Industry Committee on May 1st, 2023

[The Chair, Liberal, Joël Lightbound]

I call this meeting to order.

Ladies and gentleman, hon. friends, welcome to meeting no. 70 of the House of Commons Standing Committee on Industry and Technology.

Pursuant to the order of reference of Monday, April 17, 2023, we are studying Bill C‑34, An Act to amend the Investment Canada Act. Today's meeting is taking place in a hybrid format, pursuant to the House Order of Thursday, June 23, 2022.

This afternoon, we welcome a number of witnesses to study Bill C‑34. As an individual, we welcome Charles Burton, senior fellow at the Centre for Advancing Canada's Interests Abroad of the MacDonald-Laurier Institute.

By videoconference, we also welcome Daniel Schwanen, vice-president, research at the C.D. Howe Institute.

We also have Dan Ciuriak in person, and Robert Mazzolin by videoconference, both senior fellows at the Centre for International Governance Innovation.

In addition, we welcome Jim Balsillie, chair of the board at the Council of Canadian Innovators.

Finally, from the Canadian Bar Association, we welcome Sandy Walker, chair of the Competition Law and Foreign Investment Review Section, and Michael Caldecott, chair of the Foreign Investment Review Committee, Competition Law and Foreign Investment Review Section.

I'd like to thank all of you for joining us in person or virtually for this significant study.

Because we're welcoming a large group of witnesses, we will try to limit testimony to five minutes.

Without further ado, Dr. Burton, the floor is yours.

The floor is yours, Mr. Burton.

[Dr. Charles Burton, Senior Fellow, Centre for Advancing Canada's Interests Abroad, Macdonald-Laurier Institute, As an Individual]

Thank you very much, Mr. Chair.

My area of expertise is China's domestic politics and foreign policy. With that in mind, I'd like to pick up on two points raised by Minister Champagne when he appeared before this committee last week. The minister said that, henceforth, state-owned companies' investments in Canada will be approved only in exceptional circumstances.

Secondly, Minister Champagne told you last November that, after a national security review and based on intelligence he'd received, he had ordered three Chinese resource companies to sell their interests in Canadian critical minerals firms—lithium.

However, the fact is that all Chinese global enterprises are fully integrated into the PRC party, state, corporate, military and security apparatus, because, as party General Secretary Xi Jinping put it, “Party, government, military, civilian, and academic, east, west, south, north, and center, the party leads everything.”

There are no Chinese industrial enterprises existing independently from China's party-state. Huawei, for example, does not self-identify as a Chinese state-owned enterprise, but, like all PRC institutions, its org chart suggests that Huawei's Chinese Communist Party branch takes precedence over the Huawei board of directors in corporate decision-making. Huawei's corporate purpose is to compete prudently in foreign markets and make money. However, as the Government of Canada determined in banning Huawei's participation in 5G software and hardware, Huawei's raison d'être is not just about economic profitability but also to serve other PRC regime geostrategic purposes that threaten Canada's national security.

Chinese law requires that all companies and individuals co-operate with their intelligence establishment and hide that co-operation. That, combined with the Chinese regime's unrelenting cyber and human-source spying on our Parliament, political parties, government departments, universities and businesses, is reason enough to conclude that foreign investment from China must be subject to the most stringent national security test, regardless of what sector or industry the proposed investment may target.

For example, China's so-called police stations are overseen by Chinese diplomats in Canada to coordinate Chinese Communist Party United Front Work Department operations, in order to menace and harass Canadian Uyghurs, Tibetans and human rights activists, subvert Canadian officials, facilitate Chinese Ministry of State Security espionage operations, hand out money for election interference and so on. If these police station operations are inconvenienced by an RCMP vehicle parked outside the station, whether it's in Markham, Richmond, Montreal, or wherever, it is easy for the Chinese authorities to simply inform a Chinese business invested in Canada that the police station will relocate to it premises and to please issue fake letters of invitation to facilitate false visa applications for Chinese police or People's Liberation Army military researchers to enter Canada on false pretenses for covert or grey-zone operations that transfer dual-use technologies to the Chinese regime. We have many examples of this, including evidence given by Canadian government immigration officials in this regard.

Any intellectual property that any Chinese concern becomes privy to through its foreign investment in a Canadian partner is, as a matter of course, going to be covertly transferred through Chinese Communist Party channels to whatever elements of China's Communist Party regime can apply the Canadian proprietary technology or manufacturing process to further China's overall diverse regime interests. We have many examples of this, too.

Finally, I urge a more coordinated approach to all this. Australia's Foreign Investment Reform (Protecting Australia's National Security) Act 2020 was enacted to follow on its Foreign Influence Transparency Scheme Act 2018. I should point out that implementing this latter act—the foreign influence registry—did not instigate any rise in anti-Asian racism in Australia.

I strongly recommend to this committee that Canada look carefully to Australia’s strengthening of laws against covert foreign influencing and espionage, curbs on proxy foreign donations to political parties, and better controls over the security of critical infrastructure. Modelling on Australian legislation could allow Canada to make our legislative improvements in a much shorter time frame. The longer we delay, the worse it gets.

Thank you, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Burton.

We will now move to Mr. Schwanen now for five minutes.

[Daniel Schwanen, Vice-President, Research, C.D. Howe Institute]

Thank you, Mr. Chair.

I prepared my speech in English, but obviously I will be pleased to answer any questions you may have in French, if you prefer.

According to the OECD, scrutiny of foreign direct investment, or FDI, on security grounds, has picked up quite a bit since 2015, as firms controlled by foreign governments that are not necessarily friendly have used FDI on the one hand to gain access to critical supply chain components, or to critical technologies or infrastructure, while on the other hand clearly exhibiting signs of not treating these investments or their host countries on normal commercial terms, and even introducing coercive or hostile aspects into the relationship of the kind that Mr. Burton described.

It’s not foreign ownership per se but the combination of these two factors that is alarming, and the proposed amendments are also part of a global trend. Again, there's the example of Australia.

Studies that we published over the years have recommended simplifying and bringing more transparency and more openness to the screening of those foreign investments in Canada for which there are no reasons to think that they would not be undertaken for legitimate commercial reasons, following Canadian laws and so on, while at the same time exercising a sharper scrutiny of investments posing potential security threats. We can do both. The research I just mentioned supports the current direction in this bill.

I want to make that support clear, because the rest of my comments concern the relationship between this bill and Canada’s competitiveness in attracting FDI.

Canada had a decent year in 2022 in terms of attracting or retaining FDI, as reported just a couple of days ago by Statistics Canada. Nevertheless, the OECD continues to rank Canada’s FDI policies as more restrictive than those of partners who also happen to be competitors for investment, such as the United States, the United Kingdom or Australia.

As we strengthen these security provisions in the Investment Canada Act, then, we don’t want to unnecessarily add to these barriers by sacrificing predictability and transparency of criteria for potential foreign investors, when this predictability and transparency can be provided consistent with ensuring the security and safety of Canadians.

Since addressing economic security threats is a major focus of this bill, for example, I would say that to be predictable and transparent, Canada needs to be coherent across government about what these economic threats are and how they can be addressed by adding criteria for scrutinizing foreign investment. As one example, Canada is still developing its national supply chains strategy, which presumably will address the security of critical supplies. Which sectors come under particular scrutiny here under the ICA should be consistent with that strategy, just as Canada’s decision on which investors will come under particular rules or scrutiny should be informed by the Indo-Pacific strategy. This is a matter of coherence and clarity for foreign investors.

Naturally, what we might at any given point consider “certain investments in certain sectors” has to be left to regulations; it has to be flexible, but I hope that the legislation will require that these regulations be based on a clear rationale and require the government to provide guidance regarding their interpretation, for example in the form of updated guidelines on the national security review of investments.

With respect to the bill’s information-sharing provisions, they will help align our FDI policies with those of our close partners, which is a good thing in an era of friendshoring and will help us understand and anticipate threats better, especially assuming that our partners reciprocate with information sharing.

The ability provided in the proposed amendments for the investor and the government to discuss mitigating actions an investor might take to make its plan conform with Canada's security needs was also anticipated in our 2015 paper, and it is to be applauded. Of course, for that mechanism to be effective, investors need to know the elements that would make such an undertaking acceptable in the government’s eyes, without the government divulging national security secrets. Here again, clarity of criteria and guidance are crucial.

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you.

I'll now cede the floor to the Centre for International Governance Innovation, and Mr. Ciuriak.

[Dan Ciuriak, Senior Fellow, Centre for International Governance Innovation]

Thank you very much, Chair and honourable members. Thank you very much for the opportunity to present today.

I am a senior fellow with CIGI, where I write on the digital economy and innovation.

I want to make several remarks, largely in connection to how well the reforms of the Investment Canada Act respond to the digital transformation.

The first comment is that in the innovation economy, when a company wants to require a new capability, it acquires a company that has successfully mastered that particular function and then it absorbs it. The significance of the company may not be its market cap but its role in the ecosystem of innovation, how that amplifies or expands the company's own palette of products and capabilities and how that technology that it acquires combines with others to produce world-class applications. What matters in the innovation economy is not the size threshold so much as the connectedness threshold. I don't see that concept in the present construction of the reforms.

The second point is that the act is premised on the ability to designate prescribed sectors. The words “supply chain” or “value chain” do not appear, as far as I can tell, in the act; however, the geopolitical background or battleground in the technology war today is not in sectors but in supply chains. Economic security today is based on capture of the valuable parts of value chains.

Some of you may be familiar with the smile curve of innovation, where basically the value capture where you have lots of value is at the initial stage of the production process, which, in the data-driven and knowledge-based economy, is with capturing patents, intellectual property and data. Then it's in the market end where you have branding. In the middle part of the curve, which is the low-value capture part, that's where you do the data processing, the development of processes and so forth. That is where we are now concentrated in Canada. We are not capturing the high ends of the value chain.

The question for us as we move forward in framing an Investment Canada Act that is going to work for Canada is how to capture the high ends of that curve. I don't see that either in the act right now.

My third point is that data is the essential capital asset of the modern, knowledge-based and data-driven economy. It's value is Protean and depends on the application. What's valuable to one person may not be valuable to another. This is one of the least well-understood areas of valuation of the market economy.

Back in the 1990s, Robert Solow famously said that the computer revolution is everywhere but in the economic statistics. Today, data is everywhere but in economic and trade statistics. We're not seeing it, but we know that it is very powerful and very important. A company may be otherwise valueless. Its market cap may be minimal, but the data that it possesses may be extraordinarily valuable. From a national security concern, that may be of great concern to Canada. It's not easy to see how the Investment Canada Act captures this particular reality.

The fourth point is that the draft act is based on whether an entity has a place of operations, employees or assets in Canada. Prior to the digital transformation, the combination of export controls and investment screening effectively covered the waterfront to safeguard our national security concerns with regard to the way the economy functions; however, with the digital transformation, it is now possible for companies to operate in Canada on a virtual basis. This distinction is recognized in the OECD/G20 inclusive framework, whereby we have agreed on how to tax the operations of foreign multinationals that are operating with significant presence in Canada but on a virtual basis.

Those companies may be capturing data and may be influencing our society just as much on a virtual basis as any company with a physical presence here, yet there is no way to screen that presence at the moment.

If we were to generalize what we are doing today with the Investment Canada Act, we would be talking about an “operations in Canada act”. One part of that act would be the physical operations that we call investment. Another part of it would be the virtual presence. We don't have that distinction yet, so we are not responding adequately yet to the digital transformation.

Another part of it would be the virtual presence. We don't have that distinction yet, so we are not responding adequately yet to the digital transformation.

The fifth and final point is that, in my view, the greatest threat to our national security at the moment is data-driven, micro-targeted personal messaging that drives divisiveness. The technical notes to GPT-4, the most powerful large-language model recently released by OpenAI, comments on how easy it is to get factions to hate each other. It's very easy also to tweak an algorithm from “do no harm” to “maximize harm”. This has been proven in trials.

The question is how we actually address that. The Investment Canada Act has a section that deals with cultural industries. Our culture is being transformed by the presence of this inflow of information and disinformation, without any referendum on how to actually manage this.

I would say that our cultural institutions are in the attention business, and our existing ones are not competing well. We don't have a way right now to deal with that, and while the Investment Canada Act purports to address this issue, it does not.

I will leave it there.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Ciuriak.

I will now turn over the floor to Mr. Balsillie of the Council of Canadian Innovators for five minutes.

[Jim Balsillie, Chair, Council of Canadian Innovators]

Chairman Lightbound, honourable members, thank you for the opportunity to present today.

I'm Jim Balsillie, chair of the Council of Canadian Innovators. In the modern, knowledge-based and data-driven economy, the sources of prosperity and the vectors of risk have changed. Updating the Investment Canada Act is a critical strategic step that can advance Canada's prosperity and security. Unfortunately, the proposed amendments are not sufficient to make the ICA fit for those objectives.

The understanding of foreign direct investment that informs the updated document is based on the tangible production economy. Today's economy is knowledge-based and data-driven. In such an economy, FDI is extractive, where technology, knowledge and data assets, senior executive personnel, tax base and wealth effects can easily flow out of countries that receive foreign investments. Prosperity and security risks do not scale with the size and type of buyer but with the nature of economic and security spillovers.

Specifically, economic and security risks should not be analyzed separately. IP and data have multisided features that interrelate, giving rise to the so-called “dual-use” technology that has both economic and national security value. Any assessment of risk and net benefit needs to include the economic and security value of assets as an integrated whole alongside the changed nature of spillovers in the economy of intangibles.

Second, the list of strategic technologies and a set of risk factors is incomplete and needs to mirror those of our allies, particularly the United States.

The ICA needs to be regularly updated to properly guide an informed assessment of a given investment in Canada. IP and data have strong public good characteristics, so decisions made by businesses do not price the associated spillovers into contractual agreements. Data, in particular, has pervasive dual-use characteristics with implications not just for the security of our nation's infrastructure, like transportation, telecommunications, energy and finance, but also across all economic sectors and areas of human interaction, including democracy.

My recommendations are, one, to broaden the focus of any review to a include a more appropriate lens of critical strategic technologies, which would allow for the assessment of university partnerships, licenses and transactions of valuable IP and data. If assets are deemed critical to Canada's prosperity and security, then the ICA needs to ensure that they remain in our control, regardless of the type of foreign counterparty or the nature of the commercial relationship.

Two, give legislative powers to the federal government similar to those legislated in Australia to unwind any prior investment, university partnership, joint venture, or merger or acquisition.

Three, build capacity inside the federal government for governance of today's economy. Recent FDI initiatives such as the Sidewalk Toronto project, continued university partnerships with Huawei and Invest in Canada agency marketing strategies demonstrate that Canada's policy-making apparatus is not just rooted in the traditional production economy of yesterday but is decades behind the realities of the contemporary economy.

Four, create a transparent, expert entity akin to CFIUS to implement and oversee all FDI regulations and strategies for the federal government, akin to the coherent and coordinated approach Professor Burton just advocated for.

The strategic nature of IP and data have restructured the composition of markets by reconfiguring how an economy extracts benefits from technology and introduces new risks. This is why advanced economies and our allies have made significant steps to develop modern investment screening systems and continue to make dynamic updates, expanding the powers of foreign investment reviews necessary to defend valuable national interests. Canada must do the same if it wants to defend critical infrastructure and assets vital to our prosperity, security and sovereignty.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

Ms. Walker, the floor is yours.

[Sandy Walker, Chair, Competition Law and Foreign Investment Review Section, The Canadian Bar Association]

Merci.

Good afternoon, Mr. Chair and honourable members of the committee.

My name is Sandy Walker. I'm the chair of the competition law and foreign investment review section of the Canadian Bar Association. I'm a partner with the law firm of Dentons Canada.

Thank you for inviting the CBA to discuss the proposed amendments to the Investment Canada Act.

The CBA's main objectives are to improve the law and the administration of justice, and we are here today to that end.

With me today is Michael Caldecott, chair of the foreign investment committee of the section. Michael is a partner at the law firm of McCarthy Tétrault.

At the outset, the CBA recognizes both the importance of foreign investment to the Canadian economy and the importance of national security review of foreign investments in protecting Canada's national security. Today, we offer our views on how the bill can be improved to ensure its effective implementation without imposing unnecessary burdens on foreign investors and the government.

The bill establishes mandatory preclosing notification for acquisitions involving targets in prescribed business activities. Such transactions could not close until clearance has been received. To ensure predictability, it is critical that the new regime not come into effect until crucial terms such as “a prescribed business activity” have been defined. These definitions are essential to determine whether a preclosing filing is required and, as a result, should be defined either in the law itself or, if not, in regulations the bill would require to define those terms.

Second, if these definitions are not in the legislation, the draft regulations should be prepared in parallel with Bill C-34, or the amendment should come into force only after the regulations have been finalized.

Third, the bill will capture acquisitions of non-controlling interest in a foreign entity with a Canadian subsidiary. Even if the target has very limited operations in Canada, in these cases national security concerns are unlikely to arise. We therefore recommend exempting these indirect acquisitions where revenues and/or assets in Canada are under a de minimis level.

Fourth, to address transactions in progress when the amendments come into force, we recommend that the new regime become effective 90 days after the bill receives royal assent.

I will now ask my colleague Mike Caldecott to discuss the other points.

[Michael Caldecott, Chair, Foreign Investment Review Committee, Competition Law and Foreign Investment Review Section, The Canadian Bar Association]

Thank you, Sandy.

Our second point is that the investment review division—IRD—will need to have adequate resources to administer the new notification regime. The government must be able to process notifications quickly to determine their completeness, because national security review timelines run from a filing's certification date and closing cannot occur until this timeline has expired.

IRD is currently unable to make certification decisions promptly. They are often issued at least a month or more after notification. With an increase in the number of filings, the timing of certification will be become even more problematic and could significantly delay the closing of transactions, negatively affecting the credibility of the government within Canadian and international business communities.

We recommend that the government be required to assess a filing's completeness within three business days and to ensure IRD has adequate resources to achieve this time limit.

The third point is the introduction of interim measures. The bill allows the minister to prohibit all forms of transaction planning activity, including those that are legitimate to undertake on a post-signing, preclosing basis. We believe the minister should have such an extraordinary unsupervised power only for a limited time, such as 30 days. To extend the interim prohibition, the minister should be required to apply for a court order, with notice to the affected parties.

The bill also gives the minister the power to accept mitigation measures as conditions of approval. In the interests of transparency, we believe the minister should periodically publish aggregate and anonymized guidance indicating the types of mitigation accepted.

In closing, the bill gives the government greater ability to assert national security privilege during the judicial review of a national security order. This raises serious concerns regarding the ability of investors to effectively exercise the right to seek judicial review.

We have proposed some options to address this imbalance and achieve a better, fairer decision-making process.

Thank you again for the opportunity to present today. We look forward to answering any questions you may have.

[The Chair, Liberal, Joël Lightbound]

Thank you very much to all of our witnesses today.

We'll start the discussion with Mr. Perkins for six minutes.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Thank you, Mr. Chair, and thank you, witnesses, for coming.

I'd like to begin with some questions for Dr. Burton.

In 2017, the previous minister of industry failed to request a full national security review of the acquisition of B.C.-based telecommunications company Norsat International and its subsidiary, Sinclair Technologies—both telecommunications companies in Canada—by China-based Hytera, which is partially owned by the Chinese government.

The Manitoba-based Tanco mine, which is Canada's only producing lithium mine, was purchased by a Chinese company, Sinomine, in 2019. Again it was approved by the government with no national security review. In addition to all the lithium it produces going to China, it also produces over 65% of the world's cesium, which is used in drilling applications. It is also Canada's largest deposit of tantalum, which is used in electronics.

In January 2022, Minister Champagne failed to follow his own guidelines when he fast-tracked the takeover of the Canadian Neo Lithium Corp by Chinese state-owned Zijin Mining Group, without a national security review.

It appears to me that the act, as it states right now, is totally inadequate in dealing with national security reviews and the minister's voluntary ability to do it. My understanding is that this bill does nothing to change the threshold, which right now is $415 million, so a state-owned enterprise also under $415 million is not subject to any jurisdiction or scrutiny by the minister.

Is there anything in this bill that changes the requirement, or addresses the request by the industry committee in its report in 2020 that the limit be zero dollars for the review of any state-owned enterprise, in order to ensure our national security reviews are done?

[Dr. Charles Burton]

I did hear Minister Champagne say that there would not be a threshold for national security for economic damage to Canada. That apparently does still—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

It's not in the bill though. He won't always be there and previous ministers have not invoked the powers they have. There is nothing in this bill that guarantees that any current or future minister will, is there?

[Dr. Charles Burton]

Yes, I quite agree. I am distressed by these examples that you gave, and we came pretty damn close to giving Aecon, the construction company, to China. There have been so many examples of this.

It is puzzling that we don't seem to understand the seriousness of China's security threat to Canada. Time after time we make these decisions or even reverse a Harper cabinet decision with regard to Chinese state acquisition.

I agree with the Canadian Bar Association that we need adequate resources for notification, but for a different reason from what they say. They want it to be done more speedily. I understand that, but I think we need a lot more expertise in government to be informing these decisions. We really have to be much more questioning of why, time and time again, when there are serious allegations of malfeasance by China-connected entities, we seem to put those reports into the back of a drawer and don't act on them.

I'm not getting particularly partisan-political about this. I just want to know what the reasons were for these decisions that were not taken, according to the CSIS reports.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Recently in the news we've all been witnessing Glencore's attempts at a hostile takeover of Canada's largest remaining miner, Teck Resources. Glencore was fined $1.1 billion in the United States last year for violating the U.S. Foreign Corrupt Practices Act, for basically bribery and corruption around the world in their mining operations, which they use as a cost of doing business.

Canada has fined one of their subsidiaries $28.5 million for misleading investors. The United Kingdom fined them almost half a billion Canadian dollars for the same issues around corruption and bribery in Africa.

Should this act contain an automatic provision review and consideration about companies that have been convicted of bribery, corruption and breaching those laws around the world, or that have even done a settlement out of that process in order to get away from those charges?

[Dr. Charles Burton]

This has been an ongoing issue as well. I published a piece in The Globe and Mail on Tuesday with regard to the China Investment Corporation's lack of support for Teck with regard to the hostile takeover by Glencore.

We have been seeing this kind of thing for quite a long time. In terms of our previous policy of allowing Chinese investor immigrants, for example, to come to Canada, the basis for assessment was whether the Chinese person who wanted to invest in Canada had behaved in a way that maintained the standards of China in how much income tax they evaded and how much bribery they paid, on the assumption that if they were following the norms of China, they would follow the norms of Canada.

The program was eventually cancelled, because that just doesn't work. You can't expect a company to behave morally in Canada when it's been behaving atrociously in foreign nations. That's my opinion, as a non-expert on the subject.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

Mr. Van Bynen, the floor is yours.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Thank you, Mr. Chair.

I'd like to direct my first question to either Ms. Walker or Mr. Caldecott.

In the Bar Association's April 2023 brief, you encouraged the government to ensure that the amendments proposed in Bill C-34 and the regulations and guidelines accompanying the new mandatory preclosing regime are clear and do not impose unnecessary requirements or burdens.

How do you suggest the government strike the required balance between the protection of Canada's national security interests and the importance of allowing foreign investment in Canada?

[Sandy Walker]

One way that the act can address the proper balance is by ensuring that you're capturing the right transactions in the mandatory pre-notification procedure. That requires that when you define “prescribed business activity”, you're focusing in on those areas and those transactions, so it's the acquisitions of businesses in sectors that are involved in certain activities that raise the most national security concerns.

Currently, we have national security guidelines. They have an annex that includes a list of factors. It's about 10 items long. They're very broad. They don't give a lot of guidance. They might just say “biotechnology” or “quantum computing”. I don't have the list in front of me, but it is extremely broad and gives very little guidance.

Another source of guidance might be looking at what other jurisdictions have done. The NSIA in the U.K. has quite a long description of the types of transactions that raise national security risks. CFIUS has a lot of information describing the types of sectors and activities that create national security risks. That's one angle.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Thank you.

In its brief to committee, the Bar Association also noted that terms such as “material non-public technical information” and “material assets”—which are essential parts of the criteria for identifying whether or not a preclosure filing is required—are ambiguous. These terms may be defined by regulation.

How do you feel they should be defined? Should they be in the legislation, in the act or by regulation? What are your concerns with respect to that?

[Michael Caldecott]

On the issue of “material non-public technical information”, we have a precedent in the United States. What we've seen in the reform to the CFIUS program, which is under the FIRRMA act, is that the term has been defined relatively narrowly and precisely. The Canadian Bar Association supports that definition in that it provides a degree of certainty as to what is captured by it.

The additional concern that the Bar Association identified, when this term was going to be set, was whether it would be in the legislation or in regulation. Given that there is uncertainty at the moment as to when regulations will be prepared and published, it seemed to us that it was important that the term be defined in the act itself.

The final point on that is just to mention that this term is not.... The term “prescribed business activity” may legitimately be a list of sectors that evolves over time as different sectors become more or less sensitive. “Material non-public technical information” may well be in the same category as that, but it is certainly an easier definition to reach and therefore perhaps more conducive to being included in the act, rather than regulations that could subsequently evolve.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

The benefit of regulations would be the flexibility in how they can be modified.

Wouldn't you see that as an important characteristic, particularly when we see such change in the industry and technology? Is that not the flexibility you want to see in the act?