:
Thank you for your generosity, Mr. Chair.
I would first like to acknowledge the work done by our colleague Brian Masse.
[English]
I would like to congratulate him on the passing at third reading of the Ojibway national urban park act. I think it's a huge achievement by a colleague. We should all be proud that a private member's bill gets that recognition. It's all thanks to him. I wanted to say that on the record, even though I know most of his questions might not be about the Ojibway national park today.
I also want to thank Andy Fillmore, my parliamentary secretary, for all his work, and thank you for the work of all members of the committee.
[Translation]
Dear colleagues, I'm very pleased to see you, and even more so for this opportunity to speak to you about Bill .
Our colleagues, as well as businesses and various other stakeholders, have shown a great deal of interest in the modernization of this act. The last time it was revised was 2009. I believe my colleagues would agree with me that the world has greatly changed since then.
As you know, the Investment Canada Act performs an important role in Canada's economy. Its primary role is to encourage economic growth, and it intervenes only in instances where an investment would be harmful to Canada's national security.
The purpose of modernizing the act is to strengthen our capacity to protect Canada's national security and intellectual property. It would also improve transparency for investors and give them certainty, while strengthening our capacity to take rapid and firm action to reduce national security risks.
I welcome the comments made by the many members of the House who came to see me in person. Quite a few of my colleagues rightly underscored the fact that national security was not and ought never to be, a partisan issue. We are all united in our desire to protect the interests of Canadians.
Before continuing, I'd like to clarify something about which there appears to be some confusion—the trigger thresholds.
Bill mainly addresses the Canada Investment Act's national security review, not the net benefit reviews.
Net benefit reviews are triggered by a number of financial thresholds. These thresholds are of course published and updated every year. The amounts vary, depending on whether the investor is a state-owned or state-controlled enterprise, a member country of the World Trade Organization, or country with which Canada has a trade treaty.
On the other hand, there is no triggering financial threshold for a national security review. Allow me to repeat: there is no triggering financial threshold. All investments, irrespective of value, are subject to the national security review, with no exceptions.
[English]
In this context, I want to take a few minutes to discuss three themes that I think came up through debate and that would be relevant for colleagues around this table.
First is the ability to protect Canada's interests. One thing I was pleased to hear was the agreement around ensuring the government has the right tools to protect Canada's interests. Today, it's all about the tool box. There's a lot of ambition, I would say, around this table, but I think they would find that the Minister of Industry today has a very limited tool box to address the security threats we're facing.
The amendments we're proposing to the ICA will strengthen our ability to respond to the evolving threat environment and, I would say, to the geopolitical situation we're facing today. Things like undertakings will make sure that we are more nimble and allow companies to make binding commitments to mitigate any national security concerns that are associated with proposed investments.
Previously, imposing conditions on a transaction to mitigate risk could occur only through a Governor in Council order. These GIC orders typically cannot be amended. Allowing undertakings at the ministerial level means these conditions could be imposed and amended, giving us greater flexibility to adapt to the conditions in order to protect our national security.
Colleagues, we have seen that in a cyberworld and a world where we've seen more people interested in IP and our critical resources, we need to be nimble to be able to answer the threat. This bill will allow us to make the review process more efficient by providing the Minister of Industry, in consultation with the Minister of Public Safety, with the authority to order further reviews, rather than seeking an order in council from cabinet. This is about doing business at the speed of business.
Removing the step of getting an order from cabinet at this specific stage will give more time to our security and intelligence partners to complete a thorough assessment of the national security risk. We should all be happy about that, because we want to have the best intelligence for any minister to make a decision.
However, I want to emphasize that cabinet will still remain the authority to make the decision on any final order related to blocking an investment. That authority to make a final order is not changing, but we need to accelerate the process before the final step, to move at the speed of business.
The second thing I've heard about from colleagues, Mr. Chair, is protecting IP and intangible assets. We all know that companies now sit on a lot of intangible assets, and we need to make sure we protect that. Another thing we heard about was the importance of protecting, like I said, intellectual property and intangible assets that Canadian companies own.
Our government recognizes the value of the intangible economy as it's growing, and the relevant opportunities for all Canadians. This bill will help protect the intangible assets of Canadian business through the introduction of a new pre-implementation filing requirement and a new authority for the Minister of Industry to impose interim conditions on an investment, so it's about pre-filing requirements and also having interim conditions during the period that you're going to review that.
Colleagues will understand that's what matters, because before you give a final approval or not, you want to make sure that companies will not be disclosing IP to the other side. That way, the government can ensure that such harm does not occur. I think this is something that the committee has been asking for. Believe it or not, today, the Minister of Industry doesn't have the authority to impose interim conditions, meaning that you freeze the situation for the time of the review. We know that, with intangible assets, it's not something that you can give back. Once people have had access, they have the knowledge. We need to prevent that.
The new authority will impose conditions and will prevent the transfer of Canadian intellectual property, trade secrets and technical know-how to non-Canadian entities prior to the conclusion of the national security review. The ICA already allows us to take a look at asset sales. We will now have the tools to manage those cases much more efficiently and, I would say, in the interest of Canadians.
The third thing I've heard from colleagues is around transparency.
[Translation]
The bill adds certainty and transparency for enterprises and investors by specifying the improvements we are going to make to the national security review process.
There will also be robust protection of any information supplied to my department, Innovation, Science and Economic Development Canada, in connection with both national security and net benefit reviews.
Such protection is required to protect the bond of trust between the department, potential investors and Canadian enterprises involved in a transaction. For that reason, we will never publicly disclose such information, or specific circumstances, involved in current or past reviews. Although there are restrictions on what can be disclosed, we have already been publishing our decisions and directives to clarify how the Investment Canada Act is being applied.
Bill also adds new provisions for the protection of information In the judicial review of decisions. This amendment will enable the government to defend its national security decisions on the basis of sensitive information, while protecting such information from disclosure. These new provisions will also enable applicants to participate more fully in judicial proceedings.
To conclude, I'd like to thank the committee for the work it has done over the past few years, including its studies on the Investment Canada Act. Colleagues around this table have all contributed to the outcome we are presenting today. We took your comments and the recommendations of our colleagues into consideration, and they are reflected in Bill .
I would even go so far as to say that action is urgently needed, because colleagues on both sides of the House frequently asked me to intervene. I explained to them how the shortage of tools in our tool box was impeding our capacity to do a better job of defending Canadian interests.
We also gave consideration to recommendations made with respect to other recently announced policies, such as those pertaining to the protection of critical minerals. As you may have noticed, I've already announced four policies that will provide better protection for Canadian interests.
I am enthusiastically looking forward to further work with you on this bill. As I mentioned previously, I acknowledge that we all agree on the fact that Canada's national security is not a partisan matter and that we need to be united in our determination to work together for Canada's protection.
I'd like to thank the committee for its excellent work.
I will of, course, be happy to answer any questions that members of the committee may have in order to achieve the best possible results on behalf of Canadians.
Thank you.
:
I believe you've put that clearly, Mr. Lemire.
I'm all for transparency. There is, of course, the annual report, and there are other things that we can do in that area. There could be a judicial review. I want to provide parliamentarians with as much information as possible.
However, it's important to know that our decisions are often based on issues of intelligence. We therefore need to strike a balance.
As for the annual report, we're prepared to look at that with members of the committee. We can try to see whether people want more information in it, provided that we can maintain this essential balance. As you know, it's a process which, by its very nature, requires us to maintain the trust of investors, and involves various non-disclosure considerations for each competing enterprise.
I believe that through our policy statements in the annual report on what we are doing, and also in our approach to the annual report, we provide a lot more information than we used to. Various people, and my colleagues, will no doubt recall that for Neo Lithium, we were able to give out more information than in the past. The senior officials will be able to tell you more about that.
I'm in favour of this transparency, but at the same time, I believe we need to maintain this balance with respect to information, precisely in order to be able to make the right decisions.
:
Sure. First of all, let me congratulate our colleague on a great achievement on the Ojibway national urban park act.
For me, the way we have structured the deal with Volkswagen is as Canada's response to the IRA in a very smart way. We've said that the company in this case needs to build a facility. We're talking about a $7-billion facility. We said in the fall economic statement that we would be levelling the playing field with respect to the Inflation Reduction Act in the United States, but that we would not have a race to the bottom. That would not be smart for anyone to do that, and that's what I have been advocating in Washington and in many parts of the world.
What we said was that first they would have to build the facility, and then we would provide production and support. I like it because the conditions are in the contract, to your point. That's why I was saying to colleagues before that, when people say it will be between $8 billion and $13 billion, that will only be, perhaps ever, if they build a battery and sell a battery, subject to the IRA being in place or any reduction in the IRA, whether the amounts would be reduced or the IRA would be disappearing, and after that it would be done retroactively. Then you have a number of contractual conditions around that, which I think, to your point, are the best way to protect Canadian taxpayers, because not only do you have an upfront investment by the company, but as we saw with GM and Ford, if you do an equivalent analysis, if you look at the multipliers that are normally used, an investment like that will generate between $200 billion and $400 billion over 30 years.
Now, for folks who were here before the pandemic, a federal budget is $300 billion. That's the equivalent in 30 years of a full federal budget in terms of the economic impact. What we did at the time was look at what the payback was. That's what I focused on. When people invest, they get a return on investment.
To your point, we said there would be 3,000 direct jobs. If you look at that, it's 30,000 indirect jobs that will be created in the Canadian economy. My answer is that this is Canada's response to the IRA in a very smart and targeted way, because, to your point, we said we are not the United States, so it has to be targeted, focused and very strategic. Bringing in the first-ever European manufacturer to Canada and the first OEM in 35 years, you would agree with me, is a home run.
:
Yes, it is. I come from the big three tradition, and it is because it has been something we've been trying to get for a long time.
We're already seeing the effects of the IRA, the Inflation Reduction Act, because even Canadian companies are subcontracting out some work to make eligibility back in the United States. It's going to get highly complex, and that's even for tool and die mould-making and so forth, so I appreciate that you're in front of trying to compete with it, because if we don't, then you're out of business generally. We don't like it in some respects, but that's the way this works.
I want to move on—actually, this does include land close to the Ojibway national urban park and by the Gordie Howe bridge—to a situation and to find out how Bill can deal with it. Windsor Salt was bought up by a holding firm and has now been bought by another one called “Stone Canyon Industries”. It's a U.S. holding firm.
It's now on strike. Stone Canyon is known for basically being a hedge fund for union-busting. That's what they're trying to do. There hadn't been a strike there in 30-something years. There now is a strike because they're trying to get rid of the union.
I guess the point is how we deal with this in this act where, for example, a Canadian business is bought by a legitimate green-lit buyer at the beginning, but maybe later on a foreign national state government comes in. Is there anything we can do about that? If it's a holding company, some of these private equity forms are also owned by different fiefdoms around the world, and we don't know where some of the money comes from.
Do you have any thoughts about that? Anbang was another one that came up before with the Chinese with regard to that situation. Is it almost like a rope-a-dope, where somebody buys a Canadian company and then later on, within a year or something else, it gets bought by another state-owned entity?
:
We had wide consultations, because there are two purposes within a law like that. First of all, I would say that it has to be the most significant update since 2009, so I think it's very much wanted based on comments not only from colleagues but from Canadian businesses.
With Canadian businesses and how we attract investment in this country, it is stability and predictability and, I would say, the rule of law. It's very important for investors to know what we're going to do. That's why I've done a number of policy statements as well, to be very clear to investors about what we expect under the act and how the act is going to be administered.
We consulted widely, but I think that's why I am urging you, colleagues, and my colleagues from the other side, to really very quickly study this bill to its conclusion, because I have said—and I think some colleagues have had to apply this act—that we need more tools in the tool box. I think these tools would serve Canada well, not for me, but I would say probably for future ministers down the road to make sure they have more tools in the tool box.
We consulted with a lot of industry, and I would say, Tony, that one thing that came up—and I think Mr. Lemire mentioned it—was all around intangible assets and IP.
People are saying, “Minister, in an IP-rich world, how do you protect that under the act?” I would say that the measures we have put in terms of the pre-implementation filing but also the measures that we put in place during the time that we review the transaction are the best safeguards. Because today, again, for colleagues to know that today, if we come to a national security review, there are no interim measures that could be applied.
As you know, in IP, it's not like with physical assets. If people start talking to each other and exchanging trade secrets, even if we block a transaction, it's probably too late. That's why I am urging colleagues to really say that we need that, because from the get-go, if it's a IP-rich company.... Let's say that you have a foreign company that wants to buy a company that does quantum computing. I would want to impose interim conditions to say that no one should talk to the employees of that company until the time that we have decided that it's in Canada's best interests to allow that. No one should be talking to each other, but today I don't have that authority under the act. I think this is missing to better protect the economy of the 21st century. It's no longer bricks and mortar. It's about IP. That was some of the strongest feedback we received from the community.
:
Colleagues would know that one thing that is lacking today is undertakings. The Americans deal with national security on the basis of undertakings. To say, for example, “We will allow a certain transaction to go forward, but,” for example, “you're not going to take contracts from the defence department” or “you're not going to do certain things that would be harmful to national security.”
The Americans use that very much, in the sense that they would allow a transaction but then it would have a set of undertakings to say, “You can do this, but you can't do that; you can do this, but you can't do that.”
Today our system is binary. Either we approve or we don't. Sometimes, in the interests of Canada, you would say, “I want to approve it, but,” for example, “you're going to keep a majority of Canadians on your board” or “you're not going to deal with sensitive technologies” or, for example, “you're not going to share technology with foreign parties.” That's part of the challenge that we have under the act, that we cannot impose undertakings, which I think our American partners do all the time. That is really something that is lacking today.
To be honest, when I say, “for future ministers”, I think they would want to have that in their tool box to say, “That might be good, but,” for example, “you're not going to do this or that.” Today we can't, so—
An hon. member: [Inaudible]
Hon. François-Philippe Champagne: I'll stay as long as the chair wants me to.
An hon. member: [Inaudible]
Hon. François-Philippe Champagne: I'm very happy as well. Life is a long journey.
Thanks to the witnesses.
Mr. Vincent, in view of the minister's answers to my questions about Neo Lithium and the other three companies that were asked to pick up their marbles and go home, I would ask that you take various factors into consideration in your replies.
We know that the government of Canada is getting ready to invest in a Volkswagen battery plant. I have in front of me I a map of mines in Canada and a list of the 31 critical minerals considered important for national security. It's acknowledged that Canada's mines cannot supply all of the lithium and rare earth metals needed to produce batteries, either for the Volkswagen plant or any other future plants. It will therefore have to import these if they are to manufacture and install these batteries.
In view of all these contextual factors, don't you think that foreign investments will be needed in all of Canada's mines? There are, after all, many projects on the table that we would like to undertake.
Under the new version of Bill , which might be adopted, I believe that the time required to get all these mines up and running, and the investments that will be required, are going to demand a lot of work from public servants. They will have to carry out an extremely thorough analysis. We’re still talking about China, but there may well be companies in other countries that would perhaps want to invest in Canada, particularly in this area.
Words are important. If I'm not mistaken, the minister mentioned a new industrial niche for Canada. He even compared it to the introduction of the automobile in the early 19th century.
In view of all these factors, how are we going to attract foreign investors to Canada, when China is currently producing 30% of all the raw materials needed to make batteries?
That's a long question, but I think you understand the context.
[English]
Mr. Chair, I think I understand the question well.
It's actually important for members to recognize as well that the purpose of the ICA, the way it is structured and the reason it was created in the first place were fundamentally so that it would provide a predictable regulatory environment for investment while protecting Canada's natural interests and making sure that we have the right net benefits for Canada.
To your point, the purpose of this act is not at all to stop investment. It's quite the opposite. The purpose is actually to encourage investment by creating a predictable regulatory environment and, in doing so, give us the capacity to stop investments that would be injurious to our national security.
To your point, I think in the context of minerals and mines and, frankly, probably elements all along the value chain that you referenced, it's fair to say that we absolutely, from a Canadian perspective, want to be encouraging investment. However, we're looking, through the ICA, to make sure that, as those investments come, they are not injurious to Canada's national security and they're to Canada's net benefit.
From that standpoint, what these changes are designed to do is to strengthen that regulatory environment and give investors a predictable understanding of the Canadian environment.