Thank you.
Mr. Chair, committee members, thank you for the invitation to appear before the committee concerning amendments to the Investment Canada Act in Bill C-60.
Before I begin my comments, let me briefly introduce my organization, the Canadian Council of Chief Executives.
The Canadian Council of Chief Executives is a not-for-profit, non-partisan organization composed of 150 CEOs of Canada's leading businesses. We engage in an active program of public policy research, consultation and advocacy. The CCCE is a source of thoughtful, informed comment from a business point of view on issues of national importance to the economic and social fabric of Canada.
The Canadian Council of Chief Executives represents 150 chief executives and leading entrepreneurs in all sectors and regions of the country. Our members lead companies that collectively administer $4.5 trillion in assets, employ more than a million Canadians, and are responsible for the majority of Canada's exports.
The topic before your committee today is an important and highly complex one. Changes to the Investment Canada Act and the federal government's policies cannot be viewed in isolation but as part of a history of experience with the review of foreign investment in Canada. The changes that form the subject of your deliberations were announced in December 2012, when the government approved two significant acquisitions of Canadian firms by foreign state-owned enterprises under the existing ICA, the Investment Canada Act.
It is our view that the decision to approve the acquisitions of Nexen and Progress Energy Resources was the right one. Canada's population is small relative to those of other major advanced economies, and we have a tremendous need for capital to develop our industrial base and to achieve our potential as a leading exporter of energy and advanced energy technologies. At the same time, companies looking to invest in Canada must play by our rules, respect our values, and adhere to Canadian laws as well as our regulations and environmental and labour standards. Canada wants and needs foreign investment, but not all and not any.
Of significant importance, the government did not change the rules during the reviews of these two transactions, recognizing that to do so would have significantly lowered investor confidence. Canada has one of the strongest traditions of the rule of law in the world. We are clear in our purpose and our willingness to act as circumstances demand. Such fortitude requires a constant assessment of our rules, and on occasion their amendment.
In examining the changes to the ICA before us today as part of Bill C-60, there are three comments I wish to table.
The first is that the Canadian Council of Chief Executives supports the government in its efforts to promote foreign direct investment in Canada. The CCCE also supports the government in its efforts to articulate its intent to assess the commercial interests of investors making significant acquisitions in Canada, and this of course includes state-owned enterprises. Foreign direct investment in Canada is critical. Our history, from the fur trade to resource development, is the story of effectively harnessing foreign capital to improve our standard of living. Foreign investment brings a wealth of management expertise, innovation, and new business opportunities, not only capital. Canada needs foreign investment to realize our potential.
The CCCE fully supports actions to ensure Canada's openness to investment and to provide comfort to Canadians that the government is reviewing and monitoring transactions to ensure they are undertaken on a commercial basis, they demonstrate good corporate governance, and they adhere to Canadian law. The guidelines for SOEs introduced in December recognize the essential role of private enterprise and free market principles in driving economic growth and prosperity. They will, in our view, safeguard the national interest while ensuring that Canadians continue to reap the benefits of a welcoming approach to foreign investment.
Canada is, of course, not alone in its efforts to understand and assess the impact of investments by state-owned enterprises. Our experience must be shared and developed alongside other advanced market economies to make sure our regime is internationally competitive, and indeed, why not the best in the world? The Minister of Industry and his or her officials must continue to implement the act in a way that does not impede the overall flow of investment, which provides us with our high standard of living.
The Canadian Council of Chief Executives also notes that the legislative amendments will provide some flexibility for the government to extend time periods under the national security review, also under the ICA. We support these insofar as a balance is struck between clear timelines and procedures for commercial transactions and the need for sufficient opportunity to ensure a thorough security review.
We call on the government to ensure an effective and constant dialogue between ministers and officials responsible for economic and security aspects of any possible future national security review.
The second key point is that the Canadian Council of Chief Executives supports the legislative amendments insofar as the law will continue to require that the government consider each investment on its own singular merits. As experience with the legislation and SOE guidelines evolve, we would encourage the government to consider advance rulings on whether a specific entity would be treated as an SOE under the act so as to provide clarity to investors.
There is no one-size-fits-all policy for state-owned enterprises. They are highly diverse in structure, public reporting, their behaviour, and their national country of origin. The diversity and complexity of business operations indicates that each specific investment must be reviewed on its own merits.
Not all state-owned enterprises are created equal. We know that state-owned enterprises can be responsible corporate citizens held to the same standards as public or privately owned enterprises. We also know that state-owned enterprises can engage in behaviour that is motivated by non-commercial interests. Further, not all targets of acquisition will be of equal commercial significance.
These amendments proposed will allow the government to continue to assess each transaction on the basis of its unique and specific characteristics.
We encourage the application of rules here in Canada that we would be pleased to see pertain to Canadian firms and sovereign wealth funds when they act abroad. As a major investor, as well as an investee, we want to project Canada's belief in sensible, thoughtful, and predictable standards, both in principle and in execution.
Finally, the Canadian Council of Chief Executives and the Canadian business community remain actively involved in the evolving nature of investment inflows and outflows. We welcome an ongoing dialogue with provincial and federal governments, regulators, and the public on the implementation of investment and business framework policies.
Our markets and our businesses evolve and so must our rules. We must also strive to encourage Canadian firms to get to the size and scale of the state-owned enterprises we are discussing so that Canadian firms can take leadership positions in developing our resources and invest globally.
The Canadian Council of Chief Executives is pleased to have had an almost 40-year history of engagement on these issues. Both our organization and our member firms and CEOs remain ready to contribute their business experiences to the development of policies that develop and advance Canada's economy in a global context.
Thank you.