One man who will Stand Up To China

June 4, 2019

Thirty years ago today, on June 4, 1989, one solitary, anonymous man stood alone against Chinese army tanks in Tiananmen Square in Beijing.

The night before, hundreds of student protestors and citizens were crushed beneath these tanks and killed by bullets as the army squelched a protest against the Communist leadership of China. This photo of  “Tank Man” became an iconic image for a generation. We’ve used this image as inspiration for our meme of #StandUpToChina in our campaign to call out the Chinese government’s embargo against Canadian canola shipments from farmers largely on the Prairies. And it’s led us to take on larger, bigger and more important issues dealing with China.

We’ve used this campaign to focus on the larger issues of how Canadians should face many of the dangers that arise when dealing with the large, aggressive and ambitious superpower that has no interest or pretension of following the same rules or holding the same values as we do in a liberal democracy.

In our minds, it’s clear that Canada needs to forcefully #StandUpToChina and not meekly accept when the human rights or our citizens are violated or markets are slammed shut on us for political reasons. We need to #StandUpToChina when there is a clear threat to doing business with China.

Today, we’d like to introduce you to one man who will indeed  #StandUpToChina and is doing so by trying to push important legislation through the Senate and into the House of Commons before the end of June.

That man is Senator Thanh Hai Ngo. Here is is profile. Please read it – he is an amazing man, with a background that gives him insight into national security issues and the potential threat that China poses to us in certain sectors today.

Senator Thanh Hai Ngo

Senator Ngo has introduced Public Bill S-257 entitled An Act to Amend the Investment Canada Act (mandatory national security review of investments by foreign state-owned enterprises). Here is some more information on Bill S-257 that you will find useful.

Senator Ngo is facing an uphill battle to get this pushed through before the end of June. On Thursday of this week we will come back and ask you to help. For today, please read the background on this Bill, provided to us by Senator Ngo’s office, and see why it is so key to Canada’s security.

Background

With rising global investments by foreign state-owned enterprises (SOEs) in key resource sectors, critical infrastructures, and sensitive technologies are increasingly considered as  to national security, some Canadian observers and decision-makers are considering whether national security reviews of proposed investments in Canada by foreign SOEs should be mandatory, rather than discretionary.

The government is now dangerously open to investments from China in key sectors such as energy; new technologies; metals and minerals; entertainment and real estate; and consumer products and services.  Two-thirds of such investments are from SOEs.

While the government assesses all investments in Canada from a basic security perspective, including those that do not lead to a change of control, the national security review power continues to be used sparingly with SOEs.

As it stands, a national security review may only occur if the Minister of Innovation, Science and Economic Development, after consultation with the Minister of Public Safety and Emergency Preparedness, considers that “the investment could be injurious to national security” and the Governor in Council orders a review.

This Bill would therefore enact a mandatory, non-discriminatory, predictable national security review every time an SOE proposes an investment in Canada.

Analysis

Although this Bill to amend the Investment Canada Act (ICA) would target any State-owned enterprise, as defined by the Act, it specifically addresses the growing concerns regarding how the government has been risk averse to foreign direct investments from China.

When assessing whether a proposed or existing foreign investment should be subject to the ICA’s provisions that permit a national security review the following factors.

  1. Canada’s defence capabilities and interest;
  2. the transfer of sensitive technology or know-how outside of Canada;
  3. the security of Canada’s critical infrastructure, including systems, technologies and networks essential to the health, safety, security or economic well-being of Canadians and the effective functioning of government;
  4. the supply of critical goods and services to Canadians;
  5. the supply of goods and services to the Government of Canada;
  6. the ability to enable foreign surveillance or espionage, hinder current or future intelligence or law enforcement operations, or involve or facilitate the activities of “illicit actors,” such as terrorists, terrorist organizations or organized crime; and
  7. Canada’s international interests, including foreign relationships.

Key Foreign Investment cases

In 2017, “foreign direct investment in Canada increased 1.9% to $824.0 billion” from the previous year.

Between 2008 and 2017, foreign direct investment from China in Canada increased by 190% (i.e., almost tripled An analysis from Osler, a Canadian business law firm, noted that investments from China outpaced investments from the U.S. (in terms of asset value) during the 2017 fiscal year.

Canada’s openness to foreign investment in 2017 has notably included some investments from China, which outpaced investments from the U.S. in asset value  according to the Investment Review Division’s (IRD) statistics for the 2017 fiscal year.

The following examples of “high-profile” Chinese takeovers include:

July 2012:                            China’s takeover of Calgary based Nexen Inc.

March 2017:                       Hytera’s takeover of Norsat International

March 2017:                       Hong Kong-based O-Net Communications’ (O-Net) takeover of Montreal-based ITF Technologies

March 2018:                       Anbang Insurance’s (Anbang) takeover of Retirement Concepts

May 2018:                           CCCC International’s attempt to takeover of Aecon Group

(N.B. Canada rejected the proposed $1.5 billion dollar in order to protect national security.)

Ongoing:                             Huawei’s bid to implement 5G network platform.

United States’ National Security Review

Canada’s treatment of investment from China is diverging somewhat from that of the U.S., where the momentum appears to be towards increased scrutiny of investment from China – much higher than the proposed bill.

FIRRMA

The U.S. Foreign Investment Risk Review Modernization Act (FIRRMA) reforms the process that is used by the Committee on Foreign Investment in the United States to evaluate and address national security–related concerns relating to foreign investments in the United States. In particular, the FIRRMA states the following: “whether a transaction involves a country of special concern that has a demonstrated or declared strategic goal of acquiring a type of critical technology or critical infrastructure that would affect United States technological and industrial leadership in areas related to national security.”

Key Messages

  • This Bill is about prudence, not protectionism. It creates a timely and predictable reassurance to Canadians that the Government will review all investments proposed by SOEs from a national security standpoint in a manner that does note discourages investment, economic growth and employment opportunities in Canada.
  • This Bill would help the Government identify potential issues in advance and, where appropriate, proactively addressing them, and in return help clarify any issues and avoid delays, namely when it comes to investments that have:
    1. the potential for transfer of sensitive dual‐use technology or know‐how outside of Canada;
    2. the potential for negative impacts on the supply of critical services to Canadians or the government;
    3. and the potential to enable foreign surveillance or espionage.
  • The current Liberal government’s efforts to encourage foreign investment represent a dangerous and risk tolerant shift from the previous Conservative government.
  • According to Investment Monitor 2017, while foreign SOE investments in Canada equalled 24% of the number of deals from 2003 to 2016, they constituted 72% of the total value of foreign investment; this is due to the fact that the bulk of SOE investment in Canada is concentrated in a few large deals pertaining to the resources sector.

Thanks again for your interest and support.
Rick Peterson,
Founder, Suits and Boots