Canada cautious on liberalizing foreign investment

Mon Mar 18, 2013 5:04pm EDT
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By Randall Palmer, David Ljunggren and Louise Egan

OTTAWA (Reuters) - Canada will be cautious about liberalizing foreign investment rules for sensitive economic sectors because it's very hard to reverse a decision once it's been made, Industry Minister Christian Paradis said in an interview on Monday, meanwhile insisting that Canada remains open to foreign investment.

"When you decide to go with these kinds of reforms, you cannot ratchet down after that. You can ratchet up but not down," said Paradis, who is the government minister responsible for foreign investment rules.

Canada has strict rules governing foreign stakes in industries such as banks, telecommunications and airlines, as well as more general tests to determine if foreign takeovers are beneficial to Canada.

But the issue remains controversial. Paradis' predecessor unexpectedly blocked a 2010 foreign takeover offer for fertilizer giant Potash Corp, and the government last year spent several months mulling its response to an offer for oil company Nexen Inc from state-owned Chinese oil company CNOOC Ltd.

Ottawa eventually allowed the Nexen takeover, but imposed strict new restrictions on future bids by state-owned companies, particularly for companies in the Alberta oil sands.

One Canadian company widely viewed as a potential takeover target is BlackBerry, which is struggling to compete against Apple's iPhone and devices using Google Inc's Android operating system.

Paradis said he hopes BlackBerry will remain a national champion. But he said he did not know what would happen to the mobile device maker, given the unforgiving competition in the global telecommunications industry.

"We never know what can happen but I've said - and I truly believe this - I hope BlackBerry will continue to be a Canadian champion in the world, that it grows organically," Paradis said in his office in the Industry Canada building in Ottawa.   Continued...

Canada's Industry Minister Christian Paradis pauses during an interview with Reuters in Ottawa March 18, 2013. REUTERS/Chris Wattie