Good afternoon, Mr. Chair and honourable members. Thank you for inviting me to discuss the proposed amendments to the Investment Canada Act.
My name is Navin Joneja. I'm co-chair of the competition, antitrust and foreign investment group at Blake, Cassels and Graydon. I'm here as an individual and in my personal capacity, not on behalf of the firm or any of our clients.
I have been practising in the area of foreign investment, and the Investment Canada Act in particular, for over 20 years. As with my colleagues, I've had the opportunity to see first-hand the evolution of the ICA, from before we had a national security review regime to when the national security review regime that we currently have was enacted in 2009 to now the more recent trend of an increase in the number of national security reviews. I want to make a few brief observations on the proposed legislation based on these experiences. I look forward to any questions from the committee afterwards.
My comments are really directed at one of the key themes that have come up repeatedly in this committee's work on this legislation—that is, how to best balance the dual objectives of strengthening Canada's national security and, at the same time, encouraging the investment and capital needed to strengthen Canada's economy.
First, as a general matter, the framework set out in the bill contains, in my view, a number of very well-reasoned features directed at accomplishing both of these objectives. In particular, the mandatory pre-closing filings for certain sensitive sectors, if implemented properly, would allow the government to better screen for investments of concern from a national security perspective. Additionally, the improved information sharing with international counterparts should also allow Canadian government officials to make better-informed decisions on national security matters.
Another useful feature, and the one that I want to focus on more in my remarks, is the newly proposed authority for the minister to accept undertakings—in other words, binding commitments—to mitigate national security risks. In my view, this tool is lacking in the current legislation and has the potential to allow the Canadian government to do a much better job of balancing the two objectives of strengthening national security and encouraging foreign investment.
An undertakings process or undertakings regime would allow foreign investors to remedy the specific national security concern at issue without sacrificing the entire investment in the proper cases and in the appropriate circumstances. Potential undertakings could include safeguarding or restricting access to sensitive information, restricting certain lines of business or customers, or other more targeted and focused remedial measures. Other countries, such as the United States, have a more robust practice of using such mitigation measures to address national security concerns. It makes sense for Canada to have a similar tool to do so.
Furthermore, as we look at the proposed legislation as a whole, this tool will likely prove to be more useful and more important, as national security reviews will likely become more frequent. In other words, given the recent trends toward greater scrutiny and the increased powers contained in the bill—for example, in requiring mandatory pre-closing notifications for certain sectors—one can expect a greater number of national security reviews covering perhaps a wider range of industries. Having the ability to apply a more targeted set of undertakings in a regime that substantively addresses the national security concerns at issue will likely prove to be very useful going forward in balancing those two objectives.
That being said, there are also elements of the bill and its implementation that are of some concern and that could be improved in order to increase its effectiveness. My colleagues have spoken to a number of those points.
First of all, the bill allows the minister to impose interim conditions on the investor prior to the conclusion of a review. This particular aspect is quite novel and expansive. While its stated purpose is to prevent the risk of national security injury taking place before a review is complete, it also has the potential to be quite broad in application. In my view, it risks chilling otherwise benign and legitimate investments. In practice, foreign investors are typically accustomed to conditions being applied, if they are needed, to allow closing to occur. However, I do worry that a perceived threat of interim conditions prior to closing could actually deter investments from legitimate partners even signing on to an agreement to invest in Canada.
Second of all, the effectiveness of the bill and its implementation would be improved if there were greater disclosure and transparency to investors during the national security review process. There's no doubt a need to ensure that information sensitive to national security is protected, but from my perspective, there are ways to ensure that additional information is made available generally. Such disclosure and transparency also have the added benefit of allowing current and future investors to plainly recognize government concerns so they can be addressed at an earlier stage.
Finally, there are clearly a number of new and expansive elements contained in the bill. The investment review division will need to be adequately resourced and staffed in order to meet what appear to be considerably greater demands to review filings, conduct reviews and engage with investors.
In summary, in seeking to both strengthen protections for national security and encourage investment to Canada, there are a number of well-thought-out elements in the proposed legislation. There are also ways in which the legislation and its implementation could be improved and enhanced.
Thank you again for the opportunity to present today. I look forward to answering the questions you have.