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

[Mark Gerretsen, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons (Senate)]

Madam Speaker, the member has identified some areas that she suddenly feels need to be addressed. I am curious if she could tell the House how many times, because we are in fact only amending a piece of legislation here, she has raised her concerns with the minister before today, specifically about how the legislation should be changed.

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

Madam Speaker, that is a great question, actually. Members may recall I was on my feet in this House criticizing Navdeep Bains when he was the industry minister who did Anbang. I have been on my feet in this House criticizing every time one of these things has come along and calling it out, because of the danger and the breach of our privacy and the fact that they are allowing the Chinese Communist government to put security systems, information systems and software into Parliament, embassies, etc.

It is outrageous. It needs to get fixed. I have been calling for this now for eight long years.

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

Madam Speaker, I share the concerns of my Conservative colleague about Chinese investments, which are not always wise, and about the lax approach and lack of verification by this government.

I want to take this opportunity to mention that a Chinese spy was recently arrested at Hydro‑Québec facilities. We often hear the Liberals brag about the fact that they are working hard for the electrification of transportation. We are not seeing many results, but they love to talk about it. In fact, this Chinese expert was in the offices of IREQ, Hydro-Québec’s research institute, which is in my riding. He took photos and gathered information on our research into the electrification of transportation to send to the Chinese government. It takes some nerve.

All of that leads me to my question about Bill C‑34. At the time, in 2015, when I was elected for the first time, foreign investment notifications would have been sent to the government. According to government data, 10% of foreign investments were analyzed by the government in 2015.

The most recent data indicates that only 1% of investments are being analyzed. What does my colleague think of that?

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

Madam Speaker, I thank my colleague from the Bloc for the question.

There are indeed many examples of security problems where we can see that organizations have harmed Canada.

I think that the government is not paying close attention to agreements. We are going to fix that through Bill C‑34, however.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Madam Speaker, I am pleased to take part in this debate, and especially pleased to speak after my colleague from Sarnia—Lambton.

We are here to discuss a bill that relates to national security, the trade relations Canada must engage in with other countries and the possibility of investors from other countries buying Canadian companies.

Let me make one thing clear right off the bat. China is going to come up a lot during this debate and in my speech. However, there is a big difference between the people who live in China, Canadians of Chinese origin and China's Communist government. These are completely different things, and anything negative we say about China's outsized ambitions relates to Communist China, not to individuals and certainly not to Canadians of Chinese origin.

This is about international trade. We welcome everyone who wants to invest here because we also want Canadians to be welcome in other countries. We are a free trade nation. Canada has more free trade agreements than any other country—over 40 in total.

Following an election in 1988, Prime Minister Brian Mulroney was mandated by the people to sign the free trade agreement with the United States. The famous agreement between “the three amigos”, the United States, Canada and Mexico, followed a few years later.

I would like to take this opportunity to pay tribute to my colleague from Abbotsford, who has been the architect of literally dozens and dozens of our free trade agreements with other countries. The member for Abbotsford was the minister of international trade for over six years. He was the longest-serving minister of international trade in the history of this country, and thank goodness for that, because we have great relationships with Asia, Europe and the Americas. That is the legacy of the member for Abbotsford.

As members will recall, when this government was elected in 2015, it shelved a few agreements, only to eventually renew them on the cheap, which is too bad. Still, Canada today is the land of free trade.

No one can claim to support free trade and say that Canada should go abroad but that our doors here in Canada should be closed. The doors must be closed in an intelligent way. That is why we have a number of concerns about this bill, which is essentially about tightening up security measures when it comes to national security reviews of foreign investments.

This bill basically provides for seven important changes to improve the national security review process for foreign investments. It also seeks to give the minister a lot more authority in certain circumstances.

The Conservatives do not disagree with the principle. However, as with anything, the devil is in the details, and that is where we need to do our job as parliamentarians. In principle, we agree that we need to revise the national security review process for foreign investments, but Bill C‑34 is seriously flawed, and we are going to talk about those flaws.

First, let us remember that the government's track record on foreign investments from China over the past seven or eight years is poor and fails to live up to expectations. In the early 21st century, China was not under the harmful influence and control of the current Chinese government. However, the situation has deteriorated since then and we are now paying the price.

In 2017, the industry minister did not ask for a full national security review prior to the acquisition of Norsat International, a communications company based in British Columbia, and its subsidiary, Sinclair Technologies, by Hytera Communications, a Chinese company belonging in part to the People's Republic of China.

In 2020, the Minister of Foreign Affairs awarded a contract to a Chinese firm, Nuctech, which was founded by the son of a former general secretary of the Chinese Communist Party, to supply X-ray equipment to 170 Canadian embassies. In a national security review, that checks off all the boxes. We are talking about X-ray equipment in our embassies and a contract was given to a company founded by the son of a former general secretary of the Chinese Communist Party.

In January 2022, the Minister of Innovation, Science and Industry did not follow his own guidelines when he expedited the purchase of the Canadian company Neo Lithium Corporation by the Chinese state-owned company Zijin Mining without a national security review.

Much of the automotive industry is going electric. Private companies around the world, manufacturers, are investing $500 billion in this shift. Electric cars require lithium. Canada has lithium. Now, however, the government has decided to let a Chinese company take over this natural resource that is essential for economic development in the 21st century. That is a huge loss.

I want to talk about another company that was mentioned earlier: Hytera Communications. In December 2022, the RCMP awarded a sensitive contract for communications systems hardware to Sinclair Technologies, which used to be a Canadian company, a wholly owned subsidiary of Norsat International. Norsat International was founded and based in Richmond but was acquired by Hytera Communications.

That is where things stand today after all these years of Liberal governance. Whether it is lithium, X-ray machines in our embassies, or security equipment for the RCMP, critical items are being funded by investors from China, a Communist country, need I remind the House.

There is a big difference between Communist China, Chinese people and Chinese Canadians. Shame on anyone who makes a connection between those elements; there is none. It is the Chinese government that is to blame.

Let us talk about Hytera Communications, which belongs to the People's Republic of China and is a major supplier to China's national security department. In December 2022, we learned that the Canada Border Services Agency used Hytera's communications technology equipment in 2017. Let us remember that Hytera is facing 21 espionage-related charges in the United States and was banned by President Biden himself. With friends like that, who needs enemies?

Pressure has mounted in recent years as companies tied to the Chinese communist regime have strengthened their positions here in Canada. The government has been slow to act on that, which is why it introduced Bill C‑34.

Essentially, Bill C‑34 gives the minister more powers, but the minister needs more still. Here are some ideas we are going to put forward during the committee's clause-by-clause study to improve this bill. First, all acquisitions subject to a net benefit review or a national security review must get cabinet approval regardless of the outcome of the investigation.

The bill also does not provide for the preparation of a list of autocratic countries that are banned from having Canadian companies or assets. I am talking here about China and Russia. The bill also does not include a net benefit test, or a measure of attempts to take control of key industries through acquisitions under the investment thresholds. Finally, the bill does not make any changes to the legal definition of a state-owned enterprise, which some consider to be too vague.

Let me be clear. We are in favour of free trade. Free trade means trade with other countries. That means that we can invest in other countries and other countries can invest here. Let me be clear, when it comes to China and the Communist Party that is currently in power there, we need to be incredibly vigilant. We need to recognize that they are not our natural friends.

We therefore need to enhance security measures to prevent mistakes, such as a lithium company ending up in the hands of the Chinese government, Chinese-controlled X-ray equipment in our embassies, and RCMP communications ending up in the hands of the Chinese government, from ever happening again.

Limits must be set, and that is what we want to do by improving this bill.

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

Madam Speaker, I congratulate my colleague from Louis‑Saint‑Laurent on his excellent speech. It was quite interesting and very intellectually stimulating. It is a pleasure to listen to that kind of speech.

I would like to go back to the issue of the net benefit analysis. I think my colleague mentioned this in his speech. In the Investment Canada Act, there is a review threshold that seems to go up almost like clockwork each year, sometimes even faster than inflation.

For example, in 2015, the review threshold was $369 million. If we look at this year's figures, we see that the review threshold for countries with which we do not have an economic agreement, to use the lowest figure, hit $1.3 billion. This means that the government does not even look at the file when a company is purchased for less than $1.3 billion. These transactions are just rubber-stamped.

Let me name a few companies that are in this situation. Héroux-Devtek has a market value of $560 million. Lassonde Industries has a market value of $800 million, which means it still passes under the radar. Cascades has a market value of $909 million, and TC Transcontinental has a market value of $1.3 billion, which puts it right on the edge of passing under the radar. No one knows for sure. Resolute Forest Products, which has a market value of $1.6 billion, would fall below the second threshold, which is $1.9 billion for countries with which there is a trade agreement.

I would like to know if my colleague from Louis-Hébert thinks it is acceptable that the thresholds are so high, and that companies that are so important to our economy are not even subject to a review in the event of an acquisition.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Madam Speaker, I really appreciate the question from my colleague. However, he made a little mistake in his question: I am the member for Louis‑Saint‑Laurent, not for Louis‑Hébert. The member for Louis‑Hébert is seated over there. We know that because over the weekend he said on Quebec television that he was in the corner over there with the leader of the Green Party. I will leave it at that.

I thank my colleague for very clearly demonstrating that we must always be vigilant and that when we increase the threshold for review so much, we are exposing ourselves to risk. That is where we need to pay attention. I completely understand.

I will play fair. The situation changed dramatically from 2015 to 2023. Oversight of China in 2015 may not have been very strong and that was understandable. These days that is no longer possible. We need to be vigilant and take this seriously.

As my colleague from the Bloc Québécois demonstrated so well, the bar is currently set too low. We have to set it higher. I also want to thank my colleague for highlighting the problem that came up at Hydro‑Québec.

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

Madam Speaker, I want to thank my colleague from Louis‑Saint‑Laurent for his speech. Let us remember constituency names. It is important.

My colleague made some good points, but he did not talk about the major changes that Bill C-34 will make, including the new definitions involving businesses.

Does my colleague think this bill contains improvements or not?

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Madam Speaker, yes, of course. The mere fact that legislation is being introduced to address this issue is a step forward. Increasing oversight of foreign investments with respect to national security, specifically those from communist China, is a good thing.

However, this step forward does not go far enough. We need to make our experts even more effective. Cabinet and the minister responsible will indeed have a little more power. However, we have sadly been able to demonstrate, as have several colleagues, that over the past four or five years, there have been shortcomings in this regard. We must therefore better equip our intelligence services and our police services, those who ensure our security on a national and international level.

In our view, this bill does not go far enough. Fortunately, we will be able to improve it when it is studied in parliamentary committee.

[Mark Gerretsen, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons (Senate)]

Madam Speaker, I will be sharing my time today. With whom, I am not exactly sure yet, but it will happen after QP that somebody will come in and take the other half of my speaking time.

I am pleased to rise to speak to Bill C-34. This is an important piece of legislation to ensure we continue to keep up with the evolving global economy. We know there are a lot of great opportunities that Canada has been able to seize over the last number of years, and I will speak to one in particular in my riding in a few moments.

This legislation is there to enable the minister, whomever that may be, to ensure they can put the proper measures in place and take the proper approaches to not only maintain Canada's national security, but also enhance our economic security. The two absolutely need to go hand in hand.

A piece of this legislation I was particularly interested in was giving the minister the ability to improve information sharing with international allies. Having the ability to share information back and forth with our allies, with regard to various economic opportunities and various international companies, certainly will give us some ability to protect that security. We know economic security and national security go hand in hand, and they absolutely need to.

This particular piece of legislation, the Investment Canada Act, was established to provide investor certainty while reserving Canada's ability to block individual investments under specific circumstances. It is key to mention that, because it is not just about the security of our own nation or the security of Canada. When we talk about investing, we also want to make sure the rules are absolutely clear so that those who seek to invest in Canada know exactly what to expect. That is why this legislation is so important and why it is important to continually update it. The last time it was done, I believe, was in 2009. Now we are seeing it happen again as a result of changes in the global economy.

One investment opportunity coming to just outside my riding in Hastings—Lennox and Addington, which a Conservative member represents and I know she is very excited about, is a new opportunity that was announced last summer. It is with respect to a German-based company with ties throughout Europe, not just Germany, that invests in battery manufacturing. This company has chosen just outside of my riding, in her riding, a particular location in Ontario to establish what will become the largest battery manufacturing plant for electric vehicles in North America.

It is amazing because this company has chosen Ontario. I will tell the House why it chose Ontario. When it was looking at the various options, it basically shortlisted them down to three cities. I will not name the two other cities, but they were both in the United States. The reason Ontario was chosen was because of the company's ability to access clean energy. When the company is producing electric vehicle batteries, it takes a lot of electricity to run that process.

That company made it very clear in its press announcement that it wanted to know, when it is making a sustainable product, which is electric vehicle batteries, that the inputs into that product are sustainable themselves. The company knew Ontario, because of a former Liberal government, no longer burns coal. Ontario has one of the cleanest electric grids. I know the Speaker is from Quebec, and we can have a debate about this later on, but as a result that company chose Ontario because of access to clean energy.

I think it is very telling that the move toward sustainability is no longer just a movement that is driven by individuals and political leaders with these aspirations and ideas. We are now starting to see it built into corporate decisions. We are seeing these large multi-billion dollar companies, seeking to invest in other parts of the world, making the decisions and saying they want to know that they are using sustainable products to create their end product.

Umicore chose to set up in Hastings—Lennox and Addington just outside of Kingston. It will be investing, I believe, around $5 billion. The Government of Canada is also adding to that investment to establish this battery manufacturing plant. It will take the raw materials right to the end product that will be delivered to the car manufacturers.

There is a lot to be said about these types of deals, especially as we have been moving and transitioning into this new green, sustainable economy over the past number of years. It is critically important that, as we look for other countries and companies in other countries to do business with, the rules about investing in Canada are very clear. Companies like Umicore that want to invest billions of dollars in Canada want to know what the rules are and what they should expect from the government. I think that is fair, but we also have to have the ability to control our own national security by making sure that we make the right moves at the right time when it might not be in the best interest of Canada.

Ultimately, that is what Bill C-34 does. It puts us in a position where the minister, whomever that might be, whether it is the current minister or a future minister under a different government, is given the tools that are needed to make those decisions on behalf of Canadians.

There have been some comments in the House today about extending too much responsibility or giving too much power, perhaps, to a minister to make those decisions. However, it is important to remember that we elect people and put them in positions so they are able to make those decisions on behalf of Canadians. Sometimes those decisions have to be made relatively quickly. Therefore, empowering them with the tools to do this, so that they can continue to work on deals and make deals with companies like Umicore, which will be coming to my region, is incredibly important.

It goes without saying that I support this legislation. Every member in the House should support this legislation. I recognize, as the member for Louis-Hébert said before me, that he does have some concerns that he wants to raise at committee during the clause-by-clause process. That is important. It is part of the democratic process. Perhaps our bill could even be improved further by his contribution and the contribution of all members. I genuinely hope that all members will come to it with that understanding.

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

I want to interrupt the hon. member to ask everybody to please calm down.

We are trying to listen to a speech, but the noise level is becoming increasingly disruptive.

The hon. member has one minute and a half left.

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

Madam Speaker, I was just wrapping up. I am happy to take some questions now before question period.

However, I am pleased to support this legislation. I hope that all parties can work constructively together at committee to improve the legislation so that we can offer the best, on behalf of Canada, to other international companies seeking to invest here.

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

Madam Speaker, I listened intently to the member for Kingston and the Islands' speech. In my opening speech on this I said that these micro-administrative changes are much needed, but they are likely not to do what is claimed. The government has had the opportunity, over the last eight years, in the existing act, to reject takeovers by Chinese state-owned enterprises of Canadian assets. These include the Tanco mine in Manitoba where the government actually said no to a national security review, and Hytera, which took over telecommunications businesses. The then minister of industry said no to a national security review.

Can this member please tell me what in this bill will ensure that those types of acquisitions by state-owned enterprises are reviewed in the future?

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

Madam Speaker, I can appreciate the question. The premise of the question, when we start off by saying that there are micro pieces of amendments to the legislation that will not do what they are intended to do, perhaps does not start us off on the right foot of the collaborative approach of trying to make the bill better.

The member specifically raised a point about state-owned purchases like the ones he is referencing, and I have heard a couple of other members raise this too. I think there is an opportunity to discuss that in committee. The member for Louis-Hébert raised the exact same point in his speech, prior to me speaking, that the Conservatives would like to dig into it a little deeper and to find out if there is a way the legislation can be improved even more to address that concern.

I hope the member brings it forward and the committee is able to satisfy the concerns of the Conservatives as it relates to that particular issue.

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

Madam Speaker, I listened to the speech given by my Liberal colleague. He said that it was important to give the minister more powers to review foreign investments. I concur. More powers and further review are necessary, but I wonder what the government is doing with this power once acquired.

I clearly remember a case, in 2016, because it happened in my riding. Rona, a very important Quebec-based chain, was sold for $3.2 billon. We filed an access to information request to determine the rationale for the government's review under the Investment Canada Act. There were no documents, no studies, nothing.

Can the member opposite explain why the government, which wants new powers, is not using the powers it has and is not fulfilling its role when it reviews potential investments?