3 Conservative MPs Raised Concerns about CNOOC-Nexen Deal

Three Conservative MPs wrote to the prime minister and the industry minister to raise concerns about the contentious takeover of Calgary-based oil and gas producer Nexen by a Chinese state-run company, the CBC has learned.

Documents obtained by CBC News Network's Power & Politics through Access to Information reveal strong opposition to the $15.1 billion deal from key industry people and the Conservative backbenches.

On Aug. 13, 2012, Kitchener, Ont., MP Harold Albrecht wrote to Industry Minister Christian Paradis to register "philosophical and practical opposition" to the takeover by the China National Offshore Oil Corporation (CNOOC).

"As a conservative, I believe in free and fair trade, and a limited role for governments in the economy," he said. "To allow the China National Offshore Oil Corporation to purchase Nexen would not demonstrate examples of free trade or fair trade."

Albrecht warned that tax dollars could be wasted in the transaction — and that there is no guaranteed access to Chinese markets or "commitment to reciprocity."

"Worse, this is an example of the most unfair trade possible: expecting job-creating entrepreneurs to compete against the full resources of a global superpower that appears able to flout the disciplines of currency markets and the most basic standards of human rights," he wrote.

This week, the closing of CNOOC's takeover of the Canadian oil and gas producer was delayed by another 30 days to March 2, 2013. Because Nexen has assets in the Gulf of Mexico, the purchase must be approved by the Committee on Foreign Investment in the U.S.

The documents show that British Columbia MP Russ Hiebert wrote to Prime Minister Stephen Harper on Aug. 15, 2012, calling for changes to the foreign investment law in order to ensure that Canada had an ability to press for human rights reforms. He insisted the bilateral trade relationship as it exists is not working in Canada's favour.

"I am concerned that our trading and investing relationship with China is one-sided and that an investment proposal of a similar magnitude and nature by a Canadian company in China would simply not be welcomed by the Chinese," he said.

Harper formally approved the Nexen-CNOOC deal on Dec. 7, 2012, but said the trend of takeovers of Canada's oilsands by foreign state-owned firms would not continue. He signalled they would be permitted only in "exceptional" circumstances in future.

"To be blunt, Canadians have not spent years reducing the ownership of sectors of the economy by our own governments, only to see them bought and controlled by foreign governments instead," Harper said at the time.

A third Conservative MP, LaVar Payne of Medicine Hat, Alta., wrote to Paradis Aug. 21, 2012 to raise "grave" concern about the human rights record of China — calling it "far from stellar."

"It is my belief that Canadian laws must prevail, and that if we were to allow a state-owned company of a foreign nation that brutally represses its own citizens to buy a strategic asset here, we would be setting a very dangerous precedent," he wrote. He also flagged potential problems with the "lack of environmental concern" by the regime in Beijing.

"I do believe that the Chinese administration has little to no regard for environmental preservation, and this is another area of concern," he said.

Conservative MPs weren't the only ones raising red flags.

A confidential letter from Canadian Steel Producers Association president Ron Watkins to Paradis warned the takeover could disrupt supply chain relationships and reduce the potential "net benefits" to Canada. He also raised concerns that procurement practices could favour imports from China.

"This is especially a risk vis-à-vis the Chinese steel industry, which features a very high degree of state ownership or control, and a proven record of WTO [World Trade Organization] -inconsistent product dumping and export subsidies in Canada and elsewhere," Watkins wrote.

The Canadian Coalition on Human Rights in China, which represents 15 organizations focused on human rights in Canada's relationship with China, also wrote an extensive letter raising concerns that Canada's foreign policy position on China puts investment goals ahead of human rights. It called on the Harper government to develop benchmarks and timelines for progress.