Thank you for the invitation to appear today.
Your study is important and timely. I encourage you to also include economic considerations in this nexus, because the economy and our security are two sides of the same coin.
Canada's policy thinking remains rooted in the 1970s, in an economy that no longer exists, which has caused a systemic erosion of our prosperity and productivity over the past 35 years. Recent strategic actions of leverage against Canada by multiple large nation-states have laid bare that our sovereignty and security were concurrently eroding over the same period because of this outdated thinking.
The digital transformation over the past 35 years has created a new kind of economy in which wealth, power and security are rooted in the ownership of intangible assets of IP and data AI. These assets behave differently in the market than tangible goods do and require different strategies. As shown in appendix 1, they have grown to dominate, making up over 92% of the S&P 500's $55-trillion total value.
As summarized in appendix 2, the tangible and intangible economies operate in opposite ways, with the intangible economy of negative rights and economic rents governed by domestic and international frameworks that are constantly changing to create winners and losers, thus incenting strategic behaviour, including leverage.
In the ensuing appendices, I will summarize the examples I present where the U.S., the EU and China have developed sophisticated capacity and strategies to utilize these legal frameworks to advance their prosperity and security via value-added products and process technologies in the realms of defence and critical minerals. Then I'll conclude with what Canada needs to do urgently.
In appendix 3, I list examples of how in 2025, the U.S. advanced their interests via legal frameworks such as their AI white paper, the GENIUS Act for tokenization, an array of tariffs and the flexing of IP march-in rights.
In appendix 4, I summarize how the U.S. national security strategy integrated these into one document, illuminating the role of strategic standards, adding resource security, including critical minerals and doing much more.
In appendix 5, I show that while we are aware of the recent high-profile U.S. exit from 66 international organizations, they doubled down their participation in three international standards organizations that govern value chains for advanced products and process technologies for critical mineral and defence sectors and for many other sectors as well.
In appendix 6, I note how the U.S. patent office concurrently created a working group to create more patents from their SMEs and insert them into global standard organizations and, by extension, into global value chains, all to lock in and profitably grow their companies.
Appendices 7 and 8 illuminate aggressive U.S. tokenization strategies for both financial and real-world assets, including critical minerals and mines.
Appendix 9 summarizes how the EU uses standards, particularly via CEN-CENELEC, for the value chains for defence and critical minerals, just as the U.S. and China do.
Appendices 10 and 11 show soaring granting of patents for mining, defence and AI, with Canada essentially absent.
Appendix 12 summarizes how China has strategically built dominance in critical mineral value chains of processing, patents and standards alongside traditional supply chains of mines.
As you can see, Canada requires a wholesale reorientation of how a sovereign nation must be governed in the 21st-century economy if we want greater global scale from our promising companies and gifted entrepreneurs. The strategies I have identified today are all “and” strategies, not “or” strategies, when it comes to capitalizing our natural resources, but they are technical and require expertise. Absent these updated approaches, Canada will again not achieve better outcomes for Canadians. The November federal budget and the recent defence industrial strategy were missed opportunities to reorient away from the failed approaches of the past.
I will close with a quote from an expert in an article stating that in this modern economy, FDI should not be an article of faith, because without shrewd insertion into value chains of intangibles, a “country can host large foreign-owned production facilities and impressive export volumes while capturing only a thin slice of the value created.”
Thank you. I look forward to your questions.