Thursday, July 06, 2017

Avoiding "Norsat Like Uncertainty" by Allowing the Chinese to More Easily Buy Advanced Canadian Companies

         By Chuck Black

It might be news to Canadian high tech and space companies attempting to comply with protective US laws such as the international traffic in arms regulations (ITAR) and the Canadian controlled goods program (CGP), but China sees the creation of a free trade agreement with Prime Minister Justin Trudeau's government as a way to avoid future "Norsat like uncertainty," and facilitate the purchase of other Canadian high technology companies.

National secrets be damned.

Prime Minister Trudeau shaking the hand of Chinese ambassador Lu Shaye in May, 2017. As outlined in the May 2nd, 2017 National Post article, "Ambassador Lu Shaye: Why Canada-China free trade is a win-win for both countries," the Chinese premier and Canadian prime minister "agreed last year to pursue the signing of a free-trade agreement, one that will create better conditions and a better environment for co-operation between our two countries." Photo c/o Adrian Wyld/The Canadian Press via AP.

As outlined in the July 5th, 2017 Canadian Press post, "China sees free trade with Canada as way to avoid future Norsat-like uncertainty," China is "hoping a future free-trade deal with Canada will help it avoid future controversies such as the national security concerns that surfaced over a Chinese takeover of a Canadian satellite technology company."

The article quoted Chinese ambassador Lu Shaye as stating that "he believes a free-trade agreement would help alleviate some of the unknowns for Chinese investors in future deals like the contentious takeover of Norsat International Inc."

As outlined in the June 23rd, 2017 CBC News post, "Norsat International investors approve takeover bid from Chinese firm," Vancouver, BC based Norsat International was acquired by Chinese based Hytera Communications after a hard fought battle with Atlanta based Privet Fund Management

Norsat sells custom satellite communications capabilities to Canadian and US civilian and military organizations for "remote and challenging applications" and lists various western civilian and military clients including the US Department of Defence, Boeing, CBC News, Reuters, NAV Canada and the Canadian Coast Guard as customers. 

The US government has announced its own review of the purchase. 

As outlined in the June 26th, 2017 Globe and Mail post, "Pentagon to review contracts with Norsat after Chinese takeover," the US Defence Department "will review all its business dealings with Norsat International Inc. after the Vancouver-based satellite technology company closed a deal that will allow it to be swallowed up by a Chinese telecom giant."

According to the article, the Liberal government has taken heavy criticism in Parliament and from members of the US House of Representatives Armed Services Committee for approving the Norsat takeover without conducting a comprehensive national security review.
Chuck Black.

Chuck Black is the editor of the Commercial Space blog.

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