Industry Committee on June 18th, 2020

[Tim Hahlweg]

I think it's a great question.

By educating people in vulnerable sectors, especially now in the COVID context, if we use the biopharma example, that education piece and that outreach is critical for these companies to know and be aware when they might be vulnerable to attack.

Once they are armed with that information, they can start to spot signs and then they can get in touch with the government to say they think something is going on here and you might want to review this. That education piece kick-starts everything, because we're only alive to the threats when they're brought to our attention. That's the importance of that outreach.

[Majid Jowhari, Liberal, Richmond Hill, ON]

I'd like to hear Mr. Davies' input on that, especially on the innovation.

[Mitch Davies]

With so many small and medium-sized enterprises with a lot of really interesting technology in Canada, these types of businesses may not have the significant corporate resources to make the assessments sometimes that might be required, and of course that's important. They are also often lacking in financial resources and need investment.

In some ways it keeps the doors open. People come through the doors, make offers and so forth.

[Majid Jowhari, Liberal, Richmond Hill, ON]

That's exactly where I wanted to go. You took the words out of my mouth when you said that not only do they not have the financial resources, but also they do not have the capacity to do this.

If you're talking about a small business, an SME that has anywhere from 10 to 15 people, and they are focusing on, let's say, innovation and the environment, they may not have the capacity. How do we safeguard against it?

[Mitch Davies]

The committee's review of this is timely and important in that regard to raise awareness.

My colleague from the service has also mentioned extensive efforts being undertaken by CSIS to get out there and talk to Canadian businesses. Of course, we do that in partnership with them, and support them in that, because we have many connections in the business sector.

[Majid Jowhari, Liberal, Richmond Hill, ON]

For us to be able to get out and talk to small businesses, we need the partnership from all the different departments that are being discussed.

Is that in the mandate? Does sufficient funding exist to be able do this or do we need to go back and advocate for the education, as well as the funding for the departments to spearhead that?

[Mitch Davies]

Certainly, advocacy is important. I have made that comment.

There were also, in a budget two years ago, I believe—my colleagues might remember the exact budget—additional resources added to the system for the investment review process. It was very much aimed at strengthening the overall network in government that does this work, recognizing its importance.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Mr. Rochon, I see you nodding. Can you chime in?

[Dominic Rochon]

We also outreach public safety. Part of that outreach is with our provincial and territorial friends, of course. Educating individuals at the forefront of investment attraction or securities is part of our mandate.

As Mr. Davies pointed out, the government did invest in economic security writ large, putting in something like $67 million. The ICA is but one tool. We have export controls, controlled goods regulations, the banking sector and the Bank Act, so there are many controls in place. Economic security is a suite of efforts, including raising awareness.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you.

[The Chair, Liberal, Sherry Romanado]

Ms. Rempel Garner, you have five minutes.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Thank you, Madam Chair.

Mr. Davies, has the government advised your department to provide any recommendations on potentially lowering the threshold for review on the ICA?

[Mitch Davies]

The question of lowering the threshold, if you're speaking of the dollar thresholds that apply in terms of the WTO, the free trade agreement, or SOE, those—

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Specifically, the net benefit test.

[Mitch Davies]

Yes, that would be the part of the act where there are dollar thresholds.

There are important trade law implications—

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Just a straight yes or no. Has the government advised you to undertake any work to lower that threshold, or conversely, has your department provided advice to the government that it is something it should be undertaking?

[Mitch Davies]

Canada has made a number of commitments in trade agreements in terms of the openness of its trade regime, and it's a ratchet provision—

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

That's not particularly helpful. I was looking for a yes or no, Mr. Davies. That's not helpful.

[Mitch Davies]

There are legal issues with respect to reducing the limits.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

I was just looking for a yes or no in light of COVID.

Has the government directed your department, or have you provided advice to the department that the definition of state-owned enterprise should be broadened to look at state-influenced enterprises, and have a greater scrutiny on shell companies?

[Mitch Davies]

The definition in the act is actually quite broad. It encompasses direct and indirect influence, influence of individuals, and it allows the minister to make a determination after taking into account all of the facts. In fact, if you ask the members of the bar, and I believe you've had a number of them before you, they would probably say that is quite an open provision, and it's actually one that we would log—

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

So I take that as a no?

[Mitch Davies]

Well, the provision is quite broad as it's structured now.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Thank you.

Mr. Hahlweg, has your department advised the government that there should be certain countries in which Canada, or Industry Canada, or any department, should be providing greater scrutiny of corporate acquisitions, given the current global context?

[Tim Hahlweg]

There are a number of threat actors out there, as I noted, so within the classified space with your NSICOP colleagues, we do have those discussions about the countries that are potentially problematic. Foreign interference cuts the swath, and we've been subject to foreign interference and economic espionage for a number of years.