Canadian Lib

Canada has been a nation for 106 years, but many Canadians feel that it has only recently begun to develop a national character; the country's psyche has been shaped first by the French and British, and lately by the Americans, especially those in business north of the border. Non-Canadian interests (mostly U.S., some British) control a third of the country's business activity and 60% of its manufacturing; Americans own 95% of the oil industry and all of the auto plants. Now legislators have decided that it is time for some economic consciousness raising, and have written the nation's first Foreign Investment Control Act. It is expected to clear the Canadian Senate and become law this week. After the act sailed smoothly through the House of Commons without a dissenting vote in late November, Alastair Gillespie, Minister of Industry, Trade and Commerce, grinned: "Now we're going to be more than a mere appendage of foreign corporate giants south of the border."

Tough Bargaining. The act in effect gives the government veto power over efforts by foreign firms to start new businesses in Canada, expand present operations into new fields (as opposed to simply increasing capacity), or take over any Canadian company that does more than $3,000,000 a year in business. Plans for any such moves will have to be submitted to a screening agency, which will make a preliminary decision as to whether the proposals promise "significant benefit to Canada": final approval, however, can come only from the Canadian cabinet. "Foreign firms" are defined as those in which non-Canadians hold 25% or more of the voting stock, those in which a single foreigner holds 5% or more of the voting stock, or those whose directors or managers are more than 20% non-Canadian.

The law will force American companies into hard-nosed bargaining with the Canadian government. In order to get their plans approved, for example, American companies may have to set up research and development facilities north of the border (Canadians have long been especially irritated by the fact that most R. and D. for the country's industry is done in the U.S.).

Canada is most unlikely to close off investment opportunities altogether. Its citizens recognize that they owe much of their high standard of living--second only to the U.S.--to the expansion of industry that has been made possible by foreign capital. Indeed, the country urgently needs more foreign investment to create jobs for its growing work force; the Canadian gross national product is rising 7% this year, but the unemployment rate is 6%. The new law is designed not to keep out foreign capital but to make sure that it comes in on Canada's terms.

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