Mr. Speaker, I am pleased to speak today to this opposition motion concerning the takeover of the Canadian company Nexen by the Chinese company CNOOC.
Essentially, the motion sponsored by the NDP's industry and natural resources critic calls for three things. First, it calls on the government to undertake public consultations before making a decision concerning the plan to acquire Nexen. Second, and more broadly, it asks the government to hold consultations concerning the entire issue of foreign ownership in the Canadian energy sector. Third, the motion asks that this exercise be used to clarify the concept of “net benefit” to Canada when foreign takeovers are reviewed under the Investment Canada Act.
Before going any further, I would like to do a brief review for the people listening, because I am sure there are people in my riding, Rivière-des-Mille-Îles, who are listening to me now and do not see how this issue affects their lives. But we have to remember that even though this is happening in Alberta, the issue affects all of Canada and all Canadians. This is the biggest foreign purchase offer by a government-owned company in the history of Canada and the first in what will probably be a series of similar major acquisitions.
In July 2012, the China National Offshore Oil Corporation, CNOOC, put in an offer to purchase Nexen, an oil company based in Calgary, for $15 billion.
It is important to know that CNOOC is 64% owned by the Chinese government and that a number of the company's key executives, including the president and vice-president, are appointed by the Chinese government. If the transaction were to go through, as the Nexen shareholders hope, it would be the biggest takeover in Canada by a foreign state-owned corporation, and as I mentioned, some people are afraid that this is just the beginning.
By getting its hands on Nexen, the Chinese government would control the 12th largest oil company in Canada, a company that has interests in 300,000 acres of oil sands and another 300,000 acres of land that is suitable for shale gas drilling.
We have to realize that this is a growing trend. Canada has already authorized multiple acquisitions of Canadian companies by Chinese companies in the natural resources sector. According to information compiled by the CBC, these transactions add up to $23 billion dollars since 2005. Consider, in particular, the investments by the China Petrochemical Corporation in Syncrude, and various investments by the China National Petroleum Corporation in Canadian oil and gas.
To win over the Canadian regulatory authorities, CNOOC has promised to keep the company’s head office in Calgary, maintain the same number of jobs and keep the existing management team. These fine promises remind me of the commitments made by the Anglo-Australian multinational Rio Tinto when it got hold of Alcan in 2007. The brief experience we had with that transaction showed how detrimental that loss of control was for workers in Quebec. And we learned recently that the corporation was going to suspend its activities at the cathode production centre at the Arvida plant and cut management positions at the Shawinigan aluminum smelter.
We also have to realize that CNOOC's environmental practices raise eyebrows among some observers.
For example, in June 2011, two consecutive spills at CNOOC project sites dumped 204 tonnes of oil and polluted more than 6,200 km2 of the ocean surface in China’s Bohai Bay. The company did not report the spill until 30 days later. In addition, the site operator said that CNOOC insisted on using an affiliated company rather than going with a clean-up service that offered faster deployment.
All of this is of particular concern because the Conservative government refuses to require that corporations honour the environmental commitments made in the foreign investment review process. It is even less likely that Canada will require a state corporation that enjoys the support of the Chinese government to honour its commitments.
In addition, the new foreign investment protection agreement signed by the Conservative government and China includes investment protection measures that give special rights to foreign corporations.
CNOOC could wield more power than Nexen vis-à-vis the Canadian government and block environmental restrictions.
As we know, CNOOC and the Chinese government have a dismal human rights record. For example, a project in Burma was controversial because 3,000 oil wells were dug by hand and more than 300 acres of agricultural land were forcibly confiscated.
What is most ironic is that this takeover of a Canadian company by a Chinese state-owned company is taking place under a government that, not so long ago, shied away from the Chinese market because of the Chinese government's poor human rights record.
In 2006, for example, the Prime Minister said:
I think Canadians want us to promote our trade relations worldwide, and we do that, but I do not think Canadians want us to sell out important Canadian values—our belief in democracy, freedom, human rights. They do not want us to sell that out to the almighty dollar.
On July 28, 2012, the editorial writer for Le Devoir wrote:
At the slightest diplomatic chill, the Chinese government will not hesitate to blackmail its trade partners by threatening to close facilities or interfering in the markets to choose its suppliers and customers.... It will thus be up to the Prime Minister himself...to decide. However, based on the statements he made in 2006 and those he is making now, the Prime Minister's priorities have clearly changed: he is now focused on oil patch investments and trade opportunities with Asia. How can we trust that Canadians' long-term interests will be seriously considered in this process?
For many observers, the Chinese government's control over CNOOC and the possible control this company could have over a resource as strategic as Canadian oil represent an unacceptable potential threat to national security.
The Canadian Security Intelligence Service recently warned this Parliament. I would like to quote some of what it said:
When foreign companies with ties to foreign intelligence agencies or hostile governments seek to acquire control over strategic sectors of the Canadian economy, it can represent a threat to Canadian security interests. The foreign entities might well exploit that control in an effort to facilitate illegal transfers of technology or to engage in other espionage and other foreign interference activities.
All of these legitimate concerns bring us back to the process used by the government to examine this transaction. The bid is subject to a foreign investment review process under the Investment Canada Act to determine whether it constitutes a “net benefit” to Canada.
This process has some serious shortcomings. First, it takes place in secret behind closed doors. Canadians will not be consulted. They will not be able to provide information on the effect the transaction will have on employment, the environment or the energy sector in general.
Furthermore, the process will not take into account CNOOC's track record with regard to human rights or the fact that this company has already caused oil spills and environmental disasters. This type of takeover must not be examined quickly and informally.
Given the serious concerns this transaction has raised, the NDP is calling on the government to hold public hearings before making a decision. We also believe that the government should take advantage of this opportunity to broaden the debate and hold consultations on the whole issue of foreign ownership in the Canadian energy sector.
As my colleagues already mentioned, companies, workers and communities need certainty with regard to foreign acquisitions, but the review process for these transactions lacks transparency, accountability and predictability.
In closing, I would like to encourage all of my colleagues, regardless of party affiliation, to support this NDP motion.