Canada to Vet Nortel Asset Sale, Avoids Change to Foreign Investment Safeguards

Strategic Insights -

Prime Minister Stephen Harper has stated that Ottawa will scrutinize the purchase of Nortel assets by Ericsson under existing law, ensuring it benefits Canada. This move comes as the $1.13 billion deal has sparked concerns over Canadian control of prized next-generation wireless technology. Harper emphasized that the government will not introduce legislation to increase protectionism in foreign investment, despite opposition calls to block the sale. The deal has become a test of the Harper government's willingness to adapt its industrial strategy to foster growth in the telecommunications sector.

Key Takeaways:

  • The Harper government will examine the Ericsson purchase under the Investment Canada Act to determine if it is in Canada's national interest.
  • Existing provisions of the Investment Canada Act may be insufficient to stop the transaction, with many observers believing the government should intervene to block the sale of Nortel's wireless assets.
  • The deal marks a test of the Harper government's readiness to tailor its industrial strategy to foster growth in innovative telecommunications.
  • Research in Motion (RIM) and opposition MPs have urged Ottawa to intervene to block the sale of Nortel's wireless assets to a foreign-owned corporation.
  • The Harper government has signed trade liberalization agreements with eight countries and is discussing similar deals with four other Central American nations.
  • The PM emphasized the importance of keeping borders open to prevent the recession from getting worse, citing the need to remove protectionist barriers and ease trade restrictions.

Statistics:

  • Two-way trade between Panama and Canada reached $149 million last year.
  • The Panama economy grew at a rate of 9.2 per cent in 2008, despite the world recession.
  • The Harper government has signed trade liberalization accords with eight countries.
  • The government is discussing similar deals with four other Central American nations.
  • The 27-nation European Union is also under discussion regarding a trade liberalization accord.

Sources:

  • Adrian Wyld, The Canadian Press, "Harper to sign free-trade deal with Panama" (no date)
  • The Canadian Press, "Harper government to vet Nortel sale to Swedish firm Ericsson" (no date)