Canada Eyes Tougher Standards

In a move that may herald new nationalist sentiments towards foreign investors, the Canadian government's Foreign Investment Review Agency (FlRA) has initiated a legal battle with two U.S. firms. On March 28, the newly-elected Liberal cabinet voted to support the agency in its opposition to a deal between Detroit International Bridge Co. and Central Cartage, Inc., both Michigan-based ` companies.

Detroit International owns the Canadian half of the Ambassador Bridge, a traditional symbol of U.S.-Canadian unity which spans Lake Erie and links Detroit with Windsor, Ontario. Detroit International failed to notify FIRA of its plans to merge with Central Cartage-a deal involving the transfer of the Ambassador assets to the newly created company. The agency sought and received an injunction to block any transfer of the bridge assets, and has announced its intentions to permanently prohibit the move.

Officials from both companies consider the decision invalid, claiming the agency has no jurisdiction over what is essentially an intra-U.S. merger. "The FIRA decision conflicts with U.S. law," says Ronald Leck, executive vice president of Central Cartage.

The significance of the Central Cartage case appears to extend far beyond ownership of the Ambassador Bridge. The decision was the agency's first under Canada's new Liberal administration and FIRA's new chief, Herb Gray. Gray, whose 1972 report on multinationals in Canada prompted the creation of the agency, is a long-time critic of foreign corporate activity in the country.

U.S. government officials speculate that the decision may be the first step in Gray's campaign to broaden the jurisdiction of FIRA.

At present, FIRA's jurisdiction is limited strictly to reviewing applications for new investments in Canada. Gray is looking to make the agency an oversight body as well, with the power to review multinational operations after corporations establish Canadian facilities. Such a move would have dramatic implications for foreign investors-each year, multinationals reinvest $6 , billion in Canada, and if Gray's ' proposals are adopted, these investments would fall under FIRA's scrutiny.

All signs indicate Gray may very well succeed. In the Liberal Party's opening address to parliament on April 13, the Trudeau administration vowed to extend the powers of FIRA to include the oversight provision. If FIRA does begin extracting more favorable terms from foreign corporations, the credit will be Gray's. According to Marc Lortie, spokesman for Canada's Embassy to the U.S., "Herb Gray is the prime mover behind all these policies."