principles do little to provide clarity. Indeed, the clarification has politicised the issue and ratcheted up tension with Chinese conglomerates.
The first principle covers the investor’s independence from the relevant government (to monitor for actual foreign government control). It is unclear what degree of independence is deemed appropriate. Moreover, it is uncertain whether this provision could be enforced against a publicly listed entity in which a state or regional government held a formal but minority interest Second, the Board will review the investor’s litigation record and ‘common standards of business behaviour’ (i.e. the extent to which investor has clearly expressed commercial objectives and the quality of its corporate governance). It is equally uncertain whether this would apply to a newly listed corporation or one with no previous litigation history. Third, the FIRB will assess the impact of the investment on competition (to be determined in consultation with the Australian Consumer and Competition Commission). Such an approach may have value in the case of major acquisitions, such as BHP Billiton’s proposed takeover of Rio Tinto. It is questionable what impact the transfer of a mid- tier company could have on competition policy, making the provision largely irrelevant unless invoked for short-term political reasons. Fourth, the FIRB will evaluate the impact of the proposed investment on government revenue or other policies, including tax and environmental protection. It is hard to see how this could be utilised only against state-owned investment vehicles without compromising equity of treatment principles. Fifth, it will evaluate national security considerations, which includes undefined ‘strategic interests’. Sixth, the board will determine the impact on the operation and direction of Australian business, ‘as well as its contribution to the Australian economy and broader community’, which includes taking into consideration ‘the interests of employees, creditors and other stakeholders’.
The Federal Treasurer, Wayne Swan, has sought to display his pro-inward investment credentials and displace concern by suggesting his office is swamped by Chinese proposals. He has publicly stated that the government had approved a Chinese investment once every nine days since coming to office. He also intimated, however, that Chinese investment proved exceptionally complex; it required a more detailed examination, which in turn allowed for an expansion of the timeframe for approval beyond thirty days. 67 The proposals have generated considerable ire in Western Australia, where those involved in facilitating inward investment complain that it is important to ‘differentiate between stock market and real miners’.68 They also suggest that linking the national interest to the need to separate supply and demand misunderstands the dynamics of the mining industry. This is precisely the message the Federal Treasurer promulgated in a recent speech in Melbourne.
The key is that investments are consistent with Australia's aim of maintaining a market-based system in which companies are responsive to shareholders and in which investment and sales decisions are driven by market forces rather than external strategic or political considerations… Our predisposition
67 Under Australian law, foreign investors can withdraw an application if it has not been accepted within the timeframe, thereby guaranteeing confidentiality. In one recent case involving a Chinese- based corporation, the government refused the request for withdrawal and allowed the proposed investment to be gazetted. According to a senior representative of the Chinese firm involved, this decision was contrary to its wishes and demonstrated ‘discriminatory practice’ (Interview, Beijing, 5 September 2008).
Interview, Perth, 23 August 2008.