Bill C-34

National Security Review of Investments Modernization Act

An Act to amend the Investment Canada Act

This enactment amends the Investment Canada Act to, among other things,
(a) require notice of certain investments to be given prior to their implementation;
(b) authorize the Minister of Industry, after consultation with the Minister of Public Safety and Emergency Preparedness, to impose interim conditions in respect of investments in order to prevent injury to national security that could arise during the review;
(c) require, in certain cases, the Minister of Industry to make an order for the further review of investments under Part IV.1;
(d) allow written undertakings to be submitted to the Minister of Industry to address risks of injury to national security and allow that Minister, with the concurrence of the Minister of Public Safety and Emergency Preparedness, to complete consideration of an investment because of the undertakings;
(e) introduce rules for the protection of information in the course of judicial review proceedings in relation to decisions and orders under Part IV.1;
(f) authorize the Minister of Industry to disclose information that is otherwise privileged under the Act to foreign states for the purposes of foreign investment reviews;
(g) establish a penalty not exceeding the greater of $500,000 and any prescribed amount, for failure to give notice of, or file applications with respect to, certain investments; and
(h) increase the penalty for other contraventions of the Act or the regulations to the greater of $25,000 and any prescribed amount for each day of the contravention.

National Security Review of Investments Modernization Act

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Mr. Speaker, I very much enjoyed working with the fine member from the Bloc Québécois at the finance committee. I am confident we will work with the members of the Bloc to include things like automatic triggers for reviews by cabinet and for reducing the ability of actors to avoid this through things like asset sales and otherwise.

We need to tighten up potential loopholes in this legislation to make sure we can fully protect Canadian companies, resources and ideas.

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

Mr. Speaker, I am just looking for a comment from the member. Why should we believe the Liberals would even use these new powers, after eight years of inability to recognize national security risks?

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Mr. Speaker, I am not sure it is a great thing that I speak on behalf of the government. What I would say is that there are many different fields where the government could have acted, including perhaps reviewing past applications and transactions. That simply has not been done in many cases and should have been. Divestitures should have happened with respect to state-owned enterprises. Even with regard to other issues, such as passports or putting in place Magnitsky sanctions on human rights, the government cannot seem to get out of its own way.

[Mark Gerretsen, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons (Senate)]

Mr. Speaker, I listen to my colleague's discussion on Bill C-34, and I cannot help but think of some of the incredible investments we have seen just recently in a neighbouring area to where our ridings are. In particular, in Hastings—Lennox and Addington, I think of the incredible work the Minister of Innovation, Science and Industry did in attracting Umicore, a multi-billion dollar operation to build electric vehicle batteries right in a neighbouring riding to both of ours.

Would he not agree that the types of investments we can see through the modernization of this act would continue to benefit not just our ridings but Canada as a whole?

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Mr. Speaker, it is a joy to be a neighbour of the member for Kingston and the Islands. That probably ends my career with the Conservative Party, but there we go.

What I would say to him, in all seriousness, is that that is a great exception. It unfortunately proves the rule that Canada continues to be a laggard in the G7 and the OECD when it comes to productivity and innovation.

While I certainly welcome the manufacturing jobs, it would be even better to get the research and development, as well as the heads of these companies, right here in Canada so that we would not be just a secondary manufacturer or resource economy but actually have a controlling interest and prosper from our own ideas.

[Tako Van Popta, Conservative, Langley—Aldergrove, BC]

Mr. Speaker, I have a question about foreign corporations and state-owned corporations funding research chairs at our world-class leading universities and, at the end of the process, being the owners of the intellectual property that has been produced by Canadian brain power.

Does he think there should be controls or regulations around that? Does Bill C-34 address that?

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Mr. Speaker, we have to acknowledge the world that we live in today, not the world we lived in 20 years ago. There are challenging actors out there who are trying to take Canadian ideas and utilize them for their own prosperity.

We must control our ideas. We have to be straightforward with it but cannot back away from the ideas. Canadian ideas are Canadian, and they are there for Canadian prosperity.

The House resumed consideration of the motion that Bill C-34, An Act to amend the Investment Canada Act, be read the second time and referred to a committee.

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

Mr. Speaker, I am pleased to rise in the House today to speak to Bill C‑34, the national security review of investments modernization act, which was introduced by the Minister of Innovation, Science and Industry.

As the minister, my colleague from Saint‑Maurice—Champlain, mentioned, this bill is an attempt to update and strengthen the Investment Canada Act through seven amendments.

I will not list them all, but I will say that the government is seeking to streamline the minister's ability to investigate national security reviews of investments, strengthen penalties, create a list of industries in which acquisitions would automatically be subject to national security reviews, give the minister the power to impose interim conditions, remove the Governor in Council from the process for making an order for further national security reviews and substitute the minister, and improve coordination with international partners.

The act was last modernized in 2009. It is true that an update is needed. As my colleague from South Shore—St. Margarets and shadow minister for industry mentioned, I can confirm from the outset that we will be voting in favour of this bill at second reading. We will, however, work to make improvements to it.

If there is one phrase that sums up how we feel about this bill, it is “too little, too late”. After eight years of this Liberal government approving countless acquisitions of Canadian companies by state-owned firms, we are skeptical that protecting our national security interests is important to this government.

There is no shortage of examples of breaches. There have been numerous cases over the past few years where this government failed to take the real threats posed by foreign investments seriously.

I am proud to be a member of the Standing Committee on Industry and Technology. Over the past two years, we have examined several cases of government failures during transactions and contracting processes that had the potential to compromise national security.

I will share a few examples, some of which are very disturbing.

In January 2022, the Minister of Industry failed to follow his own guidelines when he fast-tracked the takeover of the Canadian company Neo Lithium by Chinese state-owned Zijin Mining without a national security review.

It seems to me that when a company controlled by the Chinese Communist regime wants to buy a Canadian company, that should raise a red flag. Unfortunately, that did not happen in this case. We are talking about rare materials that are important in dealing with climate change, for making more batteries and such. Lithium is an extremely important element in the production of batteries. A review should have been done.

As I just mentioned, this is a Canadian company specializing in critical minerals, like lithium. Unfortunately, this government did not sound the alarm or issue warnings. We should already be doing everything we can to protect our companies in such a key sector, but, when the buyer has ties to the Chinese Communist regime, that is stating the obvious. A serious and rigorous review should have automatically been considered.

The Standing Committee on Industry and Technology undertook an urgent study on this subject to investigate this questionable transaction. Following this study, we made three recommendations.

The first recommendation reads as follows: “That the government create a formalized and transparent process...by which government departments provide advice to the Minister...regarding decisions made under the Investment Canada Act”.

The second recommendation reads as follows, “That the Minister issue a notice...for all investments by firms from authoritarian regimes considered to be state-owned enterprises under the Investment Canada Act”.

It is worth noting that in China, the government often controls many companies, either partially or fully, through various means, so we need to have a closer look at that.

The third recommendation reads, “That the Minister release in a timely manner a full and comprehensive Critical Minerals Strategy”.

A year has passed, but it is clear that nothing has been done in that regard, unfortunately.

I will give a second example of a dubious contract. In December 2022, the RCMP awarded a contract for sensitive communications equipment to Sinclair Technologies, which is a subsidiary of Norsat.

It is important to note that Norsat, which was founded and based in Richmond, British Columbia, had itself been acquired by Hytera Communications. Who owns Hytera?

It is headquartered in China and is therefore partly owned by the Communist regime of the People's Republic of China. The company is even a major supplier to China's national security department. The $500,000 contract was awarded without any thorough investigation or verification, even though it is known within the federal public service that China and the companies it controls have attempted to interfere in Canadian affairs.

When the media broke the story, the minister responsible took swift action and cancelled the contract. Still, it is astounding that, once again, no one in government saw this coming, no one realized how dangerous the situation was.

Hytera has been charged with 21 counts of espionage in the United States. President Biden has banned the company from doing business in the U.S., but it is free to operate here, no problem. The Prime Minister trusts everyone. Forgive me for questioning the severity of what the government wanted to do at that time.

I have one final, particularly troubling example that I would like to present here. It was identified by the Standing Committee on Government Operations and Estimates. In 2020, the Minister of Foreign Affairs awarded a contract to the Chinese company Nuctech, founded by the son of the former secretary general of the Chinese Communist Party, to supply X-ray equipment to 170 Canadian embassies and consulates. The contract was worth $6.8 million.

Although it was assured that this equipment would not be connected to embassy networks, the contracts included delivery, installation, and maintenance. Again, this is a question of national security. It is extremely important to verify these things.

During his testimony before the committee, David Mulroney, Canada's former ambassador to China, had some very harsh, but very fair, words for the government. He said that the experience gives us a troubling glimpse into this government's incompetence in dealing with China, considering that it has received clear, daily warnings that China is a strategic challenge to our country. However, there is no sign that the government is any more aware, no sign it has developed a greater sense of urgency to identify and better manage China-related issues. There is no evidence of any efforts to galvanize the government as a whole. All departments and agencies need to make an urgent effort to ensure that this does not happen.

This shows an appalling lack of leadership. Once again, history has repeated itself. We are hoping for changes to the bill. After second reading, it will go to committee, where we will be able to propose amendments.

I could say a lot more about this bill, but it is no different from everything else. Everything is broken.

[Jenny Kwan, NDP, Vancouver East, BC]

Mr. Speaker, the Harper government increased the threshold above which a foreign takeover of a Canadian firm is reviewed, from $300 million to a billion.

Does the member stand by that decision or will he support reducing the current threshold to zero, so that every prospective transaction for either state-owned or state-controlled enterprises triggers a review?

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

Mr. Speaker, when we made that decision several years ago, the reality was that the value of international investments was much higher. We wanted the flexibility to conduct the reviews for contracts within those amounts.

Yes, I agree with the amounts. Given the current cost of living, the cost of building or repairing a home or buying a business has increased spectacularly because of the inflation caused by the current government. Inevitably, greater flexibility was required in conducting these reviews.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Mr. Speaker, my colleague raised some very troubling points in his speech.

There seems to be a trend. Year after year, the number of foreign investments made in Canada goes up, as does their value. According to the latest available data, there were 1,255 applications for a total of $87 billion. Only eight of those applications were reviewed.

This bill would bump the number of applications reviewed up a bit, to 24. That is barely 2%. It does not sound like that is enough.

What should the government do to improve this bill?

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

Mr. Speaker, I thank my Bloc colleague for that very important question.

We will vote in favour of the bill at second reading. Together, we can make sure all the necessary elements are in place to do a review. Obviously, China is not the only country that could pose a national security risk to Canada. We want to work together to make sure the strictest standards and safeguards are in place to prevent incidents like those we have seen in recent years.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Mr. Speaker, I am very pleased to hear that the Conservative Party will be voting in favour of this bill. It is important to make investments before things get difficult. Can he comment on the fact that it really is important to modernize the international trade regulations?

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

Mr. Speaker, I completely agree with my colleague that we need to implement the necessary safeguards to prevent national security risks for Canadians, whether it be in telecommunications, business or health. In every area, we need to ensure that these safeguards are broad enough to ensure that nothing harmful gets through and avoid this type of incident.