C.MADA
Trudeauls delve to 'Canadianizes industry
Canada's oil and gas boom is giving that
country's econarnic natkuialists a power-
ful now lever for agmWor a 10119-303gid
gut cutting down the controlling stake
that foreigner% mainly U. & companies,
wield in key Canadian in&istrios.
By a series of measures tbat will proba-
bly include tax wrift-offs bmwing Cana,
dm, energy companies and government-
aided buyouts of subsid1issies of roultins-
U01281 Oil gientS, the TIN-al government
of Prime Minister Pierre Elliott Trodeau
hop" to raise Canadian control of the oil
and gm industry from jut 36% at pres-
gut-as measured by assets of Candl-
an-held companies-to at seat 50% by
1990.
The says. if it sucesetis will shift
L-to r=&2-- '---A* =m of the tre-
mendous Rz-4al clout that oil and gas
companies we smoking a a result of
their huge cash dow, which Jumped to $7
t"Sillion list year out of a total of $32 bill-
!on to- the entire Caurdlazz economy.
Those fund& which oil and gm producers
we already stsrtiag@ to invest in other
businesses as well, an asen by Marc
Lalonde, Mhustw of Energy Wm A
RasourcW as the decisive few in a now
drive to -Canadi=W the economy.
As put of the strataff. the Trudeau
government Wm plus to turn Petro-
C-nad- the toderally-owned oil can*&-
ay that the previous Progressive Cionser-
vative goverziment bad proposed to sell
off. into a major intr4raled *0 company
capable of competing with the multina-
60CLILLL "Canadians most be partnem
not just employees. in car future oil and
gas industries,' Lalonde asys.
AMM-" For U.S. end
odw foreign investors in Canada the
new energy policy-schaduled to be un-
Taw in October along with proposals
for tougher gmwwmt mutim of man-
oil investments-is delaying massive
capital spending plan end raising Un-
a" question scout their,fature role in
Canada. 'How the hall do I plax." $26
/0_@i. M. MacLeod. senior vio@ot of
111011 C
.1 4nads, Ltd. and chairzoan of the
C-Han Petroleum Assu. 'For scam-
pie, we're looking at reactivating off-
shore drilling on the eart coast at a cost
of F25 million or $30 -Moe a wall. I
can't plan onless I know then is an
incerttive [that] is not ridiculously biased
Cagamt foreign co-paidesr
Lalonde up invesmat from abroad
will continue to be "welcome' and that
the total foreign stake in the oil and ps
industry, now worth = billion, will
probably keep in dollar UWM
even though foreigners' percentage
M SU31UM wax- October S. ism
share will fall as investment b) Ca"-
us accelerate& Adds John A- Arm-
strong. chairman of Imperial Oil Ltd.
Canada's biggest oil company. which is
69% owned by E=on Corp.: 'I think the
pouptry will achieve the objective of the
government in tam of foreign owner-
ship or control without necessitating a
change in the equity holdings of the
companies that are here today.' Despite
inflows from abroad. imposed since 1974
by Canadies Foreign Investment Review
Agency (nRA). total U. S. direct invest-
Canada wants to control
at lent SO% of Its oil
and gas Industry by 1990
mout in Con-do has continued to grow in
recent years; to U1 billion at present.
Nevertheless. Michael H. Wilson, a Pro-
gressive Conservative member of Parlia-
m-utt who is the oppos-tion party's
'shadow' Minister of Industry, Trade &
Commerce, worries that the C="&W-
zation strategy will drive out foreign
investors. 'U you have a mandatory
requirement that we most reduce owner-
ship by X percent by 1990, I think- that
we some cornpanioe that will Pt out
altagethar" he Says,
Epally disturbing for many Canadi-
an businessmen is the risk that the now
policies will jeopardii the w=tWs ef-
forte to free itself from dependence an
imported oil. 7Us couk happen if for-
Enwo Minister L21644W. C-Wim -M
U key soctors of the econ4nW.
sip investors diver% to hospitable
more
areas large amounts of capital that are
badly needed to develop Canada's energy
potential-particularty the Promising
offshore and Arctc regions that am
expected to need S= billion to invest-
meats over the next two decadeL La-
ntents Edward R. R. Carruthers. a part-
air in Blain Ciarruthers, a Calgary law
Arm that represents foreign =will in-
the one band that we should be &yWC to
promote energy seLf-suaiderw Mid with
the other hand is working -gains that
CUL,
Adding to the Jitters of prospective
investars is Ottawa's bittar dispute with
the prwinces over oil W gas prim and
W K - P=t cf a =4=90 0 v c: fed -
eral vs. provincial powers that Trudezu
is pushing to a showdown with proposals
to overhaul the CwuuU&n constitution
(BW-Sept. 15). Premiers of provinces
that st-. *WL to attract more I-nVest-
ment, Canadian or foreign. also worry
that the nvA. a federal agency, may
deter mm investments that thn want
for their eamornic development pro..
grams.
The spowhoe& Trudeau, however. is M.
visited that be is riding a tide of broad
PwW-r support for his revival of eco@
zornic nationslim Trudeau. who ro-
lurned to power in elections list Febru.
x7, had called for a reduction of foreign
economic influence when he was first
elecW Prime Minister in IN& He set
up tam nu in 197.1 and Pez*,Cana& in
1975. although such initiatives were
downplayed in the late JJM. when more
foreir investmon't seemed needed as a
spur to the sluggish Canadian economy.
Now, Trudeau and nationalist Cabinet
manbers-led b) Lalonde and Hub
Gray, the Industry. Tr&& & C4mmerce
Uldner-argue that Canadians mom
have control over the crucial decisions an
bw to develop the m3p reserves of w4
gas. and coal that give Canada, the bat
chance of achierimg zn&rV s&-vA-
dency among the industrial usboaL
@rw pubile. n indicated by opinion
polls, is very saw-d-ve of then kinds of
initiatives,7 says. Gray, who overseas the
law 'Mey are particularly supportive
of federal goverm--ent leadership an a
national basis to help as have a st: imam
industrial sector." Demands for greater
Canadian control over foreign-owned op.
stations also are being fueled by plant
shutdowns by nbsidiaries of U. S. auto
and puts maksm ;articularly in Ontar-
io-which includes the W`indsar am
that Gray represe--ta in Parliament. In
CANADA
earlier restrictions. an now investment., vestars: -The government is saying an
C)
U4
BAT Industries document for Province of British Columbia 13 April 1999

Odaws, near Toronto, Caisada!s United
Auto Workers ready Seized a pwtB
plant that was about to be closed by
Wrapupyourholiday 1%rida-based HoudaMe Industries IaL
and wrong hm hicressas In the
shoppingwit call ance pay that the company bad offered.
The spearhead of the now Canacrialai-
iiiiiiand Bush @s zation drim though-ralleeting its (am
on energy-is IDialy to be Petti4anada,
which operates an an autotailmous; com-
HolidayBeverageSampler pany but is given policy suidam by the
Bu*wmW99k%Hokby government. Petro-Canskilsk produced
Somplaif-c ha-dV booklet only SM million mm th of oil and gas
wNh9*9"Vkl9C*- I= yaw, but it is & partner In promising
d4ft" ff* &Ud MMM exploratory acrup offshore In the At-
in wirias W4 43ift in Ul- Carlada's proposed pollews
Color In #*it hok%ov Pock- have already delayed
V* ogiroAndbestdoll.ym
concolot&k"800 spending by U. S. Invostom
rvirriberandMaNorturldo
lantic: and in the Arctic and it has the
right to lb&& in' to niany losses held by
swidvoursellactimtO private oil companies by bVing up to a
ony of 50 nx*w dlied. 25% share in the uptclinitory step of
Wicpulayarhakby
11toppiggwilhaphona opistrations. Oil induatr7 sottrees believe
CoL sww for" 1`1101111cly that PstrDwCansda. has arranged a nuw
sive credit line--ostimaited a high am
bookletbdWI SL7 billion-as a potential war chat for
acquisitions. of Canadian st"Alarles of
VJAeloJohnc4m=L WAS for;34,a oil =-flen4- la 127C% Petro-
DuslitimWese. Cued& bought Atlantic Ra"alld Cana,
MOGOOW40 1111109@ de 1Ad. for =0 million, NW in 1M it
1W Ave" offie Amoftm
NX. try cm spent $13 bMm to began= Ndfic: Po-
troloom Ltd, a subsidiary of Phillips
In September. Peft-Cansda was be-
fieved by ea indail" mmdvn to be the
umnaw bidder thin made an offer,
COMPUTER issued by Belgim's Putrolinak to buy
that compues kw* prolltable Cm-
dian opwadon& AM industry aources
POWER FOR as coavinced that Psb*.Qna& bw
targirted for acquisition at least one sub-
Miar7 of a U. S. compaw. The most fre-
valw@@ quiently mentioned an Suncor, a sub"-
BUSINESS U-Y of San CO. with sales of Il= million
SUBSCRIBE TO THE MAGAZINE THAT bwt yrar. Tectco Cansidn- with &&:a of
COVERS EYERYTHINa YOU "MD TO W billiocr and Gulf Cana&, with son
KNOW ABOUT CHOOSING AND USING of SL6 bUmL MW aim is to make Pat-
iwair@ COMPUTERS. w-Canads. the largest oil company in
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- HOW business people US* M#Crci- Best buys in computer equipment Gardiner Watson Ltd.
S Om
CrnnZ me stookinark
I compute, primer M Contracts To fiwthor tbat aim. oilmen say that
introduction to b siness S*ftw&fs 0service bursaw Vs. in-house the goverrumiqt is coiLlidering mossuires
Answers to youri"Questions computeirs that OXM mm foreign cotapailim to "U
Advice from experts .small -computers in largo off a or pan of tb& Ca"alit assets
How Iii deal with suppliers corporations by putting them at a disadvantage Vis-
$mm Business computers Magazine SUBSCRIBE NOW! Dw J_vjs Canadian-owned competitors. The
33 Walcriung Plaza. Montclair. NJ 07042 One year for only S12! most powerful incentives if adopted,
vmuld be a proposed two-tier system of
t" Wair be b"W00110, grants or tax credits-more favorable
1 [3 Chock Enciosed Z skit me 6.00 of tax 1100MI-110119 for Cansillazi-ollmod Companies than for
foreign subsidiaries-that is being dis-
Name 0-saild within the government as a re-
Address pluement for the dopWon allowance on
productioti that expired early tkis ym.
Company Reportattly. subsidiaries of U.& OH
companies are already preparing de-
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(D
E
BUSINESS WEEX- octatiff S. 1980 CANAIDA
I_pi
co
BAT Industries document for Province of British Columbia 13 April 1999

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8OC-228-9290.
majors who don't want to be
part of Petsv-Canula. undoubt-
offly an looking around for
partners arrUtog C,n,rl;,n COM.
partim' says Douglas D. Pe-
Wm vice-praident and chid
economist at Toronto Dominion
Bank. Pow L Haydan, a part-
nor in the Toronto law firm of
McDonald & Ha)dan. says he
&W adviess foreign comparties
to I'make share offerings to In-
cr@ Cause= ownership, d*-
velop a board with C;xuadmn
members-and talk to nu to
try to got recognized by it as a
Canadian company.'
9A@ab~ - 0- . AIM cost.
trusersial proposal to a= Ca-
nadianization is for govern-
Meat fi"VW4.1 Support for Ca.
media= to buy out foreign-
12W
ownislassaftortobidagainst wknbVukmwGr*r-WW*PUbftquPW
foreigners in takemer battles. 1w ohm mmwrj at foreign bivertment.
Such bwJft which would be
available in other iodustries as well as mane He addz 'One approach would
onargy. -a Maly to be in the form of be the RUng of information by th com.
guarantees of privats-sector Inns rather parties penodically and d=W:L' be.
than direct [government] grants or di- tween the companies and the gowrn-
red mm' says Gray meat as to the way they an operating in
Gray &W is keenly interested in ex- areas that would be the subject of pub.
panding powers of the nZA. The MA's licly announced guidelium'
basic mandate in to accept or reject for- Under sucli a 'moratoringm system,
sign investment proposals an the basis of which is already in effort for oil and gas
conwaniss, the Energy. Mines & Re-
Petro-Canada may start sources Dept. publishes an annual analy.
a drWe to buy Canadlen sis of the Allancial performance anil
units of foreign oil concerns invexuriout Policies of Canadian compa-
W" as a group, 00111parmt them with
the benefits that investors pledge to forsip-owned. companies Fuwra re-
bring to CanaA- Now the rzMA also is puts, Gray suggests, might identify in-
being used incrassiin* to support the dividual cornpanin instead of _- ping
govwnatees C4nadianitation drnv, an thern-a " that could put heavy pout-
CNMPlifled by the commitments that ical pressure on managements So) a L
Northwest Exploration Co, a Denver oll Edward NewalL chairman of Du Pont
concern. negotiated with the mu and C;amida Inc. and president of the Cana-
the Ei=a, Min&; & Rasotirces Dept. in dian Manufacturers' Assnz 'V Gray's
order to get the pun light for setting up positions are adopted holus-bolus. they
a subsidiary in Calgary. Northwest seem have a strong impact [on foreign
&grow among other things, to sell 30% investments
of the Canadian afilliate to Canadians Moscowit chord. Nowell argues, however,
within five yam and to give pr f that GriVs policies may be blunted by
to Canadians in future joint wenw--is. !on andanalistic Cabutat mamba% such
-rhat 41* of approach will increasingly as Pmance MinistW Allan MwEachim
the pattern of what the govern- and Economic Dirklopment Minister
went is looking for in [the oil and gas] HJL 06m 'By the time Graylt propos-
seetw," Gray saya. als work their way through the Cabinet,
In order to give Canadians a chance to the Parliam=4 wid, the provinces. rm
M against foreign takeover offem the boli" we will am a much mm reason-
90"MMeot Wm proposes to require the able at of proposals."
nu to give public notice of law take- But in eneru. at lust. foreign ib"s-
am proposals before making decisions tore an certain to fire strong prosaures
on them And the nus authority would to Caudianize, because the principle of
be widened. under another proposal. to national control of natural resources
brim large@ e@ foreign-owuitd sub- strikes a remnant chord among most
adianes, as well as new investments, Canidianz. Sm Lalonds: 'No nation
under its satiny The aim, Gray sea that seeks to 4xLeptridently control its
is 'to ensure that then firms am operat- own desdicy can afford to permit the
Pi
Mg in a manner that would make a fair commanding heights of its economy to
contribution to our industrial develop- be controlled by forrignem' a
CANADA BLOW-SS WEEK- 0cobor G. 1990 131 C:)
-4
(-..4
'IO
BAT Industries document for Province of British Columbia 13 April 1999