Government Operations Committee on Dec. 7th, 2020

[Dr. Charles Burton]

I can say a couple of thing about this.

I think that certainly before the 2017 intelligence law it was clear that Chinese citizens are always required to respond to the demands of the Chinese Communist Party. I think the intelligence law simply made explicit something that was already in effect.

With regard to Hong Kong, Hong Kong is now fully integrated into the mainland system. The companies that operate there would not be able to be independent of Chinese Communist Party control, and therefore I think should be regarded the same as companies from the rest of China.

I would say one other thing. These kinds of procurements are not reciprocal. The Chinese government would never put any foreign 5G into their telecommunications, allow any foreign company to install security equipment in their embassies or allow foreign acquisition of mines and other energy resources. I think that by itself, aside from the moral issues that Christian brought up, suggests this is not something that we should be doing.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you.

If I understand correctly, even though Hong Kong had another regime, today it is completely integrated. If a federally chartered company wants to do business with a Hong Kong-based company and lease a loading and unloading dock for 60 years along a very large Canadian river, is that also the kind of situation that should be viewed with suspicion and that Canada should put a stop to?

[Dr. Charles Burton]

I'm sorry but I don't understand the question. Is the question if a Hong Kong company has a lease on property in Canada?

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

A company that wants—

[The Chair, Conservative, Robert Gordon Kitchen]

Ms. Vignola, unfortunately, we are running out of time.

Mr. Burton, maybe we can get a clarification from Ms. Vignola to you a little bit later and then you could answer that in writing.

[Dr. Charles Burton]

Okay.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you.

Mr. Green, you have two and a half minutes.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you, Mr. Chair.

I want to take this last section to do what was suggested earlier and get to the root of how we might be able, as a committee, to improve procurement.

Mr. Chair, through you, to Mr. Leuprecht, how can the federal government improve how security risks are assessed, in your opinion?

[Dr. Christian Leuprecht]

First, let's actually have a mechanism to assess those when it comes to procurement.

As I pointed out, we do have one when it comes to investment. It is under consideration for critical infrastructure, but it is not currently under consideration for broad swaths of what the federal government does or where the federal government invests, such as in research and development.

Maybe we could actually start even by having a discussion. I think the discussion that you are initiating is very prescient in that regard.

[Matthew Green, NDP, Hamilton Centre, ON]

In that regard, which federal organizations, if any, should play the key role in the security assessment process?

This came up in an earlier meeting, so I won't pre-empt what my answer is, but I'd love to hear yours.

[Dr. Christian Leuprecht]

We need to have a comprehensive strategy. I think Ambassador Mulroney alluded to this continuous working in silos with one agency, as Professor Carvin points out, reaching out while another entity does not. It also requires a complete rethink of how we actually work in government, with a much more horizontal approach instead of the vertical implementation we currently have. As I think Ambassador Mulroney rightly pointed out, there is no good mindset in Ottawa when it comes to policy implementation. The minister loses interest; many of the senior civil servants lose interest, and they just pass it off to someone.

I think it requires an entire process, from devising a policy to actually executing that policy. It's a several-step process that needs to have much more consistent attention at all points throughout it. That would already be a very good beginning in terms of getting a more equitable approach.

[Matthew Green, NDP, Hamilton Centre, ON]

In your opinion, based on your professional background, are there any bilateral or multilateral forums in which Canada should be engaging to improve its procurement security assessment?

[Dr. Christian Leuprecht]

The Five Eyes mechanism, which I think Professor Carver might have alluded to, already provides us a very good opportunity for better operational integration. We do this quite well at the defence level, but it is much more recent at the level of intelligence and security, other than signals intelligence. We are leveraging mechanisms, but the learning curve is relatively steep, in particular with regard to what we can share and under what conditions with our partners.

Actually putting the frameworks in place so we can talk about things in an intelligent fashion with other people who hold other relevant information and put that together to see the whole picture beyond our borders would be a good start.

[Matthew Green, NDP, Hamilton Centre, ON]

It sounds like a course you could maybe put together and teach.

[Dr. Christian Leuprecht]

I'm teaching it at RMC right now. You're welcome to join and audit the course.

Thanks for your fantastic questions.

[The Chair, Conservative, Robert Gordon Kitchen]

Mr. Paul-Hus, you have five minutes.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Thank you, Mr. Chair.

My question will be for Mr. Elcock.

I'm a member of the Special Committee on Canada-China Relations. Two weeks ago, the Minister of Foreign Affairs, the Hon. François-Philippe Champagne, appeared and mentioned right away in his speech that the China of 2020 was not the China of 2015.

We can see this very well today; Nuctech is just a drop in the bucket and really shows us the security issue that China can represent.

I'd like to know if you currently consider that Canada has already given up the fight against China.

[Ward Elcock, As an Individual]

Mr. Chairman, no, I don't. I think the reality—and on this I would agree with Mr. Mulroney—is that the absence of policy decisions at the top makes it more difficult for the government, more broadly writ, to respond to the threat from China. I think the importance of a policy, or the revision of a policy on China by the Government of Canada, is an enormously important thing. I'm more sanguine than Mr. Mulroney would be about how government would respond were such policy decisions to be taken, but I think the policy decisions, ultimately, need to be taken.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Thank you, Mr. Elcock.

I think it's pretty clear from the testimony we've heard today that the government urgently needs to do a national security review with respect to procurement. We're here primarily to talk about procurement. We know that two years ago, the government did a review of the legislation through Bill C-59 that touched on national security and tried to put some structure back in place. However, I think we have an urgent problem with respect to the procurement.

My next question is for Dr. Leuprecht.

Do you think we should do this very urgently?

[Dr. Christian Leuprecht]

We need a more nuanced approach. Our current approach is too one-size-fits-all. Indeed, not every investment from China is a threat, on the contrary. As an average country with an average economy, we need investment from abroad. We need some degree of technology from abroad because we don't have the capacity to research and manufacture everything in Canada.

So, we need to be able to identify where this investment could be a positive-sum game for China and Canada, and could be a positive-sum game in the private sector as private investment when the same interaction within the public sector and public procurement pose a threat to national security.

We currently lack the tool to take this much more nuanced approach to engagement with China. We need and lack leadership from ministers and politicians because, at the end of the day, they are the ones who give direction to public servants. So, public servants could just follow the mechanism, the frameworks, the law and regulations that are put in place by the policy branch of our democracy.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

It's clear that the lack of political strength in this issue is serious.

I'd like to talk to you from a technical point of view. We remember Nortel. At the time, when it went bankrupt, the Canadian Armed Forces took possession of the building, and they found that the premises were bugged. The Chinese had bugged the entire place. The technology at the time was not as advanced as it is today.

In your presentation, you talked about critical infrastructure. Is there a concern that China right now, with all the technologies already in place everywhere, is in a position to take over the subway in Toronto or Montreal, for instance? That may seem exaggerated, but do you think, from a technological point of view, the Chinese can already do this?

[Dr. Christian Leuprecht]

The risk is bound to exist given the ubiquity of technological facilities. That said, you mentioned Nortel, but in the 1970s and 1980s, it was the largest private-sector employer of engineers in Canada and a world leader in this field. It went completely bankrupt as a result of its own mistakes, but also because its intellectual property had been stolen by hostile actors.

So, there's a great risk, not only to the public transportation you mentioned, but also to Canadian businesses. Who will invest in research and development in Canada knowing that intellectual property will be stolen by competitors?

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Thank you.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Paul-Hus.

We will now go to Mr. Drouin for five minutes.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Thank you very much, Mr. Chair.

I'd like to thank the witnesses for being with us today. I greatly appreciate it.

Dr. Leuprecht, you spoke earlier about Nuctech in Canada and its relationship with its head office. You explained that it was a master-servant relationship. I assume what you meant by that was that the decision-making process was master-controlled and that this decision was made in China, even though there were subsidiaries in Canada. Decisions aren't made in Canada, and any decision relating to Nuctech is made in China.

Have you seen the same process used in other Chinese state-owned enterprises?