The Australian system for regulating foreign direct investment in the mineral sector

"The government o f Canada has, since 1981, been under intense political pressure to modify its foreign direct investment (FOI) regulatory regime(1). To date the government's response has been limited to administrative and ""cosmetic"" changes: substantive issues have been largely ignored(2). However, as long as the economy continues to flounder , the Foreign Investment Review Agency (FIRA), as it is presently formulated , will continue to be an easy target for government critics . This phenomenon, in conjunction with the virtual certainty of a federal general election within two years, suggests that changes to the FIR Act will be seriously entertained by the present government.Recent events indicate that if change s are made, they will likely entail the adoption of a special-sector approach within the existing framework of a general screening system(3). Since this approach is currently employed in Australia(4), it would seem to be appropriate, from a public policy perspective to study that country's experience in developing and operating such a scheme. In doing so, I shall focus on the mineral sector; the rationale for doing so is as follows. First, this sector served as the focal point of the Australian FOI regulatory debater(5), Second , with the exception of the oil and gas industries, the non-petroleum mineral sector is one of the few areas of the Canadian economy wherein the Trudeau government has adopted an explicit domestic ownership target(6). Third, the non-petroleum mineral sector is, undoubtedly, a prime candidate to be denoted a s a special-sector if such a framework were to be utilized by the Canadian government!"".Although international comparisons are fraught with danger , a Canadian/Australian comparison is particularly appropriate(8). Both countries have reasonably similar economic, political and social structures . Furthermore, as noted above , Australia is the only other western country which employs a general screening mechanism for FOI. In addition, it utilizes a special area approach ; within this scheme, an explicit target of a minimum of 50% Australian ownership of all new resource projects has been formulated and clearly promulgated to all of the relevant interest groups. This policy, broadly defined, has been in place for more than six years and during this time the Australian mineral sector has, by world standards, prospered(9). Hence, the Australian experience in designating the mineral sector as a key area within a general screening system, should be of interest to Canadian policy-makers."