Industry Committee on June 21st, 2023

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

That means it's not usually. Is that right?

[Mark Schaan]

That's correct.

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

Thank you, Mr. Chair.

I think Mr. Fast may have some questions. He's just looking something up.

[The Chair, Liberal, Joël Lightbound]

Thank you.

As a reminder, we're on the subamendment proposed by Mr. Gaheer. If this passes, then we'll move back to CPC-2 as amended to discuss CPC-2.

Go ahead, Mr. Fast, on the subamendment.

[Ed Fast, Conservative, Abbotsford, BC]

Thank you, Mr. Chair.

I didn't hear Mr. Gaheer explain his rationale for introducing this amendment. Could I ask him to do that? Then I'll follow up.

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

I guess he said it to me.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

Yes, I did, and very eloquently, too.

The trouble with the wording we have with CPC-2 is the fact that it could lead to legal challenges with the Canadian pension funds, for example. If there is a reciprocal protection of investments from the other side, then Canadian pension funds could face potential legal challenges.

We're sort of protecting from that by narrowing CPC-2. It's a threefold narrowing. One is changing it from 21 days to 45 days, just to make it more realistic based on the officials' comments. The second is to make sure that the investor gets notified. Last, it's to make sure that it's applied to SOEs in countries we don't have trade agreements with, just to narrow CPC-2 to make sure we don't open up what could be perceived as Canadian companies that are seen as state-owned enterprises to legal challenges abroad.

[Ed Fast, Conservative, Abbotsford, BC]

I think you've confirmed what I suspected, that this is about making sure Canada complies with its trade agreements, because virtually all of our trade agreements have investment provision chapters, very significant investment chapters, where we provide advantageous access to our economy, and it's reciprocal.

If the CPPIB were investing abroad, obviously we would want to make sure that its investments could be made without another trade agreement partner standing in the way of its obligations under that trade agreement. To make it very simple, this is about our compliance with our existing trade agreements.

I'm going to ask the officials a question, because I want to be very clear. What review are we talking about? Are we talking about net benefit reviews? Are we talking about national security reviews? This looks like net benefit reviews.

[Mark Schaan]

That's right. CPC-2 amends the provisions related to who is subject to a net benefit review. This shifts the threshold essentially to zero if the investor is a state-owned enterprise.

[Ed Fast, Conservative, Abbotsford, BC]

Some of our trade agreements are with countries that have very significant state-owned enterprises, where those state-owned enterprises are the primary investors abroad. These are countries like Vietnam or, even more importantly, Malaysia, which is a CPTPP trade partner.

They would be excluded from this provision. Is that correct?

[Mark Schaan]

Under the subamendment, they would not be subject to a net-benefit threshold of zero.

[Ed Fast, Conservative, Abbotsford, BC]

Is that because they have preferential treatment under our trade agreement?

[Mark Schaan]

They have most-favoured nation obligations, yes.

[Ed Fast, Conservative, Abbotsford, BC]

It's beyond most-favoured nation.

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Fast.

Are there any other comments on the subamendment moved by Mr. Gaheer?

Mr. Généreux, you have the floor.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you, Mr. Chair.

I would like to ask the officials a question.

My colleague Mr. Fast was referring to trade agreements in particular, but are there any other treaties or agreements between countries to which this bill will eventually apply? Will future agreements have to be made subject to the provisions or conditions introduced by this bill?

[Mark Schaan]

Thank you for the question.

The subamendment indicates or introduces a concept currently defined in the act, which includes bilateral and multilateral agreements with other countries. The list includes countries that are signatories to the Canada-European Union Comprehensive Economic and Trade Agreement, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the Canada-United States-Mexico Agreement and other bilateral agreements. If Canada concludes an agreement with another country, it will be covered by this definition. That country will be entitled to the same protections and treatment, defined in the act, as other countries.

This does not include all the agreements that Canada has concluded with other countries, particularly within the framework of the World Trade Organization, of which Canada is a member, nor does it include other types of less formal agreements, such as foreign investment agreements or investment protection agreements, because there are many other agreements defined in the act.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Can you give me other examples of agreements that are not as official as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership?

[Mark Schaan]

There are, for example, digital cooperation agreements, which are not official agreements between countries. There are also foreign investment promotion and protection agreements with certain countries.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I don't know if you remember this or if you were aware of it, but the committee welcomed Jim Balsillie, formerly of Research in Motion, which made phones whose name I forget and which we no longer use.

[Mark Schaan]

You're talking about BlackBerry phones. Research in Motion is Mr. Balsillie's former company, yes.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

You're right.

Without going so far as to say that Canada was light years behind, Mr. Balsillie indicated in his testimony that Canada was lagging far behind, particularly compared to Europe, in its way of doing business and approaching technological developments, which are fast-paced and ever-present. I know I'm straying a little from the subamendment, but it's part of a whole anyway.

I find it interesting that you talk about agreements that could be described as informal in the technological field. Can we consider that the bill in its current form, including the proposed amendments and subamendments, will cover all future agreements that may arise?

I don't know if you understand my question.

[Mark Schaan]

Yes, I think I understand your question. You raise a number of issues.

First of all, it's important to recognize that the current version of the Investment Canada Act covers intangible and digital aspects, and includes a large section of guidelines on intellectual property and its treatment.

As for the second part of your question, which concerns agreements relating to digital aspects and new technologies, you should know that the latest agreements that Canada has concluded, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Canada-European Union Comprehensive Economic and Trade Agreement, contain sections on these subjects, including a chapter on intellectual property. This chapter was also a sensitive issue during the negotiations of the agreement with the European Union.

Canada continues to take technological developments into account when negotiating these agreements, and to ensure that their provisions enable it to maintain a good position in the global economy.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you.

In the report or brief he submitted to the committee, Mr. Balsillie talked about very specific things. If you’ll allow me, I’ll read an extract, because he uses a certain terminology and I want to make sure we understand each other:

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.

Do you consider that the subamendment and the amendment that we have moved, and the bill as a whole, reflect these elements that Mr. Balsillie talks about? I remember that it struck me when he testified. He said that, even with the bill in its current form, we were not ready to face the future in terms of our relations with our partners.

[Mark Schaan]

Thank you for the question.

Firstly, on the treatment of intellectual property and data, as I said, there are already certain elements, including guidelines for the consideration of national security aspects. There is a large section on intellectual property and the ability of the Investment Canada Act to cover these aspects.

Secondly, the requirement to consider the list of sensitive technologies and national security aspects is one of the reasons why it is important to give the minister full discretion to consider all aspects of a situation. As Mr. Balsillie pointed out, data, intellectual property and national security considerations need to be intertwined and fit with the investment.

It would also be important for the government to keep an up-to-date list of sensitive technologies, as well as guidelines on intellectual property in relation to national security.