CANADA TRENDS AND DEVELOPMENTS Contributed by: Kevin West, Andrea Hill, Priya Ratti and Meryam Kellow, SkyLaw
The new opportunities for investment in Canada Canada is rethinking pipelines and other major economic investments Canada has traditionally been very slow to approve major infrastructure projects. A pro - posed LNG pipeline to the Atlantic Ocean had met with stiff opposition. This is all changing. Canada sees the need to focus its infrastructure on trading with friendly nations in Europe. Donald Trump is rethinking pipelines too The Biden administration cancelled the Key - stone XL pipeline from Alberta to the United States, primarily for environmental concerns. Calgary-based TC Energy sued the US govern - ment unsuccessfully for USD15 billion in losses due to the cancellation. Mr Trump now says that he would like to see the pipeline proceed. Military spending is set to soar Canada recognises that it needs to spend more on its military. Canada has pledged to meet its NATO commitments of meeting its 2% of GDP target. Canada recognises that it can no longer rely on the United States for its military security. Interprovincial trade barriers Canada has an embarrassing number of inter - nal trade barriers. Provinces charge levies on goods such as alcohol crossing provincial bor- ders. Governments and businesses are moving to remove those trade barriers. Increased focus on supply chains and markets in other parts of the world The trend to “friend-shoring” started shortly after Russia invaded Ukraine. Many Canadian busi - nesses will now be looking to friendly partners in other parts of the world given the disruption to supply chains with the United States.
Canadian businesses are attractive acquisition targets There is likely to be a lot of interest in Canadian companies. The trade war is likely to result in lower net export volumes and weaker terms of trade lead, and lead to a further depreciation of the Canadian dollar, making acquisitions in Canada cheaper. The uncertainty of tariffs will likely push valuations down. However, the Canadian government is rightly concerned about predatory takeovers of Cana - dian companies. There is an increased risk of the Canadian government restricting or block - ing acquisitions by non-Canadians on economic grounds. Canada’s relationship with the United States is permanently changed The rules-based international order has been abandoned. There is no longer any belief that we can achieve peace through prosperity. The United States has articulated its new policy as “peace through strength” . As a result, borders can change, or become blurred. Markets and supply chains are disrupted. Tariffs and the retaliation they bring also poison economic and security alliances. There is no clear path for- ward. It is clear that the objective of the United States is to achieve greater access to Canada’s minerals by forcing economic hardship. Can - ada will fight back. The outcome is uncertain; Mr Trump could reverse course (unlikely), some type of EU-style economic deal may be negoti- ated, or the United States could absorb Canada, through threat or through force. The alignment of the United States with Russia that has been made evident by Mr Trump’s position on Ukraine makes Canada particularly vulnerable as it sits between the two countries, with vast mineral wealth, particularly in the Arctic. It is not incon- ceivable that Russia and the United States carve
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