Poor protection

It's hardly news that the Cons are doing nothing to hold foreign investors to their obligations in taking over Canadian companies. But it's worth noting that Industry Minister Tony Clement is not only declining to exercise his authority, he's also going out of his way to minimize what the Cons can actually do to protect Canadian interests:

“I will do what I have to do to protect Canadian interests,” the minister said in the interview. “I will not do so in a way that is reckless, but I will do so in a way that, if there is a contractual obligation that we believe has been breached, then obviously we have to protect Canadian interests.”

Under the Investment Canada Act, foreign companies attempting to acquire Canadian firms must prove the deal represents a “net benefit” to Canada. In deciding whether to approve deals, the industry minister considers a range of factors, including the effect on economic activity and employment in Canada, according to department guidelines.

If the minister believes a foreign company has violated its commitments, he or she can issue a demand letter asking the company to comply. Eventually, the government could seek a court order forcing the company to divest the Canadian holding, or pay a penalty of up to $10,000 a day, among other remedies.

The striking part of Clement's statement is his effort to paint the issue as a contractual one.

After all, the relationship between his office under the Investment Canada Act and a foreign investor carries some obvious differences from a mere commercial contractual relationship. Clement acts as a regulator with the ability to determine at the outset whether an investment will create a "net benefit" for Canada. And after deciding whether the conditions placed on a takeover are appropriate, he has the authority to follow through on that assessment of the public interest by enforcing compliance through a process which involves a range of consequences far beyond those which would apply under any ordinary contract.

Which makes it highly significant that Clement is looking to understate his own authority. By using labels like "contractual obligation" which try to shift the discussion from a governmental frame of reference to a commercial one, Clement understates both the nature of the obligations of foreign investors, and his own role in regulating them.

Of course, it's not hard to see how that might serve the Cons' purposes. In addition to offering a means of escaping responsibility for the job losses which are taking place on their watch, it also serves a longer-term ideological goal of making government seem less effective than it can be.

But Clement's efforts to minimize what he can do also serve to highlight the fact that his preference is not to do anything more than he can avoid. And that can hardly offer much reason for any additional foreign owners to take seriously the possibility that he actually will do his job by defending Canadian interests.

Edit: fixed wording.