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CNOOC-Nexen deal good for Canada: Desmarais

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While Ottawa decides whether is should back the Chinese-state run CNOOC's $15.1-billion bid for Calgary-based oil producer Nexen, one of the country's top business leaders tells BNN that the deal has plenty to offer Canada.

Andre Desmarais, president and co-chief executive officer at Power Corporation says that allowing a state-run company from China to buy a Canadian energy company should be treated no differently than allowing a company from another country access to Canada's resources.

"I think it's important that the government has to work with Canadians and for Canadians and so therefore it may decide to impose conditions to make sure Canadians understand that if it is accepted that this is a good deal for Canada and in the interest of Canada," he says. "I have no reason to believe they can do that because we are a sovereign nation, the resource is here, the Chinese will have to come here, they'll have to follow the law, they'll have to export their goods, they'll have to pay the taxation related to that, they'll have to pay their employees, they'll have to do all sorts of things just the way any other owner [would]."

He says it's in China's interest to "behave well" if they do receive approval for the takeover and to make sure Canadians are happy with the way they operate in Canada.

In July, CNOOC launched its $27.50 per share offer for Nexen -- the first ever outright takeover of an oil patch company by a Chinese company. Because the takeover is worth more than $330 million it must be approved by Ottawa and pass the "net benefit" test -- which critics says lacks clarity. The rule has been used in the past to squash foreign takeovers such as BHP Billiton's proposed takeover of Potash Corp. in 2010.

But Desmarais, looking beyond the CNOOC deal, believes that economic ties with China -- rather than attracting skepticism -- should be at the centre of the Canada's trade policy.

"I would like to see a free trade agreement with China and Canada, how wide it should be at first could be discussed…I like policies that really engage people to work together and drive together," he says. "China cannot be an enemy, it's going to be a very powerful country, it's going to be an extremely important part of the geopolitical aspects of the future…I see it as a fantastic opportunity for Canada."

And he believes that Canada's rich source of natural resources will be vital to the growth of the Chinese economy.

"I think that for China and the rest of the BRIC countries to do really well, the only way for them to grow economically is to need more natural resources -- they're simply going to need them," he says. "You can't have 8-percent growth in China year after year after year and think that the price of natural resources won’t go up …so that's a net benefit to Canada."

Desmarais adds that China's quest to access resources from around the world provides Canada with an opportunity to create jobs.

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