In the wake of the third and final US presidential debate (Boca Raton, Florida), which focused on foreign policy, my thoughts are on the global economy and our attitudes to the economic pros and cons that foreign investment brings.
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A big chunk of the debate naturally centred on the various foreign territories where the USA (along with its allies) is at war, but a significant portion of the dialogue was dedicated to issues of domestic security and, of a sort, economic protectionism.
President Obama spoke about “Making sure that we’re bringing manufacturing back to [America’s] shores so that we’re creating jobs here, as we’ve done with the auto industry, not rewarding companies that are shipping jobs overseas.”
Apart from being a little dig at Gov. Romney, who Obama accuses of shipping jobs overseas whilst at Bain Capital, this comment shows that, even in a discussion of foreign policy, domestic economic issues were constantly coming to the fore.
There was much talk of China. Mitt Romney worried aloud about a silent trade war with China: “We have enormous trade imbalance with China… We have to say to our friend in China, look, you guys are playing aggressively…you can’t keep on holding down the value of your currency, stealing our intellectual property, counterfeiting our products, selling them around the world… I want a great relationship with China. China can be our partner, but that doesn’t mean they can just roll all over us and steal our jobs on an unfair basis.”
For his part, President Obama opined: “With respect to China, China is both an adversary, but also a potential partner in the international community if it’s following the rules. So my attitude coming into office was that we are going to insist that China plays by the same rules as everybody else.”
There was very much a sense that both candidates used China as an opportunity to ‘talk tough’: positing the growing nation as perhaps a reason for the USA’s economic failures and both vowing to make things more ‘fair’ in the future, if elected.
Now, presidential debates, and election times in general, may not be the most likely time to exercise restraint or judiciousness in matters of foreign policy: the benefits of both talking tough and conjuring up a scary foreign enemy are worth too many votes. However, it is interesting to think about how we balance a country’s fierce desire to remain independent, self-sufficient and economically strong, with the need to do business with other countries, be a player on the global stage and increase international commerce and connectivity.
An example recently presented itself in Canada, where matters of foreign investment and ownership in the oil industry have been much debated in recent years.
In mid October, it seemed certain that Petronas, the Malaysian state-owned oil company, was going to purchase the Canadian company Progress Energy Resources Corp. for Cdn$ 5.2 billion. However, after a late call for more time from Ottawa, and a subsequent rejection of this extension request from a perplexed Petronas (which had already given an earlier extension and had raised its bid), the deal was vetoed three minutes before the midnight deadline. Industry Minister Christian Paradis put out a press release stating that he was rejecting the deal because it did not offer “net benefit” to Canada.
With no major issues apparent that would prevent the deal from going ahead, some see the move as part of a bigger game that Canada is playing with China. Just after Petronas launched its bid for Progress in June, CNOOC ventured to buy Nexen, Canada’s sixth largest independent energy firm, which has assets in the oilsands, the GoM, the North Sea and offshore Nigeria. Did Ottawa kill the Petronas deal so as not to tie its hands when reviewing the much more controversial Cdn$ 15.1 billion CNOOC bid? How does this sit with Prime Minister Harper’s statements that Canada is an open door to foreign investment? Canada has been pushing closer ties with China but, as one Conservative is reported to have said in Ottowa, “We expected them to buy our oil, not our oil companies”.