Industry Committee on Jan. 27th, 2022

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

The national security review is first carried out by various departments of the Government of Canada—

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Do you sign off on transactions like this one?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

This is a process—

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Do you sign off on transactions like this one?

[The Chair, Liberal, Joël Lightbound]

Mr. Généreux, please let the minister finish talking.

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Mr. Généreux, this is a well-established process where I work closely with department officials and national security employees to ensure that each of those transactions is subject to a review.

In the case of critical minerals, transactions are subject to the new regime we implemented last March that calls for an additional review to ensure that the proposed transactions do not undermine Canada's national security.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

In the case of transactions with companies funded by public entities like China or companies that are their property, as in this case, does the Prime Minister's office participate in those decisions?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Under the act, the minister of innovation is responsible for enforcing the Investment Canada Act.

You talked about state-owned enterprises. If you look at item 7 of the new guidelines, which came into force last March, you will see that all those transactions, regardless of the amount, are subject to the additional review.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Why weren't the additional 45 days used to verify this transaction?

You are essentially saying that Canadian–owned lithium in Argentina was not the right kind, as that lithium does not meet Canada's needs. However, a Chinese company decided to purchase the lithium for $1 billion. Of course, the purchase includes technological equipment, among other things. China is interested in that, but Canada is not.

I can understand that the lithium used varies from one location to another, but why is Canada giving a business owned by the Chinese state an opportunity to compete with it? Although the lithium is in Argentina, China will transport the mineral back home to process it. It will then sell us batteries. China actually already sells a lot of batteries to us. This is clearly a good move for China.

Why isn't that the case for Canada, given the national security in terms of supply and, as my colleague said, in terms of the relationship between Canada and the United States?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Mr. Généreux, I said so already and I am happy to repeat that the Neo Lithium transaction has been reviewed. We ensured that it had no impact on national security. What is more, the transaction was subject to the additional process I implemented last March.

The element that those who are listening to us must understand is that the minister can begin investigating as soon as we become aware of a transaction, which may be well before the department is notified of the transaction. Under the act, the minister has the authority to investigate, to request the production of documents and to put questions to the company as soon as public information reaches us.

I know that you are concerned about the time. What I am saying is that the legislation allows us to investigate even before a notification is issued. There is only one national security analysis process and not two. It begins on the first day and consists of a number of steps.

When we conclude that the transaction poses no threat to national security, we terminate the investigation. We also receive recommendations from the country's national security agencies.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

When the Prime Minister—

[The Chair, Liberal, Joël Lightbound]

Thank you, minister.

Mr. Généreux, your time is unfortunately up.

Minister, I know you will have to leave the meeting. It is now nearly 6:30 p.m.

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

I don't know whether I took an extra five minutes in the beginning, but—

I will let you decide, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

We have one more question left before the end of the second round. If you can stay for another five minutes—

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

What we are discussing this evening is important, and I want to make sure to answer my colleagues' questions. So I am prepared to stay a bit longer.

[The Chair, Liberal, Joël Lightbound]

Okay. Thank you, minister.

Mr. Gaheer, go ahead for five minutes.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

Hi, Minister, and thank you for making time for us today.

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Good evening. It's good to see you.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

It's nice to see you as well.

My question is, what's the government's track record when it comes to reviewing ICA cases? Are there examples you can give where a foreign takeover in the mining sector was rejected on national security grounds?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

I'm happy you asked the question, because one thing I can say is that we did four times as many reviews as the previous government, and we blocked twice as many transactions as the previous government. I think we should take no lessons from the Conservatives when it comes to national security. That's going to be abundantly clear with the annual report that we're going to be submitting.

Listen, I'm happy you asked the question, because not only did I issue in March the new security guidelines when it comes to foreign investment, but I'm the minister who issued the new framework on security when it comes to research in our universities and colleges.

We blocked the transaction, as you may recall, for TMAC in Nunavut, which was the subject of a foreign takeover. We took the proper time, as in the case of Neo Lithium, to review the transaction, and we decided, on the basis of national security, to block it. More recently, you may have seen that, through the Governor in Council, I have ordered China Mobile to divest all its assets in Canada.

Canadians who are watching us tonight can understand that our track record speaks for itself. National security is paramount in our decisions. This was the case with Neo Lithium. Again, to repeat, to be absolutely clear, Neo Lithium was reviewed on a national security basis and was even subjected to the enhanced scrutiny that is called for under the guidelines I've issued, to make sure that this would not be injurious to Canada's national security.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

That's great. Thank you.

I feel as though there's a need to balance economic interests and national security considerations. What assessments happen behind the scenes to balance economic interests and national security interests? What's the thought process behind doing that?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

On the one hand, we want foreign investment in Canada. It's good. We've seen a number of companies that have been able to grow because we have had foreign investment in the country. On the other hand, we want to make sure we tell the world and the investors that we will protect our national security.

That's what you've seen with the new guidelines that I published in March. They're very specific. They tell the world explicitly that for a foreign company trying to invest in any of these sectors, not only will we do the national security review, which is a multistep process, as I've explained many times, but the transaction will be subject to enhanced scrutiny. That includes state-owned enterprises, and it includes investment when it comes to critical minerals.

It's something that I think is very important, because, yes, we are open for business, but everyone in the world should know that when it comes to critical minerals, personal data, or sensitive technologies, we will always protect national security. We have never hesitated. I have full trust in our National Security and Intelligence Review Agency. They're doing great work. They're the ones who advised us with respect to lithium and all the other transactions, but it's a quasi-judicial process, so we need to apply legal standards when we do that. That's what we did, and that's what we will continue to do.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

That's great. Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Gaheer. I understand that you have no further questions.

Minister, this concludes the second round of questions we had for you.

We will spend the second hour with officials from various departments.

Thank you for joining us, minister.

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Thank you, Mr. Chair.

Esteemed colleagues, I will have the pleasure of seeing you next week.

Thanks for having me at the committee, Mr. Chair.