National Security Review of Investments Modernization Act

An Act to amend the Investment Canada Act

Sponsor

Status

This bill has received Royal Assent and is, or will soon become, law.

Summary

This is from the published bill. The Library of Parliament often publishes better independent summaries.

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.

Elsewhere

All sorts of information on this bill is available at LEGISinfo, an excellent resource from the Library of Parliament. You can also read the full text of the bill.

Votes

Nov. 20, 2023 Passed 3rd reading and adoption of Bill C-34, An Act to amend the Investment Canada Act
Nov. 7, 2023 Passed Concurrence at report stage of Bill C-34, An Act to amend the Investment Canada Act
Nov. 7, 2023 Failed Bill C-34, An Act to amend the Investment Canada Act (report stage amendment) (Motion 3)
Nov. 7, 2023 Passed Bill C-34, An Act to amend the Investment Canada Act (report stage amendment) (Motion 1)
Nov. 6, 2023 Passed Time allocation for Bill C-34, An Act to amend the Investment Canada Act
April 17, 2023 Passed 2nd reading of Bill C-34, An Act to amend the Investment Canada Act

May 1st, 2023 / 5:15 p.m.
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Bloc

Sébastien Lemire Bloc Abitibi—Témiscamingue, QC

Thank you, Mr. Chair.

Mr. Balsillie, one last time, I'd like to address with you the issue of inadequate intellectual property protection and Canada's longstanding issues with innovation that can drive technology champions to leave the country or to set up shop abroad. Bill C‑34, An Act to amend the Investment Canada Act, doesn't address the threshold issue.

Do you think it's a mistake to not have minimum acquisition thresholds? What impact does that have on marketing in Canada?

May 1st, 2023 / 4:05 p.m.
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Liberal

Tony Van Bynen Liberal Newmarket—Aurora, ON

Thank you, Mr. Chair.

I'd like to direct my first question to either Ms. Walker or Mr. Caldecott.

In the Bar Association's April 2023 brief, you encouraged the government to ensure that the amendments proposed in Bill C-34 and the regulations and guidelines accompanying the new mandatory preclosing regime are clear and do not impose unnecessary requirements or burdens.

How do you suggest the government strike the required balance between the protection of Canada's national security interests and the importance of allowing foreign investment in Canada?

May 1st, 2023 / 3:55 p.m.
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Sandy Walker Chair, Competition Law and Foreign Investment Review Section, The Canadian Bar Association

Merci.

Good afternoon, Mr. Chair and honourable members of the committee.

My name is Sandy Walker. I'm the chair of the competition law and foreign investment review section of the Canadian Bar Association. I'm a partner with the law firm of Dentons Canada.

Thank you for inviting the CBA to discuss the proposed amendments to the Investment Canada Act.

The CBA's main objectives are to improve the law and the administration of justice, and we are here today to that end.

With me today is Michael Caldecott, chair of the foreign investment committee of the section. Michael is a partner at the law firm of McCarthy Tétrault.

At the outset, the CBA recognizes both the importance of foreign investment to the Canadian economy and the importance of national security review of foreign investments in protecting Canada's national security. Today, we offer our views on how the bill can be improved to ensure its effective implementation without imposing unnecessary burdens on foreign investors and the government.

The bill establishes mandatory preclosing notification for acquisitions involving targets in prescribed business activities. Such transactions could not close until clearance has been received. To ensure predictability, it is critical that the new regime not come into effect until crucial terms such as “a prescribed business activity” have been defined. These definitions are essential to determine whether a preclosing filing is required and, as a result, should be defined either in the law itself or, if not, in regulations the bill would require to define those terms.

Second, if these definitions are not in the legislation, the draft regulations should be prepared in parallel with Bill C-34, or the amendment should come into force only after the regulations have been finalized.

Third, the bill will capture acquisitions of non-controlling interest in a foreign entity with a Canadian subsidiary. Even if the target has very limited operations in Canada, in these cases national security concerns are unlikely to arise. We therefore recommend exempting these indirect acquisitions where revenues and/or assets in Canada are under a de minimis level.

Fourth, to address transactions in progress when the amendments come into force, we recommend that the new regime become effective 90 days after the bill receives royal assent.

I will now ask my colleague Mike Caldecott to discuss the other points.

May 1st, 2023 / 3:35 p.m.
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Liberal

The Chair Liberal Joël Lightbound

I call this meeting to order.

Ladies and gentleman, hon. friends, welcome to meeting no. 70 of the House of Commons Standing Committee on Industry and Technology.

Pursuant to the order of reference of Monday, April 17, 2023, we are studying Bill C‑34, An Act to amend the Investment Canada Act. Today's meeting is taking place in a hybrid format, pursuant to the House Order of Thursday, June 23, 2022.

This afternoon, we welcome a number of witnesses to study Bill C‑34. As an individual, we welcome Charles Burton, senior fellow at the Centre for Advancing Canada's Interests Abroad of the MacDonald-Laurier Institute.

By videoconference, we also welcome Daniel Schwanen, vice-president, research at the C.D. Howe Institute.

We also have Dan Ciuriak in person, and Robert Mazzolin by videoconference, both senior fellows at the Centre for International Governance Innovation.

In addition, we welcome Jim Balsillie, chair of the board at the Council of Canadian Innovators.

Finally, from the Canadian Bar Association, we welcome Sandy Walker, chair of the Competition Law and Foreign Investment Review Section, and Michael Caldecott, chair of the Foreign Investment Review Committee, Competition Law and Foreign Investment Review Section.

I'd like to thank all of you for joining us in person or virtually for this significant study.

Because we're welcoming a large group of witnesses, we will try to limit testimony to five minutes.

Without further ado, Dr. Burton, the floor is yours.

The floor is yours, Mr. Burton.

April 26th, 2023 / 6:20 p.m.
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Conservative

Ed Fast Conservative Abbotsford, BC

Thank you so much for being here at committee.

Just to follow up on that question, we do not have trade agreements with countries that are the most problematic when it comes to hostile regimes. We know which countries those are. That does provide us with some opportunity within the net benefit test to perhaps lower thresholds or incorporate additional tools that are going to give us the ability to place a greater focus of scrutiny on those investments. I'm thinking of investments even like the one that was made by Glencore—or it was going to be made by them. There were two offers from Glencore for Teck, and Teck has resisted both of those. That caused enough consternation with the minister's office that he actually responded to a letter from the Vancouver Board of Trade and signalled that Teck was important—very important.

What in Bill C-34 is actually going to prevent the last champions of industry within Canada from being acquired and potentially being hollowed out by foreign entities, not necessarily on the national security side but on the net benefit side?

April 26th, 2023 / 6:15 p.m.
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Conservative

Bernard Généreux Conservative Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC

Thank you, Mr. Chair.

Thanks to the witnesses.

Mr. Vincent, in view of the minister's answers to my questions about Neo Lithium and the other three companies that were asked to pick up their marbles and go home, I would ask that you take various factors into consideration in your replies.

We know that the government of Canada is getting ready to invest in a Volkswagen battery plant. I have in front of me I a map of mines in Canada and a list of the 31 critical minerals considered important for national security. It's acknowledged that Canada's mines cannot supply all of the lithium and rare earth metals needed to produce batteries, either for the Volkswagen plant or any other future plants. It will therefore have to import these if they are to manufacture and install these batteries.

In view of all these contextual factors, don't you think that foreign investments will be needed in all of Canada's mines? There are, after all, many projects on the table that we would like to undertake.

Under the new version of Bill C‑34, which might be adopted, I believe that the time required to get all these mines up and running, and the investments that will be required, are going to demand a lot of work from public servants. They will have to carry out an extremely thorough analysis. We’re still talking about China, but there may well be companies in other countries that would perhaps want to invest in Canada, particularly in this area.

Words are important. If I'm not mistaken, the minister mentioned a new industrial niche for Canada. He even compared it to the introduction of the automobile in the early 19th century.

In view of all these factors, how are we going to attract foreign investors to Canada, when China is currently producing 30% of all the raw materials needed to make batteries?

That's a long question, but I think you understand the context.

April 26th, 2023 / 6:05 p.m.
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Bloc

Sébastien Lemire Bloc Abitibi—Témiscamingue, QC

I would of course hope that we could monitor what happens in our supply chains. I and some of my colleagues also mentioned it, as well as the fact that sanctions for any of violations need to be stronger. These sanctions should be strengthened to deter foreign investors from violating any of the rules in the Investment Canada Act.

Would the new act include any amendments of that kind? Are the sorts of conditions that the department could impose clearly defined in Bill C‑34?

In terms of transparency, could these conditions be published? The minister has stated a strong desire for transparency. Will this be reflected in reality?

The most striking case for us, as Quebeckers, is of course the purchase of Rona by Lowe's. We never learned what conditions were placed on this by the minister. In the end, we get the impression that there is nothing of this company left in Quebec, even the supply chains.

April 26th, 2023 / 5:55 p.m.
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Liberal

Viviane LaPointe Liberal Sudbury, ON

On the subject of national security, I understand that, under the act, Canada was only permitted to share limited information regarding certain aspects of current and ongoing cases.

What information will be shared with international allies under the proposed option in Bill C-34?

April 26th, 2023 / 5:55 p.m.
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Liberal

The Chair Liberal Joël Lightbound

Thank you very much, Mr. McLean. That's all the time.

Just as a reminder for MPs, we have officials with us taking their time to review Bill C-34, which is what this committee is looking at.

Thank you being here with us to examine Bill C-34, which has been referred to this committee.

Ms. Lapointe, you have the floor for six minutes.

April 26th, 2023 / 5:50 p.m.
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Liberal

The Chair Liberal Joël Lightbound

Dear colleagues, we are now reconvening this meeting of the Standing Committee on Industry and Technology.

We are now welcoming two senior government officials, Mr. Vincent and Mr. Burns. Thank you for being with us for the second hour of this meeting, which will be shorter than planned, because we have only 30 or 40 minutes left.

We will now continue our discussion of Bill C‑34.

Mr. McLean, you have the floor for six minutes.

April 26th, 2023 / 5:15 p.m.
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Liberal

François-Philippe Champagne Liberal Saint-Maurice—Champlain, QC

Thank you for the question.

Mr. Chair, obviously you have the final word on everything, so we'll focus on the question that was asked.

Definitely, what I was saying was that Bill C-34 is under national security, which has no threshold. The first thing I was trying to explain to the committee and colleagues was around the fact that, when it comes to national security, there's no threshold, so we review any transaction that would have an impact on national security. That's what Bill C-34 is about. It's to provide more tools in the tool box with respect to that.

The net benefit test has a number of thresholds, whether you're part of the OECD or whether you're a country with which we have a trade agreement, but what I'm saying is that because of what we were looking at—and colleagues have been asking questions—when it comes to national security, there's no threshold. I think it's important for colleagues to know that, because that's really what we're looking at. It's to have more tools in the tool box, because there were questions at the time from colleagues on whether we are looking at all transactions. The response is clearly, when it comes to national security, that every transaction, every investment, is subject to the act.

April 26th, 2023 / 5:05 p.m.
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NDP

Brian Masse NDP Windsor West, ON

Yes, it is. I come from the big three tradition, and it is because it has been something we've been trying to get for a long time.

We're already seeing the effects of the IRA, the Inflation Reduction Act, because even Canadian companies are subcontracting out some work to make eligibility back in the United States. It's going to get highly complex, and that's even for tool and die mould-making and so forth, so I appreciate that you're in front of trying to compete with it, because if we don't, then you're out of business generally. We don't like it in some respects, but that's the way this works.

I want to move on—actually, this does include land close to the Ojibway national urban park and by the Gordie Howe bridge—to a situation and to find out how Bill C-34 can deal with it. Windsor Salt was bought up by a holding firm and has now been bought by another one called “Stone Canyon Industries”. It's a U.S. holding firm.

It's now on strike. Stone Canyon is known for basically being a hedge fund for union-busting. That's what they're trying to do. There hadn't been a strike there in 30-something years. There now is a strike because they're trying to get rid of the union.

I guess the point is how we deal with this in this act where, for example, a Canadian business is bought by a legitimate green-lit buyer at the beginning, but maybe later on a foreign national state government comes in. Is there anything we can do about that? If it's a holding company, some of these private equity forms are also owned by different fiefdoms around the world, and we don't know where some of the money comes from.

Do you have any thoughts about that? Anbang was another one that came up before with the Chinese with regard to that situation. Is it almost like a rope-a-dope, where somebody buys a Canadian company and then later on, within a year or something else, it gets bought by another state-owned entity?

April 26th, 2023 / 4:55 p.m.
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Bloc

Sébastien Lemire Bloc Abitibi—Témiscamingue, QC

I wasn't able to get you to bet, but I nevertheless amicably told you that the Huskies would win in five games, and I would like to officially report that that's what happened.

Bill C‑34, which focuses strictly on national security, is not doing anything about the fact that Quebeckers and Canadians are gradually losing control over their own economy. That's why we are asking the government to table another bill to modernize the whole Investment Canada Act rather than just the section on national security. National security is all very well, but economic security is also important.

You decided not to do anything about the thresholds. Why was lowering the thresholds not part of the Investment Canada Act strategy?

April 26th, 2023 / 4:50 p.m.
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Liberal

François-Philippe Champagne Liberal Saint-Maurice—Champlain, QC

The most important aspect of Bill C‑34 is the provision that allows the minister to extend the national security analysis period. In these matters, the agencies have a lot to look at. I believe that the guidelines we have come up with, meaning the four policies I previously announced, send a very clear signal to markets about critical minerals: we take this issue very seriously and allow acquisitions by state enterprises only in special cases, because we know that it's a key sector for Canada's economy and for several of its allies

We want to develop these resources and build our economy here. As I was explaining it earlier, what we want to do is not just mine and export natural resources. The idea is to mine them, refine them and keep the added value here in Canada. That's how we're going to go about building a strong economy.

April 26th, 2023 / 4:50 p.m.
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Liberal

François-Philippe Champagne Liberal Saint-Maurice—Champlain, QC

As you know, we are in partnership with our colleagues in the United States and Europe. Bill C‑34 includes a provision that will enable us to exchange information with our colleagues and allies around the world.

It's an important provision, because of what we can see happening today in terms of development. For example, state or non-state stakeholders could purchase part of a technology in one country and another part in a different country and end up with a dual purpose product, meaning both military and civilian, that could eventually prove harmful to Canada's national security.

From that standpoint, the provision in the act that allows for the exchange of information with our partners is important for the protection of national security. As you know, I was at one point the Minister of Foreign Affairs. Over the years, I encountered instances of companies purchasing components in various countries, a practice that enabled them to eventually make a particular product. Unless we exchange information with our allies, including the Five Eyes, things like that could take place under the radar.

This provision in the bill is essential because it will enable us to work more effectively with our partners. Given how quickly quantum technologies and advanced digital technologies are developing today, we need to be able to exchange information with our American, British, Australian and New Zealand partners when we carry out a national security study, to ensure that we understand all the repercussions.