Mr. Speaker, I am thankful for the opportunity to speak to the motion before the House.
I will begin by stating that foreign investment plays an important role in the Canadian economy. Investors bring with them knowledge, capabilities and technology which can increase the productivity, efficiency and competitiveness of Canadian firms. These investments provide capital to Canadian-based companies to expand and create jobs for Canadians.
In recognizing the importance of investment, Canada has a broad framework in place to promote trade and investment, while at the same time ensuring that Canadian interests are protected.
Investment flows both ways in and out of Canada. In fact, in the past several years, Canadian companies have invested more abroad than foreign companies have invested in Canada. According to Statistics Canada, the stock of foreign investments into Canada has reached $600.5 billion in 2011, while Canadian companies are even greater investors abroad at $684.5 billion.
The Investment Canada Act provides a mechanism to carefully review significant acquisitions of Canadian enterprises by non-Canadian companies to determine if they are likely to be of net benefit to Canada. It also provides a process to review investments which could pose a threat to national security.
The motion before us asks the government to:
—not make a decision on the proposed takeover of Nexen by CNOOC without conducting thorough public consultations...immediately undertake transparent and accessible public hearings into the issue of foreign ownership in the Canadian energy sector with particular reference to the impact of state-owned enterprises; and...must respect its 2010 promise to clarify in legislation the concept of "net benefit" within the Investment Canada Act.
CNOOC has filed an application for review of its proposed acquisition of Nexen Inc. under the Investment Canada Act and the Minister of Industry is accordingly conducting that review of the proposed investment.
The review process under the act is rigorous. As part of the process, the Minister of Industry must consider the views of various stakeholders and consult affected provinces or territories as well as other government departments.
In addition, there is room for Canadians to express their views. Any person or group that has a view on a specific investment proposal may provide those view to the minister during the review process. I might add, many of the people in my riding have expressed their views to me as their representative. We are the vehicle to express their views in this debate.
Where an investment is subject to review under the act, the minister must approve an investor's application for review before an investor can implement an acquisition. He will only approve applications where he is satisfied, based on the plans, undertakings and other representations of the investor, that the investment is likely to be of net benefit to Canada.
Also, as the investor is a state-owned enterprise, the guideline for investments by state-owned enterprises net benefit assessment, published under the Investment Canada Act, apply to this proposed investment. The guidelines clarify in the review under the ICA, as part of the assessment of the factors listed in section 20 of the act, that the minister will examine: the corporate governance and reporting structure of the non-Canadian proposal; how, and to the extent to which, the non-Canadian is owned or controlled by a state; and whether the Canadian business to be acquired will continue to have the ability to operate on a commercial basis.
As indicated in the guidelines, examples of undertakings that address these issues include: the appointment of Canadians as independent directors on the board; the employment of Canadians in senior management positions; the incorporation of business in Canada; and a Canadian stock exchange listing.
I will now take a moment to explain the confidentiality provisions of the act.
These provisions do not permit comments about specific investments to be made without the investor's prior agreement. Divulging confidential information outside the narrow exceptions of the act is a criminal infraction. During the review process, investors generally provide plans and undertakings to support their view that their investments are likely to be of net benefit to Canada.
The act sets out strong protections for the information obtained from an investor or Canadian business. This protection is necessary to ensure that investors provide all the information necessary to conduct a thorough review while preventing the harm to the investor and the Canadian business that could come from disclosure.
That said, this government welcomes Canadians' interests in this process and will endeavour to provide information whenever possible.
All approved investments are subject to monitoring to determine the extent to which the plans and undertakings provided by the investor have been implemented. An evaluation of the implementation of the plans and undertakings provided by the investor is ordinarily performed 18 months after the implementation of the investment. Monitoring may be more frequent. Additional evaluations may be performed based upon the performance of the investor and the duration of the undertakings.
The act provides for remedies where the minister is not satisfied that the investor is meeting its obligations under the act.
The decision to take enforcement measures under the act is based upon the overall performance of the investor in implementing its plans and undertakings. Decisions to take enforcement measures are made on a case-by-case basis based upon the specific circumstances of the transaction. The process for enforcing plans and undertakings provided by an investor during the review process includes seeking an order from a superior court to remedy any gap in implementation of plans or undertakings.
Our government has also been proactive in updating the act to adapt to the changing environment. In particular, our government introduced the state owned enterprise guidelines in 2007; introduced a national security amendment in 2009; amended the act to raise the review threshold, focusing reviews on the transactions that are most significant to the Canadian economy; introduced targeted changes to provide the minister with a greater ability to publicly communicate information on the review process; and published an annual report on the administration of the act.
The climate for international investment is constantly evolving. We will continuously examine the act to ensure it is up to date and effective.
Our targeted improvements to the Investment Canada Act provide greater transparency to the public, more flexibility in enforcement and an alternative to costly and time-consuming litigation.