Mr. Chair and members of the committee, thank you for the invitation to appear this afternoon.
I chair the competition and foreign investment practice at the Canadian law firm Borden Ladner Gervais LLP. My comments today are made in my personal capacity and not on behalf of the firm or its clients.
I have practised Canadian competition law and foreign investment regulation for over 25 years. I've previously taught competition law, including foreign investment regulation, at the Dalhousie law school as a part-time faculty member for about 10 years. I'm also currently appointed by the commissioner of competition as a non-governmental adviser to the International Competition Network.
My remarks on the bill today are going to focus on the issue of prescribed business activities. I'm also going to refer to them as sensitive sectors. There's been considerable discussion, I think, both within this committee and among stakeholders, about what a prescribed business activity should be for the purposes of what the bill proposes to be a mandatory pre-closing notification requirement. It is essentially an early warning system for sensitive-sector foreign investments in Canada.
As an aside, I do note that the minister has suggested that these sectors will be reflected, to some degree, in the regulations to the new act. In response to some questioning I had reviewed in some of the other sessions, I agree that it is preferable, by the way, to leave those sectors for inclusion in regulations, as opposed to within the act itself, to preserve a degree of flexibility.
Having said that, my remarks today won’t really be about what should specifically be on the list or not. My primary concern before you this afternoon is really to discuss how we ensure clarity and comprehensiveness in how that list is expressed in the regulations.
I have two things to say about that. The first is that we need to ensure we describe each prescribed business sector in a meaningful way and certainly beyond what we presently have in the existing guidance and policies that have been issued by industry.
If you look at the existing guidance, what we have done to date is set out very broad buckets with varying levels of context. That’s because that list currently is for the purpose of evaluating the application of the substantive test to be applied by the minister or the Governor in Council in making a national security determination. If you look at annex A to the national security review guidelines, it lists 15 sensitive technology areas without a lot of elaboration. Those areas include aerospace, biotechnology, medical technology and quantum science. That's fine for that purpose, but for the purpose of implementing a mandatory and suspensory notification system that's going to be triggered, really, by tying an activity to one of these prescribed business sectors, as the bill proposes, we'll have to make this a bit more detailed, as some other jurisdictions have done.
I am personally a little cautious about importing ideas from other countries’ regulatory regimes holus-bolus into our policy architecture, especially in foreign investment regulation, where in fact Canada has been active for a longer time than many of our major trading partners. There are many things we learned on our own that we should be quite ready to deploy. However, I will make an exception here. I will invite the committee to review what the U.K. has done in their approach to identifying the sensitive sectors under their National Security and Investment Act. Their regime actually identifies 17 sensitive sectors, which are sort of similar to those contemplated in our guidelines.
The U.K. government did two things beyond just listing them. The first thing was that they had fairly comprehensive—I think it's about 50 pages' worth—regulations where they set out 17 schedules, like a schedule per sector, with definitions accompanied by technical detail. Then there's a requirement that within three years after implementation—I think within a three-year period after—the minister has to review the schedules to make sure they are achieving the U.K. Parliament's objectives. That, I think, is a useful thing they have done.
The second thing they did, in addition to the regulations they had, was to issue accompanying guidance that fairly comprehensively interprets the scope of each one of those 17 schedules. Actually, when you go to the website, you will see they even outline a series of evaluative considerations that are particular to each one of those silos. I would suggest to you that this approach, which combines reasonably comprehensive sector descriptions with the detailed guidelines and on top of that has a requirement that the government review the list periodically, is a good thing for us to look at in Canada.
My second observation is maybe a bit more substantive. It's to simply note that we should maintain a calibrated approach to identifying prescribed business activities as opposed to a more reflexive one. That's for two reasons.
First, our approach to identifying sensitive sectors should be broadly consistent with the positions taken by our allies, not just in the Five Eyes, which I know folks have talked about in committee, but also in bilateral relationships like our Canada-U.S. joint action plan on critical minerals, where we are coordinating our approach to that supply chain to some degree with what the U.S. is contemplating.
My second and final point is simply that national security obviously requires a whole-of-government approach. It’s probably good to remember that, though the Investment Canada Act is a way we can assess and address potential national security concerns, it’s unrealistic, in my view, to assume that the legislation can accommodate the entire universe of legitimate national security concerns that may emerge, and will no doubt continue to emerge, in the future. It's really just one piece of the puzzle. Obviously it's a very important piece of the puzzle that we want to get right, but again, it is just one piece.
With that, I'm done. I thank the committee for its time. I'm happy to answer further questions as required.
Thank you.