Economic-Based Threats to National Security 

Date: February 11, 2021

Classification: Unclassified

Branch/Agency: NCSB/NESTF

Issue:

Globalization and the deepening of economic relationships with non-traditional  partners has resulted in new threats to Canada’s national security. Exploiting pathways into the Canadian economy via trade and investment or research partnerships with academics, potentially hostile foreign actors can gain access to sensitive technology, critical infrastructure and the sensitive personal data of Canadians. The COVID-19 pandemic has exposed Canadian business and intellectual property to even greater risk from hostile activity. The Government of Canada must ensure that its capacity to manage these threats keeps pace with their magnitude and complexity while ensuring that our economy remains open and competitive. 

Proposed Response:

• Canada welcomes foreign investments and trade, which help businesses to succeed and grow, creating more good, well-paying jobs and delivering strong economic growth that benefit all Canadians.
• At the same time, Canada must have the tools and resources it needs to protect our key economic assets of sensitive technologies, sensitive personal data, and critical infrastructure against economic-based threats to national security.               
• We know that there are those who seek to acquire Canadian technology and expertise in the private sector and at our universities using sophisticated and at times illegal means and that this could prejudice Canada’s national security.
• We are taking action across several fronts to protect our national security against these economic-based security threats.
  • First, our departments and agencies are working together to identify the risks and where they are most acute;
  • Second, we are reaching out to stakeholders including Canadian businesses and academic institutions to raise their awareness of the issue;
  • Third, we are examining means to enhance our capabilities to meet these threats effectively while continuing to encourage foreign investment, trade and economic growth.      
• To support efforts to respond to economic-based security threats, Budget 2019 invested $67.3 million over five years, starting in 2019–20 and $13.8 million per year ongoing, to: Public Safety Canada; Innovation, Science and Economic Development Canada; Global Affairs Canada; and the Royal Canadian Mounted Police, among other federal agencies.

Background:

Increased global trade together with rapid technological innovation have provided Canada with immense opportunities for economic growth and increased prosperity. Important emerging fields of technology have become key drivers of economic growth and development. However, these advancements have also given rise to new and serious national security vulnerabilities which are emanating through a range of entry points into Canada’s economy. Sensitive technologies with military or dual-use applications, sensitive personal data of Canadians, and critical infrastructure are the key assets that drive our economy and are most targeted by hostile actors. 

These threats may come from:

1. foreign investments from hostile actors in strategic sectors and industries important to Canada’s national security;
2. the access to or acquisition of sensitive goods, technology, and expertise; or
3. funding partnerships with our universities and research institutions to gain access to cutting edge technology and IP. 

The Government of Canada has a suite of tools at its disposal that were established to protect the Canadian economy and, more broadly, Canadian strategic interests from harm. These include:

1. the Controlled Goods Program (CGP), administered by Public Services and Procurement Canada (PSPC);
2. the Export and Import Permits Act (EIPA), administered by Global Affairs Canada (GAC); and
3. the Investment Canada Act (ICA), administered by Innovation, Science and Economic Development (ISED), with Public Safety Canada leading the ICA-national security review of proposed foreign investments that threaten Canada’s national security.

Several of Canada’s security partners, including Australia, the United States, and the United Kingdom have upgraded their capabilities to more readily identify and mitigate economic-based national security risks. Canada seeks to support our allies and remain a trusted partner. Therefore, Canada will build on the current regime protecting our most valuable assets while maintaining the openness and innovation crucial to the Canadian economy.

Contacts:

Prepared by: Timothy Cairnie, Policy Analyst 613-991-2038

Approved by: Dominic Rochon, Senior Assistant Deputy Minister 613-990-4976

Date modified:

2021-08-20