Thank you, Madam Chair, for this opportunity to discuss the Investment Canada Act. Good afternoon, everyone.
I am the senior assistant deputy minister of the national and cyber security branch here at Public Safety Canada, responsible, among other things, for advising the Minister of Public Safety and Emergency Preparedness on the national security dimensions of the ICA. My remarks will focus on the national security provisions under the ICA, which is administered by the Minister of Innovation, Science and Industry, as we just heard, who consults with the Minister of Public Safety and Emergency Preparedness as part of his deliberations.
The national security provisions of the ICA are broad by design and enable Canada to assess all inbound foreign investments, including the establishment of a new Canadian business or an entity carrying on operations in Canada, the acquisition of control of a Canadian business of any dollar value, and the acquisition of all or part of an entity carrying on operations in Canada.
National security is not explicitly defined within the ICA, as this allows the government to remain nimble in response to the ever-changing threat environment. Public Safety Canada manages a national security review process in collaboration with 18 departments and agencies. As we heard Mr. Hahlweg point out, this ranges from CSIS, the Communications Security Establishment, the Department of National Defence, the RCMP and Global Affairs Canada to Natural Resources Canada, the Public Health Agency and the Department of Finance. This whole-of-government approach brings the relevant expertise to bear as we assess the national security risks of each transaction.
The review takes into account a variety of factors, including the potential effects on Canada’s defence capabilities and interests; the potential effects on the transfer of sensitive technology or know-how outside of Canada; involvement in the research, manufacture or sale of goods or technology important to Canada’s national defence; the potential impact on the security of Canada’s critical infrastructure; the potential to enable foreign surveillance and espionage; the potential to hinder current or future intelligence or law enforcement operations; the potential impact on Canada’s international interests, including foreign relationships; and the potential to involve or facilitate the activities of illicit actors, such as terrorists, terrorist organizations or organized crime.
In light of COVID-19, we have also applied increased scrutiny to all foreign direct investments in Canadian businesses that are vital to public health and the security of supply of critical goods.
The national security review is rigorous, with multiple steps and thresholds that must be met before taking action. Unlike many countries, Canada has a mandatory notification scheme where an investor must let the Department of Innovation, Science and Economic Development know when they establish or take control of a company.
The process begins once we become aware of a transaction, with a preliminary assessment of all filings and information sharing among partners. If there are reasonable grounds to believe that the investment could be injurious to national security, the process moves into a notice period, with a 45-day window for the community to investigate concerns. If, after this period, concerns remain that the transaction could be injurious to national security, a national security review is ordered by the Governor in Council on the recommendation of the Minister of Innovation, Science and Industry, after consultation with the Minister of Public Safety and Emergency Preparedness.
The national security review period provides Canada with another 45 calendar days, with an optional 45-day extension, to investigate whether this investment would be injurious to national security. In total, from receipt of notification to recommendation to cabinet, the process can take up to 200 days. Further extensions, of course, may also be granted with the investor’s consent.
At the end of the national security review period, the government has three options. If it is determined that the investment does not meet the threshold of “would be injurious to national security”, the investment is allowed to proceed. If the government determines that an investment meets the threshold, then it may decide to either allow it, subject to the imposition of mitigation measures to address residual risk, or order that the investment be blocked, if it hasn’t been implemented yet, or divested, if it has been implemented.
To conclude, the national security review process is a robust one, involving a multitude of investigative bodies that work collaboratively to ensure that Canada is safeguarded against national security threats that can arise through foreign direct investment.
Madam Chair, I would be pleased to now answer questions that members may have. I'll offer up the same disclaimer as my colleague from ISED, in that I may be unable to speak to, or respond to, questions related to specific investment reviews that are currently under way or that have taken place.