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www.lexpert.ca/usguide-corporate/ | LEXPERT • June 2017 | 11 But Campbell also cautions that the new guidelines don't ensure investors access to all the information on which the gov- ernment may be reviewing a case on national security grounds. Indeed, the guidelines specifically state that access to "sensitive information" that is protected under the Canada Evidence Act may be restricted. Section 38 of that statute defines "sensitive information" as information about "international relations or national defence or national security that is in the possession of the Government of Canada, whether originating from inside or outside Canada, and is of a type that the Government of Canada is taking measures to safeguard." The challenges around "sensitive information," then, will in certain cases still have to be managed. "The truth remains that we're not as fully evolved from a transparency viewpoint as we might like," Campbell says. "But the process could evolve further and we might see something that turns out to be like the process they have in the immigration area where there are special securi- ty-cleared counsel who can have access to sensitive information." From a substantive perspective, the national security review guidelines reveal that the government will consider the nature of the assets or businesses as well as the nature of the foreign inves- tors, including the potential for influence by third parties. More particularly, the factors considered may include: the potential ef- fects of the investment on Canada's defense capabilities and inter- ests; the potential effects of the investment on the transfer of sen- sitive technology or know-how outside of Canada; involvement in the research, manufacture or sale of goods and technology identified in the Defence Production Act; the potential impact of the investment on the security of Canada's critical infrastructure, including processes, systems, facilities, technologies, networks, assets and services essential to the health, safety, security or eco- nomic well-being of Canadians and the effective functioning of government; the potential impact of the investment on the sup- ply of critical goods and services to Canadians, or the supply of goods and services to the government; the potential of the invest- ment to enable foreign surveillance or espionage; the potential of the investment to hinder current or future intelligence or law en- forcement operations; the potential impact of the investment on Canada's international interests, including foreign relationships; and the potential of the investment to involve or facilitate the ac- tivities of illicit actors, such as terrorists, terrorist organizations or organized crime. Campbell says that "critical infrastructure," which has at- tracted considerable attention in the US in the national security context, will likely be the most controversial of the factors listed. "What is critical infrastructure may be somewhat in the eyes of the beholder and therefore malleable case to case," he says. Also, the guidelines as a whole are non-binding and inclusive rather than exhaustive, leaving the government with some leeway in their interpretation and application. "We're still cognizant that these guidelines could mean anything, and that things we never thought of could get caught under them," Borgers says. But that doesn't mean the guidelines don't have significant value — both for investors and the government. "From investors' perspective, the guidelines reduce the risk that the government will use the national security view for political reasons," Borgers says. "From the government's point of view, the release of guide- lines that are objectively clear with measurable criteria shield the decision from allegations of political motives." However that may be, it's a far cry from the days when Cana- dian governments were secretive, even about the number of secu- rity reviews that had been conducted. "The Liberals have made it part of their policy to provide information about the number of reviews conducted and the results annually," Borgers says. "It's all very positive, because the new policies allow us to go to clients saying that we have objective criteria that give us a degree of con- fidence in predicting whether their deal will be cleared." As well, there are other developments emphasizing the federal government's commitment to easing the pathways for foreign in- vestors. The Fall Economic Statement indicated that the govern- ment would allocate C$218 million over five years to create a new federal body, the Invest in Canada Hub, which would employ a sales force to promote Canada and work with global companies to increase investment that will benefit Cana- da, and increase the number of trade commis- sioners focused on investment attraction in strategic markets. The Liberals have also introduced new legislation that eases foreign ownership re- strictions on Canadian airlines from 25 per cent to 49 per cent. As a sign of its commit- ment, the government — even though the legislation had not yet been passed — imme- diately exempted two existing airlines from the 25-per-cent restriction so that they could pursue foreign injections of capital. It's not, however, as if Canada is shying completely away from protectionism. For example, neither the $1-billion threshold for direct WTO investments nor the CETA $1.5-billion threshold will apply to investments by non-WTO investors; to investments by any foreign SOE investors; or to acquisitions of Canadian cul- tural businesses, to which lower thresholds will apply. Nor, some will observe, has the government allowed non-Canadians to ac- tually control Canadian airlines. Still, Brian Facey at Blake, Cassels & Graydon LLP in Toronto is optimistic that the trend to liberalization will continue. "We expect the current government to remain steadfast in its support for foreign investment," he says. "With the increasing thresholds, less transactions will be subject to a net benefit review. For those that remain above the thresholds, we expect that the Minister will take a careful and reasoned approach, and ultimately will be prepared to agree to reasonable undertakings." INVESTMENT LIBERALIZATION "[Raising the threshold for net-benefit review] was an extremely strong signal of interest in investment, effectively removing a bunch of transactions from the requirement of review under the Investment Canada Act and leaving only the largest for consideration." Neil Campbell McMillan LLP