44th Parl. 1st Sess.
February 6, 2023 11:00AM
Madam Speaker, I will let the member opposite continue on this line with my question, which has to do with our Five Eyes partners. They clearly said they did not want Huawei to have any access to the 5G networks in Canada, but it took the government two years before it came to that decision. Meanwhile, Bell and Telus implemented Huawei's 4G across the nation.
What mechanisms are present in the bill that the member believes will help us stand better with our Five Eyes partners?
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Madam Speaker, the most important thing within this legislation, from my perspective, is that it would enable more discretion for ministers, whomever they might be. I see that as a positive thing.
The Conservatives seem to believe there should be a listing of industries to which this would be applied. I tend to disagree. I believe that is one of the reasons we have opposition parties. Opposition parties are well positioned to be critical of government if they have a different opinion on investments they believe should have been better tracked, for example. That is why I encourage members to take into consideration that the principles of this legislation and its modernization will ultimately provide a higher sense of national security for Canadians.
With regard to the specific question, I really cannot provide more of a detailed answer than the minister has provided in the past.
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Madam Speaker, we are used to hearing from the member opposite, but it is nice to know that he is capable of talking about different subjects. We see more and more of that every day.
I listened to his speech and I felt like it was missing a vital component, something that seems to be missing from most of the speeches given by most of the parties here in the House. I am talking about national considerations and the importance that we should be placing on our flagship companies, our local businesses. A company that is established in Quebec or even elsewhere in Canada comes with a head office, decision-makers, and specialized and well-paying jobs. A Canadian- or Quebec-owned business also comes with shareholders who benefit from it. That way, the profits stay here and the strategic elements are there. It is also important that a certain amount of our locally owned companies remain here.
I would like to know whether the member opposite thinks that head offices and locally owned businesses are important. I would like to hear his thoughts on that, because that aspect seemed to be missing from his speech.
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Madam Speaker, the member brings up an excellent point, and I will use the specific example of New Flyer Industries, which is now one of the world's best bus manufacturers existing today. I know that Quebec also manufactures buses. New Flyer Industries likely would not be in Manitoba today if not for government getting directly involved.
I think of Dominion Tanners, which has a branch that supplies certain materials to the head office. When that head office goes bankrupt or closes, the subsidiary ends up shutting down. There may be more opportunities to support those types of subsidiaries and companies that are in fact ultimately profitable, but we lose those jobs in part because of what is taking place in another region, whether in Canada or, often, outside of Canada, and because of a decision that has been made that might be evaluated on a different metric than what we would like to see.
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Madam Speaker, I thank the member for his speech. I have certainly been in the House to hear a lot of them, and I appreciate the effort he takes to make sure that his voice is heard. As always, I encourage him to allow some of the backbenchers to also have a voice.
Getting to the point, one of the challenges, which the member mentioned in his speech, is that Canadians are feeling less and less trustful. They are very concerned about how assets are moved in this country and how foreign entities are participating.
One thing I have a concern with is a loophole around postclosure notification requirements. We know that things go through a process, but if something happens afterwards, a certain amount of time is given that often allows foreign investors to move sensitive assets out of Canadian businesses before the federal government even becomes aware of them. That really concerns me and the NDP because we want to make sure that the process is clean. If we are going to have foreign investment in this country, there should be accountability at a much higher level, because that is what Canadians need to hear.
I am wondering if the member could speak to that loophole and if there is going to be any effort to support amendments that will fix it.
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Madam Speaker, I have had the opportunity to get to know the minister over the last number of years, and I know the NDP's critic referred to the NDP having a series of amendments. My suggestion to the member and the NDP would be that they sit down with the minister or the minister's staff and share with them what their concerns are to see if in fact some of those perceived or real loopholes can be addressed.
At the end of the day, I like to think that the people coming from abroad to invest in Canada are being watched over, at least in good part, so that Canada is a net beneficiary of that investment.
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Madam Speaker, this is important legislation. It gives us a chance to talk about the way in which so-called investors in Canada have an impact on our economy.
We saw foreign direct investment take off back in 2006, believe it or not. It was 2006 when Stephen Harper broke his promise that there would never be taxes on investor trusts. That ended up having the effect of causing a lot of foreign takeovers of Canadian companies. Then investment trusts got taxed and a lot of Canadian investors lost out. A lot of them still remember that change in election promise.
I mention that because when we speak of investors, quite often they are mercenary. They are coming in and buying up Canadian companies when they get the chance, and what they increasingly bring to Canada are security threats. That is in relation to the takeover of many Canadian enterprises by companies controlled by the People's Republic of China. They are protected by another move in the Harper era: the Foreign Investment Promotion and Protection Agreement with the People's Republic of China. It did not expand to trade for Canada into China. It just protected Chinese investors in Canada from regulations they would not like.
All of that is to say that this is important legislation, but does the parliamentary secretary not think it is time to think about more investment by Canadians in Canadian enterprises and not being so very welcoming to foreign investors?
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Madam Speaker, Canada has billions of dollars' worth of foreign investment coming into the country, and the member would know full well that billions of dollars leave Canada to be invested around the world. I would like to think that given the billions of dollars leaving the country, maybe we could revisit the issue and look at investing here in Canada.
At the end of the day, I truly believe that we need to modernize legislation, which the minister proposed in Bill C-34. It should allow for not only more investment but a healthier system. A healthier system that provides more stability not only would attract more foreign investment, but would, I would like to think, keep a lot of the dollars already in Canada invested in Canada.
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Madam Speaker, I noted that during his speech, the member talked about the security of our economy. Right now, under the legislation, foreign investment review is triggered only when the assets of a Canadian corporation are at least $454 million.
I wonder if the member would agree that, given the nature of security threats and foreign acquisitions by hostile governments, it would be better to have that threshold at zero dollars.
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Madam Speaker, again, if there are ideas from members of the opposition, or even from government members, to improve the legislation, I would really encourage them not to sit on them but let the ministry know about it. This always helps us out, even prior to going to committee. Most importantly, hopefully the legislation will pass relatively quickly so that we can at least get it into law before the end of the year.
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Madam Speaker, I will be sharing my time with the member for Louis‑Saint‑Laurent.
I rise today to address Bill C-34, an act to amend the Investment Canada Act. Bill C-34 is an attempt to update and strengthen the Investment Canada Act through seven significant amendments. Mainly, these changes to the act aim to protect Canada's national security with stricter regulations and higher penalties.
The main tenets of the bill attempt to introduce a pre-implementation filing requirement for specified investments. It would streamline the minister's ability to investigate national security reviews of investments and strengthen penalties for offenders. It would create regulatory power to generate a list of national security industries where automatic proposed acquisitions would be reviewed for national security harm, and it would provide ministerial authority to impose interim conditions and accept mitigation undertakings.
The bill would remove the Governor in Council, replacing it with the minister in making an order for further national security review, and involve the Governor in Council in the results of the national security review only if the investment is found, after investigation, to be injurious to national security. It supposedly would improve coordination with international partners and strengthen rules for the protection of information in judicial review proceedings.
In essence, this bill would give the Minister of Industry more time and authority to assess foreign transactions that might compromise national security, by removing the Governor in Council from the initial process while also making more severe the penalties for violating the Investment Canada Act. This, on its face, is beneficial and necessary, but there are several gaps that need to be addressed, which I will outline later.
Threats to our national security and sovereignty come in a dizzying array with regard to scope and creativity. Today, I want to focus on threats to our national security via our economy by investment from actors with malicious intent. There is just cause to update and strengthen the Investment Canada Act to prevent such threats or, at the very least, reduce the number of threatening actions made to Canada's economy and national security via investment. There exists a scary number of examples wherein Canada's national security was jeopardized due to a lack of due diligence on behalf of the industry minister with regard to foreign direct investment.
The industry minister's 2021 mandate letter directed the minister to do the following:
Contribute to broader efforts to promote economic security and combat foreign interference by reviewing and modernizing the Investment Canada Act to strengthen the national security review process and better identify and mitigate...security threats from foreign investment.
The keywords here are “better identify and mitigate...security threats”. There is ample evidence to show why the Prime Minister so directed the industry minister, as the Liberal record on allowing bad actors to invest in Canadian companies, and therefore our intellectual property and data, is rather horrifying.
In 2017, the Minister of Industry failed to request a full national security review of the acquisition of a B.C.-based telecommunications company, Norsat International, and its subsidiary, Sinclair Technologies, by China-based Hytera Communications, which is partially owned by the People's Republic of China. The Chinese government owns about 10% of Hytera Communications through an investment fund.
The United States, our largest and most important trading partner, blacklisted Hytera in 2021. Its Federal Communications Commission stated that the company “pose[s] an unacceptable risk to the national security of the United States or the security and safety of United States persons”. Sales and import of Hytera equipment are banned in the U.S. as a result, and our industry minister let this company, with its ties to the Chinese ruling Communist Party, buy a Canadian company.
It gets better, or should I say, it gets worse. Hytera Communications is also facing 21 charges in an American espionage case. The United States Department of Justice is accusing the firm of conspiring to steal trade secrets from Motorola. We know this tactic has been used before by the Chinese government, and yet our industry minister okayed a sale of a Canadian company right to it.
In 2019, Manitoba-based Tantalum Mining Corp. of Canada Limited, also known as Tanco, was purchased by the Chinese company Sinomine Resources. The purchase was approved by the Liberals with no national security review. The mine produces lithium and more than 65% of the world's cesium, which is used in drilling applications, as well as Canada's largest deposit of tantalum, which is used in electronics.
Sinomine was recently ordered by the government, in November, to divest itself of its investment in Power Metals Corp, a different mining exploration firm in Vancouver, but the government was apparently totally fine with its continued ownership of the Tanco mine and its critical minerals operations, as its divestment order said nothing about it.
In 2020, our Department of Global Affairs awarded a $6.8-million contract to state-owned, China-based Nuctech, which was founded by the son of the former Chinese Communist Party secretary general. That is $6.8 million of Canadian taxpayer money basically going directly into the Chinese Communist Party's pockets, along with precious data.
As John Ivison wrote for the National Post in 2020, “Nuctech is known as the 'Huawei of airport security'”. The contract was to supply security equipment for 170 Canadian embassies, consulates and high commissions around the globe. A security industry source told Ivison for the story that he was concerned there were now “significant pieces of Chinese technology sitting in every embassy” and that the contract included delivery, installation, operator training and software.
For the same article, Guy Saint-Jacques, a former Canadian ambassador in Beijing, explained that the Chinese business strategy overseas is to win market share and, once dominant, dictate prices, illustrating that not only are there security concerns with these problematic investments, but there are also long-term economic implications. We cannot continue to let China and other actors with malicious intent interfere with Canada's economy and national security, even if they do offer the lowest prices for the service.
That said, the pattern of allowing risky investments without full security reviews continues. It was apparently briefly acknowledged in 2021, with the industry minister updating and enhancing guidelines for national security reviews of transactions involving critical minerals and state-owned enterprises in March of that year. However, 2022 saw a number of lapses, even with this enhanced protocol.
In January 2022, the minister failed to follow his own updated guidelines when he fast-tracked the takeover of the Canadian lithium company Neo Lithium Corp. by Chinese state-owned Zijin Mining, again, without a national security review.
Wesley Wark, a visiting professor at the University of Ottawa who specializes in international affairs and intelligence gathering, told the industry and technology committee, while studying the takeover after the fact, that it was a mistake. The value of the transaction was close to a billion dollars.
Then, in November 2022, the minister ordered three Chinese companies to divest their ownership of three critical minerals firms, but Neo Lithium was not included.
In December 2022, possibly the worst offence, the RCMP awarded a contract to supply sensitive hardware for its communications systems to Sinclair Technologies, which, members will recall, was sold to Hytera Communications, the Chinese company partially owned by the Communist Party and blacklisted in the U.S.
It was also revealed in December of that year that the Canada Border Services Agency has been using communications equipment and technology from Hytera. A CBC story says that Public Services and Procurement Canada did not take into consideration the security concerns about Sinclair and its ownership during the bidding process. The difference between that and Quebec-based Comprod's offer was $60,000. The Liberals love to hand out money left and right, but they could not spend $60,000 to keep our security hardware domestically sourced and provide Canadians with jobs while we are at it.
As we can see, the bill is sorely needed, but there are a few areas for improvement within the bill itself.
I do not like the part that gets rid of the Governor in Council approval and gives power just to the minister. I think that should be fixed. The legislation should also consider updating the act's definition of a state-owned enterprise, which is now too vague. There is no provision to block any subsequent takeover by a state-owned enterprise of a previous Investment Canada Act-approved acquisition.
It is my hope that the government learns from its mistakes, listens to the opposition parties and experts, and gets this legislation right. We cannot keep selling off parts of our economy, national security and precious resources to bad actors.
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Madam Speaker, I loved the last line about learning from mistakes. This is the same Conservative Party that, when there was warning after warning about Chinese state companies stealing IP from Canadian companies, Stephen Harper was selling off key assets, like $15 billion for Nexen to a state-owned company.
When HD Mining in British Columbia, a Chinese company, announced it could not hire Canadian workers, Stephen Harper gave it 14 years to bring in Chinese workers to exploit Canadian assets. Stephen Harper thought that was so good that he signed a secret free trade deal that allowed Chinese state companies to sue any level of government. Imagine the United States letting Montana or Miami be sued.
Stephen Harper was more than willing to sell us down the river, sell out our assets and sell out our resources, while we warned them about the theft of IP and resources by Chinese state companies.
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Madam Speaker, I see the outrage in the member opposite, but perhaps he could apply that to the party that he is supporting, the party that sold out health care in B.C. to Anbang. Does the member remember that? It was a total disaster. We had to come in and rescue them in the pandemic.
Huawei is another example, where the government sat on its decision for two years and let Huawei build all the 4G networks under Bell and Telus in this country.
Why does the member not take his outrage and apply it to the government that he is propping up?
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Madam Speaker, the member has identified some areas that she suddenly feels need to be addressed. I am curious if she could tell the House how many times, because we are in fact only amending a piece of legislation here, she has raised her concerns with the minister before today, specifically about how the legislation should be changed.
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Madam Speaker, that is a great question, actually. Members may recall I was on my feet in this House criticizing Navdeep Bains when he was the industry minister who did Anbang. I have been on my feet in this House criticizing every time one of these things has come along and calling it out, because of the danger and the breach of our privacy and the fact that they are allowing the Chinese Communist government to put security systems, information systems and software into Parliament, embassies, etc.
It is outrageous. It needs to get fixed. I have been calling for this now for eight long years.
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Madam Speaker, I share the concerns of my Conservative colleague about Chinese investments, which are not always wise, and about the lax approach and lack of verification by this government.
I want to take this opportunity to mention that a Chinese spy was recently arrested at Hydro‑Québec facilities. We often hear the Liberals brag about the fact that they are working hard for the electrification of transportation. We are not seeing many results, but they love to talk about it. In fact, this Chinese expert was in the offices of IREQ, Hydro-Québec’s research institute, which is in my riding. He took photos and gathered information on our research into the electrification of transportation to send to the Chinese government. It takes some nerve.
All of that leads me to my question about Bill C‑34. At the time, in 2015, when I was elected for the first time, foreign investment notifications would have been sent to the government. According to government data, 10% of foreign investments were analyzed by the government in 2015.
The most recent data indicates that only 1% of investments are being analyzed. What does my colleague think of that?
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Madam Speaker, I thank my colleague from the Bloc for the question.
There are indeed many examples of security problems where we can see that organizations have harmed Canada.
I think that the government is not paying close attention to agreements. We are going to fix that through Bill C‑34, however.
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Madam Speaker, I am pleased to take part in this debate, and especially pleased to speak after my colleague from Sarnia—Lambton.
We are here to discuss a bill that relates to national security, the trade relations Canada must engage in with other countries and the possibility of investors from other countries buying Canadian companies.
Let me make one thing clear right off the bat. China is going to come up a lot during this debate and in my speech. However, there is a big difference between the people who live in China, Canadians of Chinese origin and China's Communist government. These are completely different things, and anything negative we say about China's outsized ambitions relates to Communist China, not to individuals and certainly not to Canadians of Chinese origin.
This is about international trade. We welcome everyone who wants to invest here because we also want Canadians to be welcome in other countries. We are a free trade nation. Canada has more free trade agreements than any other country—over 40 in total.
Following an election in 1988, Prime Minister Brian Mulroney was mandated by the people to sign the free trade agreement with the United States. The famous agreement between “the three amigos”, the United States, Canada and Mexico, followed a few years later.
I would like to take this opportunity to pay tribute to my colleague from Abbotsford, who has been the architect of literally dozens and dozens of our free trade agreements with other countries. The member for Abbotsford was the minister of international trade for over six years. He was the longest-serving minister of international trade in the history of this country, and thank goodness for that, because we have great relationships with Asia, Europe and the Americas. That is the legacy of the member for Abbotsford.
As members will recall, when this government was elected in 2015, it shelved a few agreements, only to eventually renew them on the cheap, which is too bad. Still, Canada today is the land of free trade.
No one can claim to support free trade and say that Canada should go abroad but that our doors here in Canada should be closed. The doors must be closed in an intelligent way. That is why we have a number of concerns about this bill, which is essentially about tightening up security measures when it comes to national security reviews of foreign investments.
This bill basically provides for seven important changes to improve the national security review process for foreign investments. It also seeks to give the minister a lot more authority in certain circumstances.
The Conservatives do not disagree with the principle. However, as with anything, the devil is in the details, and that is where we need to do our job as parliamentarians. In principle, we agree that we need to revise the national security review process for foreign investments, but Bill C‑34 is seriously flawed, and we are going to talk about those flaws.
First, let us remember that the government's track record on foreign investments from China over the past seven or eight years is poor and fails to live up to expectations. In the early 21st century, China was not under the harmful influence and control of the current Chinese government. However, the situation has deteriorated since then and we are now paying the price.
In 2017, the industry minister did not ask for a full national security review prior to the acquisition of Norsat International, a communications company based in British Columbia, and its subsidiary, Sinclair Technologies, by Hytera Communications, a Chinese company belonging in part to the People's Republic of China.
In 2020, the Minister of Foreign Affairs awarded a contract to a Chinese firm, Nuctech, which was founded by the son of a former general secretary of the Chinese Communist Party, to supply X-ray equipment to 170 Canadian embassies. In a national security review, that checks off all the boxes. We are talking about X-ray equipment in our embassies and a contract was given to a company founded by the son of a former general secretary of the Chinese Communist Party.
In January 2022, the Minister of Innovation, Science and Industry did not follow his own guidelines when he expedited the purchase of the Canadian company Neo Lithium Corporation by the Chinese state-owned company Zijin Mining without a national security review.
Much of the automotive industry is going electric. Private companies around the world, manufacturers, are investing $500 billion in this shift. Electric cars require lithium. Canada has lithium. Now, however, the government has decided to let a Chinese company take over this natural resource that is essential for economic development in the 21st century. That is a huge loss.
I want to talk about another company that was mentioned earlier: Hytera Communications. In December 2022, the RCMP awarded a sensitive contract for communications systems hardware to Sinclair Technologies, which used to be a Canadian company, a wholly owned subsidiary of Norsat International. Norsat International was founded and based in Richmond but was acquired by Hytera Communications.
That is where things stand today after all these years of Liberal governance. Whether it is lithium, X-ray machines in our embassies, or security equipment for the RCMP, critical items are being funded by investors from China, a Communist country, need I remind the House.
There is a big difference between Communist China, Chinese people and Chinese Canadians. Shame on anyone who makes a connection between those elements; there is none. It is the Chinese government that is to blame.
Let us talk about Hytera Communications, which belongs to the People's Republic of China and is a major supplier to China's national security department. In December 2022, we learned that the Canada Border Services Agency used Hytera's communications technology equipment in 2017. Let us remember that Hytera is facing 21 espionage-related charges in the United States and was banned by President Biden himself. With friends like that, who needs enemies?
Pressure has mounted in recent years as companies tied to the Chinese communist regime have strengthened their positions here in Canada. The government has been slow to act on that, which is why it introduced Bill C‑34.
Essentially, Bill C‑34 gives the minister more powers, but the minister needs more still. Here are some ideas we are going to put forward during the committee's clause-by-clause study to improve this bill. First, all acquisitions subject to a net benefit review or a national security review must get cabinet approval regardless of the outcome of the investigation.
The bill also does not provide for the preparation of a list of autocratic countries that are banned from having Canadian companies or assets. I am talking here about China and Russia. The bill also does not include a net benefit test, or a measure of attempts to take control of key industries through acquisitions under the investment thresholds. Finally, the bill does not make any changes to the legal definition of a state-owned enterprise, which some consider to be too vague.
Let me be clear. We are in favour of free trade. Free trade means trade with other countries. That means that we can invest in other countries and other countries can invest here. Let me be clear, when it comes to China and the Communist Party that is currently in power there, we need to be incredibly vigilant. We need to recognize that they are not our natural friends.
We therefore need to enhance security measures to prevent mistakes, such as a lithium company ending up in the hands of the Chinese government, Chinese-controlled X-ray equipment in our embassies, and RCMP communications ending up in the hands of the Chinese government, from ever happening again.
Limits must be set, and that is what we want to do by improving this bill.
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Madam Speaker, I congratulate my colleague from Louis‑Saint‑Laurent on his excellent speech. It was quite interesting and very intellectually stimulating. It is a pleasure to listen to that kind of speech.
I would like to go back to the issue of the net benefit analysis. I think my colleague mentioned this in his speech. In the Investment Canada Act, there is a review threshold that seems to go up almost like clockwork each year, sometimes even faster than inflation.
For example, in 2015, the review threshold was $369 million. If we look at this year's figures, we see that the review threshold for countries with which we do not have an economic agreement, to use the lowest figure, hit $1.3 billion. This means that the government does not even look at the file when a company is purchased for less than $1.3 billion. These transactions are just rubber-stamped.
Let me name a few companies that are in this situation. Héroux-Devtek has a market value of $560 million. Lassonde Industries has a market value of $800 million, which means it still passes under the radar. Cascades has a market value of $909 million, and TC Transcontinental has a market value of $1.3 billion, which puts it right on the edge of passing under the radar. No one knows for sure. Resolute Forest Products, which has a market value of $1.6 billion, would fall below the second threshold, which is $1.9 billion for countries with which there is a trade agreement.
I would like to know if my colleague from Louis-Hébert thinks it is acceptable that the thresholds are so high, and that companies that are so important to our economy are not even subject to a review in the event of an acquisition.
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Madam Speaker, I really appreciate the question from my colleague. However, he made a little mistake in his question: I am the member for Louis‑Saint‑Laurent, not for Louis‑Hébert. The member for Louis‑Hébert is seated over there. We know that because over the weekend he said on Quebec television that he was in the corner over there with the leader of the Green Party. I will leave it at that.
I thank my colleague for very clearly demonstrating that we must always be vigilant and that when we increase the threshold for review so much, we are exposing ourselves to risk. That is where we need to pay attention. I completely understand.
I will play fair. The situation changed dramatically from 2015 to 2023. Oversight of China in 2015 may not have been very strong and that was understandable. These days that is no longer possible. We need to be vigilant and take this seriously.
As my colleague from the Bloc Québécois demonstrated so well, the bar is currently set too low. We have to set it higher. I also want to thank my colleague for highlighting the problem that came up at Hydro‑Québec.
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