PM vows to relax foreign investment curbs

Fri Sep 12, 2008 4:06pm EDT
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By Randall Palmer

OTTAWA (Reuters) - Prime Minister Stephen Harper promised on Friday to permit more foreign investment in airlines and uranium but not in telecommunications, and he said he would not act on recommendations to allow bank mergers.

A reelected Conservative government would also add a national security provision to its Investment Canada Act. That would allow more foreign investment only if domestic security concerns are not compromised and if the other countries involved open up their markets.

"We are a party of free enterprise, free markets and free trade," said Harper, campaigning in Nova Scotia for the general election to be held on October 14. "These principles form the cornerstone of our prosperity, but we also believe government needs to be able to draw the line when any foreign takeover would jeopardize our national security."

In June, the government-appointed Competition Review Panel urged the government to lower barriers to foreign investment in uranium mining, air transport and telecommunications, and lift a ban on domestic bank mergers.

Harper said he would proceed in uranium and airlines only. He said he will also agree to lift the general threshold for reviewing foreign investments to transactions worth C$1 billion ($943 million) from the current C$295 million.

"We will allow for increased foreign ownership in the airline sector subject to negotiation with our trading partners, and we will allow foreign ownership of uranium mining and producing, provided that such investments meet a national security test and that Canada also receives comparable benefits from investor nations," he said.

The new foreign investment threshold for airlines would be 49 percent, up from 25 percent, he said.

The sector, suffering from surging fuel costs and a weak economy, has called for relaxed ownership limits for years.   Continued...

<p>Conservative leader and Canada's Prime Minister Stephen Harper is flanked by security while delivering a speech to the Halifax Chamber of Commerce in Halifax, Nova Scotia September 12, 2008. REUTERS/Chris Wattie</p>