Moved third reading of Bill C-34, An Act to amend the Investment Canada Act.

He said: Honourable senators, it is my pleasure to speak today at third reading of Bill C-34, An Act to amend the Investment Canada Act.

Over the next 45 minutes, I will do my best to convince you and every person waiting to support this bill.

I am just kidding, colleagues.

My speech will last a maximum of 28 minutes. I will do it in a very respectful way.

I would like to talk briefly about why the Senate should pass this bill. Before I proceed, I’d like to begin by thanking all my Banking, Commerce and the Economy Committee colleagues, as well as the bill’s critic, Senator Carignan, for their involvement in our study of this bill. I’m especially grateful to my Progressive Senate Group colleague, Senator Bellemare, and to the committee chair, Senator Wallin, for their flexibility and their valuable advice on how to append several observations in both official languages during the clause-by-clause consideration of the bill in committee yesterday at noon, just hours before the official report was tabled in this chamber yesterday afternoon. This experience gave me an appreciation of how the legislative process and the logistics of Senate business are enhancing this assembly’s agility and effectiveness.

Colleagues, the Investment Canada Act is an important and far-reaching tool. It enables Canada to respond to evolving threats that could result from foreign investment, yet it protects Canada’s receptiveness to beneficial international investments.

Canada is already an attractive location for foreign investment, as the most recent statistics available for 2023 show. In fact, Canada ranks third among OECD countries in terms of foreign direct investment dollars, after the United States and Brazil. Per capita, that means Canada is number one.

Despite this success, we need to adapt. The world has changed in 15 years, and global trade is becoming more fragmented. As a member of the G7, a member of the FVEY, better known as the Five Eyes, and, more importantly, as a major trading partner — and military partner, in the case of NORAD — of our American neighbours, we can’t turn a blind eye to national security issues. We may long for the good old days of barrier-free trade liberalization of decades past, but we can’t stick our heads in the sand.

We have to be extra cautious with respect to certain investment plans from certain autocratic countries that could possibly be concealing malicious intentions.

That’s another reason why we need to modernize our legislation so it can provide foreign investors with clarity and predictability.

Our country needs foreign direct investment and international trade to enable Canadians to maintain their standard of living and fund social programs. That’s why the government has chosen to take a balanced approach, and it will continue to be pragmatic in taking action on the very real issues of national security.

In return, Canada will have to remain vigilant and fight back against purely protectionist measures, which introduce economic barriers under the guise of national security. I am referring to tariffs on Canadian steel and aluminum imposed by our neighbours to the south under the pretext of national security. At the same time, it is essential that the law be modernized to adapt to these new threats.

Canada remains an open economy that is the envy of the world, but our country is also increasingly the target of hostile actors.

Honourable senators, our allies, such as the Five Eyes, have adopted their own modern regimes in recent years. This update of the Investment Canada Act will provide authorities with new tools to prevent hostile actors from exploiting Canada’s expertise and capacity for innovation.

For example, the new pre-implementation filing requirement will guarantee that Canada has more oversight into certain key sectors, in particular those that give foreign investors substantive access to cutting-edge intellectual property and trade secrets once the investment is finalized.

What is more, the new ministerial power to impose interim conditions during the national security review process will help reduce the risk of harm to national security arising in the course of the review itself, for example, through the possible transfer of intellectual property before the review is complete.

The proposed changes in Bill C-34 also include financial penalties in the case of non-compliance with the law. These penalties have not been updated in several decades and are no longer commensurate with the current typical value of transactions.

The bill will also enable Canada to share specific information with its international counterparts to protect common interests in matters of security by using evidence-based best practices.

Finally, the resulting amended legislation will help trigger the national security review process when the investor has been found guilty of corruption in a given jurisdiction.

Honourable senators, like many other bills passed in this chamber, this bill is not perfect, and the Senate Banking Committee added several observations. Senator Bellemare will no doubt elaborate on those observations, since she is responsible for many of them.

However, as demonstrated by the unanimous support Bill C-34 received in the other place, national security is not a partisan issue, and senators should also support this bill.

As the bill’s sponsor, I thought it was important to look at how the bill evolved in the other place before it was submitted to the Senate for our consideration.

Honourable senators, this bill underwent an in-depth review by the committee in the other place, which held 12 meetings and heard from 44 witnesses.

What is more, unlike several other bills that were passed in the other place, this time, the government agreed to many amendments presented by Conservative, NDP and Bloc Québécois members in order to improve the bill that is before us today.

For our part, the Banking Committee held six meetings on this bill and heard from ten witnesses, including the Honourable François-Philippe Champagne, minister responsible for the bill. The committee also produced a report and added observations, which my colleague will talk about later.

I hope everyone will agree that, taken together, these legislative changes will help Canada benefit economically from foreign investment while strengthening its ability to act quickly and decisively to address national security threats.

Honourable senators, it’s been a long week. Let me therefore conclude by inviting you to support Bill C-34.

Thank you for your attention. Meegwetch.

Thank you for your kind words, Senator Gignac. It always worries me when the sponsor of a government bill thanks me for my work as critic. It makes me wonder if I’ve done my job properly.

Colleagues, I rise today to speak at third reading of Bill C-34, An Act to amend the Investment Canada Act, whose short title is the National Security Review of Investments Modernization Act.

The Investment Canada Act was passed a little over 40 years ago, so it does indeed need to be modernized. As I pointed out in my speech at second reading, the bill was amended and improved for the last time in 2009, under the Harper government, through Bill C-10, the Budget Implementation Act, 2009.

The economic aspect of the Investment Canada Act is certainly important, but now, more than ever, the national security component is of critical importance. In that regard, I’m very concerned about Bill C-34. Fortunately, some Conservative amendments were passed in the other place that provide additional safeguards for our national protection, but I’m still seriously concerned. Again, I don’t believe that Bill C-34 goes far enough. I will return to that later.

Recent years have shown us that the current government takes an outrageously lax and alarming approach to Canada’s security, the administration of public funds, the overuse of all kinds of consultants, the failure to enforce strict and transparent accountability, but most of all, the apparent total lack of accountability of government ministers for the many abuses committed.

In fact, this government’s incredible bungling is enough to make anyone’s head spin. The recent scandal involving the ArriveCAN app is only the last in a long list.

Although we generally agree with Bill C-34, our study has revealed some seriously disturbing flaws. Considering the aggressive behaviour of certain dictatorships toward Canada, including interference in our democratic process, industrial espionage and hostile takeovers of some of our telecommunications companies, why doesn’t Bill C-34 make them a priority or, at least consider them in a more specific, contemporary way?

Faced with this inconsistency, all Canadians would agree that it defies common sense. Obviously, I do.

The committee heard from a number of witnesses, including Anthony Seaboyer, Director of the Centre for Security, Armed Forces and Society at the Royal Military College of Canada. Mr. Seaboyer gave us a very enlightening, but also very worrisome, presentation.

Essentially, he believes that if the bill doesn’t go further, it will be partly obsolete before it is even passed. According to his testimony, his research focuses on the weaponization of information by authoritarian regimes. He said the following:

I research how authoritarian regimes target Canada with artificial intelligence . . . applications for hybrid and grey zone warfare exploitation operations of our open, rules‑based democratic societies and institutions. They do this to serve their regime interests. . . . Particularly, I look at how they try to undermine democracies, and why they do this, through the weaponization of information.

In that sense, he’s a privileged player, but, above all, an extremely credible one. Mr. Seaboyer considers the bill to be a good step in the right direction, but listening to his statement, given that when the bill was drafted, AI-based applications had nowhere near the data processing capacity they have today, this bill could be obsolete as soon as it passes.

Mr. Seaboyer stressed that the thresholds that trigger security reviews should be considerably lowered, that much harsher monetary penalties should be introduced for non-compliance and that all companies from totalitarian countries, such as China, Iran, Russia and North Korea, should automatically be subject to security reviews when those companies want to invest in Canada. I’ll come back to each of those aspects later, but it’s already clear that Bill C-34 does not meet the requirements outlined by Professor Seaboyer.

Honourable senators, we need to seriously consider whether Bill C-34 is not already obsolete.

During committee study in the other place, the Conservatives presented an amendment to ensure that a security review is automatically triggered as soon as an investment is made in Canada by a company headquartered in a totalitarian, undemocratic country. That amendment was rather nonchalantly defeated, but I believe it was crucial to Canada’s security.

The government’s refusal to amend the bill in this way is tantamount to denying the new environment in which we now live. Our civilizations are fighting an information war, but mostly a war against disinformation. With the advent of artificial intelligence, it’s impossible to imagine the new stratagems that our adversaries will deploy to destabilize our democracies.

For example, under Chinese law, businesses in that country are required to enable the operations of Chinese intelligence services and to share any exclusive intelligence with them. If a Chinese company, of any kind, refuses to comply with the demands of the Chinese intelligence services, its leaders run the risk of extrajudicial incarceration and severe sanctions, following well‑established protocols. That is what Mr. Seaboyer told us during his testimony.

He gave the example of electric vehicles that might be introduced in our countries through Chinese companies. Their prices would be well below current market prices to make it easier to flood western markets with these vehicles. Let us not forget that electric cars are mobile data sensors. Do we really want companies based in totalitarian countries to roll out a multitude of potential spy agents in our streets? This is no longer the stuff of science fiction, honourable senators. It is on our doorstep and may have already entered our homes. We have to be extra vigilant, but unfortunately, that is not what Bill C-34 does.

Look at what happened with Hytera. I talked about it in my speech at second reading, but I believe it is worth mentioning it again to illustrate the very real possibility of potentially harmful companies intruding in our lives.

In 2017, a company called Norsat set up shop in Canada. It is still based in British Columbia. It also owns Sinclair in Toronto. The company was acquired by Hytera, which is partially owned by the Government of China and works in the critical telecommunications sector. Even though the then Minister of Industry was urged many times in the House to conduct a national security review of that acquisition, he refused to do so, and therefore there was no national security review.

In January 2022, Hytera was charged with 21 counts of espionage in the United States, and President Biden subsequently banned the company from doing business in the U.S. However, eight months later, the RCMP purchased radio frequency equipment to integrate into the communications system, giving the Chinese state-owned subsidiaries access to all the locations of the RCMP communications services. No national security review was conducted on this either.

Shockingly, Public Services and Procurement Canada has confirmed that security concerns were not taken into account during the tendering process for this equipment. This is alarming. The Liberals also failed to consult their own government’s Communications Security Establishment about the contract. Instead, the contract was simply awarded to the lowest bidder.

This example should raise major concerns because of a new provision introduced in Bill C-34. The current Investment Canada Act leaves it up to cabinet, acting in accordance with certain criteria, to order a security review of potential foreign investments in Canada. However, Bill C-34 hands that responsibility over solely to the minister responsible for the act in consultation with the Minister of Public Safety. Colleagues, don’t you think the Hytera example should serve as a huge, glaring red flag with respect to this new provision?

The other aspect of Bill C-34 that really bothers me is how weak the penalties for breaking the law are. They’re laughable, considering what’s at stake, and utterly preposterous compared to what other countries are doing. Here again, Canada is lagging behind.

Mr. Seaboyer did not mince words on the subject. Here is what he said:

 . . . the level of penalties is far behind, and it’s much easier to perform these attacks in Canada. The repercussions are nowhere close to those of some of our Five Eyes partners, and, to be compatible with them, we need to be much more rigorous on some levels. . . . but we certainly need to cooperate better and more optimally with them, matching more closely the repercussions they have introduced.

Mr. Seaboyer also said the following:

I was very surprised when I saw the penalty numbers. They are so low that really . . . it has zero effect.

They are so low that they have zero effect. Honourable senators, it would be difficult to be clearer than that.

Despite Bill C-34’s many flaws, we will still vote for it in order to move a step forward.

As I mentioned in my introduction, a future government will obviously have to quickly introduce a new bill to plug the many national security holes in Bill C-34.

Thank you.

Are honourable senators ready for the question?

Is it your pleasure, honourable senators, to adopt the motion?

Hon. Senators: Agreed.

(Motion agreed to and bill read third time and passed.)