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The Heron, an Unmanned Aerial Vehicle, leased through Macdonald Dettwiler and Associates Ltd. (MDA), is prepared for launch at Kandahar Airfield, Afghanistan, early February 11, 2009.

In its last round of amendments to the Investment Canada Act, the federal government gave itself wide scope to reject foreign investment on national-security grounds.

It provided no definition of "national security," nor any criteria to judge whether a proposed investment might trigger such a review. The Act allows the government to invoke the national-security concerns to block foreign acquisitions that fall below the usual $300-million threshold for Investment Canada reviews.

Typically, such a security provision would be used in cases in which the companies controlled sensitive technology used in defence or communications. The Conservative government's rejection of the proposed takeover of Macdonald Dettwiler and Associates Ltd. was widely seen as involving national-security issues, though Ottawa never explicitly used that justification.

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It was also seen as an amber light to state-owned companies - particularly Chinese ones - to proceed cautiously with acquisitions that might trigger security concerns.

At the same time, the government adopted new hurdles for those state enterprises, saying it would ensure that they were pursuing commercial, rather than political goals.

Critics have complained about the vague nature of the regulations, saying they could be used to protect economic welfare, defence-related sectors or to block investment from countries seen as security risks.

However, the government's "national security" screen is a redundant layer of protection, other than capturing deals that fall below the dollar threshold. The "net benefit" test is an equally vague concept, and a foreign acquisition that jeopardized national security could surely be rejected on the grounds that it did not represent a net benefit to the country.

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