Bill C-34

National Security Review of Investments Modernization Act

An Act to amend the Investment Canada Act

This enactment amends the Investment Canada Act to, among other things,
(a) require notice of certain investments to be given prior to their implementation;
(b) authorize the Minister of Industry, after consultation with the Minister of Public Safety and Emergency Preparedness, to impose interim conditions in respect of investments in order to prevent injury to national security that could arise during the review;
(c) require, in certain cases, the Minister of Industry to make an order for the further review of investments under Part IV.1;
(d) allow written undertakings to be submitted to the Minister of Industry to address risks of injury to national security and allow that Minister, with the concurrence of the Minister of Public Safety and Emergency Preparedness, to complete consideration of an investment because of the undertakings;
(e) introduce rules for the protection of information in the course of judicial review proceedings in relation to decisions and orders under Part IV.1;
(f) authorize the Minister of Industry to disclose information that is otherwise privileged under the Act to foreign states for the purposes of foreign investment reviews;
(g) establish a penalty not exceeding the greater of $500,000 and any prescribed amount, for failure to give notice of, or file applications with respect to, certain investments; and
(h) increase the penalty for other contraventions of the Act or the regulations to the greater of $25,000 and any prescribed amount for each day of the contravention.

[The Chair, Liberal, Joël Lightbound]

Just to provide a bit of context on the idea for Thursday's meeting, I'm hopeful that we'll get Bill C-34 done, and we can free our friends who've been with us over many meetings. Thursday would be a steering committee meeting so that we can hash out the plan, in particular with regard to Bill C-27 and how we intend to approach it, and also, perhaps, if we have time, to vote on some of the motions that have been presented and how we intend to deal with them.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

I was wondering whether we're going to have a subcommittee meeting to look at what legislation is going to come forth and so forth. Some of these motions are excellent. Actually, they're all really good motions, and in different ways. I have amendments to them, but at any rate, I'm just wondering whether we're going to have our own planning meeting, because it will be interesting to find out out where Bill C-27 stands as we're working through this.

Obviously, the one by Mr. Perkins with regard to the PBO officer is just one meeting, so that's easy to deal with and dispense with, but the other suggestions are more comprehensive and would require planning.

I'll just throw that out there. Maybe you can share with us how you would like to deal with this or if we are going to go one-off at them at the end of the meeting if there's time, or maybe on Thursday, if we can get through Bill C-34 today or next week.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Is this the finance committee?

I have a study motion to move. I think Mr. Vis will move the other one. I'll get right to it.

The clerk has just distributed them. I understand we'll debate and discuss them once we're through Bill C-34, so this won't delay clause-by-clause.

I move:

That, pursuant to Standing Order 108(2), the committee invite the Parliamentary Budget Officer to appear for two hours, to address the report, “Break-even Analysis of Production Subsidies for Stellantis-LGES and Volkswagen”.

[The Chair, Liberal, Joël Lightbound]

I'm not sure the applause will last. I hope it lasts the whole session. We're off to a good start. Thank you for that, colleagues.

Before we get back to Bill C-34, I know there are some study motions that some of you want to table. We'll get that out of the way and then we'll resume with Bill C-34.

I yield the floor to Mr. Perkins.

[The Chair, Liberal, Joël Lightbound]

Good afternoon, everyone.

I call this meeting to order.

Welcome to meeting No. 84 of the House of Commons Standing Committee on Industry and Technology. Today's meeting is taking place in a hybrid format, pursuant to the Standing Orders. Pursuant to the order of reference of Monday, April 17, 2023, the committee is resuming consideration of Bill C‑34, an act to amend the Investment Canada Act.

A reminder that all comments should be addressed through the chair. For the safety of our interpreters, please ensure that you speak into the microphone that your headset is plugged into.

I'd like to welcome back our witnesses today: Mark Schaan, assistant deputy minister, Strategy and Innovation Policy Sector; Jamieson McKay, director general, Investment Review Branch; James Burns, senior director, Investment Review Branch; and Mehmet Karman, senior policy analyst, Investment Review Branch.

I hope everyone had a good summer. We are pleased to see you again. I would also like to welcome the Parliamentary Secretary to the Minister of Innovation, Science and Industry, Ryan Turnbull, who is participating before our committee.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I'll ask the officials to explain the change to the Investment Canada Act with the proposals in clause 20 of Bill C-34.

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you, Mr. Chair.

This amendment would improve transparency and accountability by ensuring that the annual report, which is required to be published, would include details on the use of the minster's duties and powers for national security review. This would include, for example, the new powers on interim conditions and accepting binding undertakings to mitigate national security risk.

The proposed amendment to Bill C-34 would be that Bill C-34 be amended by adding, after line 15 on page 13, the following new clause:

19.1 Section 38.1 of the Act is renumbered as subsection 38.1(1) and is amended by adding the following:

(2) The report shall include information on the exercise of ministerial duties and powers under Part IV.1.

[The Chair, Liberal, Joël Lightbound]

We can resume.

To Mr. Perkins' point of order, after consulting with the legislative clerks, if you look at, for instance, clauses 15 and 16 of the bill, the disposition of the law at section 25.4 is already amended. It's already open. As soon as this clause of the original act is modified by the bill, then it opens it up.

That's why the ruling I've made on the previous clauses does not apply to this one: Bill C-34 already opens section 25.4 to amendments, and section 36 as well.

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you, Mr. Chair.

There is a further amendment that, again, aims to increase the transparency and accountability around this. This amendment would allow the minister to disclose the names of companies that are subject to final national security orders.

The change that is being recommended is that Bill C-34 in clause 19 be amended by adding, after line 15 on page 13, the following:

(3) Section 36 of the Act is amended by adding the following after subsection (4.1):

(4.101) For greater certainty, when communicating or disclosing under paragraph (4)(e.2) the fact that an order was made under subsection 25.4(1), the Minister is not prohibited from communicating or disclosing the identity of the non-Canadian and of the Canadian business or entity referred to in paragraph 25.1(c) that is the subject of the order.

[The Chair, Liberal, Joël Lightbound]

Dear colleagues and friends, I now call the meeting to order.

Welcome to meeting number 83 of the House of Commons Standing Committee on Industry and Technology.

Pursuant to the order of reference of Monday, April 17, 2023, we are continuing our study of Bill C‑34, An Act to amend the Investment Canada Act and resuming clause-by-clause consideration. Today's meeting is taking place in a hybrid format, pursuant to the House order of June 23, 2022.

I invite members to have a look at the guidelines on the use of earpieces and microphones to ensure that there are no echoes or high-pitched sounds that could disturb our interpreters, whom we thank in passing and even applaud. I sincerely thank them for everything they do.

Joining us again today, from the Department of Industry, are Mark Schaan, senior assistant deputy minister, strategy and innovation policy sector; Jamieson McKay, director general, strategy and innovation policy; James Burns, senior director, investment review branch; and Mehmet Karman, senior policy analyst, investment review branch. They are here to answer our questions.

Thank you all for joining us. Once again, my apologies: it's voting season in the House, so we're often a little late.

(On clause 16)

Ladies and gentlemen, let us begin without further ado. You will recall that we had reached clause 16 of the bill and that Mr. Perkins had proposed the amendment renamed CPC‑11.2 and numbered 12525376.

Mr. Perkins, you have the floor.

Canada Business Corporations Act

[Ryan Williams, Conservative, Bay of Quinte, ON]

Mr. Speaker, I am happy to talk about the beaches of Bay of Quinte. Sandbanks is the largest freshwater sandbar in all the world. We welcome well over a million visitors a year, and everyone is welcome. Some of us wish we were there today.

The bill deserves the attention that we are trying to give it, as rushed as it is. We need to spend time on a lot of different bills right now. We are dealing with Bill C-34 and are waiting for Bill C-27. The reality is that there is a lot of important legislation that we need to get through, and we need to spend the ample amount of time that these bills deserve to have spent on them. As I have mentioned, we certainly would have liked to see a few more amendments studied. We wanted to see the future of money laundering studied and not just to catch up to today.

There is a lot of great work to happen ahead, and as soon as we are done with the beaches and it gets a little colder, we will see everyone back here in Parliament so we can keep working on behalf of Canadians.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I didn't give them this one. I'm sorry. It's 12525376 to clause 16, that Bill C-34 in clause 16 be amended by adding after line 28 on page 10 the following:

(2) section 25.4 of the act be amended by adding the following after subsection (1):

(1.1) If the investment would give the non-Canadian the right to use intellectual property whose development has been funded, in whole or in part, by the Government of Canada, an order made under subsection (1) may require any person or entity from whom or which the Canadian business or the entity referred to in paragraph 25.1(c) is being or has been acquired to repay all or part of any such funding

Again, it comes from the same report from the industry committee from the last Parliament. It called on the government to look at any IP related to an acquisition that is being sold to say that, if that's been done and it's going to a foreign entity, the taxpayer money that may have gone into that through a grant in council or any of the other various mechanisms.... If that IP is leaving the country, then that IP should be repaid.

I know the officials have just gotten it. They can take a look. I don't know if they—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Yes, and the clerk has copies of it. Perhaps she could circulate it.

When I was reviewing the amendments we submitted last week, there was one area of testimony I was concerned about that we hadn't addressed. I think we had a discussion. A lot of it came from Mr. Balsillie and a few others.

It is the area of intangible assets. I would propose—and the amendment is being circulated now—that Bill C-34, in clause 15, be amended by adding after line 18 on page 8 the following: “(1.01) In determining whether to make an order under subsection (1), the Minister shall have regard to whether the non-Canadian could, as a result of the investment, have...the right to use intellectual property whose development has been funded, in whole or in part, by the Government of Canada.”

I'm sorry. I'm reading the wrong amendment, am I not? I'm sorry. That's the wrong one.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Boulerice.

Before we can debate it, I regret to inform you of my decision.

Bill C‑34 amends the Investment Canada Act to, among other things, authorize the Minister of Industry to impose interim conditions on investments to prevent national security breaches that may occur during the review, to make an order to extend the review under part IV.1, and to allow written undertakings to be submitted to the Minister of Industry to address national security risks and to provide that the minister may, with the agreement of the Minister of Public Safety and Emergency Preparedness, terminate the review as a result of the undertakings that have been made.

However, amendment NDP‑4 seeks to add a new obligation for the Governor in Council, that of providing the reasons why an order has not been made, which constitutes a new provision not provided for in the bill as adopted by the House of Commons at second reading. As House of Commons Procedure and Practice, third edition, states on page 770:

An amendment to a bill that was referred to a committee after second reading is out of order if it is beyond the scope and principle of the bill.

In the chair's opinion, for the reasons stated above, the amendment is beyond the scope of the bill. Therefore, Mr. Boulerice, I rule this amendment out of order.

As you know, that decision is not debatable, but it can be overruled if a member of the committee requests a vote on it.

Mr. Perkins, you have the floor.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Thank you, Mr. Chair.

I will make a slight alteration to CPC-11, if I can, as I table it. Just to be clear, I believe there's an issue in CPC-11 with what I proposed as new subsection 25.3(6.2). That's at the bottom on the page.

I propose that we put forward this motion without that new subsection. There perhaps is an issue, as I understand it, around whether or not it would be out of order. It imposes, I believe, a new condition or a new requirement on the minister, and it's a minor element of what we're trying to do with this amendment.

This amendment deals primarily with the fact that no clause in Bill C-34 allows the minister to review past acquisitions and mergers under the national security review process. The amendment seeks to give the minister power to review past acquisitions by non-Canadian state-owned enterprises through the national security review process. The geopolitical situation in the world is constantly changing, as we know. Acquisitions conducted by authoritarian states like China 10 years ago did not pose the same sort of national security threat, in my view, at that time, that they perhaps do now, but could pose a threat today.

Several of us have pointed out, and some of the witnesses have pointed out, that the minister needs to have the power to review previously approved ICA acquisitions by non-Canadian companies through that. Indeed, I've actually had a couple of sidebar conversations generally with the minister on this, on some acquisitions in the past. While the minister ordered last year three mine interests to be divested under policy, there were some other ones I brought up, like the Tanco mine, where he said it didn't allow him to go back far enough to deal with that issue. I think, actually, I may have even read about the minister referring to something more recently in the media when he was asked about reviewing an acquisition.

We put this forward because, whether it's this minister or current ministers, we would need the ability to go back when the geopolitical situation changes, as it has with regard to China. We had what I call sort of the “Bill Clinton” policy for many, many years through various governments—that through broader trade and economic engagement in the WTO, we could help China become a more open and a more...maybe not democratic, but a more human rights-based country.

I think that actually did work for a while, but the regime changed. With that regime change, we've seen, in my view, quite a bit of a step back. The regime has very different motivations in terms of how it engages internationally than we hoped for over the last 20 years. In fact, I think we're in a business cold war right now, in some ways, with China in particular. They are very aggressive in acquiring mineral rights around the world and companies under certain levels in our country. They have already acquired some of our strategic assets that we cannot get back.

Mr. Chair, I would urge members to at least give the minister the authority in the act and to give the government the ability to go back and revisit some of these, as I believe many other countries have in some of their acts. I think Britain and certainly the United States have given the minister some ability to go back further than ours does.