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.