The Impact of National Security Reviews on Foreign Direct Investment in Canada

March 29, 2022

Foreign investment in Canadian companies has long been subject to government review.

In recent years, the government has moved away from examining the economic impacts of foreign direct investment to focusing on national security implications. From fiscal 2009/10 to fiscal 2018/19, there were 22 orders for a national security review. In the two years following, there were a further 18 national security review orders – nearly doubling the total in just two years.

The issue at hand is not that these reviews are happening. It is important that the government review investments that could compromise critical infrastructure, disrupt the supply of important goods and services to government, or involve sensitive technology.

Our concern, outlined in a recent C.D. Howe Institute paper, is that investors and their advisors often have little information available as to why the reviews are occurring or how decisions were made. This lack of information exposes the process to criticism from investors, vendors and the public. Investors often receive few if any reasons for a national security review, and this lack of clarity is challenging for both the investors and the Canadian companies and innovators who count on foreign investment.