Why Ottawa should have red-flagged — not approved — Chinese takeover bid for satcom firm Norsat

By Diane Francis

Ottawa inked the takeover by the People’s Republic of China of a tech company called Norsat International in Vancouver. 

The company sells satellite-communication systems to the U.S. military and agencies and now a Washington D.C. commission has red-flagged this deal as a threat to U.S. national security.

This permission should never have been granted to China-based Hytera Communications Co.
Hytera, which has been competing with U.S.fund manager Privet to buy the company, has raised its offer to US$11.50 per share and amended the break fees, but Norsat says there’s no assurance that the transaction will get all necessary approvals and be completed.
There is a strategic reason why the Chinese would buy this company and Canada must, on behalf of our trading partner, not allow itself to become a backdoor entry into the U.S. Pentagon or other sensitive sectors and entities.
This displays the same naivete as afflicted former Prime Minister Stephen Harper who pursued a “free trade” deal with unfair trader China.
This week, Justin Trudeau answered critics by stating that the deal was run by American authorities. 

But, given China’s avowed goal of snapping up important technology, a full detailed analysis with the Americans of what this company does – and why the Chinese want to buy it – should have been undertaken.
Now there’s a U.S. political backlash.
This is not a matter of sovereignty, but alliance. 

Ottawa cannot ignore or bypass military, and national security concerns, and certainly never to please China.
What would Canada think if the U.S. signed a bilateral with a country whose corporations threatened Canada’s national security?
Besides scrapping this deal, Ottawa must stop pursuing a bilateral “free trade” deal with China, given its past negotiations, behaviour, and continuing damage to the west, through cyberattacks and counterfeiting.
We are the two most symbiotic and synergistic economies in the world, good friends, cultural cousins, and inter-dependent in terms of security and business.
Donald Trump doesn’t make the relationship any easier, but it’s never been totally smooth sailing.
Canada’s best course in trade policy is to double down on its biggest asset which is this economic relationship with the United States. 

A replacement for NAFTA should be a bilateral deal that is more far-reaching and includes free movement of workers across the border.
This makes sense – whoever is President — because the United States is where the capital, expertise, and opportunities are and will be for Canadians, individually and corporately.
Except for this China misstep, the Trudeau government has handled the volatile U.S. situation quite well. 

Ottawa announced more spending on military and defence. 

This has been a request that was not only Trump’s but Obama’s too, who said elegantly that the “world needs more Canada and NATO needs more Canada” in his address to Parliament before leaving office. 

Finally, this month Ottawa announced increases of $70 billion over a decade.
But Ottawa must drop the myth, once and for all, that China is a desirable bilateral trade partner. 

Here’s why:
China’s corporations are state-owned enterprises, or client corporations, and accede to the wishes of the Politburo.
China will never grant reciprocity in terms of market access or the rule of law.
China is a known trade cheat who conducts cyber warfare against governments and corporations, and indulges in large-scale counterfeiting by ignoring copyright and patents.
Deborah Wince-Smith, President of the United States Council on Competitiveness in Washington D.C., said at a tech conference last month in Boston: “China is the epicenter of digital theft. If nothing had been stolen by China, the U.S. would have another $1.7 trillion [or 10 per cent more] in GDP.”
China’s track record in Canada is abysmal and includes a request to the Supreme Court of Canada, by a Chinese engineering giant a handful of years ago, to exempt it from our laws after it breached safety violations and ignored our courts following workers’ deaths. 

The Court refused to hear the case. 

Fines were never paid.
China is on a tear to snap up strategic assets –telecom, satellite, defense, aerospace, artificial intelligence – around the world. 

It’s also snapping up farmland, resources and infrastructure deals (through their Silk Road initiative) wherever it can.
Norsat is small potatoes, but obviously of importance or wouldn’t be sought. 

If it’s for sale, an American or European bidder would be acceptable because we have trade deals which grant Canadians market access and legal rights in those jurisdictions.
China wants one-way trade — its way — and nobody will ever be able to buy their technology or resource companies or be granted reciprocal access privileges.
The Canada and the U.S. economic union is the envy of the world and must be safeguarded and enhanced.
The best advice, when navigating among superpowers, is that Canada must remember that the enemy of my friend does not have to be my enemy, but it certainly cannot be my friend.