The way the United States looks at it, Canada, our friendly neighbor to the north, has become increasingly nationalistic in the past year by "Canadianizing" its energy resources and by making it tougher for foreign investors--including Americans--to get a foothold through a watchdog government board, the Foreign Investment Review Agency.
The basic goal of Canada's energy policy is to reduce foreign ownership from more than 70 percent to no more than 50 percent by 1990, through a system of openly discriminatory taxes and incentives that give the advantage to Canadian exploration and ownership of oil and gas companies. At the end of the year, for example, Parliament passed Bill C-48, one of the basic building blocks of that policy, reserving to the Crown a 25 percent share of oil and gas production from the so-called Canada Lands.
There also has been what the United States considers a worrisome increase in Canadian corporate takeover of American assets. Record capital outflows, as Canadians borrow abroad to buy up foreign oil assets, are a source of concern in Canadian energy and financial circles as well.
These irritations exist despite the fact that Canada and the United States enjoy extraordinary common bonds, not the least of which is a two-way trade that reached $90 billion in 1980, the largest bilateral trading relationship in the world.
From the point of view of the ruling party in Ottawa, the squabbling over Canada's economic policy is just a manifestation of Canada's growing up. "Every two-bit country in Africa and the Middle East" has moved in a similar way to protect the ownership of its own energy resources, the aggressive minister of energy, Marc Lalonde, told this reporter last summer.
"There are too many American businessmen who have considered this country as being the 51st (American) state for too long," Lalonde asserted.
Anyone who tries to be objective, Lalonde insisted, "cannot but conclude that these are very moderate measures, and that if the Americans were in the same situation, they would have acted a long while ago, along something of the same lines."
Or, as Minister of Trade Herb Gray recently put it in a speech to the Chicago Council on Foreign Relations, "our policies are not, nor are they intended to be, anti-United States, or anti-any other country. They are pro-Canadian . . . "
The six-year old FIRA carefully screens proposed foreign investment of all kinds to determine whether they "bring significant benefit to Canada," according to Gray. As things stand, more than half of Canada's manufacturing sector is foreign-owned. Nineteen of the 50 biggest Canadian companies are controlled by foreigners, against two out of 50 in the United States. While the United States hollers that FIRA is too tough, many Canadians believe it is too soft and does little to change the foreign domination of the Canadian economy.
U.S. and Canadian officials have been discussing these problems on a more or less continuous basis, and little has happened, except that the American complaints about FIRA seem to have deflected any chance that the watchdog agency will be made even tougher.
There will be another chance to go over these issues next week, when Ed Lumley, Canadian minister for trade, sits down with his counterparts from the United States, Japan, and the European Community in Key Biscayne, Fla., to discuss worldwide import and export problems. The focus will be largely on Japanese issues, but the tensions between Canada and the United States won't be ignored.
Assistant Secretary of State Robert Hormats--who along with Trade Representative William Brock and Undersecretary of Commerce Lionel Olmer will be in Key Biscayne for the United States--says that "Canada is going to be a tough problem for us. On one hand we have a very active and good trading relationship in many areas with the Canadians. On the other, there are some very acute sources of friction which revolve primarily around energy and FIRA.
"And what's needed, I think, is for Canada to recognize that some of these practices are simply in our eyes very unfair. (We would like) for them to reconcile the concerns we have in a way which is consistent with their nationalistic approach. To put it another way, we can understand Canada's desire to have a greater percentage of national ownership, (but) it's the way they're doing it which we perceive to be unfair and . . . I think it's important for Canada and for Canadian-U.S. relations that Canada find ways of achieving its national objectives in ways that (are fair)."
Primarily, Hormats indicated, the U.S. objects to "retroactive" provisions in the Canadian efforts to increase their share of ownership. He concedes that will mean a somewhat slower timetable, but feels it's a price Canada should be willing to pay for preserving an overall warmer relationship with the United States. But the Canadians have a long-term strategy, as well as considerable pride. They don't plan to knuckle under easily.