Industry Committee on June 7th, 2023

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

To be quick, I was lurking about during that study. Part of the reason I support this amendment is not only that it's almost identical to the one I've put as well, but it's hard to determine even what the value of some companies are. That was one of the things we found with emerging technologies. We also found it with those that are holding patents and other types of intellectual property, which is very difficult to find a true face value of, and it's only becoming more complicated with artificial intelligence and other types of emerging companies.

For me, as a New Democrat, I'll be supporting the amendment. I think Mr. Perkins did a good job of laying out the broader argument for it, but I just want to add that little specific component about the valuation of companies being highly subjective, especially given the nature of some of the industries that are involved. We saw this even when Ericsson took over Nortel at that time. It's because what they wanted was the patents. They didn't really want the rest of the bones; they just wanted the patents where the real value was, and that was the same fate as RIM and others.

That's the reason I'll be agreeing with this amendment.

Thank you, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Masse.

I see that Mr. Fast wants to talk. I have Mr. Fillmore, but just so that everyone's on the same page, there's agreement between the parties—given our late start—that we're going to end this committee at around 8:30, so we might not have the time, Mr. Fast, for your intervention. We'll get back to CPC-2 when we resume clause by clause.

Mr. Fillmore.

[Andy Fillmore, Liberal, Halifax, NS]

Thanks, Chair.

I just have two quick points that I wonder if the team to respond to. These go to exactly what we're talking about here.

The first is that, in essence, this amendment reduces the threshold for a review to zero for a net benefit review. The challenge there is that this runs counter to our trade agreements. It creates a problem for us, for example, with pension companies that are maybe invested in China, because in China we're a state-owned enterprise and then there could be retaliation. We don't want to create unintended consequences. I'd ask you to reflect on that if you could.

The other is, just to make it really clear for all of us here, in the case of... We just talked about net benefit reviews. Now we're talking about national security reviews. There is no threshold. Every transaction is subject to national security reviews, is that correct?

[Mark Schaan]

That's correct.

[Andy Fillmore, Liberal, Halifax, NS]

Okay.

Expand on either of those points if you would like.

[Mark Schaan]

As you note, the thresholds are a part of international negotiation and a function of the fact that there is a degree to which net benefit reviews are to be concentrated on those large-scale transactions that are of import to the net benefit of the country, but there's no threshold for a national security review regardless. That includes the nature of the assets that are potentially in acquisition, whether or not they are patents or broader technologies.

[Andy Fillmore, Liberal, Halifax, NS]

Could you add a little detail on the risk of reducing the net benefit threshold to zero and the risk to Canadian interests?

[Mark Schaan]

Those international thresholds for net benefit are the same that allow for Canadian companies to be able to make investments in our partner, ally countries without being subject to net benefit reviews, and allow them to continue to engage in acquisitions and foreign investment outside of Canada, recognizing that's an important part of the overall growth of our companies, without an additional uncertainty.

[Andy Fillmore, Liberal, Halifax, NS]

Okay, just in that example, there's a Canadian pension company invested in China. There's a retaliatory strike against the Canadian pension fund because we have applied a zero threshold net benefit review to a Chinese interest in Canada. The impact then on Canadians.... I guess I'm making it clear in my question, in my statement: we don't want to throw the first dart and then have darts thrown at Canadian interests as a result. Is that a fair assessment?

[Mark Schaan]

The only other consideration I would add is that oftentimes the linkage to the SOE is actually through an affiliation to the net investor who's not necessarily of the nation of the SOE, but is actually a trading ally.

[Andy Fillmore, Liberal, Halifax, NS]

Thanks very much.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Fillmore.

That concludes our meeting.

I want to thank Mr. McKay, Mr. Schann and Mr. Karman for being here today and for their patience. We were slow in starting the meeting. We will have a chance to see each other again in the next few weeks to resume clause‑by‑clause consideration of Bill C‑34.

Thanks as well to the interpreters, analysts, the clerk and all the support staff for their patience.

The meeting is adjourned.