THE STANDING SENATE COMMITTEE ON BANKING, COMMERCE AND THE ECONOMY
EVIDENCE
OTTAWA, Thursday, February 29, 2024
The Standing Senate Committee on Banking, Commerce and the Economy met with videoconference this day at 11:30 a.m. [ET] to consider Bill C-34, An Act to amend the Investment Canada Act.
Senator Pamela Wallin (Chair) in the chair.
[English]
The Chair: Hello to everyone joining us here in the room and online. Welcome to this meeting of the Standing Senate Committee on Banking, Commerce and the Economy. My name is Pamela Wallin, and I serve as the chair of this committee. I’d like to introduce the members of the committee who are here with us today: Senator Loffreda, who is our deputy chair; Senator Bellemare; Senator C. Deacon; Senator Gignac; Senator Marshall; Senator Martin; Senator Massicotte; Senator Miville-Dechêne; Senator Petten; Senator Duncan; and Senator Yussuff.
Today, we will continue our examination of Bill C-34, An Act to amend the Investment Canada Act. We have the pleasure of welcoming Anthony Seaboyer, Director, Centre for Security, Armed Forces and Society at the Royal Military College of Canada. He is here to help us understand the national security implications of this bill.
Welcome, and thank you for joining us. We’ll begin with your opening remarks. Mr. Seaboyer, you have the floor.
Anthony Seaboyer, Director, Centre for Security, Armed Forces and Society, Royal Military College of Canada, as an individual: Thank you very much for inviting me.
First, my comments are my opinions only and not those of any other institutions.
My research focuses on the weaponization of information by authoritarian regimes. I research how authoritarian regimes target Canada with artificial intelligence-enabled, or AI-enabled, 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. I look particularly at how AI-enabled applications enable them to perform information attacks on democracies that are far more effective than they have been in the past, and how they do this based on data and how they access this data. Particularly, I look at how they try to undermine democracies, and why they do this, through the weaponization of information.
Key to effective foreign adversary influence campaigns is the accuracy of the knowledge and data that foreign adversary governments have on citizens in democracies. The more accurate the data that foreign intelligence services have on Canadians, the more effectively they can target and influence Canadians. This is why we have to defend our democracies by protecting our data. In the age of the weaponization of information, the protection of our personal data from access by foreign intelligence organizations is vital to our democracies and the way we live.
In undemocratic, authoritarian regimes, there are no private profit-driven enterprises as we know them from rule of law-based democratic societies, like we have in Canada. This is a key feature that we have to understand. Chinese companies are required under Chinese law, for example, to enable operations of Chinese intelligence services and share all proprietary information directly with them. If a Chinese company — any Chinese company — doesn’t follow requests from the Chinese intelligence services, their leaders run the risk of extrajudicial incarceration and severe sanctions following well-established protocols. Over a dozen very prominent Chinese business executives have been disappeared in China in the past year alone. They tried to run their companies to maximize corporate economic interests, but when intelligence services require them, for example, to offer products in Western markets at prices far under production costs to serve the geostrategic agendas of the regime, they have no choice but to surrender to Chinese government demands. Lack of compliance with directives from Chinese intelligence services leads to investigation and purge of the company’s leadership for disloyalty.
This tension between greater profitability interests, for example, and non-economic acquisitions for furthering Chinese state interests is a business-as-usual situation in China. Chinese companies regularly have public relations contingency plans prepared in case their CEOs suddenly vanish — a situation that we cannot imagine in Canada.
Therefore, accepting Chinese investment means engaging with the Chinese regime and inviting their influence into Canada. It is not simply a regular commercial transaction.
If a Canadian company is acquired by China, the People’s Republic of China will establish a so-called Chinese Communist Party committee in the company, even in Canada. With every company that China acquires in Canada, Chinese intelligence services expand their influence directly in Canada. The revelations about “Chinese police stations” in Canada are just the tip of the iceberg that we’ve recently seen.
They use the acquired data to feed AI-enabled applications that can build very insightful information overviews that can be exploited for influence campaigns and to gain access to Canadian critical infrastructure.
A key example — and I could delve into this more during the question-and-answer session if there is interest — are the cheap electric vehicles that China is trying to flood Western markets with, which are way under the prices of production costs. They could soon possibly come to Canada. Modern cars are basically mobile sensors that collect many data points every second — not just of who is in the car, but also which licence plates are in the cars around it, as well as the people are on the streets as they can be recognized with the now easily accessible facial recognition applications. AI-enabled applications can process this collected data in near real time, providing very precise situational awareness to foreign intelligence services wherever these cars are driving, where they are parked and who is in or around them.
Let me conclude by saying that Chinese and other authoritarian regimes’ investments in Canada lead to exactly this kind of sharing of information with foreign intelligence services. Do we want the intelligence service of a foreign country to watch us driving our cars? Do we want them to know where we are driving, when we’re driving, how we’re driving, and with and to whom?
This highly personalized data can be used to feed influence operations that are part of hybrid warfare designed to weaponize asymmetries in democratic societies compared to authoritarian regimes; this is what I would like to raise your attention to. Thank you very much.
The Chair: Thank you very much for your opening comments, and for raising the questions we’ve been grappling with.
We’re going to begin our questioning today with the deputy chair, Senator Loffreda.
Senator Loffreda: Thank you for being here this morning with us.
You mentioned security concerns and hybrid warfare. We’re all concerned with that, but do you feel that the bill properly and adequately balances economic interests with national security concerns? We are amongst the global leaders with respect to foreign direct investment. Do you feel that this bill will help us maintain that status?
You talked about China, and 3.3% of our exports are to China and close to 10% of our imports are from China, so there is a substantial amount of business that Canada does with China.
Is there a proper balance in this bill, and do you feel like something is missing or should be added?
Mr. Seaboyer: You’re talking to a political scientist with a national security perspective, so I’m talking from the national security perspective. From that national security perspective, I think the bill is a great step in the right direction, but it’s not sufficient.
From my perspective, any investment from an undemocratic, authoritarian regime — and there are not many; there are four that I’m most concerned about: China, Russia, Iran and North Korea — should be subject to the highest levels of scrutiny through national security checks. Why? It’s because we see that these regimes are constantly targeting and undermining our democracies. They see Western-style democracies as threats to their existence, and they try to undermine them.
From my view, the threshold should be lower. It’s a step in the right direction, but it’s not sufficient as it is, from a national security perspective. However, I recognize there are other interests that play a role as well.
Senator Loffreda: So, in other words, you feel like there should be a reindustrialization that should progress in Canada? If you look at those numbers — a reindustrialization. In other words, I’m discussing the numbers I gave you: 3.3% of our exports are to China and close to 10% of our imports are from China. Do those numbers concern you? In a sense, does this bill go far enough to protect and balance the economic interests and national security threats?
Mr. Seaboyer: From my perspective, no. When it was drafted, the capabilities of AI-enabled applications to process data were nowhere close to where they are now. The ability of foreign intelligence services to access, process and analyze the data — as they can do today in 2024 — was never there. The bill doesn’t recognize that sufficiently, and it should be stronger in terms of protecting our national security interests, in my view.
Senator Loffreda: Thank you.
Senator Marshall: I have two unrelated questions. First, I always thought of China when I was reading the background material on you, but you also talked about Russia and North Korea. Do you think there should be a separate, more intense review of proposed investments from those three countries, as opposed to a one-size-fits-all? Should it be carved out?
Mr. Seaboyer: Not necessarily. The interests of, for example, China and Russia are very different in terms of how they’re influencing us and what they want to do. That said, I’m not sure it’s necessary to treat them differently. I would want to see any investment from any of those four countries — particularly Russia and China — be scrutinized by the highest possible national security checks. That would be sufficient for me. But it is true that they follow very different strategies and have very different interests — particularly Russia and China — in their influence campaigns.
Senator Marshall: Can you talk about the data? You mentioned the security of data and access in your opening remarks. The data is like a gold mine, especially in China. Even with the government privatizing, for example, health care records — I don’t know if the Canada Revenue Agency is too — there’s some risk there with regard to hackers. Can you talk a little bit about that because it keeps coming up as an issue that there’s not enough security over the data and not enough review?
Mr. Seaboyer: Absolutely. I would differentiate between two things: Hacked data is a whole different challenge we’re facing than that of countries purchasing companies, thereby accessing all consumer and product data that they have. This is, unfortunately, a legal way to access the data. This is completely separate from hacking. They don’t have to go to the lengths of actually hacking in order to access the data.
How are they using this? We have to understand that any AI-based application is only as good as the data it uses. The more data they feed these algorithms, the more they can learn and the more accurate they can be. What we’re seeing today is that the targeting cycle for influence operations — how countries identify who to target, when to target, how to target and with which narratives — is being increasingly automated with AI-enabled applications, so they don’t have actual people sitting there. China currently has over 400,000 people doing this, but, more and more, this is done by algorithms and AI-enabled applications. The more data you have, the more accurate they will be, and the less we, as citizens, will notice we’re being targeted — and the more effective they will be in changing our thinking. This fundamentally undermines our organic democratic will-formation process.
Senator Marshall: The possibility is there, if you can access health care data, motor registration data and national revenue data. It’s wonderful.
Mr. Seaboyer: It’s a huge challenge. This comes with the convenience of modern society. The more we do online, the larger our data trail becomes and the more exploitable this is to adversaries.
Senator Marshall: Thank you.
Senator C. Deacon: Thank you very much, Mr. Seaboyer. What I struggle with is the tension produced by the fact that in order to have business investment, you must have the ability to have a liquidity event. And if we want to shut down business investment, we can do it by shutting down the ability to reliably sell one’s company. But the concerns you raise are fundamental.
I was really surprised to have highlighted the lack of penalties in this bill for non-compliance. It reminded me of the issue of Cambridge Analytica and Facebook, where the Americans imposed a fine of $5 billion, whereas we imposed a fine of only $9 million. It’s a rounding error; it’s not a concern. Can you speak to that issue? I think we could at least lower the thresholds and have stronger enforcement with stronger penalties.
Mr. Seaboyer: I was very surprised when I saw the penalty numbers. They are so low that really — as you say — it has zero effect. But beyond that, I would say that it’s very essential to raise awareness and understanding of how they’re targeting us, why they’re targeting us, why and how they do this with foreign investments, and then prevent that from happening in the beginning. That would be my primary interest.
Senator C. Deacon: You spoke about hundreds of thousands of those working in this space, plus advanced AI in China. How many tens or hundreds do we have at our end?
Mr. Seaboyer: In messaging out into foreign adversaries?
Senator C. Deacon: No, in protecting ourselves.
Mr. Seaboyer: That’s a very good question. The protection against these information attacks has to be a whole-of-society approach through public education — teachers in schools — our media organizations and various government levels. If you include all that, we have a lot of people who need to be involved and who are, to an extent, involved. But the main and newest difference, I would say, is that these AI-enabled applications fundamentally oversaturate what information is available in the information space. They drain out legitimate information, overwhelming anybody in our society who is consuming information. With that, authoritarian regimes want to achieve a lack of agency, because people become overwhelmed, the information space is so oversaturated that “information suffocation” occurs. It becomes too exhausting for people to deal with the information because they’re experiencing this onslaught of information. So they turn away, and information apathy emerges. They turn away and stop engaging with civil society. Eradicating civil society is a key goal of authoritarian regimes, and this is what we need to prevent; that’s the challenge I see. They want us to lose our agency as citizens and disengage from the political process, and they do this by overflowing the information space with disinformation and other methods. That’s where data protection comes in.
Senator C. Deacon: Social media-enabled.
Mr. Seaboyer: It’s a huge part of it, but it’s not just social media. It comes in various forms.
Senator C. Deacon: Thank you.
Senator Petten: As I’m listening to some of the other comments about the threat of cybersecurity and potential investors wanting the data, do you think that Bill C-34 needs to be strengthened?
Mr. Seaboyer: These attacks don’t just happen in the information space with traditional information warfare operations; they are in combination with hacks. If you look at deepfakes, such as the Zelenskyy deepfake by Russia against Ukraine, they hack into legitimate news websites — this is hacking and cyberwarfare — and post these deepfakes, looking as if they are legitimate news broadcasts by the news organization. So it’s always a variety and bouquet of forms of warfare that are combined. Cybersecurity absolutely needs to be adapted. This is the problem and challenge we are facing: Technology is developing so fast that the laws are always a couple of steps behind the newest capabilities that countries have to influence democracies.
Senator Petten: Thank you.
The Chair: Just on that point, Mr. Seaboyer, you said that this bill was out of date before it was drafted. That will be the case every single day, 365 days a year. Do you have any suggestions on how to keep this an open process so that it can constantly be updated without the rigours of changing a piece of legislation?
Mr. Seaboyer: I’m going to take the easy way out. That’s your job. It’s very hard to update legislation and have a grasp on it. Even those of us who are studying these areas are constantly trying to stay on track of this constantly moving ball; it’s incredibly difficult. We only know of what is openly available, generally speaking. We don’t know what China is doing in their secret labs. We do know that they are, by far, the top investor in AI development. Of the top 10 universities that publish most on AI, 8 are in China and 2 are in the United States. Canada is nowhere close to that; we see that. It’s an incredibly difficult challenge because AI is self-learning, which speeds up the learning process. It’s very difficult to keep track of that.
[Translation]
Senator Miville-Dechêne: Have you looked at similar legislation in other Five Eyes countries to see whether our legislation, broadly speaking, matches theirs — not in detail — in terms of being able to choose the right investments that don’t put our national security at risk?
[English]
Mr. Seaboyer: It’s a step in the right direction, but as we just heard, 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. The spirit is the same, the attempts are the same and, I think, the general threat perception is similar, but we certainly need to cooperate better and more optimally with them, matching more closely the repercussions they have introduced.
Senator Miville-Dechêne: Do you have specifics in terms of the difference in penalties, for example? Do you know what they are, or could you follow up with us?
Mr. Seaboyer: I’ll follow up with numbers on that, but for me, it’s two essential points: first, the threshold when a national security test is required, and, second, the penalties introduced. Those would be the two things I would focus on most. First of all, it’s the following: When are security threats required and how strictly are they enforced?
Senator Miville-Dechêne: On transparency, we heard testimony that suggested there should be more transparency by the minister on who is blocked and who is not blocked after inquiry.
Do you agree with that, or do you side with those who say that it could be problematic to have more transparency, because it would give tools to foreign countries, which would then try to retaliate against us?
Mr. Seaboyer: I very much understand the concerns of greater transparency, but I believe that one of the strengths — maybe the key strength — of our society is our transparency and the accountability that comes from it. I believe that is a risk very much worth taking. I believe it is a core fundament of our society that we have this transparency. I don’t think this is a compromise we should make.
Senator Miville-Dechêne: It’s written that the minister “may publish.” Is that enough for you?
Mr. Seaboyer: This is not my field of expertise. Personally, I would like the largest amount of transparency possible.
Senator Miville-Dechêne: Thank you.
[Translation]
Senator Gignac: I’d like to welcome the witnesses. I have two questions. The first has to do with the bill and the second with government procurement.
For the first question about the bill, there is an aspect that annoys the committee about the fact that there is a transfer of powers from the Council of Ministers — the Governor in Council — to the minister. He needs to consult the Minister of Public Safety, but not necessarily all the other ministers.
Yesterday, a witness suggested that we take inspiration from the CFIUS, the Committee on Foreign Investment in the United States.
[English]
This is a committee with many more people. So is it something that we have to look at?
[Translation]
You’re the Director of the Centre for Security, Armed Forces and Society and, with all due respect for the Department of Public Safety, the Department of National Defence is surely better equipped from a national security standpoint to examine the issue, with technology, for example.
Are you comfortable with the current authorization process as recommended in the bill?
[English]
Mr. Seaboyer: This is something that goes a bit beyond my expertise level. I can tell you how they’re trying to influence us, why they’re doing this and, ideally, how we can defend this as the whole of society. Beyond that, it would be something that goes beyond my expertise.
Senator Gignac: I have a second topic. You have expertise; I found your case interesting when you talked about electric vehicles, because I questioned the government regarding the procurement here. In the U.S., a Chinese company cannot any longer apply on the mass transit when they have a big project, because of facial recognition — all the reasons you described. So I’m surprised that, in Canada, we don’t harmonize with the U.S. and so on.
Is that something you would suggest the government have a look at as well?
Mr. Seaboyer: Absolutely. I don’t understand why we don’t.
Senator Gignac: That’s precisely why my first question was asked: You have much more expertise than some other departments here regarding when allies have foreign direct investment data and all the implications. We need some people with expertise to help the minister with this.
Mr. Seaboyer: I would agree with that, yes.
[Translation]
Senator Bellemare: Thank you for being with us. Listening to you, it’s clear that the security risks in Canada are now very high.
I am going to continue sort of along the lines of the previous questions, even though many of them have already been answered.
My first question is this. With or without this bill, Canada is now under threat. With all the consumer goods, no matter what we do, we are already being spied on everywhere. Many countries already have a presence here, regardless of the laws.
That is my understanding, and I would like you to tell us more about it. Nevertheless, you would like this bill to be stricter, perhaps even to the point of excluding countries from direct investment in certain sectors of the economy.
Have I understood correctly? Thank you very much.
[English]
Mr. Seaboyer: If I understood your question correctly, you’re saying that Canada is not a threat anyway, and you want to know more about how this threat is happening and how they’re targeting us — is that correct?
[Translation]
Senator Bellemare: Yes. What I was thinking is that the bill might not add any more threats than there already are.
[English]
Threats are there anyway, so, with the bill, the increase is really the threats or not. If so, would you recommend to us to say that we should limit some countries investing in Canada and in some sectors in particular?
[Translation]
Mr. Seaboyer: I think it’s necessary.
[English]
It’s just China, Russia, Iran and North Korea. Those are the countries — particularly the first three and in that sequence — that are most effectively targeting us. These countries see the sheer existence of a democracy as a threat to their grip on power. Why is that? With digitalization, their citizens see our living conditions better than ever before, and they ask themselves why they can’t have the same freedoms as Canadians. “Why can’t we have rule of law like Canada does? Why can’t we have freedom of movement and freedom of expression?” That creates extreme pressure on authoritarian regimes.
They respond to that in two ways: They try to control access to information domestically — what people are thinking and how they’re thinking — and, outside of the country, they look to influence how a democracy functions and what perceptions exist of their country. That’s what they’re trying to do. They’re trying to control how people think internally, and how people think outside of their country and how they’re influencing.
For example, China sees any flow of what they call “unauthorized information” anywhere in the world as a threat to their national security — anywhere in the world, including Ottawa, Kingston and Montreal. They do that through a vast array of influence tools, from buying movie companies and having movies distributed, to arts, culture and sports in various forms.
Like we heard before, they do that with different goals, so there is some necessity there to fine-tune approaches. But in my view, foreign investment is one tool among many to access data and critical infrastructure, and to buy and purchase influence — directly and through how the data is exploited. With any deals that we make there, we’re risking national security and the functioning of our democracy, and we have to be aware of that.
I do recognize, of course, that other factors play a role in your decision making as well, but, from a national security perspective, regarding those four countries, there should be the most rigorous testing. I would see very few exceptions where there would be agreement after such a testing.
Senator Bellemare: Thank you.
Senator Massicotte: Thank you for being with us this morning. The first part of your presentation was basically outlining all the threats. I must admit that I’m not the least bit surprised. I think those are the facts, from my information, but your information is better than mine. Regardless, I thought, “Of course they’re doing that. We should not expect otherwise.” I suspect we’re doing the same as a country. Maybe our values and systems are different, but the Americans are doing the same thing: trying to make sure we cut off or control. I’m sure every major investment by China in our environment is going to be checked and reviewed; it’s automatic.
Having said that, though, what do we do as a consequence? You’re saying that we should increase the testing to be more severe. That’s very tough. We’re all doing the same thing; from what I see and read, in regard to all the things we are trying to do to protect the industry — the important stuff — we, and they, are doing the same thing. Everybody is doing the same thing. Maybe in 10 years, we’ll find out it was all a waste, but everyone is very aggressive with it because there’s distrust in our political world.
What do we do to make sure we get there, and that it’s not all a waste of time and money?
Second, you made reference to the Five Eyes. If you notice from the last year and a half or two years, we’re often not part of it. We’re part of the Five Eyes, but, for some reason, we’re not the favourite friends of the Americans anymore, and we’re not there with them anymore. We are being excluded, such as with the submarines and so on.
So what do you do with that? We are not there anymore, because we are not America’s best friend.
Mr. Seaboyer: From my perspective, I agree with some of the things you said, and others, I do not.
First of all, what we try to do with foreign investments in China is very different from what they are trying to do with investments here. We are not trying, in my view or from my understanding, at all to influence them in any undemocratic ways.
If we try to assert influence, we are trying to further human rights, or we are tying to improve the living conditions of citizens. These are fundamentally different goals, under fundamentally different value sets, than they have when they are coming here. I would like to make that differentiation.
Beyond that, the Five Eyes is a great point. It is interesting that there are coalitions — the submarine case with Australia — that we are not a part of, and we have to ask why that is the case. This could have to do with our abilities to protect secrets. This could have to do with our abilities to provide effective defence. There is the question of defence spending and investment in appropriate defence equipment. These are all factors that play a role.
I would agree that there has been a change, and we have to really ask why that is, because the relationship with the United States is an absolutely vital one for us in terms of defence and security.
Senator Massicotte: Thank you.
The Chair: That is a very interesting point. Thank you.
Senator Duncan: Thank you very much. My Scottish father used to say that if you look after the pennies, then the pounds will take care of themselves — pounds being the British currency.
My concern is on the smaller enterprises, and you have spoken of investment in the larger terms of national security. My interest is in the small- and medium-sized enterprises and in individual holdings.
Theoretically, those are tracked through the Financial Transactions and Reports Analysis Centre of Canada, or FINTRAC. I am curious if you have any recommendations in terms of the threshold in this particular act?
As a follow-up to that, is there enough communication between the silos in government to ensure that our national security is, indeed, protected?
Mr. Seaboyer: I will start with the last question. That is always the challenge, and has always been a challenge. It is being improved, but there are a lot of mechanisms at play and different interests at play. There is competition at play. That is leading to this still increasingly being a challenge.
One of the key factors that adversaries exploit in their weaponization of asymmetries are attempts to weaponize differences in societies. They don’t have these challenges, because they are so centrally organized. They have other challenges, as we saw with the mutiny, for example, in Russia, but they do not have this challenge so much. They are trying to weaponize that against us. That is regarding the first question.
In regard to the second question — and, again, I’m speaking from a national security perspective as a national security expert — I am aware that there are other interests that have to be considered in the negotiation process of amending bills, not just national security. I would argue that national security is absolutely essential, but there are other interests.
The threshold I would recommend — again, just from a national security perspective, but that is my perspective — is, unfortunately, zero because China will purchase various companies or invest in companies under the threshold that exists, and even lower ones, and still access, influence and exploit influence through these channels. From my perspective, with the times that we are in right now, we cannot afford that. Our democracy is under attack from various sides, and this is an opening that is going to be only more vulnerable with the further advancement of AI capabilities.
Senator Duncan: Thank you.
Senator Yussuff: Mr. Seaboyer, thank you for being here and for your perspective. I have a couple of questions in this context.
The pilfering of data depends upon one’s perspective. Most of the data that is in Canadian society that we care to protect, whether for privacy reasons or for others, is on the open market. It would be very decent to say, “Let’s restrict China in regard to those investments so they’re not getting it,” but they don’t have to necessarily buy a company to gain access to the data.
I want to be very clear so that we’re not wasting our time and thinking we are doing something — when we are not necessarily dealing with the real issue. Data is flowing on the open market, pretty well free and without restrictions, to a large extent. It’s what Western democracies are very good at, and everybody knows there is value in data. If you can get a hold of it, you can mine it for all kinds of different reasons.
How do we prevent that reality, which has nothing to do with investment? It is the question of how China, or any one of these powers, can have access to data without ever investing in Canada, period.
Mr. Seaboyer: You raise an extremely good point.
The biggest threat to access of data is the carelessness of us — everybody. We want the convenience, and with convenience comes the sharing of vast amounts of data. This is largely a lack of knowledge. This is an education challenge. This is where there has to be a much larger understanding of the effects of using social media applications and various other applications.
That said, I would argue preventing access through those apps. They might buy an app; this is what China does. They will do this through various subcompanies so that it is not even known who really owns the data and who has access to the data. Preventing this kind of flow of information is, in my view, very much worthwhile.
You are totally right; I agree fully that it is not sufficient. The larger problem is that people are just willing to use these applications, like ChatGPT as an example — there is a challenge regarding the amount of data that is collected there and provided to third parties that we have zero control over, and where we post any kind of question that we’re most interested in finding out. Most people are not aware of that, and they are not willing to make the sacrifice that comes with that if we actually want data protection.
That is a publication challenge. We have to properly fund resources to investigate the challenge and identify the challenge, and then find ways — with civil society — to engage the public. There are countries that do this much better than us. Finland does this much better than us. The Nordic countries do this better. There are ways to do this even more effectively without sacrificing the key core values of our democracy, which I believe we do not have to sacrifice.
There is a very delicate balance that we can strike while keeping our values and still raising public awareness and knowledge of what data is shared, and try to prevent that.
Senator Yussuff: My second question is in regard to restricting a Chinese company from acquiring Canadian companies, regardless of whether it is in the resources sector or on the other side, or whether there is data collection and what have you. If we were to do that, as you know, there is a consequence and repercussion to all of this.
Mr. Seaboyer: True.
Senator Yussuff: As a society, we have not yet come to terms with this reality. They are the second-largest player in the global economy. They are involved in everything, and there is the challenge that it poses for society — the criticism is that we do not attract enough foreign investment. There are those who will say that ad nauseam without recognizing that there is some investment you do not want to have in a country. We have not reconciled that.
How does a government manage this challenge in the context of trying to attract investment to create jobs and grow the economy at the same time?
Mr. Seaboyer: I do not have a proper answer to that.
I recognize the challenge.
Increasingly, elected officials are less and less able to provide solutions. Because of threats like this and because of challenges like this that are increasingly complex, they are less and less able to satisfy the needs and the wills, in my view, of the population, simply because the problems are so complex.
How do you do this? We need, on the one hand, investments. I agree with you; we need jobs urgently. How do you justify leaving out, probably, the best investor or the largest investor that there is going to be in the near future? That has to be explained. There are sacrifices we have to make.
In my view, from a security perspective, these are the times we are in. There are four countries that I recommend we very closely look at if we allow any foreign investments. There are many other countries where I would not recommend that, and where I do not see a need for that, but, yes, they also do not have the financial power that China has.
I see the challenges, particularly, elected officials have in understanding and protecting national security while also making sure that there are enough jobs for people, which is going to be a much larger challenge in the very near future with artificial intelligence being further developed.
Senator Yussuff: Thank you very much.
The Chair: Senator Martin, you wanted to ask a question, unless they have been asked.
Senator Martin: Well, they were very good questions, and the more you responded to my colleagues, the more you explained regarding China and the very complex nature of the influence they can have in not just Canada but around the world. I think you have answered most of my questions.
One of the key challenges that was raised by a previous witness was the necessity to broaden the conception of what an investment is and what form it can take, and you have addressed that. Things can go under the radar and can be very discreet, and we may not even know. You did mention electric vehicles, and how they can flood the streets with cars from elsewhere — AI from elsewhere — and that can be a breach of our security.
There is a lot going on right now in our country regarding what happened in Winnipeg.
My one question is this: Are you in communication with our officials — with the Government of Canada? Your lens and your expertise are very important. I am curious about that.
Mr. Seaboyer: I try to share my research results with interested government officials, and also attend conferences and do research projects. That information is accessible. I am more than open to sharing any information with anybody interested.
Senator Martin: Okay. Thank you.
The Chair: To follow up on what Senator Martin was saying about the issue at the lab in Manitoba, many people are simply asking this question: How did they get security clearance in the first place? Is that another flaw in the system in terms of our general stance on these issues?
Mr. Seaboyer: These individual cases that we see are the tip of the iceberg. Again, they do not have to go to the length of these kinds of processes.
This is, unfortunately, the reality: We want foreign students and foreign academics in our academic institutions because they bring new ideas. They bring different concepts. That is essential. But at the same time, with China, we have to know that if individuals here do not follow guidelines by the intelligence service of China, their relatives will be threatened. There will be repercussions. They may not be let back into the country. This is an unfortunate reality. So, again, it’s another challenge we have.
We need and want foreign academics studying, working and researching here. They are, in many ways, ahead of us in some fields — but not in some other fields. We need that. We also need to be aware of what countries they are coming from and what information we are sharing. My question is this: How could that happen?
Senator Marshall: In the work that you do, have you ever looked at the privacy legislation — whether or not it is embodied in the Investment Canada Act or other privacy legislation? It seems that there are bits and pieces everywhere. Does that fall within the scope of any of your studies or reviews?
Mr. Seaboyer: Not directly, but I am interested in that aspect. Similarly, a more stringent and stronger approach would be essential for the reasons I said.
Senator Marshall: Are you saying that in relation to what is in the Investment Canada Act?
Mr. Seaboyer: I am saying that more generally. I will get back to you on that.
Senator Marshall: I would be interested.
Mr. Seaboyer: Okay.
Senator Marshall: Thank you.
Senator C. Deacon: My wonderful and extremely insightful colleague just asked my question.
I would like to go a step further. I am guessing, then, that you have not been invited as a witness in the study of Bill C-27 at the Standing Committee on Industry and Technology right now at the House of Commons? That is an important consideration.
The whole-of-government legislation and legislative frameworks — privacy being one of them — is something that perhaps we’re looking at purely through the lens of this bill, which is important, but it sounds like we have to look at all areas of legislation with a different lens, and this must be on the list of criteria that we’re examining.
Mr. Seaboyer: Absolutely. We have to adapt to the technological developments and capabilities that adversaries have with these new AI-enabled applications.
Senator C. Deacon: To that end, could you provide us with some specific suggestions of areas where we should keep this at the top of our mind as we’re examining legislation?
Mr. Seaboyer: Yes, I will provide that to you.
Senator C. Deacon: Thank you.
Senator Massicotte: Thank you again.
My colleague asked you a very good question on what we do from the value sense. You have a conflict, but I would respond with the following, and I want to see how you react to it. When we allowed China to become a member of the World Trade Organization, we sort of said, “Forget the rules because you will be more like us, and, therefore, we are all going to be happy together.” Well, that proved to be a bit naive. They did succeed, and they did take full advantage of those measures, but they did not become more like us. Their system has worked very well in their consideration. We are stuck with it now.
The way for the future is let’s not be naive. There are many things that they are doing that could be beneficial to us, and that could create jobs and be useful for us — but with your eyes wide open, because that is the world we live in.
I am a businessperson. I have seen many deals where I did not like the buyer or the seller, but, unfortunately, you deal with it. I think that the real answer is, yes, there is a lot of peril and you have to be very careful, but you cannot avoid dealing with China. If you want to exist on this path, you have no choice but to do so. So get on with it. Take the measures and be very cautious, but do business anyway.
Mr. Seaboyer: From a political perspective, I agree with you that we have to engage with them. There is no way around that, and there is no reason, at the end of the day — I still believe bringing them in closer is a proper strategy. The fact that our rules-based international order is less effective because there are adversaries or actors who do not abide by any regulations whatsoever anymore is a newer phenomenon.
That, combined with what can be done with data to undermine the political will-formation process in our democracies, leads me to be far more cautious and see necessity for far more caution than in the past. That is all that I can say.
The ways to abuse our open societies and to take advantage of this asymmetry are so further developed now, and it will be much more so in the near future, that I, personally, see the protection of this — you can call it national security, or simply our democracy and our value system — as a higher priority than I would have seen it in the past.
Senator Bellemare: I want you to focus a bit more. You told us that Finland and the Scandinavian countries put in measures that we do not have. They are small countries. Can you elaborate more about these measures?
Mr. Seaboyer: Finland has been much earlier and far more attacked, for example, by information operations and influence operations by Russia than we have. Based on that, they have started a very holistic campaign of a whole-of-society awareness of these operations, starting in school with media literacy and critical thinking education already at the kindergarten level, which is essential. It is good for any democracy. Critical thinking and media literacy are key aspects.
They have also introduced, for example, prime-time TV shows once a week that introduce which attacks came from Russia, what they were intending to do, how they did this and what you have to look for. It works quite effectively to inform target audiences — meaning our population — in advance of what the attacks will look like. If people are aware of this, and if they look for this, they can see them — at least at this stage. With deepfakes, it is getting more complicated. But, generally speaking, if people are aware of these kinds of attacks, they are, to a large extent, more inoculated. It is not 100%. People who want to believe many of these narratives will still believe those narratives. The vast majority of people can be, to some extent, inoculated through education.
Senator Bellemare: Skills training and —
Mr. Seaboyer: Media literacy and critical thinking education, but also making the public aware that this is being done. They do that effectively.
Senator Bellemare: Thank you.
The Chair: Is there any jurisdiction in the world — because Senator Duncan has raised this with you and with other witnesses: The problem is — and we hear it in the United States because they are more open about the discussion of this — for example, the Chinese buying farmland around key strategic military operations. Those are one-off transactions of farmers selling a piece of land to somebody who is prepared to pay. It kind of falls outside the jurisdiction. But are there other countries who found a way to do that without limiting or infringing personal transactions?
We would be reacting the other way by saying, “If I want to sell my farm to the Chinese, I will do it” — right? But to at least, in some way, shine a light on it is the only way the Americans have done it in order to expose the fact that it has happened.
Mr. Seaboyer: I will get back to you on this. There are similar discussions that I have seen in Germany to think about and to look at. I would like to come back to you on this to ensure that I am giving you the accurate information.
The Chair: Thank you very much.
Senator Gignac: Thank you. I found your testimony very interesting. I am concerned too.
It is an eye-opener on some threats that we could possibly have from China. I will share with you an anecdote, and then go to my question. I was in Brussels for NATO last week. We had no authorization to bring our cellular phone or laptop from the Senate — no way. It is a huge security risk.
In Canada, we have a public pension fund called the Canada Pension Plan Investment Board, or CPPIB. We have 10% of the assets in China, and CPPIB probably has access to 30 million Canadians because it is Canadian. I do not know if they have the same security measures when they travel to China that we have when we go to Brussels.
It is a good idea for this Standing Senate Committee on Banking, Commerce and the Economy to question a bit more about our public pension fund that invests in China, and maybe we’ll have you, as a consultant or expert, guide us because I am very concerned after your testimony.
Mr. Seaboyer: Yes. Thank you.
Senator Loffreda: I am pleased today to have the final comment.
Given the sophistication of hybrid warfare, and how quickly it evolves — because we see it evolves very quickly, and it is very dynamic — do you feel that this bill will be obsolete in a very short period of time? If it is obsolete in a short period of time, how often do you think we should review such legislation to protect against this? This is not going to be a bill that will protect us from hybrid warfare for the next 10 or 15 years, and we all know how quickly legislation gets updated. What are your recommendations on that thought?
Mr. Seaboyer: It depends entirely upon the development of technology — how fast technology, data analysis, data gathering and data processing develop. We have seen the curve going up like this, right?
It would have to be much faster. But I don’t think it is obsolete. It is a great step in the right direction. It depends upon what amendments are made, what the threshold becomes and what severe penalties are introduced. Yes, I would say it is a step in the right direction. In terms of the speed or necessity for updating bills, this is one of the challenges: Artificial intelligence applications overwhelm us on every level. Legislation is just another level. They function so fast. They exceed human capabilities for comprehending, operating and creating bills. That is the challenge that we face with artificial intelligence. It is one of many that you are going to be seeing very soon, if you have not already.
Senator Loffreda: Thank you.
The Chair: That is the challenge that you have thrown out here: We have to have a system of monitoring the monitoring system so that it stays up to date. Mr. Seaboyer, we really appreciate your comments today. It has been helpful for all of us to see this issue through a different lens, and also to think about a whole-of-government approach to this. The silos do not work.
Anthony Seaboyer is the Director of the Centre for Security, Armed Forces and Society at the Royal Military College of Canada. Thank you for your testimony.
Thank you all for being here today.
We will see you all in a couple of weeks as we continue this discussion.
(The committee adjourned.)