The federal government has updated its guidelines for the national security review of foreign investments under the Investment Canada Act, which introduces "economic security" as a new criterion by which the government will assess foreign investment.
These changes come during the tariff dispute between Canada and the U.S. and could have an impact on numerous industries across Canada, partner and co-head of Torys' Competition and Foreign Investment Review practice Dany Assaf told Lexpert.
The regulatory environment for M&A dealmaking is currently at a "fork in the road," Dany said. While some sectors—such as critical minerals, critical infrastructure, and sensitive technology—will be in the spotlight with the new economic and national security rules in place, the rules could impact other sectors over time, such as agriculture and food security, for example.
Canada's current relationship with the U.S. could also prompt reconsiderations around new trade partnerships more broadly.
Read: Tariffs and trade: Canada-U.S. brief
"Do we need to leave the door open to be less stringent on certain things? We need to serve the Canadian people and the Canadian national interest first and foremost," Dany says.
"Perhaps we need to keep our doors open more to nurture other customers and partner relations."
While Dany agrees that national interests are "clearly paramount" during this time, he suggests that greater clarity may be needed under the new regulatory environment.
"How do you define that, and what does national interest mean in the context of a particular case and how that could differ from national security?", he says.
"Ultimately, we need to chart our destiny. We need to look at dealmaking with open eyes, make case-by-case assessments under the new regulatory environment without prejudging, and ask ourselves the fundamental question: does this benefit Canada and make us stronger?"
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
