As an iconic part of the New York City skyline, the Chrysler Building has been depicted countlessly in almost every medium—film, photography, video games, art, advertising, music, literature, and even fashion, as its use quickly establishes without doubt the location in which the depicted events are occurring. (Wikipedia)

The purchase marks yet another major North American investment by a Middle Eastern fund. Gulf countries, flush with revenues from unprecedented oil prices, are taking that extra cash and pouring it back into the countries who paid for the oil in the first place.

In Canada, foreign ownership is a sensitive political issue. Critics decry the so called ‘hollowing-out’ of corporate Canada, and warn of its effect on national security and sovereignty interests. Meanwhile, other countries with friendlier ownership regulations are realizing the positive effects of free markets. Businesses, consumers, and shareholders enjoy increases in wealth, competitive services, and exchange/transfer of global expertise.

The Canadian discussion on foreign ownership rules heated up last month with the release of the 65 recommendations arrived at by the Competition Policy Review Panel after a one-year study commissioned by the federal government (click here for report). The panel concluded that “the federal government needs to scrap its ban on bank mergers, lighten up its foreign ownership restrictions of uranium and airline assets, and liberalize the telecommunications industry“, reported the Globe and Mail.

Shortly after the release of the panel’s recommendations on foreign ownership, the Canadian Center for Policy Alternatives (CCPA) countered the study with a report arguing that Canada needs less foreign ownership, not more. Readers of this blog who are from Atlantic Canada may remember that the CCPA is the organization that vehemently argued against Atlantica and the proposal led by AIMS (Atlantic Institute for Market Studies). Click here for a previous blog post that discussed the confrontation in more detail.

The recommendations regarding the telcom sector specially hit close to home with many Canadians. The existing oligopoly of wireless providers in Canada has seen increasing criticism in the past few months. In the spotlight are exuberant data charges highlighted by the advent of the iPhone which will hit Canadian shelves for the first time tomorrow exclusively through Rogers Wireless.

Bell Aliant (BCE) and Telus Mobility are also under fire for announcing the introduction of new charges for each text message received by cell phone users unless they subscribe to a monthly plan. Many consumers feel that the competitive landscape in the telcom sector is unfriendly to the needs of the consumer.

While protectionists scorn the findings of the Competition Policy Review Panel, they fail to address a real hollowing-out currently taking place in Canada: existing foreign owners abandoning their Canadian assets and relocating elsewhere.

A rising Canadian dollar coupled with expensive union demands is leaving Ontario with an Auto Workers crisis as American auto plants shut down operations and moved out of Canada to friendlier markets. Atlantic provinces have been experiencing a drain of skilled workers for some time now as various plant shut-downs force skilled workers to relocate to western Canada in search of jobs.

So where will the next billion dollars of oil money be invested? Most likely not in Canada.

A lot of controversy surrounds Atlantica. Yesterday, protestors took to the streets with signs and chants condemning the effort, as they believe the deal will be bad for Nova Scotia. At least two websites exist that denounce the effort (like stopAtlantica.org). A research paper outlining the flaws of the initiative was also prepared by the CCPA – The Canadian Center for Policy Alternatives

Proponents of Atlantica, (including government, business, and political supporters) are pushing to utilize Atlantica to cope with a changing economic environment in Atlantic Canada where the future seems bleak for Nova Scotia if it fails to become competitive in areas of trade and skill-adoption. With factories closing doors in the province and relocating to more affordable locations around the world, globalization will leave Nova Scotia with no alternatives but to embark on new industry adoption and re-train the work force. Charles Cirtwill, President of AIMS, explained ‘Atlantica’ in his May article on the Chronicle Herald.

Opponents of the initiative are concerned about Atlantica’s effort to open discussion on the possible deterrents to business investment in the region, including minimum wage standards and excessive unionization of labour in the Province. They claim Atlantica’s trade vision is unrealistic and is inconsiderate of environmental and social impacts.

(Image from the Maritimes Independent Media Centre website)

I believe that, while some of the details of the Atlantica initiative remain to be tweaked and studied, the idea as a whole is reasonably sound. The region working as a whole can achieve synergies that will allow it to become more competitive in the global market than any one individual part of the region can achieve on its own, this much is uncontestable. However, some of the criticisms in the CCPA paper may be legitimate (though the language used was far from ‘neutral Professional-Academic’).

Regardless of the criticisms, the initiative shouldn’t be scrapped altogether just because ‘some’ elements are not completely hashed out to everyone’s satisfaction yet. To do so will exemplify the knee-jerk reaction typical of a Province that has traditionally resisted change. Unfortunately, Nova Scotia can not afford to remain complacent in the face of the deteriorating economic situation. A strong dollar (fueled by positive economic growth of other Canadian regions), coupled with high regulations and excessive unionization is spelling disaster for Nova Scotia.

This year alone two plants have closed their doors in Nova Scotia already, sending close to 1000 (One Thousand) workers on government assistance (yes, that’s your tax dollars). In the words of Bill Furman, President and CEO of Greenbrier – the U.S. parent company of the foreclosed TrentonWorks plant in Trenton, NS: “The very strong secular outlook for the Canadian dollar, uncompetitive labour and benefit costs coupled with geography and other factors really meant that we didn’t have a choice“.

Already dubbed a ‘land of mediocrity’ in a scathing new report card from the Conference Board of Canada, this country suffers from over-confidence in the area of self-perception. Canadians think that they are untouchable, have one of the best social and health care systems in the world, and are invincible to economic strife. The country is extremely risk averse when it comes to making changes or embracing a global business view. Canadian labourers expect to be paid premium wages with extensive benefits, while ignoring the fact that they are easily replaceable since the skills they offer are hardly unique or hard to find in labour markets of other countries. More insight on this was provided previously from Andrea Mandel-Campbell in my blog post titled “Why Mexicans Don’t Drink Molson“.

And so, in the face of all studies and advice, what are some Canadians doing when someone takes the initiative to prepare for the long term inevitabilities of globalization? They form groups and organize protests to maintain status quo and, while at it, yell a little about the environment and global warming.

I will leave you with the infamous quote from Stephen Harper. Will Harper be proven correct in his assessments of Atlantic Canada?

“Atlantic Canada’s culture of defeat will be hard to overcome as long as Atlantic Canada is actually physically trailing the rest of the country.” – Stephen Harper.