The CEO Poll: Not so free trade

Canadian business leaders on creeping protectionism.

Business leaders give the federal mini-budget high marks.

Protectionism is a hot topic yet again after governments killed two major business deals recently. Canadian CEOs provided advice on what should be done about it in a recent web poll conducted by COMPAS Inc.

The 120 respondents were asked if protectionism is on the rise after Industry Canada denied the sale of the aerospace unit of MacDonald, Dettwiler and Associates to U.S. defence contractor Alliant Techsystems. Similarly, the New Zealand government blocked the sale of a $1.4-billion partial stake in the Auckland International Airport to the Canada Pension Plan Investment Board.

In response to the question, 51% of the panel said protectionism is “probably” increasing, while 15% said “definitely.” The CEOs also tended to be more supportive toward the Canadian government’s decision to block the sale of MDA than the New Zealand government’s quashing of the CPP deal. “National security concerns are a valid reason for not transferring sensitive technology,” wrote one CEO in reference to the MDA sale.

The majority of the panel wants the federal government to take a tougher position when assessing foreign takeovers involving a government-owned enterprise, while 38% of the respondents said there should be no difference in the approach. The business leaders are also in favour of tightened restrictions on foreign ownership rules for companies in the natural resources sector. Today, 65% of the respondents are in favour of tougher rules, while only 53% felt the same way in December 2005. The poll found similar results for the energy, technology and financial sectors.

Many of the respondents had mixed feelings aboutprotectionism. “It limits everyone’s opportunities and thus restricts globally our collective ability to generate wealth and prosperity,” wrote on respondent. “However, we cannot be Boy Scouts either.…Let’s try to preserve and expand true free trade opportunities generally across the board, but let’s not be stupid about it.”