Monday, October 05, 2009

What was "Cool Canada" now "Disappearing Canada" under Harper

Errol Mendes wrote last week of the evolution Canada has undergone since 2003 when the Economist magazine wrote of “Cool Canada,” (see above cover illustration) admiring our self-confidence in hockey, our refusal to join the Iraq war and our legalization of same sex marriage, for example. The issue also focussed on our having mastered deficits, and significant Canadian companies like Inco, Alcan and Research in Motion.

Mendes' thesis now, however, is that “Cool Canada” has been replaced with “Disappearing Canada.” And that our disappearing act is happening in both global politics and the global economy. Harper's absence from the U.N. gathering of leaders is a very recent metaphor for Canada's disappearing act. And see here and here for some of the recent issues where the Conservatives are letting us down on the foreign policy front. Their stubborn intransigence on Guantanamo Bay is a major failing when so many other nations have expressed their intent to help the U.S. in closing the facility by offering to take in prisoners. We're missing in action.

I'll excerpt the economic part here from Mendes' piece that articulates how the Conservatives are failing to protect Canadian industry:
In the global economy, Canada may also be disappearing. Our national champion corporations are being bought out by champion corporations that have been nurtured by other more dynamic societies.

Falconbridge, once a legendary Canadian mining company with global reputation, was swallowed up by the Swiss-based Xstratra, which enjoys some of the best tax advantages for any company in the world. Inco was merged with Vale, a giant Brazilian mining corporation. Alcan, a legendary Canadian aluminum company with a similar global reputation, has disappeared into the Rio Tinto global behemoth based in the UK and Australia. Cognos, an emerging Ottawa-based tech company with growing international reach could not resist the beckoning of IBM.

However, nothing points out the disappearance of Canadian corporate presence on the world stage more than the imminent demise of Nortel and the acquisition of its most valuable assets to Swedish nurtured Ericsson. The acquisition is likely to go ahead despite the prolonged attempt by the remaining Canadian technology giant RIM to acquire the prized 4th generation wireless communication assets of Nortel.

At an emergency hearing by the Industry committee of the Canadian Parliament, Michael Lazaridis, co-CEO of RIM, alleged that its attempt to acquire the world-beating Canadian technology of Nortel was stymied and should trigger the involvement of the Canadian government to ensure that ownership of extremely valuable Canadian-made and -financed technology stays in companies headquartered in Canada.

RIM has argued that such Canadian technology, nurtured by research tax credits, could be kept and grown in Canada by RIM if the Harper government blocked the acquisition of the Nortel technology by Ericsson. The government can do this using the “national security” provision of the Investment Canada Act if they accept the RIM argument that the Nortel wireless communication technology could be vital for future wireless communication needs of Canada’s military and police organizations.

Indeed, the entire wireless communications infrastructure built on 4th generation Nortel technology could be critical for entire sectors of Canada’s social, political and economic future. Is that not what national security is all about? Yet there is mounting evidence that the Harper government will not interfere with the acquisition of Nortel’s assets by Ericsson.

As Lazaridis noted in the parliamentary hearing, vital research and development activities over time drift from subsidiary entities to the head office jurisdictions. The future of the Canadian economy, and indeed the growth in Canadian jobs and opportunities for our children and future generations, must be growth in the knowledge economy and high value-added technology-based industries that are home grown. As we have witnessed with the crisis in the automobile manufacturing sector, branch plant economies are most at risk when the head office is under severe economic challenges.

The ultimate irony, indeed pathos, involves Stephen Harper being absent from the roster of world leaders at the UN General Assembly last week in order to celebrate the so-called “return of Tim Hortons” from the US because of his government’s tax policies. In fact, there was no real return and it was US tax policies that caused a tax restructuring of the company. Tim Hortons restructured because it wanted to escape US taxation on its global profits. There is no expectation that new jobs or operations in Canada will result just from the tax restructuring. Canada has reappeared only in the prime minister’s imagination, but has sadly disappeared at the UN.

Cool Canada is rapidly becoming Disappearing Canada under the Harper government not only in the global political arena, but also in the national and global economies. It should be one of the most major concerns of all Canadians in what looks like a looming federal election.
Yes it should. This economic argument in particular is a real vulnerability for the Harper Conservatives. It's a counter-intuitive attack against what they claim to be a strength but where the results, as set out above, speak for themselves. It's also a good point of distinction between the Harper hands-off approach and a Liberal direction which is in sync with major nations that protect their national economic champions too.

The case should be made strongly for a new economic nationalism for Canada which protects vital industries. There is plenty of ammunition here to remind Canadians that the supposed great economic stewards are letting us down, presiding over a "Disappearing Canada." That's a great and memorable way to frame it for political purposes as well.