International Trade Committee on March 8th, 2011

[Don Stephenson]

Well, we're clear of the NAFTA challenge. Whether or not there are discussions between other government departments and AbitibiBowater on other matters, I don't know.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

You're not aware of any discussions that are taking place at this point?

[Don Stephenson]

No.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Thank you.

Did you want to...?

[Martha Hall Findlay, Liberal, Willowdale, ON]

Thank you.

Thank you very much for being here this morning.

I'm just a little confused. You said there was no discussion and there was no involvement by the government at all until the settlement. Can you just elaborate a little?

I know that it's all part of the chapter 11 process, but it still strikes me as a little bit odd that the province was able to take such a drastic action—expropriations don't happen every day in Canada—for which the federal government, and Canadian taxpayers, I would say, have such significant responsibility, with apparently absolutely no involvement in the decision in the first place.

It seems a bit striking to me that Canadian taxpayers would be exposed to that without any prior involvement. Can you elaborate on that? Feel free to throw in your opinions--

[Voices]

Oh, oh!

[Don Stephenson]

I have no opinions--

[Martha Hall Findlay, Liberal, Willowdale, ON]

--as opposed to just the lines.

[Don Stephenson]

Well, first of all, I wonder whether it's actually factually correct to say that expropriations don't happen every day in Canada, because I think if you look at all levels of government, they do in fact expropriate very often in the normal course of the conduct of their business.

[Martha Hall Findlay, Liberal, Willowdale, ON]

To be clear, an expropriation of a large business by a government when it's not making room for a highway or the kinds of things that we're normally used to.... Other than those, this kind of expropriation does not happen every day in Canada, just to be clear.

[Don Stephenson]

I take the point. I only make mine to suggest that there are laws in Canada and a practice of norms in Canada with respect to compensation for expropriation.

In this particular case, we understand that there had been discussions between the firm and the province in respect of the closure of their operations in Newfoundland, but we were not party to those discussions, and we were not party to a discussion with the Province of Newfoundland prior to their decision to expropriate and their passage of the legislation. This is a provincial measure.

[Martha Hall Findlay, Liberal, Willowdale, ON]

I won't add to the question. I'll just point out that's what you said in your earlier testimony, so that didn't actually answer my question.

[Don Stephenson]

Well, we were not party to discussions with respect to this expropriation.

[Martha Hall Findlay, Liberal, Willowdale, ON]

It was a question about the commentary. It was a question about the ability of the federal government and its taxpayers to be on the hook and to be liable for such a significant compensation without having been involved in the conversation beforehand, but thank you.

Thank you, Mr. Chair.

[The Chair, Conservative, Lee Richardson]

Thank you, Ms. Hall Findlay. We'll perhaps have an opportunity to ask that in the second round.

Right now we're going to go to Monsieur Laforest.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Thank you, Mr. Chair.

Good morning, Mr. O'Neill and Mr. Stephenson.

Mr. Stephenson, you said that, aside from the chapter 11 provisions, there were provisions of international law that would allow businesses to start legal proceedings. Could you provide us with further explanations? I took notes, but...

[Don Stephenson]

Unfortunately, we did not bring a legal expert, a departmental lawyer, to explain the standards and the international laws. I do not know any more than what I said in my presentation, which is to say that it is customary.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

In broad terms, does that mean that, if there were no chapter 11 in the NAFTA, it would still be possible for AbitibiBowater to file suit?

[Don Stephenson]

Absolutely, especially by starting in a national court, under national law.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Does that also mean that chapter 11 is useless if businesses have a remedy under international law anyway? Why was chapter 11 included in the NAFTA? Is it more to protect businesses or more to protect governments?

[Don Stephenson]

Primarily, it is more to protect Canadian investors who invest in other countries, and to guarantee that they will be able to defend their rights before national courts elsewhere. It also provides those who might wish to invest in Canada the assurance that they have various options to defend their rights.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

In international trade, are you responsible for the supervision or the verification of compliance with agreements under chapter 11? Is it the Department of Foreign Affairs and International Trade that has to oversee everything that comes under the NAFTA, the agreements, the expropriations?

[Don Stephenson]

No, the Government of Canada and my department do not oversee the actions of all of the provinces and municipalities regarding expropriations or other issues. As the signatory of international agreements, we are responsible for the protection of these rights in Canada, but we have neither the ability nor the responsibility to oversee all of the decisions of provincial, territorial and municipal government.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

So there is no list of all of the major expropriations that have taken place.

[Don Stephenson]

No.