The Harper government will ask a Commons committee to review the Investment Canada Act and recommend improvements even as it defends its decision to block a takeover of Potash Corp. as "procedurally clean."
Industry Minister Tony Clement said on Friday that he will make clear the government's reasons for turning down BHP Billiton Ltd.'s $38.6-billion (U.S.) bid for the Saskatoon-based fertilizer company at the end of the 30-day appeal period. At that time, he will also spell out some policies that will guide the global business community in potential takeover bids of high-profile Canadian companies.
"My requirement is to ensure that when we describe the reasons for the decision, those reasons can be interpreted by the investment community so that they can make their decisions accordingly with as little uncertainty as possible," the minister said during an interview in his Parliament Hill office.
"So I think there are some general principles that are going to come out of this decision, and I'll be articulating those in due course."
Mr. Clement said the government is also supportive in principle of a New Democratic Party motion that calls for a review of the 35-year-old Investment Canada Act. The House is scheduled to vote on that motion when it returns from a week-long break.
"After that 30-day [appeal]period is over, we'd be happy to refer it to the House of Commons industry committee, and they can do a thorough job of looking at the act, getting some deputations, seeing what improvements can be made," he said.
The NDP motion calls for changes to the federal act to make the process more transparent and to ensure the commitments companies make to win approval for their acquisition are made public and are openly monitored and enforced. The industry minister said he too wants to see a more open review system for proposed foreign acquisitions.
The Conservative government has been criticized for yielding to a political motivations and protectionist impulses when it turned down BHP. Both The Economist and The Financial Times - influential international business publications - have editorialized that the decision is a poor precedent that sends confusing signals to the marketplace.
Saskatchewan Premier Brad Wall and federal Agriculture Minister Gerry Ritz argue that Ottawa has acted appropriately to ensure Canada protects a strategic domestic player in the global agricultural sector. Many business leaders have urged Prime Minister Stephen Harper to revisit foreign investment rules to provide clear signals that Canada will protect its corporate champions in strategic sectors such as the oil sands.
Despite complaints that Ottawa bowed to political pressure, Mr. Clement said the decision was entirely consistent with the Investment Canada Act's net benefit test and "procedurally clean."
While the test covers such quantifiable issues as impact on employment, investment and productivity, it also gives broad discretion to the government in determining "net benefit." A foreign investment must be compatible with "national industrial, economic and cultural policies," while "taking into consideration" those policies of any province "likely to be significantly affected by the investment."
In other words, while Mr. Wall may not have had a veto over the BHP deal, the legislation clearly gave considerable weight to the views of the provincial government as owner of the potash resources.