Mintz urges Canada to reduce barriers to foreign direct investment

CALGARY, Oct. 5 /CNW/ - Recent takeovers and attempted takeovers of strategic resource companies have renewed concerns that some of Canada's prized companies are falling into foreign hands. However, research released today shows that Canada has, in fact, not been a significant attractor of multinational investment, lagging behind a number of developed and developing nations.

A new paper by Dr. Jack Mintz, director of The School of Public Policy at the University of Calgary, shows that since the mid-1990s, Canada has been a net exporter of capital in world markets, as foreign direct investment by Canadian companies far outpaced the inflow of foreign capital.

"Rather than being hollowed out, we are hollowing out other countries," Mintz said. "As a general policy, Canada should reduce barriers to foreign direct investment and welcome our growing role in international markets."

The paper argues that only in limited circumstances, such as in the case of protecting Canada's national security, should Canada block foreign takeovers of Canadian companies. In fact, when state-owned enterprises operate without financial support by state owners, they could also provide net benefits to the Canadian economy.

One important area that requires further consideration is with respect to the tax-exempt status of sovereign wealth funds and state-owned companies. Canadian tax treaties should be reviewed to ensure that Canadian withholding taxes maintain an even playing field among private and state-owned businesses operating in Canada.

The research paper, entitled "Canada's Foreign Direct Investment Challenge" is available by going to www.policyschool.ca then click on "latest papers".

For further information: or interviews with Dr. Mintz contact: Morten Paulsen, 403.399.3377, [email protected]