Morneau not committing to keeping tougher foreign investment scrutiny post-coronavirus

Despite warnings from national security experts that Canada needs a strategy to deal with hostile foreign takeover attempts post-coronavirus, Finance Minister Bill Morneau won’t say whether the government will consider keeping new rules in place after the economic crisis ends.

In an interview with The West Block‘s Mercedes Stephenson, Morneau was asked about a warning issued by the federal spy agency CSIS last week on the threat posed by hostile foreign takeovers of key Canadian companies, and what the government is doing to limit that risk.

“We need to make sure we protect our economy for the long term,” Morneau said without offering specifics.

He was also asked about calls from experts for the government to craft a strategy to prevent such takeovers by authoritarian countries seeking influence in a post-pandemic world, and whether the government plans to keep recently expanded scrutiny of proposed takeovers after the crisis ends.

Morneau called the expanded measures “critically important” right now but would not commit to keeping or reviewing them into the future.

“We’re not making decisions about long-term structural issues during this time of the economic crisis,” he said. “We do have measures that were already in place to review foreign acquisitions before we got into this crisis. Of course, those will continue to need to be considered.”

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The new measures in question were announced last month.

At the time, the government said it will be keeping a closer eye on “all foreign investments by state-owned investors, regardless of their value, or private investors assessed as being closely tied to or subject to direction from foreign governments.”

That applies as well to any foreign investment in Canadian businesses “related to public health or involved in the supply of critical goods and services to Canadians or to the Government.”

While the announcement said those measures will last “until the economy recovers from the effects of the COVID-19 pandemic,” there’s no timeline for when that could be.

And all the while, countries like China, Russia and Saudi Arabia are aggressively challenging the rules-based international order and seeking expanded shares or ownership of key strategic businesses.

Saudia Arabia, for example, has been buying up shares in Canadian energy firms, while just last week, Canada’s TMAC Resources agreed to sell its Hope Bay gold mine project in Nunavut to Shandong Gold Mining, a Chinese state-owned mining company.

China has a major strategic interest in expanding control over the Arctic, which it views as both a key shipping route as the climate warms and as a region to be exploited for resource development.

That gold mine deal will have to get approval under the Investment Canada Act.

But the government has so far given little indication it plans to heed calls for a review of those criteria, which assess the “net benefit” of a deal with respect to factors like jobs created versus potential security risk.

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Prime Minister Justin Trudeau declined to say how his government planned to heed the warnings from CSIS when asked about the matter last week.

Deputy Prime Minister Chrystia Freeland similarly dodged questions about whether she would commit to a review of the Investment Canada Act criteria in light of the need to chart a path forward in a global economy battered by the coronavirus pandemic.

“At a time when our economy is facing a very difficult situation, Canadian companies are particularly vulnerable and today’s also a time when we have particular reason to pay attention to the sanctity of our supply chains,” Freeland said.

“Our government, informed by the work of our excellent intelligence analysts, is very focused on ensuring the safety and sanctity of Canadian companies and on ensuring they are not acquired inappropriately.

“It is never right for Canadian companies to be acquired by hostile foreign interests.”