ANNOUNCEMENT 24 Mar 2021

In March 2021, the government of Canada issued updated guidelines on foreign investment screening on national security grounds. 

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

Government of Canada. Investment Canada Act Guidelines: "Guidelines on the National Security Review of Investments". 24/03/2021. Available at: https://www.ic.gc.ca/eic/site/ica-lic.nsf/eng/lk81190.html

Government of Canada. News release "Minister Champagne highlights updated guidelines on national security review of foreign investments". 24/03/2021. Available at: https://www.canada.ca/en/innovation-science-economic-development/news/2021/03/minister-champagne-highlights-updated-guidelines-on-national-security-review-of-foreign-investments.html

Inception date: 24 Mar 2021 | Removal date: open ended

FDI: Entry and ownership rule

On 24 March 2021, the government of Canada issued updated guidelines on the National Security Review of Investments, specifying the Foreign Direct Investment (FDI) screening rules for additional areas such as critical minerals, personal data transfer, and sensitive technology. The guidelines concern foreign investments in the form of starting a new business in Canada, acquiring any control of a Canadian business, and acquiring any control of an enterprise operating in Canada. 

According to the announcement, the government will subject certain foreign investments into Canada to scrutiny under the Investment Canada Act (ICA) if the investment poses a risk to national security. A non-exhaustive list of such risks was published, including the previously present investment's impact on Canada's defence capabilities, supply of critical goods and services,  security infrastructure, the possibility of foreign surveillance and espionage. Such concerns as the investment's effect on Canada's intelligence and law enforcement operations, international interests, illicit activities, are also included in the list. 

The new foreign investment-related factors posing national security concerns that appeared in the guidelines are the transfer of sensitive technology, critical minerals supply chains, and the transfer of sensitive personal data. 

The government has the authority to permit foreign investment, conditionally authorize the investment based on certain commitments, prohibit the investment, or demand the investor to divest control of Canada-based business. 

The announcement specifies a non-exhaustive group of sensitive technologies, including advanced materials and manufacturing; advanced ocean technologies; advanced sensing and surveillance; advanced weapons; aerospace; artificial intelligence; biotechnology; energy generation, storage and transmission; medical technology;  neurotechnology and human-machine integration; next-generation computing and digital infrastructure; position, navigation and timing (PNT); quantum science; robotics and autonomous systems; and space technology. In turn, the range of the aforementioned critical minerals is based on the Canadian government's official "List of Critical Minerals". 

In the same announcement, the government made permanent the requirement that all foreign direct investments into Canada by foreign state-owned enterprises be subject to "enhanced scrutiny" because of the investments' potentially non-commercial objectives. The requirement was previously imposed as a temporary measure during the Covid-19 pandemic (see related state act).

AFFECTED SECTORS

 
N/A