The Competition Policy Review Panel, chaired by L.R. Wilson, presented its report Compete to Win to the Government of Canada June 26, 2008. This Panel consisted of five persons, all with business interests. It believes that Canada needs to be more open to competition because competition spurs the productivity enhancements that underpin our economic performance and ultimately our quality of life.

One wonders why a panel dealing with foreign ownership does not have "foreign ownership" in its name? This question also applies to the title of its report. There is clear implication that the issue of takeovers of Canadian companies by foreign companies is to be understood as a matter of competition, and only of competition.

Is foreign investment good for Canada? Good for whom? I believe the answers to these questions require a somewhat esoteric knowledge of economics. Having said this, I will highlight nevertheless three significant reasons to be against unregulated foreign investments. I am sure you will read or hear in the media many arguments supporting the Panel's recommendations.

A threat to Canadian political independence

David Cameron writes (p. 62) "The issue of foreign ownership in Canada was first raised by the Gordon Royal Commission (Canada 1958) and then in the 1963 budget of Walter Gordon himself. The subsequent Watkins (Task Force on the Structure of Canadian Industry, 1968) and Grey (Department of Trade and Commerce 1968) reports confirmed the trends identified by Gordon: rising U.S. ownership of the Canadian economy was a threat to Canadian political independence.

As the level of foreign control over natural resources and manufacturing increased, the government's capacity to further employment and income goals diminished. For instance, it was seen as difficult to encourage U.S. companies to undertake research and development in Canada or to further process natural resource (rather than simply export the raw materials). "In addition, as the foreign owners "ended up with more economic clout in Canada, they could use their power to play an increasing dominant role in Canadian politics."

"Hollowing out" of decision-making

When a Canadian company is acquired by a foreign enterprise, its head office is usually moved to the head office of the foreign owner. Even if the head office is not officially moved, the key management of the foreign owners makes the strategy and other critical decisions where Canadian interest may have little importance.

Head offices provide to the community high-skill, high paying jobs, such as legal, accounting, consulting information technologies, marketing and advertising. Head offices also play a philanthropic role through charitable contributions and support for various community causes.

Foreign Investment does not guarantee increase in productivity

"A large part of foreign direct investments is made up of companies' [sic] buying out state firms, pur-chasing equity in local companies or financing mergers and acquisitions". (Ellwood, p. 61) Such business transactions do not necessarily create new productivity. The same amount of goods are be-ing produced but by different ownership. In addition, jobs usually are lost as a result of downsizing after the purchase is complete