Evidence of meeting #69 for Industry, Science and Technology in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was investment.
A recording is available from Parliament.
Liberal
François-Philippe Champagne Liberal Saint-Maurice—Champlain, QC
We did not base our decision.... We based it on a generational opportunity.
Conservative
Liberal
Liberal
The Chair Liberal Joël Lightbound
Thank you.
Thank you, Mr. Champagne. The time is up for this intervention. How convenient for me, as chair.
We'll now turn to—
Liberal
The Chair Liberal Joël Lightbound
Order.
I have the floor, Minister. Please remain silent when the chair is speaking.
Mr. Gaheer, the floor is yours.
Liberal
Iqwinder Gaheer Liberal Mississauga—Malton, ON
That's great. Thank you, Chair.
Thank you, Minister, for being here before the committee.
Thank you for being here to discuss this important piece of legislation. In your opening remarks you outlined some key issues that the bill would address including national security concerns, so I have a couple of questions regarding national security concerns.
One, in your opening remarks you mentioned the difference between a national security review and a net benefit review. Could you expand on that a little bit?
Liberal
François-Philippe Champagne Liberal Saint-Maurice—Champlain, QC
Thank you for the question.
Mr. Chair, obviously you have the final word on everything, so we'll focus on the question that was asked.
Definitely, what I was saying was that Bill C-34 is under national security, which has no threshold. The first thing I was trying to explain to the committee and colleagues was around the fact that, when it comes to national security, there's no threshold, so we review any transaction that would have an impact on national security. That's what Bill C-34 is about. It's to provide more tools in the tool box with respect to that.
The net benefit test has a number of thresholds, whether you're part of the OECD or whether you're a country with which we have a trade agreement, but what I'm saying is that because of what we were looking at—and colleagues have been asking questions—when it comes to national security, there's no threshold. I think it's important for colleagues to know that, because that's really what we're looking at. It's to have more tools in the tool box, because there were questions at the time from colleagues on whether we are looking at all transactions. The response is clearly, when it comes to national security, that every transaction, every investment, is subject to the act.
Liberal
Iqwinder Gaheer Liberal Mississauga—Malton, ON
Thank you.
Some acquisitions happen before a national security review is completed. Will these new amendments prevent that sort of situation from happening or not?
Liberal
François-Philippe Champagne Liberal Saint-Maurice—Champlain, QC
I think the new pre-implementation filing requirement is certainly going to be a tool in that, because this is going to define specific sensitive sectors where we want to have access and we want pre-notification. Today, there is no obligation legally for doing that.
We have done a policy statement. If you look back, in August 2022 we allowed for voluntary pre-notification, but I think what the act is going to be doing is that—this is going to be with respect to specific sectors—they will have to pre-notify the Government of Canada. Therefore, obviously, we can better protect these investments.
Liberal
Iqwinder Gaheer Liberal Mississauga—Malton, ON
That's great. Thank you.
Do all foreign investments undergo a national security review? What about investments from countries like the U.S. or Australia?
Liberal
François-Philippe Champagne Liberal Saint-Maurice—Champlain, QC
That's a very good question.
That's why in the pre-implementation filing requirement we have limited that for specified investments, because I think colleagues have been saying the vast majority of investments are not an issue of national security. That's why we're going to publish in regulation the sectors where we want to see them, because colleagues who have to implement this act, to work with this act, know that there are thousands and thousands of investments that do not rise to that, and we don't want to increase the burden.
We want to welcome investment in Canada and provide the maximum benefit to Canadians, but at the same time, we want to protect our national security, Therefore, in sensitive sectors it will be defined in regulation, because this is going to be evolving over time. That's where you want to make sure that you have pre-notification of these investments.
Liberal
Iqwinder Gaheer Liberal Mississauga—Malton, ON
Thank you.
Chair, I'm wondering if I have room for one more question.
Liberal
Iqwinder Gaheer Liberal Mississauga—Malton, ON
Minister, what is the role of the Minister of Public Safety and other investigative bodies in the decisions on whether to mitigate or whether to possibly alter the mitigation?
Liberal
François-Philippe Champagne Liberal Saint-Maurice—Champlain, QC
I think it's a very key role and I'm happy you asked that question, because the authorities sought here are not only for the Minister of Industry. It's always in consultation with the Minister of Public Safety. The Minister of Industry bases his decision on intelligence that is coming from the Department of Public Safety and the different agencies.
I think there's a bit of check and balance there that colleagues would welcome in those terms. It's not only the Minister of Industry. It's the Minister of Industry in conjunction with the Minister of Public Safety, and sometimes when you go to a final divestment—for example, a blocking order—that has to go to the Governor in Council.
There are a number of checks and balances in the system. One is to provide flexibility for the process to be robust, to be efficient and also to strike the right balance. That's what we've been trying to do in this act.
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
Thank you, Mr. Chair.
Minister, the overall objective of the Investment Canada Act is to protect Quebec and Canadian firms from being taken over by foreign interests, or at least interests contrary to our national interest. It's also to protect certain key economic sectors against these foreign enterprises, which could become hostile to our interests. Do you agree?
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
I'd like to hear what you have to say about the example of CRRC Corporation Limited, a Chinese railway sector company. It was de facto banned in the United States for national security reasons, and in particular for cybersecurity risks. Now, this very same company is currently pre-qualified for the renewal of the Toronto subway train fleet.
Would your proposed reform mean that a company like CRRC, which is banned in the United States for reasons that are clearly related to national security, would also be banned in Canada?
Liberal
François-Philippe Champagne Liberal Saint-Maurice—Champlain, QC
It's difficult for me to comment on a transaction for which I don't have all the details. The Investment Canada Act governs transactions between foreign entities and Canadian companies.
That being the case, an analysis of the facts would be required to determine what's happening. What I understand from your example is that we are talking about an acquisition of equipment rather than an acquisition of a company. Since I don't have all the details, I can't really answer. We need to stay within the bounds of what the Investment Canada Act covers, which is transactions involving Canadian companies.
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
So how can we make sure that we are protecting Canada's interests if, in public tender calls, we find ourselves giving preference to the Chinese, who can offer the same service at a much lower cost than Quebec or Canadian companies?
Liberal
François-Philippe Champagne Liberal Saint-Maurice—Champlain, QC
I understand you. You and I often have the same feelings about subjects like that. I think that in this case, what needs to be determined is which entity launched the acquisition process, and the grounds and conditions under which it was launched. Nevertheless, I don't think the process for acquiring equipment would fall under the current act. The Investment Canada Act is about the process of acquiring Canadian entities or Canadian companies.
I understand your point of view. It could be something for the committee to study. It could examine the issue of how tender calls might do a better job of protecting the interests of Canadians. I'd be happy to hear what the committee might say about that. I'm aware of federal, provincial and municipal jurisdictions in this area, but I'd be willing to listen to the committee's suggestions.
