Canada considers new measures to protect economy from national security threats

New measures to ensure Canada doesn’t export sensitive technology to foreign adversaries are among the changes being eyed by Ottawa to bolster the country’s economic security.

Other possibilities include making it easier to fine companies that fail to comply with investment screening rules and mapping supply chains to identify critical vulnerabilities, according to a federal consultation paper.

The paper, released through the Access to Information Act, was circulated to key parties in industry, academia and civil society last spring to canvass views on better protecting Canada from hostile players out to exploit the country’s technologically advanced sectors.

Public Safety Canada is expected to publish a summary of the feedback shortly.

The paper says Canada benefits from the vast majority of the foreign investment in the country, trade in Canadian goods and technology, and research partnerships between foreign organizations and Canadian universities and research institutions.

However, it adds, some foreign states and non-state actors try to acquire technologies or forge commercial partnerships that can potentially jeopardize Canada’s national security and long-term economic prosperity.

“Canadian companies, in almost all sectors of our economy, have been targeted.”

The frequency and sophistication of state-sponsored threat activity is increasing, the consultation paper adds.

Threats come in the form of espionage, theft and cyberattacks.

But the government warns they can also be waged covertly in otherwise legal transactions such as foreign investments in sectors and industries integral to Canada’s security, or the purchase or transfer of sensitive goods, technology and know-how that are currently not subject to export controls.

Other threats involve the purchase of controlled goods and intellectual property through front companies, brokers or others that misrepresent the end use, as well as foreign-funded partnerships between Canadian researchers and entities linked to adversaries.

The consultation paper does not mention specific countries of concern. However, Canadian security officials have long warned that Russia and China, in particular, target Canada’s classified information and advanced technology.

Even so, the exercise is intended to ensure Canada’s approach is effective in responding to threats, no matter the source.

Among the federal suggestions:

• Creation of a continuously updated list of businesses, research institutions, governments and people subject to specific export permit requirements to help Canadian businesses feel more secure in knowing their goods are not being shipped to a buyer of concern;
• more flexible or even stiffer penalties for breaching investment screening rules intended to protect Canada from national security threats;
• government help to companies to better understand vulnerabilities in their global supply networks for procuring goods;
• and providing federal venture capital to sensitive technology firms to get around the need for foreign investment from potentially risky sources.

The government has spearheaded the creation of national security guidelines to help protect federally funded research.

The recent federal budget included almost $160-million over five years, starting in 2022-23, and $33-million ongoing, to implement the guidelines fully, largely through work with colleges and universities.

The consultation paper also asks how various levels of government can better co-operate to safeguard sensitive and emerging goods and technologies, critical infrastructure and personal data.

Cybersecurity is a vitally important issue that affects businesses large and small since breaches can mean losses to customer privacy as well as operational productivity, said Mark Agnew, senior vice-president for policy and government relations at the Canadian Chamber of Commerce.

“So that one really stands out to me as such an important part of the conversation around the threats to national security.”

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