Why rush Norsat sale?

PM’s approach to China under scrutiny

Since coming to power, the Trudeau Liberals have made a point of seeking closer relations with the People’s Republic of China. It would be hard to be more distant, certainly, than the relations that sometimes prevailed during the Harper era. But the Liberals seem determined to err in the other direction.

It’s a difficult balance, admittedly, to get right. More than a dictatorship, China is rated by Amnesty International and other human rights groups as one of the world’s most brutal and repressive regimes, the kind we would usually shun. It is, moreover, a strategic rival to the democracies, if not a threat, one that has not been shy about using its vast espionage network to infiltrate and spy upon Canada and its allies.

On the other hand, it’s China: a power we cannot avoid and a market, as the world’s most populous country, we cannot ignore. If we don’t sell to them, others will. Maybe trade will even encourage them to liberalize, we tell ourselves, uncertainly.

So some level of hypocrisy and moral equivocation is inevitable. All we can really do, as we try to balance principles and self-interest, is ensure it remains a trade-off, keeping any concessions as grudging as possible. Maybe we can’t change China, that is, but we can at least keep China from changing us.

Contrast that with the Liberals’ pell-mell rush into China’s embrace. It is one thing to be more open to Chinese trade and investment — even the Harper government signed the Foreign Investment Promotion and Protection Agreement (FIPA). But the Liberals, in their eagerness to court Beijing, have expressed interest in, inter alia, an extradition treaty — with a country without an independent judiciary, where the use of forced confessions, often obtained through torture, is widespread — and even a full-blown free trade agreement.

All of which may help to explain the Trudeau government’s bizarre and inexplicable handling of the proposed sale of Vancouverbased Norsat International to China’s Hytera Communications. The facts are by now well-known. Norsat is described as “a world leader in portable satellite communications,” with a roster of clients including the U.S. Army and Marine Corps, as well as NATO. Hytera is, like any large Chinese technology company, an instrument of the Chinese state: indeed the government owns a small share.

The security implications are obvious. Yet the takeover was approved earlier this month with only a routine security screening, not the kind of formal security review by defence and security experts that cabinet can order in cases like this. Two former directors of the Canadian Security Intelligence Service, Richard Fadden and Ward Elcock, have said they would have recommended such a review. For its part, the U.S.-China Economic and Security Review Commission, which reports to the U.S. Congress, has expressed its alarm, saying the deal “raises significant national-security concerns for the United States as the company is a supplier to our military.”

Worse than the Trudeau government’s apparent complacency in the face of such concerns has been its dissembling. Innovation, Science and Economic Development Minister Navdeep Bains, who approved the deal, told Parliament that it had in fact been the subject of a full security review, while the prime minister went so far as to claim that every foreign takeover is given the same scrutiny. Neither statement was true.

The whole issue may blow over, if a rival bid for Norsat by a U.S.-based investor, Privet Fund Management, is accepted in place of Hytera’s. But it still raises troubling questions about the Trudeau government’s approach to China, and the lens through which it views the regime.

It’s too crude to say it had something to do with the prime minister’s notorious series of “cash-for-access” dinners with Chinese billionaires. But it may well have something to do with his patented mix of deep cynicism and flower-child naiveté — the kind that led him to name China’s “basic dictatorship” as the system of government he most admires, the kind that emerged in that embarrassing encomium to the late Fidel Castro that never managed to mention political prisoners or mass executions.

The issues raised here are not the usual protectionist concerns about Canada’s “crown jewels” being snapped up by foreigners. If that were all, the government would be right to slap them aside: the domestic owners of Canadian assets are quite able to assess for themselves whether the sale price is worth the discounted sum of expected future returns.

That remains the case, even where the buyer is a state-owned enterprise, and thus, as it is often argued, not subject to the usual commercial imperatives. The only way in which it can “distort” the market for a given asset is by overpaying for it, in which case we should be glad to relieve them of their money.

It’s true, as the Chinese government complains, that national security concerns can sometimes be used as a smokescreen for protectionist interests. But national security fears here appear entirely legitimate — enough, certainly, to warrant a proper review and, if necessary, for conditions to be attached to the sale (such as the United Kingdom imposed in a similar case involving Hytera), if not an outright ban.

So why the rush? Why did the Trudeau government so signally fail to do its due diligence? Is it simply oblivious to security concerns when it comes to China, or is it prepared to sell them out, as Stephen Harper once said, for the “almighty dollar”?