Industry Committee on April 26th, 2023

[Charles Vincent]

I would say, Mr. Chair, that where we have the most difficulty sometimes in those situations—you mentioned one case with Rona—is in dealing with the specific transactions themselves.

Where we've tried to be very transparent is in a number of places. One is in the policy statements that we've made to make sure that the market is very aware of what's important to the Government of Canada and where we're going to be looking more closely. Two, within the context of the annual report, we've tried to publish a great deal more information around the types of industries that are affected, where the investments are coming from around the country and the number of dollars that are coming through those. I'm sure that, in the context of the annual report you've seen, those are by necessity at a higher level, from the standpoint of being industry-focused, sector-focused or geography-focused, because we're not in a position as a result of the clauses made in the act to speak to specific cases in that context.

With respect to transparency in that context, however, what we're interested in doing is continuing to work. You talked a little bit about where are we in a position to help shore up and secure some of the commitments and then where the penalties would come through to help support that. I think, when we start talking about the kinds of undertakings that the minister would be in a position to negotiate, we would then be in a position to be able to use those undertakings, and, if they were to breach those, they would be legally binding undertakings that we could then pursue in court. We would be in a better position at that point to make sure that Canadians' interests are being protected.

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

Could any steps be taken to promote local investment in some transactions?

I'm still talking about the supply chain.

For example, could there be tax incentives to encourage local investment, particularly in our Quebec companies?

How can we strengthen local ownership and control of Quebec companies that are more or less victims when a head office is sold?

[Charles Vincent]

Within the context of the ICA, things like tax reform are not going to be things that we're looking at specifically.

I will say, however, in the context of net benefit reviews, companies often bring forward commitments, undertakings that they're going to make, in order to ensure that we understand the investment is truly to Canada's net benefit, and, in that case, they are often associated with investments in Canadian supply chains and commitments to make local investments in global companies. That is our best tool currently to take advantage of those.

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

I'd like to thank you because I know that, except for the thresholds issue, which is extremely important to me, many of the things included in our report were taken into consideration. We feel that it served as a starting point.

Recommendation 8 of that report requested that you immediately table legislation to require that the Canadian Security Intelligence Service and the Royal Canadian Mounted Police be consulted in connection with any national security review.

Do you believe that's included in the bill?

[Charles Vincent]

As a matter of course, I can assure you that every single investment that comes through goes into a group within the Government of Canada that includes CSIS, CSE, RCMP, DND and Public Safety, so all of those are considered just as a matter of course. Then those departments, along with ISED and often other departments like NRCan or Transport, depending on where the investment comes from, come together to review those collectively.

I can assure you all of that happens as a standard matter of course.

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

Thank you very much for your answer.

That didn't appear to be clear for Neo Lithium.

Thank you very much, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Lemire.

Mr. Masse, you have the floor for six minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

We were talking a little bit about Volkswagen before, and the irony struck me about the subsidization of the pipeline industry and the oil and gas industry at a time when we are finally going to cleaner products, but I won't ask for a study on that because I don't want to give us more work.

Going back to the act, how much consultation and input does the Competition Bureau have? My colleague here mentioned Rona, but there have been others where there's been the purchase of iconic Canadian companies, sometimes in the entertainment industry. It could also be, in other types of industries, a little bit more sensitive. What type of involvement do they have in terms of advising the process?

[Charles Vincent]

Mr. Chair, I can assure you that the Competition Bureau is a close partner in the consideration of these. When we send out various investments for consultation within the Government of Canada, the Competition Bureau receives those to make sure that they look at the various things. We also consult with provinces and territories in relevant jurisdictions where those are coming forward. They're all part of the broader consultation that takes place with all these investments.

[Brian Masse, NDP, Windsor West, ON]

I've been pressing for some reforms to the Competition Act. Some have happened over the years, and they've also had a little bit of a modest increase in budget. I know you can't speak for them, but my concern would be this. If they're going to have this other screen, do you feel confident, being the one who leans on them, that they have enough supports in place? Especially when we have critical minerals and others that are coming online here, I'd like to have all natural resources pretty well reviewed, especially with what happened to Windsor Salt.

At any rate, what's the comfort zone there?

[Charles Vincent]

Thank you for the question.

I would say the comfort zone, frankly, is probably the same as it is almost right across the Government of Canada. What we have seen in the context of the ICA, and you can see it in the numbers of the annual report, is a consistent increase in the number of investments and the number of cases that are being reviewed.

I won't lie. It taxes the system, but it is something we're very aware of, and we're working to try to make sure we have the resources to effectively manage it.

[Brian Masse, NDP, Windsor West, ON]

With that, is most of the work that you lean on through our in-house...or is that contract work? I want this to be in-house, because of the specialties that are necessary. There are some significant value-added people with intellectual skills and knowledge of the industry. What I worry about with a lot of the contracting out we do is that it doesn't have the same lifespan for knowledge or when replacing people as succession takes place.

[Charles Vincent]

Thank you for the question.

I can assure you the work that's happening is all internal public servants working in various departments. When I talk about sending it out in consultations, that is all within the public service, either in the Government of Canada, with provincial and territorial partners or with, as you suggested, organizations like the Competition Bureau, which frankly works within our portfolio anyway.

[Brian Masse, NDP, Windsor West, ON]

Where I think there hasn't been enough discussion in Parliament about these matters is also around corporates, privacy and a whole series of different things where, if it's in-house, there's a lot more confidence there will be investment in Canada, versus when we're using consulting firms.

I know most recently an example took place where a local producer of vitamins had a problem, but because of the support and the history of working with them, it resulted in a good solution.

Mr. Chair, do I have any more time? I'm pretty well done, I think.

[The Chair, Liberal, Joël Lightbound]

You do have more time if you want it.

[Brian Masse, NDP, Windsor West, ON]

I have one last quick question, then.

With regard to this bill, if it passes in its current state and form, how would you rank it versus that of the United States? I know it's a little subjective, but I'm curious. Are we in the game, or is this a modest step forward? I'm always interested in that because of where I live. I'm curious about where you'd rank us.

[Charles Vincent]

Mr. Chair, you won't be surprised that I say it's a little bit of apples and oranges when we're making that comparison. I will say a couple of things.

We have very close relationships with our colleagues in the United States. I think there's a mutual respect of the acts in both. Both are very strong acts that are serving the interests of individual countries but also collectively, because we have lots of ties across the two.

I will say from this standpoint that we've adopted elements in here that we've looked at in other countries and have brought into ours. If you look at the U.K.'s recent reforms or Australia's recent reforms, you'll see that they've similarly taken elements of ours and embedded them within theirs. It's a fairly connected community of people with a very similar piece.

James, you work quite closely...and you were down in Washington recently, so maybe you want to talk a little bit about that.

[James Burns, Senior Director, Investment Review Branch, Department of Industry]

Thank you very much, Charles.

One thing I wanted to note for members is that the Canadian regime is, as Charles noted, quite well respected, not just with our partners in the United States and CFIUS but also with other Five Eyes partners. Canada, last year, was the first country to receive accepted state status with the United States, with CFIUS, so it's an example of the tight relationship we have with them in terms of their buying into the strength and robustness of our regime.

I thought I would add that part as well.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

Mr. Généreux, you now have the floor for six minutes.

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

Thank you, Mr. Chair.

Thanks to the witnesses.

Mr. Vincent, in view of the minister's answers to my questions about Neo Lithium and the other three companies that were asked to pick up their marbles and go home, I would ask that you take various factors into consideration in your replies.

We know that the government of Canada is getting ready to invest in a Volkswagen battery plant. I have in front of me I a map of mines in Canada and a list of the 31 critical minerals considered important for national security. It's acknowledged that Canada's mines cannot supply all of the lithium and rare earth metals needed to produce batteries, either for the Volkswagen plant or any other future plants. It will therefore have to import these if they are to manufacture and install these batteries.

In view of all these contextual factors, don't you think that foreign investments will be needed in all of Canada's mines? There are, after all, many projects on the table that we would like to undertake.

Under the new version of Bill C‑34, which might be adopted, I believe that the time required to get all these mines up and running, and the investments that will be required, are going to demand a lot of work from public servants. They will have to carry out an extremely thorough analysis. We’re still talking about China, but there may well be companies in other countries that would perhaps want to invest in Canada, particularly in this area.

Words are important. If I'm not mistaken, the minister mentioned a new industrial niche for Canada. He even compared it to the introduction of the automobile in the early 19th century.

In view of all these factors, how are we going to attract foreign investors to Canada, when China is currently producing 30% of all the raw materials needed to make batteries?

That's a long question, but I think you understand the context.

[Charles Vincent]

Thank you.

Mr. Chair, I think I understand the question well.

It's actually important for members to recognize as well that the purpose of the ICA, the way it is structured and the reason it was created in the first place were fundamentally so that it would provide a predictable regulatory environment for investment while protecting Canada's natural interests and making sure that we have the right net benefits for Canada.

To your point, the purpose of this act is not at all to stop investment. It's quite the opposite. The purpose is actually to encourage investment by creating a predictable regulatory environment and, in doing so, give us the capacity to stop investments that would be injurious to our national security.

To your point, I think in the context of minerals and mines and, frankly, probably elements all along the value chain that you referenced, it's fair to say that we absolutely, from a Canadian perspective, want to be encouraging investment. However, we're looking, through the ICA, to make sure that, as those investments come, they are not injurious to Canada's national security and they're to Canada's net benefit.

From that standpoint, what these changes are designed to do is to strengthen that regulatory environment and give investors a predictable understanding of the Canadian environment.

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

The current bill does not change the definition of a state-owned or state-controlled enterprise. China's tentacles are highly diversified. They are directly or indirectly involved in companies around the world.

Getting back to the terminology, because words are extremely important, shouldn't we have an even more accurate definition of what constitutes a state enterprise? That would enable us to avoid situations like the one we experienced with Neo Lithium.

[Charles Vincent]

It's an excellent question. Thank you.

I would say a couple of things. First of all, we'd certainly welcome advice if there are terms that the committee deems to be not well enough defined and that we should look at those and make sure. The consultations did not provide us feedback on changing the definition of an SOE in that context, but we'd certainly welcome input on that front.

The other thing that I think is important in the context of SOEs—and there was a bit of a discussion earlier about that—is thresholds in the context of the net benefit investments and whether or not we should be lowering those thresholds, in particular, around SOEs.

I just want to make sure that members understand that those thresholds are very much tied to Canada's trade requirements. The degree to which we would be lowering those thresholds would be directly counter to.... Whether it be CETA or the Canada-Korea agreement, all of those trade agreements have a very direct reference as to where the ICA is exempted from them and pulled out or, in the same context, put in.

Now, obviously, there is a former minister here, who is very familiar with that, but I just wanted to make sure that all of the members were familiar with that.

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

I'll let him speak. He wants to ask a question.

[Ed Fast, Conservative, Abbotsford, BC]

Thank you so much for being here at committee.

Just to follow up on that question, we do not have trade agreements with countries that are the most problematic when it comes to hostile regimes. We know which countries those are. That does provide us with some opportunity within the net benefit test to perhaps lower thresholds or incorporate additional tools that are going to give us the ability to place a greater focus of scrutiny on those investments. I'm thinking of investments even like the one that was made by Glencore—or it was going to be made by them. There were two offers from Glencore for Teck, and Teck has resisted both of those. That caused enough consternation with the minister's office that he actually responded to a letter from the Vancouver Board of Trade and signalled that Teck was important—very important.

What in Bill C-34 is actually going to prevent the last champions of industry within Canada from being acquired and potentially being hollowed out by foreign entities, not necessarily on the national security side but on the net benefit side?