Industry Committee on May 21st, 2013

[James Bezan, Conservative, Selkirk—Interlake, MB]

Thank you, Mr. Chair. I want to thank the witnesses for appearing today.

I want to follow up on the national security timelines that Mr. Warawa started talking about.

I'm not clear on one thing. You always mention the Minister of Industry, but when we're doing national security, who actually leads that evaluation? Is it through CSIS? Is it through the RCMP, or is it through a different agency altogether?

[Paul Halucha]

It is through the Minister of Public Safety. The way the act spells it out, it gives the minister the ultimate decision-making authority on whether there is a national security concern. He makes the decision on the “will be” and the “could be” that I mentioned in the two different phases, but it's obviously heavily reliant on the analysis of both the security and the intelligence community, who report to the Minister of Public Safety.

If he makes a recommendation, that would be taken with extraordinary seriousness by the Minister of Industry.

[James Bezan, Conservative, Selkirk—Interlake, MB]

I'm on the national defence committee. One of the things we are looking at is cybersecurity and all of the things that are happening in cyberspace. Of course, last fall Canadians heard about the Huawei Technologies corporation and things happening in Canada with that company. I guess they want to make sure that if they decide to buy up another business or another tech-com from China or elsewhere that is moving into Canada, the proper national security guidelines are going to be implemented through these amendments. I just want to make sure that this is going to be taken care of by the professionals.

You also went into detail about our needing, with these amendments, to make sure that we're still compliant with our trade obligations under existing trade agreements. You specifically mentioned WTO.

Are there any other bilaterals or trade agreements that Canada is part of that we also have to be cognizant of in dealing with the amendments being proposed here today?

[Paul Halucha]

Reservations have been taken for the Investment Canada Act and for the review mechanism, within WTO for sure, I think, but within NAFTA, and we had a precursor of it, the free trade agreement. It's also permitted for in our foreign investment promotion agreements, the FIPAs that have been done. We're permitted, obviously, within the context of the FIPAs: no one signs away the ability to conduct a review, so the review mechanism is kept intact.

[James Bezan, Conservative, Selkirk—Interlake, MB]

A final question I have is based upon the feedback I received from constituents during the whole Nexen and Petronas-Progress Energy decision process.

You have alluded already to the fact that if those companies now in Canada that definitely have state-traded backgrounds decide to expand within Canada and buy up another Canadian company, the act will apply under the new definitions and new thresholds.

[Paul Halucha]

I'm sorry. One more time, sir...?

[James Bezan, Conservative, Selkirk—Interlake, MB]

I mean, with the new definitions and thresholds that are defined in the amendments to the Investment Canada Act, in the context that if existing state-traded enterprises that exist in Canada today that are foreign-owned decide to take on other Canadian companies, they would have to be reviewed, under the current conditions.

[Paul Halucha]

If they are acquiring a Canadian business house with this, the requirement is that they be reviewed.

[James Bezan, Conservative, Selkirk—Interlake, MB]

And this is not just in the context of the energy sector, but would apply to other asset accumulations, if they were so interested.

[Paul Halucha]

The exceptional nature of the oil sands did not set up any sort of intake process different from that under the Investment Canada Act. The notification review process is still conducted along the normal lines, just with this additional policy clarification around how the minister will weigh those types of transaction proposals.

[James Bezan, Conservative, Selkirk—Interlake, MB]

Once these amendments are passed in Parliament, how will the thresholds and new definitions be brought into force?

[Paul Halucha]

It will be via regulation, both on the national security side.... I would be speculating as to whether there would be one or two regulatory packages, but there would be one set of regulatory changes to implement the national security provisions in the act and a second one around enterprise value. We have obviously had a head start on that work, given that we have already done pre-publication, last year; however, ensuring that it's appropriate now for the definition of state-owned enterprises would be work still to be done.

[James Bezan, Conservative, Selkirk—Interlake, MB]

Are those drafts that are to be gazetted about ready to go, just as soon as the act is declared?

[Paul Halucha]

Yes.

[James Bezan, Conservative, Selkirk—Interlake, MB]

Okay, thanks.

[The Chair, Conservative, David Sweet]

We go on to Mr. Masse, for five minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair. It's good to have the witnesses here.

The NDP first raised in 2003 and in 2004 the question of the Investment Canada Act's being deficient under national security and called for changes then. In 2005 the minister—at that time Emerson, who was a Liberal and then a Conservative—stated in his press release, “We expect these reviews will be rare, as existing tools are generally adequate in addressing potential national security concerns.” It took from that point in time to 2009 to get to a development of that idea into legislation.

From 2009 to 2013, how many cases would these changes actually have applied to during that timeframe, and which ones?

[Paul Halucha]

I can't answer that question.

[Brian Masse, NDP, Windsor West, ON]

Could you come back to our committee with that information? It would be interesting to find out what the new provisions actually trigger, from among the cases that have come forward. It would give some more clarity, in my opinion.

[Paul Halucha]

It's a national security process. To my knowledge, that information is not readily available. I can't commit to bring back something that I wouldn't be able to make public.

[Brian Masse, NDP, Windsor West, ON]

Okay. I think that's just part of the problem that we're faced with here still: the nebulidity of this issue and private investors trying to understand what the impact is going to be.

In these new changes, I just want to get this for the record. Are there any changes for the enforcement of undertakings or improvements? For example, in the Stelco case, let's say, is there anything in these changes right here that would improve that situation?

[Paul Halucha]

No. The government brought forward measures to strengthen enforcement in the previous budget implementation act, not in the current one.

[Brian Masse, NDP, Windsor West, ON]

Yes, and I think this is part of the problem we're seeing here. I believe this is the third time, if I'm correct, that the act has been amended in a budget implementation bill. Is that correct?

[Paul Halucha]

I wouldn't know. I know for certain that it's happened the last two years in a row.

[Brian Masse, NDP, Windsor West, ON]

Okay—