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Why Does Ottawa Keep Funding Fake Canadian Companies?

Foreign-controlled firms qualify for billions in public contracts under loose procurement rules

The Canadian Food Inspection Agency has been issuing fines for grocery stores that label imported products as being “Canadian” when the claim misleads shoppers.

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“Maplewashing” may sound like a funny crime, but regulators understand something significant: people care about whether something is really Canadian, and firms have incentives to blur that line. We have strict rules for food labelling because a “Product of Canada” is different from something merely “Made in Canada.”

In several important parts of the economy, Canada already recognizes that ownership and control really matter. Telecommunications has long had Canadian ownership and control rules. Airlines face restrictions too. The Canadian Radio-television and Telecommunications Commission has its own frameworks for determining whether an undertaking is meaningfully Canadian. In other words, we already accept that, in certain strategic sectors, counting as “Canadian” cannot just mean having an office here or a local mailing address.

But when it comes to public procurement and industrial policy, Canada still makes it far too easy for foreign-controlled firms to dress themselves up as domestic champions. Over the past several weeks, the Canadian Shield Institute has been testing the different dimensions that might make a company meaningfully Canadian. The obvious candidates are familiar enough: where a company is incorporated, where they’re headquartered, where strategic decisions are made, who owns the company, where their intellectual property sits, whether the company’s revenues and taxes ultimately land in Canada, and whether they........

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