A foreign-policy review is quietly under way, and Mr. Baird has signalled efforts to renew ties with untended regions such as Southeast Asia.

The short-term survival politics of successive Liberal and Conservative minorities have prevented ministers from travelling and making connections abroad, and limited planning, he said. “Governments are sometimes criticized for looking at things in four-year windows,” he said. “We’ve been looking at things in four-day, four-week and four-month windows for the last seven [years]. And that’s not healthy.’

The priority, as the United States and Europe face challenges and Canada needs to diversify trade, is economics. “That is the lens,” Mr. Baird said. With the U.S., Canada had success in reaching a border accord, but experienced a setback when the Keystone pipeline extension was delayed, he said. With China, Canada wants a foreign-investment agreement; with the EU, a trade deal.

But Canada needs to expand its foreign-policy planning beyond the biggest players, he said. “The countries that are going to be really important for Canada in the future also include Turkey, Vietnam, Indonesia, Nigeria. Those are pretty important.”

http://www.theglobeandmail.com/news/politics/john-baird-crafts-canadian-foreign-policy-with-a-hard-edge/article2284834/