Canada isn't anti-American, just pro-Canadian, banker says
Vancouver, British Columbia — When Rowland C. Frazee, chairman of the Royal Bank of Canada, is abroad, he constantly finds himself defending American policies.
That's a typical Canadian reaction. Canadians can be quite critical of the United States among themselves. But they don't like Europeans or Japanese, for instance, criticizing the US.
Canadians often find such foreigners lacking in understanding of the US. Watching TV from US stations, going to American movies, reading many US or US-affiliated publications, and often taking vacations across the border, most Canadians know much more about the United States than Americans know about Canada.
And Canadians basically recognize the relative merits and benevolence of their powerful southern neighbor. They are grateful they are not like Poland or Afghanistan, situated next to the Soviet Union.
Thus it grieves Mr. Frazee, chief executive officer of Canada's largest bank and the fourth largest on the continent, that Canada's economic policies have been perceived widely in the US as anti-American.
''Canadians are not anti-American,'' he asserted in an interview. ''They are pro-Canadian.''
More than $90 billion of goods crossed the Canadian-American border last year , by far the biggest bilateral trade in the world. So, although the two nations will undoubtedly differ from time to time, Mr. Frazee considers it important that the two peoples at least understand each other's positions.
The US has been troubled most by two Canadian measures. One is the National Energy Policy (NEP); the other the Foreign Investment Review Agency (FIRA).
Both reflect strong nationalistic feelings in Canada -- despite strong separatist sentiments in Quebec and a small separatist movement in western Canada.
''It (nationalistic policy) is not the government,'' Mr. Frazee held. ''It is the people.''
Some Americans saw the NEP as being discriminatory against US-owned oil companies and unjustly retroactive in some of its rule changes. They were also alarmed by a suggestion in the budget speech that FIRA tighten up on its admission of new foreign investments, most of which are American.
Mr. Frazee has attracted considerable attention in Canada by criticizing the Canadian government's actions.
In the case of FIRA, he notes that the government of Prime Minister Pierre Trudeau has not followed up on its budget message idea. ''It's a non-issue,'' he maintains. Explaining, he points out that the agency's aim is merely to make sure any new investments are of some significant benefit to Canada; that most nations have similar foreign investment review boards; and that FIRA eventually approves more than 80 percent of applications.
He admits, however, that FIRA sometimes ''takes forever'' to make up its mind. ''The administrative process has been cumbersome,'' he says. But operating procedures are being examined to see if they can be streamlined.
As for the NEP, he charges: ''It tried to do too much too fast.'' He believes that its Canadianization measures were unnecessary, as Canadian ownership of the oil and gas industry here was increasing gradually anyway.
Before October 1980 -- when NEP took effect - 68 percent of Canada's oil and gas was owned by foreign interests, 54 percent of them American. Canadians like to point out that if foreigners owned anywhere near as large a proportion of US oil and gas, Congress would get highly excited and take remedial action.
''The NEP should have had as its first objective self-sufficiency in oil,'' Mr. Frazee says. ''Unfortunately, Canadianization got way out in front of self-sufficiency.''
As a result, ''There was a certain amount of panic in the marketplace.'' Some US companies sold their Canadian properties. Canadian companies paid some $6 billion for them. One way or another, the purchases were financed through adding foreign debt, pushing down the value of the Canadian dollar on the foreign exchange markets 2 or 3 cents last year.
Mr. Frazee maintains that the NEP was not as bad for foreign companies as some of them made out. Much of the Canadian acquisition activity had nothing to do with the Canadianization policy. Even where there was a connection, he adds, there were no fire sales or forced sales. ''In virtually every case it is demonstrable that Canadian purchasers paid substantial premiums for what they bought.'' The NEP gave advantages to Canadian-owned companies; it did not penalize foreign ones. Moreover, the big oil companies, such as Exxon, Shell, Gulf, and Texaco, have remained, he noted.
Nonetheless, he maintains that the Canadianization measures were ''unfortunate.'' They did not add any extra oil and gas to the nation's reserves. And they have become ''a little impractical.'' He explained, ''We cannot afford to put a strong emphasis on Canadianization.''
Last week the government modified the NEP to give Canada's troubled petroleum industry a $2 billion package of tax breaks and other incentives. In effect, the move acknowledged that high taxes as well as the decline in oil prices have hurt the industry.
To improve the reputation of American or other foreign companies in Canada, Mr. Frazee suggests that they increase the percentage of Canadian control of their subsidiaries, set up more joint ventures, and have Canadian chief executives more often. ''It may sound parochial -- in fact it may be parochial -- but things like that matter in a country like ours. They matter in most countries.''