Industry Minister Tony Clement’s intention to take U.S. Steel to court has struck a chord with Canadian business leaders, according to a poll conducted by COMPAS Inc. An overwhelming majority of the 127 CEOs polled commend the government, and largely reject the notion that legal action damages the foreign investment climate.
Clement is accusing Pittsburgh-based U.S. Steel of failing to live up to employment and production pledges made in 2007 when it acquired Stelco Inc., and is filing an application to fine the company $10,000 per day. The move marks the first time the feds have exercised this power, and comes after intense criticism in 2006 for allowing a rash of foreign takeovers.
Of the respondents to the poll, 95% believe it is an “excellent” decision to require foreign companies to abide by their commitments when purchasing Canadian firms. They gave the Conservatives a mean performance score of 83 out of 100 for the decision, the highest score received by a government action in any COMPAS poll.
Only 5% of the respondents agreed the government should not pursue legal action because it will make Canada an undesirable country for foreign investment.
Many of the CEOs’ comments reflected nationalistic sentiment. “Finally someone in government is going to stand up for us Canadians,” wrote one CEO. “I just hope that the government sticks to its guns and does not give in to pressure from the U.S.,” wrote a respondent.
Others saw the government’s action purely as a business deal. “A deal is a deal,” according to one CEO. “Unless we are going to enforce agreements, what is the point of having them at all?” asked another.
But a minority of respondents (16%) believes the government of Canada should show leniency toward U.S. Steel because the recession slashed demand for its products, forcing it to consolidate. “It was difficult to anticipate current market conditions when imposing these requirements,” wrote one panelist about the 2007 takeover. “Flexibility is a must.”