It’s of course good news that the federal Liberal government has put the brakes on a contract that a firm partially owned by the Chinese government had scored to work on sensitive RCMP technology. But we also need to ask what mindset allowed it to happen in the first place.
Last year, Sinclair Technologies won a contract to provide radio frequency equipment for Canada’s federal police service. Sinclair’s parent company is Norsat International, which is in turn owned by Chinese telecommunications firm Hytera.
While there are already enough concerns about the degree to which private sector companies in China must answer to the authoritarian communist regime in Beijing, in this case the Chinese government actually owns 10 percent of the firm.
Hytera was blacklisted by the U.S. Federal Communications Commission (FCC) last year on the basis that it poses “an unacceptable risk to the national security of the United States or the security and safety of United States person.” That’s quite a red flag.
As if that isn’t bad enough, Hytera is facing 21 charges in an American espionage case. The U.S. Department of Justice has accused the company of conspiring to steal trade secrets from Motorola.
The Liberals haven’t actually nixed the contact yet. It’s only paused.
“As of this moment, the RCMP have suspended the contract with Sinclair, and they are in the process of both reviewing the manner in which this contract was awarded, as well as mitigating against any risks,” Public Safety Minister Marco Mendicino told media Dec. 8.
It’s hard though to imagine a scenario where the contract is allowed to proceed. But why didn’t this review process begin much earlier, when the U.S. made its announcements both about the charges and the FCC blacklist?
Were federal bureaucrats just asleep at the wheel, inattentive to these developments? Did a single person in the appropriate departments read the news of the charges and then bother to do a basic search to even see if this company had any sort of relationship with our government? Do we just not cross-reference these lists?
It’s not like concerns around China-linked telecommunications firms are anything new. That’s what the whole prolonged Huawei ordeal was about. The government should now be hyper-sensitive to these issues.
Part of the challenge though is how open we’ve been in the past to the idea of state-owned enterprises (SOEs), including ones from China, getting firmly entrenched within our government and economy.
This past January, then Conservative leader Erin O’Toole gave a press conference calling for a national security review of a Canadian mining company takeover by a Chinese SOE.
O’Toole was entirely right to do this, but why did the task fall to the Opposition leader? Why wasn’t cabinet all over it from the get-go? Why weren’t bureaucrats on top of it first? And—here’s the key question—why was it allowed to happen in the first place?
If you stop most Canadians on the street and ask them whether the Chinese government should be allowed to buy Canadian corporations, most would surely say no or guess that such a transaction is already illegal in the first place.
It’s not. And for a while now people have been sounding the alarm over what was a problematic default policy.
In fact, Conservatives in the past two federal election campaigns proposed a ban on SOEs making purchases in sensitive sectors. All in all, it was a pretty mild proposition and should have received all-party support.
Luckily, the Liberals have evolved on this issue—no doubt due in part due to pressure from the Biden administration.
Prime Minister Justin Trudeau’s newly announced Indo-Pacific Strategy says that, when it comes to China, restricting SOEs is the way they’ll be heading. The Liberals will finally be implementing what the Conservatives campaigned on several years ago.
As the document explaining the strategy says, the feds will now be “reviewing, modernizing, and adding new provisions to the Investment Canada Act that protect our national interests, as well as acting decisively when investments from state-owned enterprises and other foreign entities threaten our national security, including our critical minerals supply chains; further protecting Canadian intellectual property and research.”
Let’s hope this decisive action includes outright bans, rather than continuing on our current approach of reacting on a case-by-case basis.
It’s remarkable that it took this long for such a common-sense policy to come about.
