The Conservative Government in Ottawa, Ontario, Canada led Stephen Harper, actually did something right in April by blocking the sale of MacDonald, Dettwiler and Associates Ltd. (MDA) to the American company Alliant Techsystems Inc (ATK.) It was the first time that a Canadian government has blocked the sale of a Canadian company to a foreign concern since 1985 when The Investment Canada Act was passed. This act compels the government to review the sale of Canadian companies to foreign interests and to block any proposed sale if the transaction does not appear to be “a net benefit to Canada.”
The blocking of this particular sale is important. MDA is Canada’s largest aerospace firm, and is world-renowned for its production of satellite mapping systems, surveillance satellite technology, and space-industry robotics. ATK was hoping to buy the information-systems arm of MDA, the division responsible for developing the Radarsat-2 Arctic observation satellite. This division also produced Dextre, the Special Purpose Dexterous Manipulator that the space shuttle Endeavour used in three spacewalks in March. Industry Minister Jim Prentice sent a letter to ATK stating that he “is not satisfied” that the sale would “likely be of net benefit to Canada.”
He was right. Critics of the sale, which ATK first announced in January, warned that the deal would put Canada’s national security at risk by placing taxpayer funded space technology in the hands of a foreign country. Specifically, the Radarsat-2 satellite is used by the military to monitor activity in Canada’s Arctic, and it is questionable whether the country would be able to retain control of this vital technology if the sale takes place. With the Arctic warming at a formidable rate and the possibility that the Northwest Passage will be open to shipping within our lifetime, Canada’s sovereignty concerns in the area are growing. In the House of Commons, Prime Minister Harper backed up Prentice’s decision and emphasized that Canada, even in the early days of the space program, has always had a strong presence in space satellite technology. Canada “…has had a record of excellence in this sector and no one should doubt the determination of this minister or this government to protect this country’s interests.”
The decision to halt the sale, at least for the present time, won support from the Official Opposition, former federal scientists who developed the technology in the 1970’s, and military officials who feared that the sale would threaten Canada’s Arctic sovereignty, which is a fundamental component of the country’s defence policy. Unions also applauded the move, on the grounds that significant job losses could result if the information-systems branch was bought out.
The government’s decision was not without repercussions, however. The blocked sale caused immediate effects in the stock market. When trading on the Toronto Stock Exchange opened on April 10, the day after Prentice’s announcement, MDA’s shares lost nine per cent and closed down $4.00 at $42.85. ATK’s share price was not affected.
The sale could still go through. In an April 10th CBC news article, Brian Cullin of ATK stated that the company was still talking to the Canadian Government. In the same article, Iain Christie, the president of Neptec, an Ottawa company that builds the remote sensors that the space shuttles use to check for exterior damage, said that it was important not to read too much into the letter sent by the Industry Minister to ATK. “What it means is ATK has 30 days to decide what to do. I think what this letter does is crystallize the government’s unhappiness with the sale as it’s currently proposed.”
Michael Byers, a professor of global politics and international law at the University of British Columbia, told Canwest News Services on April 11 that there was a “compelling national-security case” for disallowing the sale of MDA. He also stated that the government must clarify its criteria for stopping sales based on national-security grounds, so that foreign investors will not be deterred from making investments in Canada. “It’s obvious now that we need explicit (sic) national-security test in the Investment Canada.” That would probably be a good idea; we have given away far too much of ourselves as it is.
