May 31, 1972 (28th Parliament, 4th Session)

LIB

Jacques Guilbault

Liberal

Mr. Jacques Guilbault (Saint-Jacques):

Mr. Speaker, I wish to take this opportunity to make a few remarks concerning Bill C-201, which provides for the review of acquisitions of control of Canadian business enterprises by foreign investors.
If I rise on this matter, it is because I feel that the Quebec people are very much concerned about the economic independence of Canada and the threat which foreign capital represents. Moreover, the people of my constituency of Saint-Jacques have every reason to be especially concerned about this. On the one hand, as many hon. members know, this constituency includes St. James St. and Dorchester Blvd, in Montreal, which are at the center of the economic activities of the whole of eastern Canada, and the officials of these firms are impatiently awaiting the decisions which the House will make in connection with this bill.
Similarly, most residents of Saint-Jacques who are in contact with financial circles earn a very modest salary. Quite a few are unemployed. Making allowance for the employment situation, they are very eager to know the decisions taken by the House concerning foreign investments.
This being said, I would like to comment on the decision of the government to deal with the foreign investment issue. As for me, the government's decision is realistic. Of course, some of my friends are already saying that I am not serious, but it is obvious that some people will accuse the government of being too weak in this respect whereas others will say that the government went too far. It is always easy to say such things when you just have to deliver a speech before the House and when you are not responsible for the administration of the country.
However, this government is responsible for the administration of the country and, when they make decisions, they have to consider the effects these decisions will have on the Canadian economy and on the standard of living in Canada. That is why I say the decision made by the government is realistic. In fact, the question is to proceed gradually rather than to take drastic steps that could harm the present state of the economy in Canada.
Obviously, according to our colleagues of the New Democratic Party, we are not going far enough. To them, there should be short term guarantees of complete economic independance for Canada. As the hon. member said who spoke before me, this is a policy for buying back foreign companies set up in Canada and we all recognize that this type of policy would be a waste of money. To my mind, we would be better off investing our money in new undertakings, instead of using it to buy companies already in operation and which create jobs, even though they belong to foreigners.
To my mind, economic independence, as some members of the Waffle group would have it, is an utopia, for our economy is no longer independent nor will it ever be. Like the economy of every country in the free world, ours is an international and interdependent economy. It is pointless to try to escape that reality.
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May 31, 1972
Foreign Takeovers Review Act
As barriers fall between countries, the more the economy of each country is influenced by the economy, the economic activity of its neighbours. We all know that in the field of international trade, neither Canada nor the United States can do what they want. We realized it recently when the United States had to impose a 10 per cent surcharge to settle difficult economic conditions.
Even a country as powerful as the United States, a country which enjoys just the same a greater degree of economic independence than Canada, must legislate to try to protect themselves on the economic level against the trading activities of other countries.
This clearly indicates that all countries are subjected to an interdependent mechanism and that trying to give one complete economic independence is an utopia similar to a suggestion that Canada should be changed into an Eldorado.
We know that even the rates of exchange greatly influence the economy of the free world countries and those rates are not easily controllable. For example, as a result of the government's decisions, Canadian currency varies on the international money market.
Today, I am told that the Canadian dollar is worth $1.02 compared to the American dollar. Obviously, this does not favour our exports, but is one more proof that the thesis of economic independence is easily made.
Finally, I should like to say one word on the investment requirements of Canadians. No doubt, Canada needs now massive investments of capital.
That is obvious in Quebec and again recently Premier Robert Bourassa went to New York to try and get some capital investment in Quebec.
My colleagues who represent ridings in the Maritimes also know precisely what I mean.
We have an urgent need of capital; we need a massive injection to boost our economy which has been showing signs of recovery for some time now. We need them above all in order to reduce unemployment, particularly in the eastern provinces and in Manitoba. And we need capital to solve the problems resulting from unemployment.
When the Canadian government must make a decision with regard to foreign investments-it has had to do so recently and it is trying to have it ratified by the House- that is the dilemma in which it finds itself. On the one hand, the government must find solutions to an intolerable level of unemployment. On the other hand, some radicals ask us to prevent foreign capital from coming into Canada.
How can the two positions be reconciled? Obviously, that is impossible. And this permits our friends from the NDP to continue to preach the utopia that is economic independence and, at the same time, to accuse us of doing nothing to fight unemployment.
In my view, the Canadian electors will not be misled by such dramatic productions. They know that we need investments for economic development, to reduce unemployment, to ensure better social measures because, obviously, when our economy is in good shape it is easier to
[Mr. Guilbault.J
put such measures into application than it would be otherwise. Besides, economic independence in Canada is best assured if the economy is healthy.
I would now like to say a word about what I call the threat of foreign takeovers. In my opinion, such a threat to the Canadian economy, within a short, medium or even long period, is a myth.
First of all, capital, either foreign or Canadian, has no nationality. The foreign corporation investing in Canada has in mind one single and clear purpose, always the same: finding a market, a place to produce at reasonable costs and ultimately profits and dividends for the benefit of its shareholders.
Capital coming into Canada is neither Japanese, American nor Belgian. It is international and it seeks a good soil where to grow. Nobody comes to Canada to invest capital with the avowed purpose or even the consciousness that some day he will control the policy decisions that Canadians will have to take to fulfil their destiny.
Moreover-and this is related to what I said a few minutes ago-it is always foreign corporations that invest in Canada, never foreign governments. This is why the myth of control over our economy by foreign countries is a real myth.
It is never the United States of America that come here to invest capital, but independent corporations which, while they are American, do not necessarily have convergent interests. Most of the time, they are companies which do not care for the neighbouring society and which being in the same field, are often in competition and want to make higher profits than their competitive organisations which invest capital in Canada at the same time.
Mr. Speaker, I should like to say a few words about the provisions of this bill. First, generally speaking, this legislation seems to me particularly reasonable, given the set of circumstances Canada is in at present.
First of all, the legislation does have some scope, although opposition members have been trying to have us believe it is very limited. I suggest that at least concerning takeover of Canadian businesses by foreigners the legislation is quite adequate since it allows the government to screen all takeovers of companies with gross annual incomes of over $3 million. Everyone will agree with me that a company with a gross income of less than $3 million a year car hardly have detrimental effects on the Canadian economy in the near future.
Furthermore, the government will be able to assess takeovers of all companies with gross assets of over a quarter of million dollars and will exercise the right to look into their operations. There again, it will be admitted that a company with assets of less than a quarter of a million dollars has little chance of exercising an unfavourable influence on the Canadian economy.
Thus the legislation is adequate and covers all industries and all takeovers liable to affect substantially the course of Canadian economy, or at least the economy of the area where a foreign company plans to locate.
I suggest that the legislation, besides being adequate in the area it covers, seems reasonably flexible. In fact, the
May 31, 1972

government retains the privilege of examining all projects of foreign takeovers. However, after assessment, the government retains the privilege of approving the request for purchase of a Canadian company by foreigners, or to reject it. And this looks like a good thing to me, because the Canadian government which must answer to the people has a responsibility to decide whether in its opinion the takeover of a Canadian company by foreigners might be beneficial or detrimental to the interests of Canadians.
As hon. members know, at the end of each year, the minister will be required to table before the House a comprehensive report of his department's activities in this field, which will provide the opposition with ample opportunity to comment on and even criticize the measures taken and decisions made by the government. I suggest that this provision is highly desirable.
Besides, I refuse to believe, as a certain party has been suggesting, that this measure is weak and will have no strength. The provisions contained in the last clauses of the bill are severe enough to potential offenders. In my opinion, this bill has teeth.
For instance, people who simply fail to give notice of their intention to sell their enterprise to foreign concerns will be liable to a $5,000 fine. We must admit that the government does not joke when it introduces a measure of this type. This is likely to make people who might have avowed intentions to transgress the law think twice.
Moreover, the bill provides that people who refuse to comply with the law will be liable to a $10,000 fine or six months in jail, or both. This shows that here again the penalties are very heavy, so we can hope that the law will be complied with; we can at least conclude that the government has made this legislation strict enough for it to be enforced.
Reading through the bill a moment ago, I even noticed that the mere fact of impeding a study or investigation being made of a foreign takeover makes the person guilty of this offence liable to a $5,000 fine. I would say this legislation has teeth and will be complied with.
I think this bill will be welcomed by the Canadian public. Of course, I already know that it will not be welcomed by the radicals, by those who would have liked the government to do nothing to prevent the foreign takeover of Canadian industries. On the other hand, this bill will not please those radicals who would want the Canadian government to buy back dollar for dollar every foreign-owned Canadian enterprise.
But I think that most Canadians will agree with this measure, in view of the circumstances we are experiencing in Canada-and it must be said that this is only one step taken by the government in this direction.
Over the last few years, the Canadian government has introduced several measures to give Canadians firm control over their economy. I do not want to detail them since the hon. minister has done it already when he tabled the bill. However, I would like to add that this legislation is another stone in the setting up of a reasonable system of controls by Canadians on their economy. I suggest it would have been ridiculous, at this time, to hurry things up and take drastic measures that could have affected or
Foreign Takeovers Review Act
substantially reduced the inflow of foreign investment in Canada. It is enough for us to realize that some 1,300,000 Canadian students are on the eve of entering the labour market. This considerable number of students will add to that, already known, of the unemployed which we are reminded of every day by the opposition during the oral question period.
It is obvious that the principal concern of the government, at this stage, is the now intolerable unemployment situation and the creation, as soon as possible and by all means possible, of the necessary job opportunities. This is certainly not the best time to propose measures that could prejudice the attainment of the major objective that the government, I repeat, has set for himself, that is to try and guarantee to each Canadian the availability of a job.
That was the dilemma facing the government: on the one hand, to fight unemployment and, on the other, to secure a reasonable independence for our economy.
I believe that the government has efficiently solved this dilemma in submitting Bill C-201 and this is why, Mr. Speaker, I will support this bill when it comes to a vote. I urge my hon. friends to do likewise.

Topic:   GOVERNMENT ORDERS
Subtopic:   FOREIGN TAKEOVERS REVIEW ACT
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