June 17, 2020

Canada must be clear-eyed about the implications of foreign takeovers of Canadian companies, not only during the current pandemic but in the long term in the new post-COVID-19 world.

A dramatic reduction in share-prices and the market value of critical resource and tech companies has been a major economic consequence of the temporary measures imposed to protect public health. While many nations are focused on weathering the pandemic, other global powers are using the downturn to further their long-term objectives.

Canada is an attractive target.

Without immediate action, Canadian businesses are drastically unprotected from this predatory behaviour. Mining, oil and gas, and manufacturing companies are particularly vulnerable because of their strategic value, and that so many have fallen below thresholds requiring a review under the Investment Canada Act.

Last week, Justice Minister David Lametti introduced draft legislation that would suspend regulatory timelines under the Investment Canada Act until Sept. 30 of this year. While providing more time for reviews is not unwelcome, it merely extends the status quo. It fails to address immediate concerns surrounding foreign takeovers or to develop a comprehensive approach that prioritizes national security and sovereignty, along with economic considerations.

Australia has already taken action to protect domestic companies from foreign takeovers, in the short term, mandating a review of each foreign takeover for any telecom, tech, energy and defence business. The United Kingdom has imminent plans to tighten their rules, and the European Union urged member states to protect critical domestic assets.

Canada must do the same to prevent the fire-sale of Canadian national strategic assets which are distressed due to COVID-19.

The Investment Canada Act must be immediately altered to lower the financial thresholds that trigger a federal review, temporarily suspend takeovers from state influenced enterprises, and require mandatory national security reviews for all takeovers, unless the purchaser is from a country that is a Canadian intelligence sharing partner.

A longer term analysis should consider to what degree Canada should retain strategic assets to protect economic resilience and sovereignty.

Beijing’s Arctic policy claims China is a “Near-Arctic State” with plans for a “Polar Silk Road,” that seeks to access arctic energy and mineral reserves, and the Northwest Passage as a major shipping route – to effectively claim Canadian resources and territory.


The Shandong Gold Mining Company’s intent to purchase Canadian company TMAC Resources is an instructive example. Shandong Gold is 47% owned by the Chinese Communist Party (CCP) government.

China is the world’s largest gold producer and controls over 90% of the world’s supply of rare earth elements. Gold offers protection against economic volatility and is widely used in control systems of nuclear power plants and nuclear weapons facilities. Rare earth metals are essential for electronics, renewable energy production and advanced military hardware.

Foreign companies also use corporate subsidiaries to purchase multiple stakes in Canadian companies each under the ICA threshold, enabling a significant cumulative ownership position without triggering a review.


How much can Canada afford to lose before its independence and self-sufficiency are at risk?


Foreign acquisitions of strategic assets can’t be viewed in isolation.

The recent drop in world oil prices was exacerbated when the OPEC+ cartel countries aimed to bolster their global dominance by using their strategic control of oil to destroy free-market competitors in Europe and North America and destabilize energy security.


The increasing use of non–tariff trade barriers like those employed by the People’s Republic of China against Canada’s canola, ginseng, and soybean exports can be used to devastating effect on national food security and revenues.


In telecom, there are only two major manufacturers for 5G networks: Ericsson/Nokia and Chinese company Huawei. The strategic control of technology can open the door to national security threats.


This is the power of foreign policy by other means – and Canada is vulnerable.


Canada is a free-market trading nation that requires foreign direct investment to grow Canada’s economy. At the same time Canada must develop a comprehensive strategy to foreign takeovers that considers all aspects of soft and sharp power diplomacy to assess the true cost of selling Canada.

— Leona Alleslev is Conservative Deputy Leader and Shadow Minister for Foreign Affairs, Pierre Paul-Hus is Conservative Shadow Minister for Public Safety, Border Security and Emergency Preparedness, and Shannon Stubbs is Conservative Shadow Minister for Natural Resources

Op-Ed originally published in the Toronto Sun. Click here!