Industry Committee on May 29th, 2023

[Brian Masse, NDP, Windsor West, ON]

Thank you.

Thank you, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

Mr. Williams, you have the floor.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Thank you very much, Mr. Chair.

Thank you to our witnesses.

I really want to focus and drill down on CFIUS versus the investment review division. Ms. Black, you've spent some time with that. I'm just wondering if you could comment based on two aspects. One would be that CFIUS seems to be multi-agency. In Canada, the investment review division exists only in ISED. Those reviews are handled within ISED only and sometimes with the minister. CFIUS seems to be multi-agency. It's centred from the Department of the Treasury and with the Department of Defense, but it exists across all agencies.

Is that something you'd see as a recommendation for Canada? Can you just comment on the changes between the two?

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

Mr. Chair, there was no interpretation for Mr. Williams. We have to make sure the interpretation is working again.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Lemire.

Mr. Williams, if you will, I would ask you to repeat your question so we can get the interpretation.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Sure, that's no problem.

Is it working right now?

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

Yes, it's working.

Thank you.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Thank you, Mr. Chair.

Ms. Black, we're talking about CFIUS versus the investment review division. The investment review division in Canada exists under ISED. Under ISED, those reviews are handled by one agency. In the U.S., those are handled by multiple agencies. CFIUS is in the treasury department, but then it goes across all agencies. It works with the Department of Defense and others.

Can you please comment on that difference and whether you would recommend changes to the investment review division in Canada? Should it be multi-agency?

[Laura Black]

That's correct. In the United States, Treasury chairs CFIUS. There are nine voting members, which are most of the cabinet agencies, including the Department of Defense. For each transaction, Treasury chooses a co-chair who helps lead the review. It operates by consensus of all the member agencies. It often brings in subject matter experts from across the government, which I think is a strength of the system.

My understanding is that ISED does consult inter-agency and bring in subject matter experts when needed, although you may know better than I do. I don't have perfect visibility into that. There are different approaches. It's kind of a hub and spoke. Some jurisdictions are perhaps more similar to Canada, and some are more similar to the U.S.

I don't have a strong opinion on whether they need to be brought in on every transaction, but I do think that kind of consultation ability is important.

[Ryan Williams, Conservative, Bay of Quinte, ON]

This is my last point on this. When it comes to CFIUS versus the investment review division, the investment review division has public input while CFIUS seems to be less transparent. We did have a part of this bill that talked about some parts of the ICA being able to be non-transparent and secretive, with secret evidence and secret judges.

Are there parts of this where you feel CFIUS warrants having a little less transparency, or do you believe that we should find more transparency, as we seem to do with the investment review division?

[Laura Black]

Being on the outside now, I always say that as much transparency as possible is preferable. CFIUS's annual report does include information on the types of risks it reviews and the mitigation measures that have been taken. I know that the relatively new assistant secretary has been doing more public engagement to try to educate businesses on what CFIUS sees as the risk.

I'm always in favour of as much transparency as possible. CFIUS does provide due process letters, for example if it may be blocking a transaction, to provide information to that particular party about the risk to the extent that it can be shared. I do understand that some information, when it's classified, can't be shared broadly either with parties or with the general public.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Thank you.

Mr. Paradis, you were involved as a minister in the government in this part. Do you care to comment on seeing the investment review division as being multi-agency? Are there any changes you would make in order to make it more similar to CFIUS?

[Christian Paradis]

Frankly, as I said, the part that I worked on was more about reviewing the directives.

I think we need to hit the sweet spot of being very well aware of the things around the national security issues while being open for business. Back in my day, on the net benefit side, the evaluation agency and so on, things were working properly. I don't think it has changed since. Once again, it's always about hitting the sweet spot.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Thank you.

Mr. Fay, you talk about data a lot. It's very important. We've been dealing with Bill C-27 as well and some other bills. It's good timing that they're all being talked about at the same time.

Let's include intangible assets and IP with data. What recommendations can you make for Bill C-34 that would review and protect those assets in Canada?

[Bob Fay]

This follows very nicely from your previous question. They have to be considered. You do need that multi-agency structure to allow input, so that perhaps the Competition Bureau wants to come in and say, “Guess what? The takeover of those assets may create concentration issues in particular sectors that can have public safety concerns.”

You really do want to bring in different perspectives. Our technology can be used for good purposes and bad purposes. I don't know much about CFIUS, but from what I've heard, it sounds very appropriate.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Williams.

Ms. Lapointe, you have the floor for five minutes.

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you, Mr. Chair.

Mr. Gilbert, in one of your responses, you talked about minerals and used them as an example. Do you think this bill and these changes will help mitigate potentially harmful foreign investments in critical minerals?

[Tim Gilbert]

I'm not an expert in the oil and gas or minerals fields, so I can't really go too deep on that.

I was just using that as an example of the government having the means available to control specific resources and specific industries right now.

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you. It's especially important in this era of critical minerals and the demand for them.

I have a question for Mr. Fay and Mr. Gilbert.

I'm realizing more and more now that the reality is that it's very difficult to create legislation today that can keep up with the speed of advancements that we're seeing in technology. How do we create legislation that accounts for this reality? How would you advise the government to be able to do that?

Go ahead, Mr. Fay.

[Bob Fay]

Thank you for the question.

One mechanism that we focused on is standard setting. Standard setting can be quite nimble. It can be tailored, obviously, to the technology, and it can embed the values with which we want the technology to be used. We can then embed mechanisms inside regulations so that the regulations take into account the standards and, as the standards evolve, the regulations are modified.

In fact, we have a paper from CIGI coming out on this topic very soon, which I'd be happy to share with the committee.

[Tim Gilbert]

From my own perspective [Technical difficulty—Editor]. I would be concerned about a Canadian-specific approach in technology and IP. The reason for that is to consider telecommunications.

Do you remember how, with Wi-Fi, it used to be almost impossible to do anything, and then a bunch of entities got together and really put a ton of money—billions and billions of dollars—into figuring out how to make Wi-Fi faster? We're into 5G now. That didn't come from a Canadian-specific standard. It's an international standard. That's how the world is working today.

We need to be open to international standards and not to set Canada-specific criteria. I'm quite different about that. Great ideas are great ideas around the world. The more we're involved in that, the better. If you're concerned about foreign ownership, then address that specifically, but don't limit the world growth of technology and the spread of technology and ideas.

I have a very different perspective. I'm very IP-focused on expansion, and we need to be part of that.

[Bob Fay]

Mr. Chair, may I come in?

Actually, I don't disagree with you. I'm not arguing for a Canadian standard per se. I'm saying that standards can be used. It may be that we adopt international standards or, in fact, that Canada can lead on standard setting in certain areas as well.

[Viviane LaPointe, Liberal, Sudbury, ON]

I'd like to provide an opportunity for the other witnesses to comment on my question, if there is time, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

Yes, there is.

[Viviane LaPointe, Liberal, Sudbury, ON]

Ms. Black, go ahead.