The federal government will look at adopting a national security test for foreign takeovers of Canadian firms, Industry Minister Jim Prentice said Tuesday.

His comments followed similar remarks made by Prime Minister Stephen Harper last week.

Prentice said he will explore bringing in guidelines on takeovers by state-owned enterprises and is pondering the creation of an explicit national security test for such acquisitions.   

"Our interest is ensuring that state-owned enterprises in Canada are operating under the same standards as any other commercial enterprise operating in Canada," Prentice told a meeting of the Vancouver Board of Trade.

Prentice said this test would not be an excuse for protectionism.

He noted that many countries — the U.S., Australia, China, Germany, the U.K. among them — already subject takeovers of domestic companies by state-owned firms to some kind of national security screening.

Under current Investment Canada guidelines, there is no explicit national security test that can be applied, just a requirement that the takeover be a "net benefit" to Canada.

"Free markets do not mean a free pass," Prentice said. "Canada is open for business, but it is not for sale."

He said a national security review is not meant to discourage all investment by state-owned firms, pointing out that several firms owned by the French and German governments are already "successfully" operating in Canada.

Prentice said he and his colleagues would be looking at the national security issue this fall. "Both Canadians and non-Canadians are entitled to clarity," he said.

He also denied speculation that the recent flurry of interest over a national security test was aimed at thwarting last month's proposed $5-billion takeover of PrimeWest Energy Trust by the Abu Dhabi National Energy Co. (Taqa). 

"This is completely untrue," he said. "I would point out that both the content of today's speech and the logistical arrangements with the Vancouver Board of Trade took place before the Taqa transaction was announced."

The PrimeWest deal will be examined under the existing rules, he said.

Despite criticism from those who say the Canadian economy is being hollowed out by a surge of foreign takeovers of Canadian business icons, Prentice said he wanted to send "a clear signal" to the market that Canada still welcomes foreign investment.