According to a recent report by the environmentalist group ForestEthics Advocacy, 71% of oilsands production is owned by non-Canadian shareholders, with foreign-headquartered companies controlling 24% of the sector's production. The group concludes that Canadians benefit very little from the industry's production on account of this high degree of foreign ownership.
How can people still be making these kinds of protectionist arguments in this day and age? Now in the 21st century, we should know better. The fact is that foreign direct investment (FDI) is a positive sum game in which both sides benefit.
Foreign investors win because they find a way to put their savings and their expertise to work while diversifying their risks. For countries that receive FDI, the benefits are many: they import technology, capital and expertise, and the risks associated with investment are taken on by those foreigners.
In comments to the press, ForestEthics spokeswoman Tzeporah Berman claimed the group is not against foreign investment, but simply wants its major beneficiaries to be Canadian. This statement betrays a lack of understanding of the positive sum nature of trade.
And indeed, the group's report is rife with protectionist fervour. It really is trying to raise an alarm about foreign ownership. It even features a special race-baiting sidebar on rising Chinese investment that refers to Canada becoming "China's resource colony."
We certainly could produce oil in Alberta without the contributions of foreign businesses and capital. But would it be a good idea? This is not an easy business. Expertise in this area is spread far and wide. Why not tap into some of it?
Without foreign investment, the industry would be smaller and less competitive, generating fewer jobs and salaries, and less revenue from taxes and royalties. Of course, this would be fine with the folks at ForestEthics Advocacy, who are staunchly against the oilsands in the first place. If you don't believe me, check out their website, which refers to the "tar sands" as "the world's dirtiest oil" and "a severe threat" to the environment. What's a little protectionist fear-mongering when the fate of the planet is at stake!
The benefits we get from importing – and exporting – capital and expertise are just as tangible as those from trading goods and services. In both cases, Canada and its trading partners specialize in what they do best, and everyone becomes more prosperous.
There is no doubt that foreigners benefit from their investment in Canada. If they didn't, why would they invest here? But they don't benefit at our expense. The important thing to recognize is that Canadians also benefit from foreign investment.
But Groups like ForestEthics are not really concerned about the benefits to Canadians of free trade and efficient, profitable oil production. Their explicit game plan is, instead, to cripple the Albertan oil industry, which is exactly what eliminating foreign investment would accomplish.
In that sense we can at least say that they are pretty coherent.
Michel Kelly-Gagnon is President and CEO of the Montreal Economic Institute. The views reflected in this column are his own.