Canada to toughen foreign investment regulations for AI, space technology

Canada will tighten its scrutiny of foreign investments in artificial intelligence, quantum computing and space technology as the government expands its power to stall and block deals for national security reasons.

Non-Canadian companies will have to give advance warning to the government before they invest in or acquire Canadian entities in those key technology sectors, Industry Minister Francois-Philippe Champagne said in an interview with Bloomberg. The tougher rules will also apply to investments in critical minerals and potentially other sectors, he said.

The idea is to buy the government time to conduct a national-security review before any transaction gets too far advanced. The would-be buyer or investor may be restricted in its access to the target company's user data or other property while the inquiry is taking place, Champagne said.

It's the first time he has outlined some of the industries and technologies that will fall under beefed-up regulations to be attached to the Investment Canada Act, which is one of the major laws governing foreign investment in the country and was recently revamped.

Canada has traditionally had an open door to foreign companies making acquisitions, a policy that allowed large global firms to snap up large mining and metals, energy and consumer products companies in Canada in the years before the 2008 global financial meltdown.

The mood began to shift after the crisis, as the government blocked BHP Group's push to buy a huge potash miner and placed restrictions on the flow of Chinese capital into the oil industry. In recent years, as the U.S. began to take broader measures to counter Chinese influence and money, Canada has followed suit.

Earlier this month, Prime Minister Justin Trudeau's government announced a tightening of rules on foreign investment into the video game industry and other interactive media, citing the ability of “hostile state-sponsored or state-influenced actors” to use the games to spread disinformation. Champagne declined to go into details, citing national security concerns, but said the government had noticed a troubling pattern.