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

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Madam Speaker, indigenous people in Canada have the highest law on their side. Section 35 of the Constitution of Canada, duly passed in this country, forms the very foundation of our state. It gives them the rights that were guaranteed to them by the Crown. They do not need this inserted into this law. They have it directly in the Constitution of Canada.

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

Madam Speaker, it is always a pleasure to talk about investments in Canada and the way this government, from day one, has looked at how we can increase Canada's GDP, support Canada's middle class and build a healthier and stronger economy, whether that is by investing in things such as infrastructure, which is something the former prime minister failed at doing, or by taking a look at how we can increase investments coming into Canada, something we have been very successful at doing in the last number of years.

Of course there are the types of opportunities that have been created by a government that has a very proactive approach at dealing with trade in general. Trade also supports the encouragement of additional foreign investment. This government signed off on more free trade agreements than in the history of any other government in the House of Commons. That, in itself, has played a significant role in how Canada is perceived around the world, whether it is Europe, the States, Mexico, Asia or south Asia, wherever it might be.

We have recognized that one way we can elevate the lifestyle and the way we live in Canada is to look at ways to create the types of middle-class jobs that Canadians want. We have been very aggressive in pursuing that along with a number of other things that I will save for another debate on another day.

However, there is misinformation consistently coming from the Conservative Party. I was listening to a previous speaker who was talking down Canada's battery industry. He was saying that we were supporting China and that we could not achieve the production of electric vehicles in Canada. He was literally, and this is no surprise, talking down what was happening in Canada. The problem is that it was not factually correct, and it seems this is an inherent problem that the Conservatives have. They look for things they can say for the spin even if it is true or not.

The member talked about batteries. Does the member realize that when it comes to the battery supply chain, Canada is second in the world? There are a lot of countries throughout the world and we are number two. We should be talking that up, not talking it down as the Conservative member was doing.

In fact, there is a multi-billion dollar investment coming in just outside of Kingston. I know my colleague from Kingston puts a lot of work into expanding that whole region in many different ways, and no doubt he might have even played a role in this. The billions of dollars that are being invested is going to help secure Canada's second place in the world when it comes to batteries.

It is recognizing foreign investment is not a bad thing. Foreign investment is going to help our economy grow. It is going to assist us in creating the types of jobs that Canadians want not only for today but into the future. It is important that the Government of Canada recognizes this by investing in it, not just acknowledging it. We have consistently done that over the years.

On the battery industry, the Kingston-area plant, the billions of dollars of investment, will create 1,000-plus jobs. A global corporation, Umicore, will be working with the Province of Ontario and the federal government. As a direct result, not only will it secure a long-term commitment in an area that will grow over the next many years but it will also create jobs and a cleaner economy, which will have other types of spinoff benefits. In part, it is possible because we recognize there are those who are abroad who look at Canada as a safe place to invest.

Contrary to what my Conservative friends might try to say, relatively speaking and compared to the world, Canada is doing exceptionally well on the investment front. We need to recognize that Canada remains an open economy and, in fact, is the envy of many countries around the world.

One could stick with the automobile industry and the transitions that are taking place. I believe there is somewhere in the neighbourhood of half a million jobs in that industry. In recent years, we have heard about investments from abroad coming to Canada to build upon those jobs, to support that industry, and understandably so, because of the resources we have to offer, because of an amazing workforce and even because of things such as our universal health care system. Companies take those types of things into consideration.

It is not just the bottom line over the next year or two for those many companies. Investors think long term. A greener economy does matter.

That is why investments in green technology by this government, are at historic levels. Stephen Harper never invested a fraction of the types of monies we are investing in a greener economy. As a result of some of those investments, I suspect we will be seeing more international players looking at Canada as a strong, healthy economy that is worth the billions of dollars of investments we will see over the coming years.

Let us think about those industries. My home province of Manitoba is rich in minerals and resources. We require foreign investment in order to maximize the potential that is there.

We have great investors in Canada and we continue to lead in many areas, especially in the agricultural industries and our manufacturing industries. One of the most high-tech airplanes out there, the ones we just purchased, is the F-35. The wings for those are actually manufactured in the city of Winnipeg.

We have industries that we have seen substantial growth. I am always amazed when I take a drive in rural Manitoba during harvest season and see canola being harvested. That comes from the Prairies. It is technology and science at work. At the end of the day, the world is better off as a direct result of Manitoba producing the type of canola it does today.

There was a time when the Prairies was seen as more of a hinterland. We could draw out resources, be paid for them at a reduced price, I would suggest, and forget about the processing. The Prairies wants, demands and has been seeing a diversification of our economies. Never before have we seen as much economic activity in a wide spectrum of areas.

I often talk about how wonderful the hog plant, HyLife, in Neepawa, Manitoba has been to the community because of everything that goes into that plant. Hundreds of employees work there. The life that it has brought to the community of Neepawa is in good part because of that plant and the hundreds of jobs it has generated. Everything that comes out of that plant is exported to Asia.

Investments within Canada as well as external investments are coming into the province of Manitoba, just as I suspect they are into all regions of the country.

From my perspective, the modernization of the Investment Canada Act provides assurances, transparency and a higher sense of accountability. It ensures that the minister is able to protect certain industries, because there is a great deal of concern out there. Two examples come to mind. One is the war taking place in Ukraine and Russia. We have seen the impact that Russia has had on the marketplace, particularly in Europe. It reinforces what the Prime Minister has indicated with respect to looking at our allied countries, countries that share the same values we have, and how we can invest more in that relationship. It becomes more of a two-way street in that sense. Not all foreign investment is good. This is why we need to have this act.

When people think about security and safety, they do not necessarily think of the economy. They might think about the Canadian Forces or our military hardware when it comes to the security of the nation, but what is equally important is the security of our economy. In essence, the Investment Canada Act is there for that. There are players in the world who invest for alternative motives. It is not just about money. We need to give additional attention to some of those players. We often hear about relationships between the different nations. I like to think that if we have learned something from some of the things we have experienced in the past, we could greatly benefit by it.

When I think of our market and our economy, most people want an open market and a free economy where businesses can thrive. Consumers would benefit and we would have a growing and healthy middle class. However, there are some things that really frustrate us as consumers, such as the lack of competition in certain areas of the economy. That has a significant impact.

I think the member for Windsor West from the NDP made reference to Target stores. I remember when Target, a big American company, wanted to invest in Canada. It was going to replace Zellers stores and close some Zellers stores in Winnipeg. It had the big store opening on Saint James Street. Then, after all was said and done, Target pulled out and there was a sense of disappointment. At one point there was a sense of excitement that we were getting this big Target store, and it was fairly well known for its pricing. Consumers felt it would be a good thing, but then Zellers disappeared and Target disappeared. That creates suspicion in the minds of many.

We have, as has been pointed out about grocery stores, some large corporate giants out there, and people are concerned about the price they pay for their food. It is not like there is an option. That is why it is reassuring to Canadians when we have a Minister of Industry who has been very proactive in communicating with these grocery giants and ensuring there is competition.

It is one of the reasons that I and many others will often go to some of the smaller family-owned grocery stores. When Sobeys bought Safeway out west, there was a great deal of concern. In my riding, we had a Sobeys on one side of Keewatin Street and a Safeway on the other side. One store ended up closing, and it is still closed today. Nothing has filled it on the east side of Keewatin Street, but the Safeway has kept that particular name because it had a history in the Tyndall Park area. If we check with the people, we will hear them provide comment that the lack of competition between those two stores might have caused prices to go up.

We could talk about gas prices. We could talk about cellphone prices too. One of the disadvantages that Canada has is the fact that we do not have the same size consumer economy as others do since we are a population of 38 million people. The U.S. has 10 times that and Europe has a multitude of different countries, so as elected officials, we need to be a little more aware of the importance of healthy competition. That is why we talk about what the Minister of Industry has been able to accomplish, whether it is attracting foreign investment or keeping companies that are here more accountable in terms of the pricing put out there. We want Canadians to understand and know that we are here to protect their interests.

That is what this legislation is all about. We recognize the value of foreign investment, and by making it more efficient by allowing ministers to extend deadlines, for example, we are in a better position to protect our marketplace security and work with countries such as the Five Eyes nations.

I will leave it at that, and maybe there will be a question or two.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Madam Speaker, I will let the member opposite continue on this line with my question, which has to do with our Five Eyes partners. They clearly said they did not want Huawei to have any access to the 5G networks in Canada, but it took the government two years before it came to that decision. Meanwhile, Bell and Telus implemented Huawei's 4G across the nation.

What mechanisms are present in the bill that the member believes will help us stand better with our Five Eyes partners?

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Madam Speaker, the most important thing within this legislation, from my perspective, is that it would enable more discretion for ministers, whomever they might be. I see that as a positive thing.

The Conservatives seem to believe there should be a listing of industries to which this would be applied. I tend to disagree. I believe that is one of the reasons we have opposition parties. Opposition parties are well positioned to be critical of government if they have a different opinion on investments they believe should have been better tracked, for example. That is why I encourage members to take into consideration that the principles of this legislation and its modernization will ultimately provide a higher sense of national security for Canadians.

With regard to the specific question, I really cannot provide more of a detailed answer than the minister has provided in the past.

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

Madam Speaker, we are used to hearing from the member opposite, but it is nice to know that he is capable of talking about different subjects. We see more and more of that every day.

I listened to his speech and I felt like it was missing a vital component, something that seems to be missing from most of the speeches given by most of the parties here in the House. I am talking about national considerations and the importance that we should be placing on our flagship companies, our local businesses. A company that is established in Quebec or even elsewhere in Canada comes with a head office, decision-makers, and specialized and well-paying jobs. A Canadian- or Quebec-owned business also comes with shareholders who benefit from it. That way, the profits stay here and the strategic elements are there. It is also important that a certain amount of our locally owned companies remain here.

I would like to know whether the member opposite thinks that head offices and locally owned businesses are important. I would like to hear his thoughts on that, because that aspect seemed to be missing from his speech.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Madam Speaker, the member brings up an excellent point, and I will use the specific example of New Flyer Industries, which is now one of the world's best bus manufacturers existing today. I know that Quebec also manufactures buses. New Flyer Industries likely would not be in Manitoba today if not for government getting directly involved.

I think of Dominion Tanners, which has a branch that supplies certain materials to the head office. When that head office goes bankrupt or closes, the subsidiary ends up shutting down. There may be more opportunities to support those types of subsidiaries and companies that are in fact ultimately profitable, but we lose those jobs in part because of what is taking place in another region, whether in Canada or, often, outside of Canada, and because of a decision that has been made that might be evaluated on a different metric than what we would like to see.

[Rachel Blaney, NDP, North Island—Powell River, BC]

Madam Speaker, I thank the member for his speech. I have certainly been in the House to hear a lot of them, and I appreciate the effort he takes to make sure that his voice is heard. As always, I encourage him to allow some of the backbenchers to also have a voice.

Getting to the point, one of the challenges, which the member mentioned in his speech, is that Canadians are feeling less and less trustful. They are very concerned about how assets are moved in this country and how foreign entities are participating.

One thing I have a concern with is a loophole around postclosure notification requirements. We know that things go through a process, but if something happens afterwards, a certain amount of time is given that often allows foreign investors to move sensitive assets out of Canadian businesses before the federal government even becomes aware of them. That really concerns me and the NDP because we want to make sure that the process is clean. If we are going to have foreign investment in this country, there should be accountability at a much higher level, because that is what Canadians need to hear.

I am wondering if the member could speak to that loophole and if there is going to be any effort to support amendments that will fix it.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Madam Speaker, I have had the opportunity to get to know the minister over the last number of years, and I know the NDP's critic referred to the NDP having a series of amendments. My suggestion to the member and the NDP would be that they sit down with the minister or the minister's staff and share with them what their concerns are to see if in fact some of those perceived or real loopholes can be addressed.

At the end of the day, I like to think that the people coming from abroad to invest in Canada are being watched over, at least in good part, so that Canada is a net beneficiary of that investment.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Madam Speaker, this is important legislation. It gives us a chance to talk about the way in which so-called investors in Canada have an impact on our economy.

We saw foreign direct investment take off back in 2006, believe it or not. It was 2006 when Stephen Harper broke his promise that there would never be taxes on investor trusts. That ended up having the effect of causing a lot of foreign takeovers of Canadian companies. Then investment trusts got taxed and a lot of Canadian investors lost out. A lot of them still remember that change in election promise.

I mention that because when we speak of investors, quite often they are mercenary. They are coming in and buying up Canadian companies when they get the chance, and what they increasingly bring to Canada are security threats. That is in relation to the takeover of many Canadian enterprises by companies controlled by the People's Republic of China. They are protected by another move in the Harper era: the Foreign Investment Promotion and Protection Agreement with the People's Republic of China. It did not expand to trade for Canada into China. It just protected Chinese investors in Canada from regulations they would not like.

All of that is to say that this is important legislation, but does the parliamentary secretary not think it is time to think about more investment by Canadians in Canadian enterprises and not being so very welcoming to foreign investors?

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Madam Speaker, Canada has billions of dollars' worth of foreign investment coming into the country, and the member would know full well that billions of dollars leave Canada to be invested around the world. I would like to think that given the billions of dollars leaving the country, maybe we could revisit the issue and look at investing here in Canada.

At the end of the day, I truly believe that we need to modernize legislation, which the minister proposed in Bill C-34. It should allow for not only more investment but a healthier system. A healthier system that provides more stability not only would attract more foreign investment, but would, I would like to think, keep a lot of the dollars already in Canada invested in Canada.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Madam Speaker, I noted that during his speech, the member talked about the security of our economy. Right now, under the legislation, foreign investment review is triggered only when the assets of a Canadian corporation are at least $454 million.

I wonder if the member would agree that, given the nature of security threats and foreign acquisitions by hostile governments, it would be better to have that threshold at zero dollars.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Madam Speaker, again, if there are ideas from members of the opposition, or even from government members, to improve the legislation, I would really encourage them not to sit on them but let the ministry know about it. This always helps us out, even prior to going to committee. Most importantly, hopefully the legislation will pass relatively quickly so that we can at least get it into law before the end of the year.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Madam Speaker, I will be sharing my time with the member for Louis‑Saint‑Laurent.

I rise today to address Bill C-34, an act to amend the Investment Canada Act. Bill C-34 is an attempt to update and strengthen the Investment Canada Act through seven significant amendments. Mainly, these changes to the act aim to protect Canada's national security with stricter regulations and higher penalties.

The main tenets of the bill attempt to introduce a pre-implementation filing requirement for specified investments. It would streamline the minister's ability to investigate national security reviews of investments and strengthen penalties for offenders. It would create regulatory power to generate a list of national security industries where automatic proposed acquisitions would be reviewed for national security harm, and it would provide ministerial authority to impose interim conditions and accept mitigation undertakings.

The bill would remove the Governor in Council, replacing it with the minister in making an order for further national security review, and involve the Governor in Council in the results of the national security review only if the investment is found, after investigation, to be injurious to national security. It supposedly would improve coordination with international partners and strengthen rules for the protection of information in judicial review proceedings.

In essence, this bill would give the Minister of Industry more time and authority to assess foreign transactions that might compromise national security, by removing the Governor in Council from the initial process while also making more severe the penalties for violating the Investment Canada Act. This, on its face, is beneficial and necessary, but there are several gaps that need to be addressed, which I will outline later.

Threats to our national security and sovereignty come in a dizzying array with regard to scope and creativity. Today, I want to focus on threats to our national security via our economy by investment from actors with malicious intent. There is just cause to update and strengthen the Investment Canada Act to prevent such threats or, at the very least, reduce the number of threatening actions made to Canada's economy and national security via investment. There exists a scary number of examples wherein Canada's national security was jeopardized due to a lack of due diligence on behalf of the industry minister with regard to foreign direct investment.

The industry minister's 2021 mandate letter directed the minister to do the following:

Contribute to broader efforts to promote economic security and combat foreign interference by reviewing and modernizing the Investment Canada Act to strengthen the national security review process and better identify and mitigate...security threats from foreign investment.

The keywords here are “better identify and mitigate...security threats”. There is ample evidence to show why the Prime Minister so directed the industry minister, as the Liberal record on allowing bad actors to invest in Canadian companies, and therefore our intellectual property and data, is rather horrifying.

In 2017, the Minister of Industry failed to request a full national security review of the acquisition of a B.C.-based telecommunications company, Norsat International, and its subsidiary, Sinclair Technologies, by China-based Hytera Communications, which is partially owned by the People's Republic of China. The Chinese government owns about 10% of Hytera Communications through an investment fund.

The United States, our largest and most important trading partner, blacklisted Hytera in 2021. Its Federal Communications Commission stated that the company “pose[s] an unacceptable risk to the national security of the United States or the security and safety of United States persons”. Sales and import of Hytera equipment are banned in the U.S. as a result, and our industry minister let this company, with its ties to the Chinese ruling Communist Party, buy a Canadian company.

It gets better, or should I say, it gets worse. Hytera Communications is also facing 21 charges in an American espionage case. The United States Department of Justice is accusing the firm of conspiring to steal trade secrets from Motorola. We know this tactic has been used before by the Chinese government, and yet our industry minister okayed a sale of a Canadian company right to it.

In 2019, Manitoba-based Tantalum Mining Corp. of Canada Limited, also known as Tanco, was purchased by the Chinese company Sinomine Resources. The purchase was approved by the Liberals with no national security review. The mine produces lithium and more than 65% of the world's cesium, which is used in drilling applications, as well as Canada's largest deposit of tantalum, which is used in electronics.

Sinomine was recently ordered by the government, in November, to divest itself of its investment in Power Metals Corp, a different mining exploration firm in Vancouver, but the government was apparently totally fine with its continued ownership of the Tanco mine and its critical minerals operations, as its divestment order said nothing about it.

In 2020, our Department of Global Affairs awarded a $6.8-million contract to state-owned, China-based Nuctech, which was founded by the son of the former Chinese Communist Party secretary general. That is $6.8 million of Canadian taxpayer money basically going directly into the Chinese Communist Party's pockets, along with precious data.

As John Ivison wrote for the National Post in 2020, “Nuctech is known as the 'Huawei of airport security'”. The contract was to supply security equipment for 170 Canadian embassies, consulates and high commissions around the globe. A security industry source told Ivison for the story that he was concerned there were now “significant pieces of Chinese technology sitting in every embassy” and that the contract included delivery, installation, operator training and software.

For the same article, Guy Saint-Jacques, a former Canadian ambassador in Beijing, explained that the Chinese business strategy overseas is to win market share and, once dominant, dictate prices, illustrating that not only are there security concerns with these problematic investments, but there are also long-term economic implications. We cannot continue to let China and other actors with malicious intent interfere with Canada's economy and national security, even if they do offer the lowest prices for the service.

That said, the pattern of allowing risky investments without full security reviews continues. It was apparently briefly acknowledged in 2021, with the industry minister updating and enhancing guidelines for national security reviews of transactions involving critical minerals and state-owned enterprises in March of that year. However, 2022 saw a number of lapses, even with this enhanced protocol.

In January 2022, the minister failed to follow his own updated guidelines when he fast-tracked the takeover of the Canadian lithium company Neo Lithium Corp. by Chinese state-owned Zijin Mining, again, without a national security review.

Wesley Wark, a visiting professor at the University of Ottawa who specializes in international affairs and intelligence gathering, told the industry and technology committee, while studying the takeover after the fact, that it was a mistake. The value of the transaction was close to a billion dollars.

Then, in November 2022, the minister ordered three Chinese companies to divest their ownership of three critical minerals firms, but Neo Lithium was not included.

In December 2022, possibly the worst offence, the RCMP awarded a contract to supply sensitive hardware for its communications systems to Sinclair Technologies, which, members will recall, was sold to Hytera Communications, the Chinese company partially owned by the Communist Party and blacklisted in the U.S.

It was also revealed in December of that year that the Canada Border Services Agency has been using communications equipment and technology from Hytera. A CBC story says that Public Services and Procurement Canada did not take into consideration the security concerns about Sinclair and its ownership during the bidding process. The difference between that and Quebec-based Comprod's offer was $60,000. The Liberals love to hand out money left and right, but they could not spend $60,000 to keep our security hardware domestically sourced and provide Canadians with jobs while we are at it.

As we can see, the bill is sorely needed, but there are a few areas for improvement within the bill itself.

I do not like the part that gets rid of the Governor in Council approval and gives power just to the minister. I think that should be fixed. The legislation should also consider updating the act's definition of a state-owned enterprise, which is now too vague. There is no provision to block any subsequent takeover by a state-owned enterprise of a previous Investment Canada Act-approved acquisition.

It is my hope that the government learns from its mistakes, listens to the opposition parties and experts, and gets this legislation right. We cannot keep selling off parts of our economy, national security and precious resources to bad actors.

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

Madam Speaker, I loved the last line about learning from mistakes. This is the same Conservative Party that, when there was warning after warning about Chinese state companies stealing IP from Canadian companies, Stephen Harper was selling off key assets, like $15 billion for Nexen to a state-owned company.

When HD Mining in British Columbia, a Chinese company, announced it could not hire Canadian workers, Stephen Harper gave it 14 years to bring in Chinese workers to exploit Canadian assets. Stephen Harper thought that was so good that he signed a secret free trade deal that allowed Chinese state companies to sue any level of government. Imagine the United States letting Montana or Miami be sued.

Stephen Harper was more than willing to sell us down the river, sell out our assets and sell out our resources, while we warned them about the theft of IP and resources by Chinese state companies.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Madam Speaker, I see the outrage in the member opposite, but perhaps he could apply that to the party that he is supporting, the party that sold out health care in B.C. to Anbang. Does the member remember that? It was a total disaster. We had to come in and rescue them in the pandemic.

Huawei is another example, where the government sat on its decision for two years and let Huawei build all the 4G networks under Bell and Telus in this country.

Why does the member not take his outrage and apply it to the government that he is propping up?