Industry Committee on June 8th, 2020

[Daniel Schwanen]

I agree. I think as Patrick mentioned, of course if the government has an investment in IP or in a company, absolutely they want to make sure it grows for the benefit and advantage of Canadians. That's why we're developing the ecosystem. Canada is really great at attracting talent right now. It's a magnet for talent. What you see is that even when foreign investors acquire a Canadian company, they leave the talent in Canada. This is what's happening here in Kitchener—Waterloo. There are some Montreal companies being taken over. They leave the talent in Montreal.

To me, that's what's really important and not necessarily the ownership. The ownership is not necessarily detrimental to Canadian policy interests; it really does depend. But I can see that the government would want to protect their investment in IP and in industry with some restrictions, yes.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

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

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Madam Chair.

My next question follows on the last exchange. I think there is a way to welcome foreign investment without necessarily handing over control. In my opinion, this could be as simple as allowing foreign companies to buy shares from any corporation—maybe even any quantity of shares—without giving them voting rights.

Obviously my question is for the representative from the Mouvement d'éducation et de défense des actionnaires. What do you think of that idea, Mr. Gagnon?

[Willie Gagnon]

Yes, that's one possible avenue. It raises technical questions under the act, and substantial amendments would have to be made to other acts on top of the Investment Canada Act.

This kind of thing is already happening, because there is such a thing as preferred shares, which prioritize a return on investment and payment of dividends but don't come with voting rights. It's easy to imagine such a system.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

In today's debate, we've talked about a moratorium, rather than a permanent amendment to the act.

What do you think about that idea?

[Willie Gagnon]

In light of everything we've heard today, it's hard to see what arguments you could make in favour of imposing a moratorium that wouldn't be permanent. For instance, the arguments used to justify distrust of China won't go away after the crisis.

How could anyone justify amending the act temporarily because of the crisis using arguments based on things that are going to be around basically forever? From what I understand, the situation in China won't be going away any time soon. The regime looks pretty secure. I don't really see any way of making this meaningful unless it's permanent.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Currently, the minister has the power to impose conditions to protect the national interest. What are your thoughts on that?

Shouldn't there be a little more transparency in how the conditions that are imposed are reported?

Should the public be better informed?

[Willie Gagnon]

Yes, definitely. You've put your finger on an important aspect.

We obviously want to know what principles, rules and criteria are being used to justify blocking a foreign takeover. We also want to know which ones were chosen and used. That will increase confidence not only among Canadian investors, but also among foreign investors who are interested in investing in a Canadian company.

There's always a benefit in having the rules be clear, and the same goes for the decisions that are made. There needs to be accountability.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

I appreciate your insight.

Thank you very much.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

The next round of questions goes to MP Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Madam Chair.

Right now the Huawei decision is kind of in limbo. Would anyone here have any objection if Huawei did a takeover of one of our telecom providers like Rogers? Would there be any objection to that under the scenarios you laid out?

I'm interested to hear if anybody has an objection to Huawei's being able to take a large market share into the Canadian telecom industry right now.

[Dr. Charles Burton]

Could I speak to that?

[Brian Masse, NDP, Windsor West, ON]

Absolutely, it's an open floor. It's on the record for everybody to have an open spot.

Thank you, Mr. Burton.

[Dr. Charles Burton]

The Huawei company has quite a strong connection to the Chinese military; its CEO is a former military man. There are concerns as to why the Chinese government is so resistant to the Huawei CFO's being sent to the United States, out of perhaps fear she would provide evidence to the U.S. government about Huawei's connection to the Chinese military and security apparatus.

We have concerns that Huawei could get knowledge of key Canadian infrastructure in the course of its installation of a system or would be able to use it for purposes of data collection and cyber espionage, as we've seen with the Chinese government's previous hacks into the NRC and, before that, the Treasury Board and other agencies. It's a big concern, and I certainly wouldn't like to see Rogers renamed Huawei.

The other problem is that, even when you have these large takeovers, it's difficult to get the state companies to abide by their commitments. As seen in Nexen, there was a commitment to maintain the existing Nexen management, but after a while, we saw the Canadians were removed and the management was assumed by Chinese communist officials, so it's highly problematic.

With regard to your question of whether we should allow Huawei to take over a major Canadian telecommunications provider, I would like to say a capital no with several exclamation marks.

[Brian Masse, NDP, Windsor West, ON]

That's pretty clear.

Does anybody else have a comment? Okay.

Thank you, Madam Chair.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

That's our time for today.

I'd like to thank our witnesses for being with us today.

The meeting is adjourned.