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.

National Security Review of Investments Modernization Act

[Bardish Chagger, Liberal, Waterloo, ON]

Madam Speaker, I would have to say that I am elected to represent the riding of Waterloo, and Waterloo is world-renowned for innovations and technologies. The member mentioned Nortel, and I remember very well the impact that had within my community. It is 2023, and I am still carrying a Blackberry to support my local economy and that brainpower. I would like to assure the member that I am confident that this government is always open to amendments. I think we have demonstrated many times that we can work together in the best interest of Canadians. I would like to encourage him to, as he has done in the past, continue working together to find the best way forward, because when our constituents and our country benefit, we all win.

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

Madam Speaker, I will be splitting my time today with the hon. member for Calgary Shepard.

To understand the significance of our debate on Canada's future prosperity and security, we only needed to look up over the weekend as the Chinese spy balloon floated at 60,000 feet from Alaska over to Canada and into Montana. It was shot down by a few F-22s and plummeted into the Atlantic Ocean by South Carolina, carrying its cameras and equipment. China wants what the West has, and it will go to new heights to get it. It is a sign of the new world.

Just as it is for America and our major trading partners, the future of our country, Canada, is in protecting our sovereignty, our land, farms, natural resources and technological assets in IP while simultaneously attracting foreign investment that benefits Canadians into the country. The Investment Canada Act continues the government's trend of coming late to the party with changes that try to catch Canada up without a serious strategy to advance Canada into the modern era. The result is not just a balloon's bubble bursting over the weekend but the threat of Canada's bubble bursting too if we do not do this the right way.

Conservatives believe that the right way to create paycheques for Canadians is a strategy that encourages made-in-Canada and grown-in-Canada products. This strategy would ensure that our companies, resources and IP stay in Canada, as well as that any investments in Canada benefit Canadians and our people, companies and resources across all our ridings and our regions.

I am sure we are all familiar with the story of The Giving Tree. A boy and a tree were friends, and as he grew up, he would eat the apples and climb on the tree. When he was older, he would ask the tree for its apples to sell for money, and he would take all the fruit away. He would use the branches to build a house and take all the branches away. He would come back later in life to ask for the trunk because the man wanted to build a boat, and the tree gave all that. At the end, the man came back and all that was left was the stump.

Canada has given away large swaths of land and agriculture, fisheries and infrastructure. We have given away a lot of our IP without investing in ourselves. What Canadians are left with is the stump. We have IP leaving the country. Our colleague from Waterloo just spoke about IP. It is missing from this bill. There are alarming statistics about how much of our intellectual property leaves. The University of Waterloo says that 75% of its software engineering grads get pilfered and leave Canada to go to the U.S.

The U.S. has 169 times the IP production of Canada. Canada produces $39 billion of IP, but the U.S. produces $6.6 trillion. We are not developing, protecting or commercializing our IP. We are about to do a study in science and research. We have what is called “the valley of death”. Our intellectual property gets pilfered and comes to belong to someone else, not Canadians.

We have the largest gaps in the world. The OECD has forecasted that Canada will have one of the worst-performing economies in the developed world in the next century. Canada has not been able to keep up with the world when it comes to IP and a knowledge-based economy. Canadian policy is still firmly grounded in industrial-era concepts, and it is failing to develop national strategies for IP and data. China developed 30,000 patents in AI last year alone. Canada has developed fewer than 30,000 patents in all its advancements.

The future of Canada needs to be protected in the airwaves, blockchain, AI, quantum computing, the sky overhead and the Arctic. It needs to be protected in our farms, food-processing plants, genomics, oceans and fisheries, as well as in developing Canadian LNG, which the world wants. Going back to The Giving Tree story, unlike the government, figuratively and literally, the Conservatives would just plant more trees, especially the trees they said they would. The world wants what Canada makes, and we have what the world needs. When we give the world what Canada makes, Canadians make paycheques and Canadians benefit.

This bill has a long way to go. Is it flawed? Yes, it is. Can Conservatives agree to do something with it? Sure we can. Can we create a new pre-closing filing agreement? Sure, that makes sense. Can we have increased penalties for non-compliance? Yes we can, as long as we are calling these companies out. Can we have improved information sharing? Sure we can, as long as we are acting on it. Closed-court proceedings are a red flag. Why do we need to have secretive closed-court proceedings?

One alarming sentence in this bill includes the words secret “evidence”. That is really concerning. New ministerial powers are also a red flag; we have concerns about that. There is no mention of protection for intangible assets, such as intellectual property, which is the backbone of our knowledge-based economy.

This bill does not address or lower the thresholds for national security reviews of state-owned enterprises. This will allow for even further control of our economy by Communist China. This bill does not address dropping the threshold for state-owned or state-controlled enterprises to zero, nor does it address automatic national security reviews of companies based in nations that threaten Canada.

If a company is based in, controlled by or owned by a country that has a heightened need for a national security review, we should review all proposed activity in Canada. We cannot allow control of any critical or strategic sectors to fall into these nations' hands.

The main threat of state-owned industries is from Communist China, which will ruthlessly use its companies to advance its long-term national interests. This was stated at INDU; Professor Balding testified at committee that every year, the Chinese government makes a list of assets for Chinese companies to acquire. If that is not an alarming statement, I am not sure what is.

For example, let us take our critical minerals. China is eating the world's lunch when it comes to critical minerals. China controls 80% of lithium and 66% of cobalt, yet the government is pushing for electric vehicles. It is even mandating that only electric vehicles are to be sold in Canada by 2035. However, it is allowing the sale of critical minerals that are central to those EVs to Chinese state-owned companies.

Last spring, the sale of Neo Lithium was allowed without a security review. This was a Canadian-owned company, and it was sold to China. Many Canadians would be alarmed to know that Canada only has one functioning lithium mine, and it is owned by China. Fossil fuels will be weaponized next along with critical minerals, and members can bet on that.

The member for South Shore—St. Margarets highlighted how state-owned companies are controlling parts of our infrastructure and our critical fisheries industry, including controlling or owning the majority of the Halifax airport.

It does not stop at corporate takeovers. Huawei created 17 research partnerships with Canadian universities. This week it was revealed that taxpayer-funded universities have been partnering with the Chinese National University of Defense Technology for the past five years. That included quantum cryptography, photonics and space science. IP that we were funding with taxpayer dollars went to Chinese military scientists.

Huawei, the Chinese company that makes the tower technology, was banned by U.S. carriers in 2018. It took us until 2022 to follow suit. Why? In 2018, the heads of major U.S. intelligence agencies warned Americans against Huawei. In the U.S., some of the things the FBI uncovered pertained to Chinese-made Huawei equipment atop cellphone towers near U.S. military bases and close to critical infrastructure.

Beijing has been leaning on expatriate Chinese scientists. Lately, we have heard reports of Chinese police stations here in Canada.

This bill would remove oversight and proper security from national security review processes under the Investment Canada Act. We need to look at this open versus closed court process. Why the secrecy? Why do we need to tuck this away? Why can we not have these proceedings in the open?

The bill would give the minister the sole power to create a list of industries which will be subject to automatic national security reviews. We all know what sectors should be protected: health, pharmaceuticals, agrifood and agriculture, fisheries, manufacturing, natural resources, IP, innovation, AI and data. The government should commit to protecting those vital sectors.

However, we have no idea what will be on that list with all the power being in the minister's office and having that taken away from cabinet. We saw what happened with Rogers-Shaw and Globalive, and we have certainly seen what has happened with McKinsey.

The future of this country depends on a made-in-Canada strategy that, in some ways, mirrors the Chinese spy balloon that flew over Canada last week, which looked at Canada with bold strategies from a 60,000-foot view.

A Conservative government would focus on growing the economy that provides paycheques to Canadians by focusing on products that are made in Canada and grown in Canada, as well as strategies to ensure our resources, IP, people and talent stay in Canada and are protected.

There is investment and there is theft, and there is no room for theft. We want to encourage investment that brings real benefit to Canadians, including in their paycheques, their savings and their lives. We want to ensure that we have greater prosperity for our region and that this is for Canadians, not just for China.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Madam Speaker, when I look at the legislation, I see the modernization of an act that would provide better transparency.

We have seen a great deal of investment over the years. The Minister of Innovation, Science and Industry talked about some significant investments in just the last number of weeks. The member referred to the battery industry and its potential growth, as well as how Canada is actually leading many other countries. I believe it is somewhere around number two or three in the world.

There are many investors who want to continue to come to Canada. Could the member reflect on the potential of some of those industries and why it is so important that we modernize the legislation to provide more clarity?

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

Madam Speaker, certainly we want Canada to lead the world not only in battery production but also in battery manufacturing. The problem with Canada, over so many years, is that Canada has become a branch-plant factory. We bring multinational corporations in, and this provides jobs. However, we are certainly not helping Canadian companies develop critical minerals and then manufacture those minerals in Canada.

As I mentioned, Canada has one lithium mine, and it is owned by China. Canada is certainly working on having Volkswagen and other great companies come in here to manufacture, but where are the Canadian companies? How are we helping Canadian companies grow?

The result is that we want GDP per capita, which means paycheques for Canadians, to go up. That means growing Canadian companies, investing in Canadian critical minerals and ensuring that Canada benefits, not solely the rest of the world.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Madam Speaker, I listened intently to my colleague's speech. He had a lot to say about China, and rightly so, in my opinion. I think we should all be concerned about China's actions and its investments, which do not always comply with our laws.

However, not all investment is from China. Many other countries invest. Under the Investment Canada Act, which is what we are debating today, when a major investment is made in Canada, the minister has to review it and determine whether it is of net benefit to Canada. There are both national security and net benefit to Canada considerations.

In 2021-22, over 1,200 notifications of investment were received, which is a lot. Only eight of those—less than 1%—were reviewed. The government has a rose-coloured view of the situation and is not doing its job.

What are my colleague's thoughts on that?

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

Madam Speaker, I agree 100%. In my speech, I mentioned lowering the thresholds, and we should probably be looking at most investments.

Most importantly, Canada needs to be proactive. We need to look at acquiring and attracting investments. We want investment in Canada. My speech focused on wanting Canadians and Canadian companies to benefit, and they do benefit from international investment. They benefit as long as there is investment in Canadian companies that will grow and stay in Canada and we protect the IP that is here.

Certainly, I agree with the member on lowering thresholds. We should look at almost all investments that come to Canada because we should be in control of those investments. If Canada is going to grow and prosper, we are also attracting investment in Canada. This means that we know where the investments need to go. It means making sure that those Canadian companies, that IP, stays in Canada and that Canadian companies are growing here in Canada.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Madam Speaker, listening to the Conservatives talk about jobs, trade and supporting Canada is like looking into the distortions of a funhouse mirror.

I remember when Stephen Harper sold off $15 billion of the oil sands to a Chinese state company and when he signed a secretive free trade agreement with China that allowed Chinese state companies to sue any level of government in Canada. The Conservatives stood up and told us this was a great thing. Can members imagine the Americans ever allowing Chinese state companies to sue their states or their municipalities? However, that is what the Conservatives did.

When they talk about supporting Canadian mining, it was Tony Clement who allowed two of Canada's greatest companies, Inco and Falconbridge, to be taken over by corporate raiders. The Conservatives would not stand up for Canadian jobs then. It is a little rich to hear the Conservatives suddenly saying that they are going to stand up to China and they are going to stand up for jobs when Stephen Harper sold us down the river every step of the way in order to favour his friends in the Chinese state companies.

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

Madam Speaker, Stephen Harper left us with one of the best economies this country has ever had. At the end of the day, I will look to the government's success, if we want to compare across the aisle.

The world has changed; 100% the world has changed. When was the last time we saw a balloon flying over the Earth? We want to—

[The Assistant Deputy Speaker (Mrs. Alexandra Mendès), Liberal, Alexandra Mendes]

We will continue with debate.

The hon. member for Calgary Shepard.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Madam Speaker, I am glad to see you back in the chair as well.

I want to start by thanking my constituents for giving me the great privilege of being able to rise in the House to speak on their behalf to the issues they are concerned with these days. To the constituents back home, the debate today is on Bill C-34, which is amendments to, although the government calls it the modernization of, the Investment Canada Act. The specific name given in the bill is the national security review of investments modernization act. For everything that is wonderful, it seems the government will always call it “modernization”.

Maybe I will take a different tack than other members have taken. I find that for every piece of legislation, whether it is Liberal, Conservative or a private member's bill, it is the moment it is tabled and the events that lead up to it that are important. This particular piece of legislation, let us to be serious, is about the People's Republic of China and state-owned investments being made in Canada, whether those are investments that contravene our national security interests or investments that, in the long term, are not in the interest of the Canadian economy or the Canadian worker.

We have seen the experience of other countries all across the world over the last two decades, since the People's Republic of China was allowed to enter the WTO, and that relationship has changed the world economy. I believe this is a response to the behaviours of the government of Beijing over the last two decades.

Madam Speaker, we were in the United Kingdom, in London recently, and we met with individuals who spoke about the general relationships the United Kingdom has. I had the great honour to return to the Palace of Westminster to hear from Alicia Kearns, chair of the foreign affairs committee in the United Kingdom. There was a long meeting held about the British business relationship with the People's Republic of China.

It was fascinating to hear experts in the field describe not only the pros, the cons, and the pitfalls for British businesses having to share their IP and technology, but also the footprint of their businesses and the exchange of workers that go and back. Some of these workers from the different provinces in China would eventually want to stay in the United Kingdom. They would be applying with and leaving to go to competitors. They talked about the long term, and the three stools of relationships, which are government to government, business to business, and people to people, and how all three are incredibly important.

In describing Canada's relationship, as the Canadian government, businesses in Canada and the people of Canada, I think our relationship with Beijing could be defined as broken at the government level, the business level and the people-to-people level.

I have a Yiddish proverb. Members know I really like them.

[Member spoke in Yiddish]

[English]

The proverb means, “The match was a success; they were broke inside of six months.”

Although the timeline is different in this particular situation, over the last six, seven, eight years, we have seen a broken relationship. There was an attempt by the Liberal government to negotiate a memorandum of understanding for a free trade deal with Beijing. That fell apart completely.

We basically had a freezing of the relationship while Canada dealt with the Meng Wanzhou case in Canada, and the Government of China held two of our citizens for no good cause. It was hostage diplomacy. One thing I heard repeatedly when I was in the United Kingdom, shared to me by both lords and ladies, and by members of their Parliament, was that it is also incumbent upon Beijing to watch the language that they use in international diplomacy.

It is not just incumbent upon us to raise issues of human rights, which are incredibly important to the people of Canada, and people in my riding as well, to that business relationship. There is an effect when politicians raise issues of human rights and that has a direct impact on business interest in China. I know in the case of Alberta, we export a lot of agricultural goods. Chinese companies are amazing purchasers of things such as canola, pork, lentils and other products that western farmers love to produce, and it is a great market for agricultural products. I do not represent an agricultural riding, but it has an impact on my riding as well, because many people who live in my riding have family members who continue to farm on their operations.

The events that have led to this today go beyond just the balloon drama that we have had over the last few days, and I know we all like to make jokes about it. We have all had enough puns.

I think the last review for the Investment Canada Act was around 2009, but let us look at the behaviour of the Government of Beijing. Right now, 47 of the most prominent pro-democracy activists, legislators and people who are interested in protecting the civic institutions of the city of Hong Kong, are on trial. The largest trial of democracy activists in Hong Kong's history is being held right now, and it does not look very positive for them. I hope the trial will go their way, but I am not very confident.

We have an amazing relationship with the people and the Government of Taiwan. The senior Taiwanese opposition leader, the vice-chairman of the Kuomintang, or the KMT, Andrew Hsia, is right now leading a delegation to Beijing's office dealing with Taiwan relations. That is happening as we speak.

In the United Kingdom, there is a semiconductor company called IQE, which is the acronym for its name. It happens to be in Wales, and as the Speaker would know, we were in Cardiff as well. The company is informing the government that, because of the delays in reaching a strategy on semiconductors in the United Kingdom, it might move out.

That is not unheard of. It is something that is happening across all western economies right now as businesses are seeking opportunities from foreign investors to help build a plant, finance their operations and manufacture goods. They are having to review where the funding is coming from and what kinds of strings are attached to it. That is what I see in this piece of legislation.

Although different members have mentioned that there are shortcomings, and the member for South Shore—St. Margarets itemized a list of concerns that Conservatives have with this particular piece of legislation, I think there are opportunities. Reuters very recently noted the fact that this Parliament has now called for the resettlement of Uighurs, particularly those who are facing a genocide in China, perpetrated by the Government of Beijing in the Xinjiang region, which will now be resettling them.

That will also have an impact on the business-to-business relationships, because the government in Beijing considers any mention of it, by any parliament or government, as worthy of retribution. Typically, it is business retribution. I am sure that, if I applied today for a business or tourist visa to go to mainland China, I would very likely have it refused, and I accept that.

Bloomberg recently reported that aluminum products that are entering the United States are being detained at the border because they are suspected of being connected to forced labour in the Xinjiang province.

Just last week, the member for Dufferin—Caledon had an Order Paper question come back to him from the Government of Canada saying that it has seized zero products in Canada related to forced labour in one particular province in the People's Republic of China, while the United States' government has been seizing hundreds of millions of dollars' worth of goods because it has evidence they were produced illegally using forced labour.

Another recent event I will bring up is that President Xi has called for more efforts to accelerate the establishment of a new pattern of development. This has been reported by the Xinhua state news agency. Its focus is on dual circulation, security and self-reliance.

With respect to the piece of legislation we are considering here, and I support sending it to committee to do further reviews, I do not think we should kid ourselves. This is indeed about the People's Republic of China. It is about the Government of Beijing, its behaviour in other countries, and what it might intend to do in Canada or has done in the past.

In the last election, at a minimum, we called for the automatic review of transactions that involved sensitive security sectors, such as defence, artificial intelligence and rare earth minerals. That is what a committee of Parliament should do, review what other sectors or economies should be reviewed. I think that, with respect to all state-owned entities that come from mainland China, we should set the bar at zero. They should automatically be reviewed. I am not worried about state-owned companies from the Republic of France or the Republic of Poland, but I am concerned about the People's Republic of China and its direct control of state-owned companies.

While we have a broken relationship, as I referred to in my Yiddish proverb, there is a relationship that we have brought to this point. That is not entirely the fault of the Canadian government. The Government of Beijing held two of our citizens hostage, and there are consequences to every action. I consider Bill C-34 part of the consequences that must be put on that government for the genocide of the Uighurs; the bad relationship it has developed with our people, our government and our businesses; and lastly, for engaging in hostile diplomacy and holding the two Michaels hostage.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Madam Speaker, I wonder if the member could reflect on the idea and the principle of the importance of having regulations in place to protect the national security of our different industries out there, which is not quite as simple as it was 100 years ago. Today, with technology and everything from microchips to what is grown in the Prairies, there is a need to ensure that we have legislation to provide assurances to investors, and at the same time, protect Canada's economy and well-being.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Madam Speaker, the member talked about how businesses differed 100 years ago. Although he is correct on that point, more broadly we have itemized the list on this legislation. The member for South Shore—St. Margarets itemized a few concerns he has with this particular piece of legislation, including things such as automatic reviews of proposed acquisition of company's assets, plants, mines, land, IP and data for the state-owned company involved. Also, what happens if it purchases it, and then breaks up the company to parcel out different components of it. There needs to be that secondary step being taken.

This legislation is on the right path, but it is the details that really matter when reviewing investments that come from overseas, especially when they are from state-owned companies. It may not be in the interest of Canada for a foreign company to come in and purchase one of ours. Even though it may be good for shareholders, at the end of the day, we agree that the national security interests of Canada should predominate when state-owned companies are involved.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Madam Speaker, I thank the Conservative member for his speech evoking his concerns about China. I have to say that I found it very interesting.

I also found his colleagues' speeches interesting. They were somewhat similar. They, too, spoke about China's investments and the fact that we must ensure that we are not indirectly controlled by the Chinese state.

I do have some questions. In his speech and those of his colleagues, I did not hear any mention or concerns about matters of national interest or strategic industries. They did not present a vision for protecting key sectors of the economy, and there was no mention of the need for reviews or monitoring.

It seems to me that China is the Conservatives' only concern. That worries me a little and makes me wonder. Any country in the world could decide to purchase Petro‑Canada, Canadian National or Canadian Pacific. Any country might also decide to buy an oil sands company, which might interest my colleague. If that were to happen, would my colleague have concerns? Does he believe that it is not serious unless it is China? Is that it?

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Madam Speaker, the member for Pierre-Boucher—Les Patriotes—Verchères is right in saying that I am concerned about the investments that are being made by big public corporations that are owned and operated by Beijing.

For the past two decades, the People's Republic of China has used businesses that it runs to make investments in other countries, without necessarily caring about the workers in those countries or those countries' future interests.

As I explained in my speech, this bill is a response to Beijing in light of the events that have occurred over the past eight years and the past two decades. I think it is completely acceptable. That is the goal and benefit of the bill.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Madam Speaker, I have a lot of respect for my colleague, but I have deep concerns when I hear Conservatives talking about human rights in China. The Conservatives signed the Canada-China Foreign Investment Promotion and Protection Agreement, which locked us into an agreement for 31 years, to 2045. In fact, the Hupacasath people in my riding had to go to court to defend their section 35 rights against that very treaty. The Conservatives were not there respecting indigenous rights or protecting their rights, which were under threat when it comes to the environment and the concerns they have around food security and land security, so enough of the past.

With respect to this bill, does my colleague share the concern that this bill would still not provide assurances to indigenous people or consultation to indigenous people? Does he share concerns of how important and significant those are, and how they need to be respected and ensured in this legislation? Enough of just counting on the minister to do the right thing. This needs to be dealt with in the legislation.