44th Parl. 1st Sess.
February 3, 2023 10:00AM
Madam Speaker, I appreciated the speech by my colleague from Windsor West, who I enjoy working with on the industry committee, and the former chair who did marvellous work on it. It is a great report. My personal favourite is recommendation number one, which is that the state-owned enterprises be reduced to zero for review.
The Investment Canada Act focuses on the acquisition of companies. However, it does not focus at all on the acquisition of individual assets. These would be things like a mine sold by a company to a foreign interest; or a technology sold, without the company being sold, to an interest that may not be in Canada's best security interest or net benefit interest. I do not recall hearing about this. Could the member comment on that?
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Madam Speaker, my colleague has been terrific on the committee so far.
This is something that we missed in the previous review, and it is appropriate for us to deal with this. I have referenced private equity firms, but there could be billionaires or others that are tinkering with different things. We could look at individual assets or innovation that is new.
I am looking forward to that, and I think the amendments are appropriate. It is refreshing, because we did not look at that in the previous report. That is why an annual review for thresholds is important, because this is an ongoing thing, especially with how things move so quickly right now.
I am looking forward to the member's contribution, and I thank him for adding that. Again, that is a new lens that we did not deal with in the past.
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Madam Speaker, I thank the hon. member for Windsor West for a speech full of good examples of things that have happened in the past. I would also reflect on the fact that, by a hair's breadth, we nearly lost Aecon Construction to the People's Republic of China. Again, that would never have had a security review if we had not started mentioning it in this place. This is progress.
I want to reflect and ask the hon. member for Windsor West if we do not want to also have a lens on. I know this is still in the philosophical framework of Bill C-34. It is still in the frame that we are better off when everything is traded all around the world and we have a massive globalized economy. Clearly, we are always going to have a globalized economy. However, in the wake of COVID, would it not be better to have many supply chains within Canada, to rebuild Canada's manufacturing capacity, to have the jobs here at home and to have food grown at home for Canadians?
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Madam Speaker, while I have floor, I will give a plug to the member and thank her for her hard work in putting together the all-party rail caucus. She deserves credit for that. She has been pushing this for more than six months, and we had the first meeting. I thank her for that initiative.
Also, I thank the member for mentioning Aecon Construction, which I raised several times in the House. It is interesting because it relates to me back at home. Aecon Construction was part of, and is still part of, the Gordie Howe project in the infrastructure along Canada's busiest border in my riding. That was actually going to be bought up by the Chinese government at that time.
Try to imagine this. I raised this several times. I worked with Congress and Senate members on the U.S. side. They did not want to have a bridge, which was billions of dollars and had the highest involvement in trade, built between Canada and the United States, that would be owned by the Chinese federal government or any other government. That was a non-starter and an important one.
The supply chain relates to that as well. During the COVID experience, we saw that there were contributions to some medicines that we had in the past and some new vaccines. We have lost control of that, so now we are actually in an embarrassing situation with one company that got Canadian money and is folding.
The member brings a really good point to that.
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Madam Speaker, the member for Windsor West has a huge track record in the House of Commons of actually ensuring that we protect Canadian jobs and stimulate the economy. We have seen under the Conservatives and under the Liberals the selling out of portions of our economy.
With the member for Windsor West's long experience and deep knowledge of industrial policy, what would he do when he became the minister of industry in an NDP government?
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Madam Speaker, a couple of things come to mind right away, which also relate to the previous question and the so-called free-market economy. I do not know where this exists. There are a couple of points. First of all, trade always existed. We just created boundaries. My area was settled for 300 years, but prior to that, it was indigenous; in terms of its trading area, trade always happened. There is no doubt that we are always going to be trading. However, countries protect certain industries. When we look at the United States, which is always held up as the model of capitalism, they have the Jones act and the Buy American Act. They have different pieces of legislation related to procurement for the arms industry and the supply and manufacturing industry, all those things that are national and strategic. I want a national policy on manufacturing to be developed. We have done some of those things in the past, but we should at least match our competition in the world and be careful about how we have investments come in. We should also be careful about vulnerability with regard to where we invest public money and then have it actually go across a board.
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Madam Speaker, I just wanted to follow up on the question from my colleague from South Shore—St. Margarets about individual assets ending up in the hands of foreign state-owned enterprises. I am thinking particularly of state-owned enterprises from nondemocratic nations, as the member for Windsor West mentioned. When we fund research chairs at Canada's research universities, at the end of the process, we end up owning an asset born of Canadian ingenuity. This does not go to national security necessarily, but it certainly goes to the strength of our economy.
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Madam Speaker, the money that we have spent publicly for national research chairs, which is an investment in our education system, is another good example that we did not get into. We have a poor record of actually moving that type of research and innovation to market, so that is a separate story. This could be a good record, and I am looking forward to looking at this more. National security is very much an open field with regard to how that is being interpreted, so we will see what definition the minister has. However, I think I have a much more open perspective on that, as I noted in my speech. Consumer issues should also be looked at; I view these issues through a national security lens as well.
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Madam Speaker, I will be sharing my time.
I am pleased to speak to Bill C-34, an act to amend the Investment Canada Act.
Canada has a long-standing reputation for welcoming foreign investments and a strong framework to promote trade while advancing Canadian interests. In fact, Canada has one of the earliest and most robust screening processes for foreign investments in the world.
The Investment Canada Act was enacted 38 years ago, in 1985, to encourage investment in Canada that contributes to economic growth and employment opportunities. The act allowed the government to review significant foreign investments to ensure these benefits exist. The act was updated in 2009 to include a framework for national security review of foreign direct investments.
Bill C-34 would implement a set of amendments to improve the national security review process of foreign investments and modernize the ICA. Collectively, these amendments represent the most significant legislative update of the ICA since 2009. These amendments would also ensure that Canada’s review process is consistent with our allies'.
However, in my view, there is another issue in foreign direct investment that should be looked into, and that is dealing with economic security. I believe this is not only an opportunity but also a necessity that we deal with foreign direct investment that results in economic stagnation of any sector of our economy, thus affecting our long-term economic security.
Let me explain this by first quoting a couple of sentences from the backgrounder that was published, which states, “The Act is designed to encourage investment, economic growth and employment”. The backgrounder also states, “The Government of Canada has committed to promoting economic security and combatting foreign interference by modernizing the ICA to strengthen the national security review process and better mitigate economic security threats arising from foreign investment.” For me, the keywords are “economic security”. There is no mention of the words “economic security” in the bill tabled by the government that we are debating today. Probably the thought is that “economic security” and “national security” are considered as synonyms.
I will now explain the importance of economic security. Canada is growing. Our population is growing. Our economy and GDP are growing, and we need our economic sectors to grow and contribute to economic growth and employment. If any economic or industrial sector does not grow and does not contribute to economic growth due to foreign direct investment, then in my view this is a threat to economic security. Any stagnation or complete lack of economic growth in a growing economy will directly affect our economic security in the medium to long term.
I will give two examples where foreign direct investment in Canada has resulted in stagnation of economic growth, which in turn is a threat to our economic security.
The two industrial sectors that are prime examples of this are the steel and aluminum industries in Canada. All steel and aluminum sector companies in Canada are foreign-owned. Due to our encouragement of foreign direct investment, today both of these sectors, with 100% foreign ownership, have been reduced to a branch office of multinational companies that are dominating aluminum and steel industry worldwide. Due to this 100% foreign ownership, there has been no increase in production capacity in both of these sectors in Canada for the last 20 years.
During the last 20 years, aluminum production has basically stagnated at about three million tonnes. While many new aluminum smelters are being set up in China and other countries, the installed capacity of the aluminum sector in Canada has stagnated. It is the same with the steel industry. During the last 20 years, the installed capacity has basically stagnated at about 15 million tonnes. Not only is there no growth in the production capacity of steel and aluminum, but due to 100% foreign ownership, Canada’s steel and aluminum exports are limited just to the U.S. and Mexico. There are hardly any Canadian steel and aluminum exports to Europe or the growing markets in Asia.
Canada has signed numerous free trade agreements across the world. We have free trade agreements with Europe and Asia-Pacific countries. In total, we have free trade agreements with over 50 countries, but has the aluminum and steel sectors taken advantage of these free trade agreements to increase Canadian exports? The answer is absolutely no.
Therefore, my question is this: If our welcoming foreign direct investment leads to 100% foreign ownership in any entire industrial sector and this results in growth stagnation of that sector, is it not a threat to our long-term economic security? If 100% foreign ownership prevents Canadian industry from taking advantage of our natural resources and our expertise to export Canadian goods across the world, is this not a threat to our long-term economic security?
We need all sectors in our industry to add value to our natural resources and contribute to Canada's economic growth by increasing their capacity to produce. We need all economic sectors to build on our many decades of knowledge and expertise to contribute to Canada's economic growth by increasing Canadian exports across the world. I again state that if any economic or industrial sector does not grow and does not contribute to economic growth due to foreign direct investment, then in my view this is a threat to economic security. Also, any stagnation or complete lack of economic growth in a growing economy will directly affect our economic security in the medium to long term.
I call upon the House to take this opportunity to address this shortcoming in the Investment Canada Act. Other than that, I completely agree with everything else that has been proposed in the bill. There was a need to update and streamline the administrative process in light of a shifting geopolitical environment and a need for alignment with international allies and for better coordination efforts with allies.
The world looks a lot different now than in 2009 when the act was last amended. The global market has rapidly changed with shifting geopolitical threats. Canada's interactions with the rest of the world are changing. The government has seen a rise in state-sponsored threat activities from hostile state and non-state actors. They are attracted by Canada's technologically advanced and open economy and world-class research community.
The level of sophistication of these threats has also increased. Hostile state and non-state actors are deliberately pursuing strategies to acquire goods, technologies and intellectual property through foreign investments that will damage Canada's economy and undermine national security while controlling the supply chain of critical goods. In fact, Canada has one of the earliest and most robust screening processes for foreign investments in the world.
The COVID-19 pandemic has accelerated this threat by creating vulnerabilities that could lead to opportunistic, harmful investment behaviour by foreign investors. They are looking to buy up vulnerable Canadian businesses. In response, the government has taken swift, concrete action to enhance scrutiny on inbound investments related to public health and critical goods and services.
The government again took action recently by enhancing scrutiny of investments involved in sensitive goods and technology, such as critical minerals, critical infrastructure and sensitive personal data. Through these amendments, the government is prepared to once again take action to strengthen the national security review while still allowing for positive foreign investments. Economic-based threats to national security are of increasing concern not just for Canada but for our allies as well.
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Madam Speaker, this issue is really important to my colleague. I would like to know if there is anything else he thinks we should be also including in this bill to make sure this is as strong as it could be.
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Madam Speaker, in addition to the economic security issues I discussed, my colleagues brought forward others earlier in debate, like the purchase of intangible assets other than the company itself, and some issues that were brought forward by the member from Windsor on the lack of competition resulting in foreign direct investments. These are the kinds of things that need to be considered now. We know this act has not been looked at in, I think, the last 13 years. This is the first opportunity we have and we need to use this opportunity to consider all aspects that are directly related.
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Madam Speaker, I would like to ask the member for Nepean about state-owned enterprises from not-so-democratic countries, or hostile countries. It was recommendation number one of the industry committee's report from the last Parliament on this issue that the threshold for consideration as a national security or net benefit test under this act be reduced from the $415 million to zero dollars, so that every transaction in every type of industry by a state-owned enterprise from a nondemocratic country would be reviewed. That is not in this bill. Would the hon. member support it being amended that way?
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Madam Speaker, investment by state-owned enterprises from non-friendly countries obviously needs to be looked very deeply into. I am not sure whether we should have a minimum threshold, but as I said, every single investment by state-owned enterprises needs to be looked into.
At the same time, in addition to state-owned enterprises, I also want to highlight investment by global multinational companies in the steel and aluminum sector, as I mentioned, that have made direct investment. One hundred percent of the sector is foreign owned, which is leading to Canadian companies becoming the branch offices of these multinational companies and is curtailing the potential to grow Canadian exports around the world.
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Madam Speaker, we in the Bloc Québécois are still reeling from the sale of Rona to the American company Lowe's and all the negative consequences that followed.
In my hon. colleague's opinion, if Bill C-34 passes as is, will the interests of our economy be better protected with respect to potential transactions?
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Madam Speaker, everything that affects Canada's competitiveness, growth, economic security or national security needs to be looked into. Let me be very clear. I am for foreign direct investment. I am for free trade. However, all aspects that affect our national security and economic security need to be looked into.
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- Feb/3/23 1:31:22 p.m.
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If a member of a recognized party present in the House wishes that the motion be carried or carried on division or wishes to request a recorded division, I would invite them to rise and indicate it to the Chair.
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- Feb/3/23 1:31:22 p.m.
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There being no motions at report stage, the House will now proceed, without debate, to the putting of the question on the motion to concur in the bill at report stage.
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moved that the bill be concurred in.
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- Feb/3/23 1:32:08 p.m.
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Madam Speaker, I request a recorded division.
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Pursuant to order made on Thursday, June 23, 2022, the division stands deferred until Wednesday, February 8, at the expiry of the time provided for Oral Questions.
It being 1:32 p.m., the House stands adjourned until next Monday at 11 a.m. pursuant to Standing Order 24(1).
(The House adjourned at 1:32 p.m.)
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