Evidence of meeting #66 for Natural Resources in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was transaction.
A video is available from Parliament.
Director, Investment Review Division, Department of Industry
Yes, most of the world is covered by that provision.
Liberal
Kody Blois Liberal Kings—Hants, NS
Okay.
Obviously there are different thresholds in terms of the actual monetary amount at which something is triggered. Mr. Schaan explained that there's an economic benefits analysis, and then there's also a national security analysis. My two questions are on the economic benefit analysis.
If there is a series of transactions that falls under the threshold but is correlated together, is there any recourse for the regulating agency in a case in which.... Let's say there's a $1.3-billion threshold in one case, but what if there was a series of investments by a series of companies that was related but was under that? Is there any recourse for regulators in those senses?
Senior Assistant Deputy Minister, Strategy and Innovation Policy Sector, Department of Industry
I'm happy to start, and then I'll turn to my colleague.
It's worth understanding the nature of the transaction. For private sector WTO investors, as you noted, it's $1.14 billion in enterprise value that is the determinant threshold; for state-owned WTO investors, it's $454 million; and then for private sector trade agreement investors outside of that, it's $1.71 billion in enterprise value. I think in many of these cases, if it was a series of related transactions, it ultimately would be determinant on us and on the investor to understand what the actual nature of the investment is.
It's worth noting that all of those are reviewable under the national security provisions, and insofar as potentially there's a cumulative series of near-term transactions, we would need to be able to assess and to understand the degree to which those related transactions were singular, potentially, in nature.
Liberal
Kody Blois Liberal Kings—Hants, NS
That's understood.
Is there a threshold, Mr. Schaan, for national security in the sense that.... You mentioned of course that all of these types of investments can be reviewed under the national security lens, but is there a threshold economically in terms of enterprise value, similar to the economic analysis that's in place?
Senior Assistant Deputy Minister, Strategy and Innovation Policy Sector, Department of Industry
In fact, no, and that's on purpose. The intention is to allow the ICA to be able to contemplate the national security considerations of all transactions, regardless of value, because some of those transactions, while potentially not necessarily high in value, may actually have very significant national security considerations. There were 1,255 such reviews in our 2021-22 year, because there are a number of transactions that are worthy of our consideration.
Liberal
Kody Blois Liberal Kings—Hants, NS
My question is around, of course, the fact that we have a number of economic and trade agreements.
Mr. Schaan, what you're saying to this committee is that there's always a lens on national security, notwithstanding the fact that there might not be an economic benefit, because we're trying to drive trade relationships to not slow down economic considerations between countries that the Government of Canada has deemed important trade partners. Notwithstanding that, there's always a delineation of where those companies and those relations can tie back to our national security.
Senior Assistant Deputy Minister, Strategy and Innovation Policy Sector, Department of Industry
That's correct.
It's worth noting that all of those investment transactions are subject to national security, recognizing that there's a multi-stage process that can play out that could last as long as 200 days. It's often thought that there has either been or not been a national security review when, in fact, there has always been a national security review. It's just that some national security reviews are slightly longer in nature.
Liberal
Kody Blois Liberal Kings—Hants, NS
Mr. Schaan, you mentioned economic factors. In as short a time as you can, can you mention what those factors are, from an economic standpoint but also more in terms of national security?
One of the concerns being raised is, of course, that geopolitics has changed a lot in the last year and a half around national security, with the war in Ukraine and different actors. Can you speak to what factors might be at play in a national security context review? Obviously that happens on every single investment. Are those factors listed, and how do we go about making that assessment?
Senior Assistant Deputy Minister, Strategy and Innovation Policy Sector, Department of Industry
I'll turn to my colleague for that.
Director, Investment Review Division, Department of Industry
You've asked two questions, one about the factors regarding net benefit review and one about the factors regarding national security. I'm going to focus on those separately.
Director, Investment Review Division, Department of Industry
You'd rather I focus on national security. All right.
We have the national security guidelines. These were updated in 2021 to set out a series of factors that we would consider. They're quite long, so I'm going to provide some examples of factors that we would consider in a national security review. They include impact on Canada's military supply chains, potential for espionage, impact on critical minerals, potential investments in sensitive technology sectors, and physical location of an asset, in terms of whether an asset is located immediately adjacent to a Canadian military base or other sensitive site.
I could go into more detail, depending on your interest, but they are set out in the national security guidelines, which were updated in 2021.
Liberal
Kody Blois Liberal Kings—Hants, NS
I would love to, but I'm out of time.
Thank you, Mr. Chair, and thank you to the witnesses.
Liberal
The Chair Liberal John Aldag
That's perfect timing.
We're now going to Monsieur Simard, who will have six minutes.
Bloc
Mario Simard Bloc Jonquière, QC
Thank you very much, Mr. Chair.
Mr. Schaan, I want to focus on the ownership structure of Paper Excellence. Earlier, you provided explanations on an indirect transaction and on what can constitute a national security analysis. If I followed your answer correctly, a national security analysis was done for the transaction between Paper Excellence and Resolute.
Senior Assistant Deputy Minister, Strategy and Innovation Policy Sector, Department of Industry
That's correct.
Bloc
Senior Assistant Deputy Minister, Strategy and Innovation Policy Sector, Department of Industry
The advice of the Minister of Public Safety on the Investment Canada Act is subject to confidentiality provisions.
Bloc
Mario Simard Bloc Jonquière, QC
I understand. You said that earlier. I would like to point out that the members of the Standing Committee on Public Accounts were able to obtain contracts related to trade agreements between the government, Moderna and Pfizer. For an elected official, it is essential to have information.
If I remember correctly, Ms. Dojack said, in response to a question from one of my colleagues, that Mr. Wijaya was the owner and that another analysis was carried out to determine the more detailed ownership structure. We are trying to make the connection between Mr. Wijaya and Asia Pulp & Paper.
So you have done that analysis, but you cannot provide us with the documents. Is that correct?
Senior Assistant Deputy Minister, Strategy and Innovation Policy Sector, Department of Industry
As my colleague said, the information about the ownership structure of that company is subject to the confidentiality provisions of the act.
Bloc
Mario Simard Bloc Jonquière, QC
I understand that. I am simply asking you if you have in front of you the result of an analysis that shows whether or not there is a link between Mr. Wijaya and Asia Pulp & Paper. You can answer yes or no, I don't need the details. It's confidential.
What I understood from Ms. Dojack's answer earlier was that this analysis had been done, but that it could not be made public. So that means that the minister—
Senior Assistant Deputy Minister, Strategy and Innovation Policy Sector, Department of Industry
Yes, Jackson Wijaya is the owner of Paper Excellence.
Bloc
Mario Simard Bloc Jonquière, QC
There we go. That means that the minister has in his hands a document that tells him whether or not Mr. Wijaya is directly or indirectly linked to Asia Pulp & Paper and whether, in the ownership structure, Mr. Wijaya is funded by Asia Pulp & Paper.
The minister has that in his hands. He must know it.
Senior Assistant Deputy Minister, Strategy and Innovation Policy Sector, Department of Industry
As I said, the application form under the Investment Canada Act is complex. The owner must indicate the beneficial owner, and the organization has confirmed that the beneficial owner of Paper Excellence is Jackson Wijaya.
Bloc
Mario Simard Bloc Jonquière, QC
Okay. I don't want to go around in circles, but I want to go back to Ms. Dojack's answer to my colleague. She told him that a more in‑depth analysis of the ownership structure was done, and that you knew whether Mr. Wijaya was connected. That is probably the case, if we look at it more closely. It's all over the media. We know that. There is probably a connection between Mr. Wijaya and Asia Pulp & Paper.
You have done that analysis, but you cannot provide the results to the committee. That's what I understood from your answer earlier.