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Canadian-United States Corporate Interface and Transnational Relations

Published online by Cambridge University Press:  22 May 2009

Isaiah A. Litvak
Affiliation:
Professor of economics and international affairs at Carleton University in Ottawa
Christopher J. Maule
Affiliation:
Associate professor of economics and international affairs at Carleton University. The authors thank Annette Baker Fox, Douglas Klassen, Joseph Nye, and Maureen Appel Molot for their helpful comments on an earlier draft of this essay.
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Extract

Transnational relations involving parent companies of United States multinational enterprises with subsidiaries in Canada have begun to interest not only the social scientist but also the politician and businessman. What is the effect of such transnational relations on the economic resources and performance of each country? What political means are used to influence corporate behaviour? What is the effect of the constitutional system on such transnational relations? What are the ways in which the countries reacted to resolve certain related interstate conflicts?

Type
Part III. Issue Areas
Copyright
Copyright © The IO Foundation 1974

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References

1 E. Raymond Corey and Steven H. Star, “Organization Strategy” (Harvard School of Business Administration, Division of Research), p. vii.

2 Strategy in this context may be viewed as “the determination of the basic goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources for carrying out these goals.” See Chandler, Alfred D., Strategy and Structure (Cambridge, Mass.: M.I.T. Press, 1962), p. 13.Google Scholar

3 Chandler, p. 13.

4 See Litvak, Isaiah A. and Maule, Christopher J., “Branch Plant Entrepreneurship,” The Business Quarterly 37 (Spring 1972): 4553.Google Scholar

5 For further discussion see Isaiah A. Litvak and Christopher J. Maule, “Marketing and Good Corporate Behavior: The Case of the U.S. Subsidiary,” in Thompson, D. N. and Leighton, D. S. R., eds., Canadian Marketing: Problems and Prospects (Toronto: Wiley Publishers, 1973), pp. 7381.Google Scholar

6 These are similar to the four types of global interactions suggested by Nye, Joseph S. and Keohane, Robert O., “Transnational Relations and World Politics: An Introduction,” International Organization 25 (Summer 1971): 332.Google Scholar

7 See Shulman, J. S., “Transfer Pricing in the Multinational Film,” European Business 20 (January 1969): 4654.Google Scholar

8 See Crispo, John, International Unionism—A Study in Canadian-American Relations (Toronto: McGraw-Hill, 1967);Google ScholarLitvak, Isaiah A. and Maule, Christopher J., “U.S. Domination of Canadian Labour,” Columbia Journal of World Business 7 (May-June 1972): 5763;Google Scholar and Globe and Mail (Toronto), 18 September 1973, p. 1. See also Cox and Jamieson in this volume.

9 See Nye and Keohane, p. 334.

10 Litvak, Isaiah A., Maule, Christopher J., and Robinson, R. D., Dual Loyalty: Canadian-U.S. Business Arrangements (Toronto: McGraw-Hill, 1971).Google Scholar

11 Ibid., pp. 57, 69, 130; and Bourgault, P. L., Innovation and the Structure of Canadian Industry (Ottawa: Information Canada, 1972).Google Scholar

12 Canada, Senate, Special Committee on Science Policy, Science Policy for Canada, vol. 1 (1970), vol. 2 (1972), vol. 3 (1973).

13 See English, H. E., Industrial Structure in Canada's International Competitive Position (Montreal: Canadian-American Committee, 1964);Google Scholar and Litvak, Maule, and Robinson, Dual Loyalty, pp. 53–60.

14 Litvak, Maule, and Robinson, Dual Loyalty, pp. 75–86.

15 Ibid., pp. 112–124.

16 See Levitt, Kari, Silent Surrender: The Multinational Corporation in Canada (Toronto: Macmillan of Canada, 1970).Google Scholar

17 This position was taken in: Canada, Task Force on the Structure of Canadian Industry, Foreign Ownership and the Structure of Canadian Industry (Ottawa: Queen's Printer, 1968); also referred to as the Watkins report because Watkins, Melville H. headed the task force.Google Scholar

18 See Annual Report of the Department ofIndustry, Trade and Commerce, 1 April 1971 to 31 March 1972 (Ottawa, 1973).

19 For further details, see Leyton-Brown's, David essay in this volume; and Fayerweather, John, “The Mercantile Bank Affair,” Columbia Journal of World Business 6 (November-December 1971): 4150.Google Scholar

20 “Mercantilism: Past, Present and Future,” paper presented at the Canterbury Annual Meeting of the British Association for the Advancement of Science, 20 August 1973.

21 See Journal of Commerce, 1 March 1973; and John Holmes's essay in this volume. Also see the New York Times, 6 January 1973; Wall Street Journal, 8 January 1973; and International Canada, January 1973, pp. 10–12.

22 Canada, House of Commons, Bill C-132, Foreign Investment Review Act, submitted by the Minister of Industry, Trade and Commerce, 1st reading 24 January 1973 (enacted December 1973).

23 We would like to thank Professor Murray, A. of the University of Windsor for bringing this point to our attention. For an interesting case study involving one company, Auto Specialties Ltd., see Windsor Star, 17 January, 28 April, 9 and 10 June 1972.Google Scholar

24 Litvak, Maule, and Robinson, Dual Loyalty, p. 132.

25 See Rasminsky, Louis (then governor of the Bank of Canada), “Monetary Policy and the Defence of the Canadian Dollar,” speech given to the Canadian Club of Victoria, 17 October 1968, p. 8.Google Scholar

26 See Molot, Maureen Appel, The Role of Institutions in Canada-U.S. Relations: The Case of North American Financial Ties, Carleton University School of International Affairs Occasional Papers, no. 24, November 1972.Google Scholar

27 Royal Commission on Farm Machinery, Special Report on Prices (Ottawa: Queen's Printer, 1969) pp. 61–90.

28 The conflict between the Swiss-based company, Hoffmann-LaRoche, and the UK government concerning the pricing of Librium and Valium is a further example of one government requiring the assistance of another. See UK Monopolies Commission, A Report on the Supply of Chlordiazepoxide and Diazepam (London: Her Majesty's Stationery Office, 11 April 1973).

29 See Litvak, Isaiah A. and Maule, Christopher J., “Extraterritoriality and Conflict Resolution,” Journal of Conflict Resolution 13 (September 1969): 305319.CrossRefGoogle Scholar

30 See Canada, House of Commons, Bill C-227, Amendments to the Canadian Combines Investigation Act, 1st reading 5 November 1973, sections 31.5, 31.6, and 32.1.

31 Litvak, Maule, and Robinson, Dual Loyalty, p. 57.

32 See Watkins report, pp. 310–346; Canada, House of Commons, Standing Committee on External Affairs and National Defence, Report No. 33, 28th Parl., 2d sess., 1969–1970; and Gray Task Force, Foreign Direct Investment in Canada (Ottawa: Information Canada, 1972), pp. 253290. See also the essay by Leyton-Brown, David in this volume.Google Scholar

33 For example, refineries have been located by Shaheen Natural Resources of New York and Gulf Oil in Newfoundland and by Texaco and Imperial Oil in Nova Scotia.

34 See Holmes, John in this volume. See also Journal of Commerce, 3 August 1973, and 11 May 1973.Google Scholar

35 See Department of Industry, Trade and Commerce, Foreign Investment Division, Office of Economics, Selected Readings in Laws and Regulations Affecting Foreign Investment in Canada, March 1972, plus amendments nos. 1, 2, 3. A discussion of these policies can be found in Dual Loyalty, pp. 36–47.

36 See Canada, House of Commons, Bill C-213, An Act Respecting Canadian Business Corporations, 1st reading 18 July 1973.

37 See “Some Guiding Principles of Good Corporate Behavior for Subsidiaries in Canada of Foreign Companies,” in Department of Industry, Trade and Commerce, Foreign-Owned Subsidiaries in Canada (Ottawa: Queen's Printer, 1967), pp. 40–41.

38 Canada, House of Commons, An Act to Establish the Canada Development Corporation, 1st reading 25 January 1971 (passed 9 June 1971), section 2.

39 See John Fayerweather, pp. 41–50; and Litvak, Isaiah A. and Maule, Christopher J., Canadian Cultural Sovereignty: The “Time-Reader's Digest” Case Study (New York: Praeger, 1974).Google Scholar For further discussion see article by David Leyton-Brown in this volume.

40 Litvak, Maule, and Robinson, Dual Loyalty, pp. 195–225.

41 Ibid., pp. 61–86. See articles in this volume by Roger Swanson and David Leyton-Brown.

42 See The Business Records Protection Act, Revised Statutes of Ontario, 1960, ch. 44 (Queen's Printer); and The Business Concerns Records Act, Revised Statutes of Quebec, 1964, ch. 278 (Queen's Printer).

43 Among the numerous examples of provincial governments seeking US investment are speeches made to the business community in New York by Premier Bourassa of Quebec and ex-premier Smallwood of Newfoundland extolling the advantages of locating industry in these provinces. In addition, the Province of Saskatchewan negotiated with the state of New Mexico to support its potash industry. See Holsti-Levy article in this volume for this case.

44 Statistics Canada, Canada's International Investment Position (Ottawa: Information Canada, 1971), pp. 69, 79.

45 Canada, Hearings before Royal Commission on Publications, 1957.

46 Canada, Senate, Hearings before the Senate Committee on Mass Media, vol. 1, 1970, p. 159.

47 Litvak, Maule, and Robinson, Dual Loyalty, chapter 5.

48 The remarks in this section are extracted from research currently being undertaken by the authors.

49 Litvak, Maule, and Robinson, Dual Loyalty, pp. 36–48, and note 21 above.

50 The ability to resolve conflicts within Canada is also constrained by federal-provincial relationships where provincial governments are anxious to promote industrial activity at almost any price. In the case of Quebec, little distinction is made between English-Canadian capital and that from the United States. In fact, at times there seems to be a preference for the US variety.

51 Hoffmann, Stanley, “International Organization and the International System,” International Organization 24 (Summer 1970): 401.CrossRefGoogle Scholar