Fisheries Committee on June 1st, 2023

[James Burns]

If I could add to that, under the Investment Canada Act, all foreign investments are reviewed on a case-by-case basis. The facts of each case are assessed and carefully considered—

[Bobby Morrissey, Liberal, Egmont, PE]

Excuse me, Mr. Burns, but we just heard in an earlier panel from a witness who said there was a significant part of that legal identity removed in 2009. Their ability to look at the socio-economic impact it would have on the community was removed.

[The Vice-Chair, Conservative, Mel Arnold]

Mr. Morrissey, your time is up.

If the witnesses want to provide information further in writing to the committee—

[Bobby Morrissey, Liberal, Egmont, PE]

Thank you, Chair. I would like to have written answers to my questions.

[The Vice-Chair, Conservative, Mel Arnold]

We will move on now to the Bloc. Ms. Desbiens, please go ahead.

[Caroline Desbiens, Bloc, Beauport—Côte-de-Beaupré—Île d’Orléans—Charlevoix, QC]

Thank you, Mr. Chair.

I'll build on the momentum of my colleague opposite.

We've had people here who wanted to testify anonymously. We have received people in deep distress because, having been caught in an unimaginable situation, they were forced to liquidate the assets of their family business, handed down from generation to generation.

Around this table, we're looking for the solution to a problem that's becoming imminent and that puts the food sovereignty of Quebec and Canada at stake. This is not a secret: The Gulf of St. Lawrence abounds in the treasures of the sea. The world's population envies this resource, so it's only natural to see aggressive foreign interests lashing out at our beautiful potential. It's okay to have money coming in from outside, as long as these people meet a certain tax obligation, as my colleague Mr. Morrissey pointed out earlier.

What do we say to people in Quebec who are worried and losing their business? Are they told to go and file a complaint with the Competition Bureau, but that in order to do so, certain thresholds must be met, otherwise their case is less likely to proceed through the courts? Are they told to turn to the Department of Foreign Affairs, Trade and Development, since we're talking about foreign investment? I'd like to know what these people are being told.

[Shendra Melia]

From a negotiating and policy perspective related to international investment and agreements, the purpose of my testimony today is to provide an explanation of the nature of the commitments that we've taken in our international investment treaties. From that perspective, I would say that our international investment treaties are meant to provide a safe and predictable framework for people to invest in Canada.

With respect to those issues, I would certainly suggest, again, that this might be a matter that experts at the Department of Fisheries and Oceans Canada could answer.

[Caroline Desbiens, Bloc, Beauport—Côte-de-Beaupré—Île d’Orléans—Charlevoix, QC]

All right, but the experts at the Department of Fisheries and Oceans are few and far between, and rather laconic.

As I mentioned in my comments earlier, the treasures found in the waters that belong to us must be protected. But the Department of Fisheries and Oceans seems to be in a gray area. I'm not sure what other word to use. I don't know if Mr. Morrissey can help me find the right words. Anyway, it's a gray area.

In fact, no one seems to be able to control foreign markets, which use very specific means and could certainly be the subject of further study, perhaps in collaboration with several departments and agencies, such as the Department of Foreign Affairs, Trade and Development, the Department of Fisheries and Oceans, the Competition Bureau and the Department of Finance. I'm not sure who would be part of that crew, but we could really look into it.

What do you think? Would such a collaboration help identify the problem and put in place tools to avoid the risks of losing our food sovereignty in the medium term?

[Shendra Melia]

As trade negotiators, we are certainly always willing to work with and collaborate with our colleagues across the government, including the Department of Fisheries and Oceans.

Perhaps I would also add something that I said in my opening remarks. When Canada negotiates investment treaties, we do protect the Government of Canada's right to regulate in the pursuit of legitimate policy objectives. The regulatory regime, in other words, is allowed to evolve and change over time. Moreover, I would also like to say that nothing in these agreements exempts foreign investors from having to comply with Canadian laws and regulations. In other words, foreign investors are subject to the same laws and regulations as domestic investors.

As I mentioned also in my opening remarks and in some of the answers to questions I've answered already, there are a number of ways in which we as negotiators and my colleagues at the Department of Fisheries and Oceans as domestic regulatory leads work together to help develop some of the framework that we include in our international trade agreements. We're certainly always happy to continue doing that and to look at new issues as they arise, including the ones you have mentioned.

[James Burns]

Perhaps I can supplement that.

The Investment Canada Act has two components: We review significant foreign acquisitions of control and we review foreign investments for national security injury. Given the specific application of the act, the Investment Canada Act ought to be viewed as one of many tools in a tool box to address foreign ownership challenges in fisheries.

In order to fully address the scope of the issue that I think you identified, I do agree that other tools could be explored, including provincial legislation and policies that could be used to address fishery licences and competition policy to address unfair competition that—

[The Vice-Chair, Conservative, Mel Arnold]

I will have to stop you there. We're about half a minute over.

We'll go to Ms. Barron, please.

[Lisa Marie Barron, NDP, Nanaimo—Ladysmith, BC]

Thank you to our new Mr. Chair.

I'm not sure who to address this question to. Perhaps I'll ask it and then you can let me know who the best person is.

Can you share with us your thoughts around what barriers are in place to implement an immediate ban on further licence and quota transfers to foreign beneficial owners? What's stopping us? What types of things would you foresee as issues with moving forward in that direction, if any?

[Shendra Melia]

Thank you very much for the question, Mr. Chair.

From an international treaty perspective, as I mentioned in my opening remarks and in responding to a few of the questions I've answered, we have negotiated some flexibility in our trade agreements that would allow the Government of Canada to take some decisions with respect to offering preferential access to Canadian investors and investments. In terms of what those barriers are, I can only speak to, from my perspective, the international investment treaties that we have negotiated. As I mentioned, we have actually negotiated some policy flexibility in those areas.

[James Burns]

Perhaps I would supplement as well, Mr. Chair, by noting that with the introduction of a wholesale approach to block certain types of investment, there would be reputational risks to Canada as a location for inbound foreign investment across multiple sectors. Ultimately the goal is to ensure that Canada is seen as an open destination for foreign investment, and blocking beneficial ownership sales could have certain reputational effects for Canada.

[Lisa Marie Barron, NDP, Nanaimo—Ladysmith, BC]

Through the chair, Mr. Burns, what are your thoughts on ways in which we might be able to overcome those challenges you're talking about? If we were to move forward, what would be some of your thoughts on that?

[James Burns]

I think that would veer into personal opinion rather than my role as a regulator. I'm not sure. I'm sorry.

[Lisa Marie Barron, NDP, Nanaimo—Ladysmith, BC]

Thank you. I was leaving you the space to see if you had some thoughts. That's good.

I do know that I'm feeling particularly like sharing today, and I know that my colleague MP Hardie has some questions that I am interested in hearing the answers to, so I'm going to give the remainder of my time to MP Hardie.

[The Vice-Chair, Conservative, Mel Arnold]

You have three minutes. She's generous.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Thank you very much. That will be noted. Thank you kindly.

With respect to the foreign investment protection measures we have in place, I'm wondering how they would apply in a situation where we're trying to wind down an investment. Right now our concern is that there are investments in Canada by entities that have distorted the market, which we'll get to in a minute, but we perceive that too many licences and quotas are in the hands of foreign investors.

If we were to take steps, as were taken in Atlantic Canada some years ago, to basically give them an amount of time to get out of the market, would that run afoul of some of our treaties and our protection agreements?

[Shendra Melia]

What I would say is that this issue is not explicitly covered through the reservations and exemptions that we take in our international investment treaties. They allow Canada, as I mentioned, to give preferential treatment to Canadian and to third party investors. In practical terms, the exemptions and reservations mean that our main investment agreements do not force the government to give fishing licences to foreign investors on the same terms that it provides to Canadian investors.

However, the exception, as I said, does not explicitly allow for the rescinding of licences, for example, so once the licences are given, the exceptions that we have taken in our international investment treaties do not specifically give the Government of Canada the discretion to rescind the licences.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

I'm sorry; I'll interject here.

Does that mean, then, that we could be taken to court or that we could face some other retaliation if in fact we required people to divest?

[Shendra Melia]

I guess my final thought on the first question, if I may, is that our agreements—

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Please be brief, because I have another question—

[Shendra Melia]

—only allow for the expropriation.... I want to get to the issue of expropriation, because I think that is perhaps at the heart of what you're asking. Our investment agreements require that if we're going to expropriate an investment, we have to do so for a public purpose, we must do so with due process under domestic law, and we have to accompany that by fair compensation for the value of the investment.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Thank you.