Bill C-300 (Historical)

Corporate Accountability of Mining, Oil and Gas Corporations in Developing Countries Act

An Act respecting Corporate Accountability for the Activities of Mining, Oil or Gas in Developing Countries

The purpose of this enactment is to promote environmental best practices and to ensure the protection and promotion of international human rights standards in respect of the mining, oil or gas activities of Canadian corporations in developing countries. It also gives the Minister of Foreign Affairs and Minister of International Trade the responsibility to issue guidelines that articulate corporate accountability standards for mining, oil or gas activities and it requires the Ministers to submit an annual report to both Houses of Parliament on the provisions and operation of this Act.

[Robert Blackburn]

Then what's the point of Bill C-300 if it's already done?

[Bob Rae, Liberal, Toronto Centre, ON]

Just to be clear, the financing wouldn't fall through because of an allegation, any more than the financing would fall through because of an allegation before the counsellor. The counsellor, under the current rules....

Let's be adults here. The Senate is going to have a Conservative majority in six weeks to two months. Whether this bill will go through or not, we don't know. But a lot of the complaints I hear from the corporate sector about Bill C-300 would be equally directed to what is happening with the counsellor.

I don't hear the corporate sector saying that the counsellor's processes are unacceptable. It's unimaginable to me that EDC would not take into account a conclusion of the counsellor on the conduct of a company. In that sense, the game is up. This question of corporate social responsibility has been resolved. It's clearly in place. Companies that act--

[Bob Rae, Liberal, Toronto Centre, ON]

I'm sure you understand that the timing of the legislation is that the legislation was proposed by Mr. McKay before the government told us what their position was on corporate social responsibility. We had a debate in this committee, a discussion in this committee, a report from this committee, and then we had a long period of delay. Then Mr. McKay brought forward his measure and then the government brought forward the counsellor process.

Many of the things that you've described as part of the problem that would be associated with Bill C-300 also apply to the counsellor process. Anybody can complain, anybody can go to the Internet, to the world, to wherever they want to go and say this activity has gone on, it's terrible, it's awful. The company's reputation is affected by that decision of whatever group to come forward.

The counsellor receives the complaint, and the counsellor then asks the company, do you want us to proceed? The company might object. They might say they don't like this, they object to it, so they'll put out a big press release.

The point is that part of what I find in your presentation and also dans la présentation de Monsieur Gascon is we have created a process in Canada now and many other countries are doing the same thing. The reason we've created a process is because there's a perception of a problem.

[Toby A.A Heaps, Editor-in-Chief, Corporate Knights Forum]

Thank you, Mr. Chair.

Mr. Chair and members of the committee, it's truly an honour to be here today, at the heart of one of our country's most important deliberations. Before introducing myself, I'd like to make one point crystal clear: the fact that you might be for Bill C-300 doesn't mean you're against Canadian mining and oil companies; in fact, I think it can mean quite the contrary.

I have a company called Corporate Knights. I'm the president and editor of Corporate Knights. It was co-founded in 2002, and we're founded on the premise that in today's global landscape, companies must be at the heart of our big solutions or there are no big solutions. We also believe there's a strong self-interest for companies to engage in commerce in a way that strengthens social and political stability, because no company can succeed in a society that fails.

In short, we are big supporters of Canadian companies, their leadership and innovation, and their potential to drive Canada's prosperity in ways that can make us all proud. Over the past eight years, we have tracked corporate Canada's performance on social and environmental matters through our annual surveys, such as the best 50 corporate citizens in Canada, the global 100 most sustainable corporations in the world, which is announced each year in Davos during the World Economic Forum, as well as investigative reports assessing Canadian companies' performance against the International code of ethics for Canadian business and other international responsible business standards. Our work has taken me to the bottom of giant open-pit mines in the Congo, to the vast plains of the Gobi Desert, right to the middle of oil pipelines in Ecuador.

Companies by and large respect and give credibility to our trademark, which is fairness. This credibility is something we've earned that provides us access to company executives and company sites. It's also why mining and oil and gas companies have purchased hundreds of thousands of dollars of products from our company.

I would like to use this opportunity to cover two main points. The first point I'd like to cover deals with some of the global currents that define the context of the marketplace in which our Canadian companies operate today. The second point I would like to make concerns the difference that Bill C-300 could make.

On the first point, today the size and power of companies paints a whole new swath of grey between states and enterprises: 29 of the world's 100 leading economic entities are companies, according to the UN Conference on Trade and Development.

The majority of the world's untapped resources lie in unstable states. The quest for resources is increasingly becoming a foreign pursuit for Canadian companies and companies everywhere. As Canada's resource levels recede, our firms have a choice: go where the resources are or go out of business. According to the United States Energy Information Administration's International Energy Outlook, roughly 80% of the world's oil supply will come from non-OECD countries by the year 2025. Many of those countries rest in weak governance zones.

Today, as we're all familiarly aware at this committee, 75% of the world's exploration and mining companies are headquartered right here in Canada. We also have a revolution in information and communications technology, which has put companies under the microscope—or YouTube, as the case may be—and what happens on the other side of the world in a remote jungle in the morning can be beamed onto your computer screen or TV that afternoon.

The fifth thing that defines the global context in which we operate is that the corporate accountability mandate has achieved an increasing traction. Over the past decade there has been a raft of international corporate performance standards and guidances, ranging from the IFC performance standards to the voluntary principles on security and human rights, to the calls for corporate accountability laws by Supreme Court Justice Ian Binnie, to the meticulous work by John Ruggie, special representative of the Secretary General on human rights and transnational corporations.

If you look at these things, you see a consistent pattern of an increasing articulation of what is expected from companies these days, and nowhere is this truer than in Canada. Bill C-300 lands smack dab in the middle of all this.

These are the four differences I think Bill C-300 can make, and these differences are all positive differences for companies, in my view. First, I think it could help clear the air for our most honourable companies. The fusion of NGOs and the ICT revolution produces many allegations. A credible mechanism that would make informed decisions would help to stop false accusations in their tracks, helping to protect the reputations of Canadian companies.

Second, right now it is assumed that if you buy a junior mining company or oil company, you're buying the assets as well as the liabilities, meaning the social and environmental liabilities. These liabilities have a big price tag. The presence of a credible accountability mechanism and administering body would offer tremendous incentive for Canadian junior companies to more closely adhere to international human rights and environmental standards, which would mean less value being destroyed and less time lost. It is a win-win for the juniors, who could sell their assets for higher prices, and for the majors, who would not have to deal with the headaches often embedded in their acquisitions of junior properties.

Third, this bill could offer a maple leaf quality assurance premium to investors. Let me explain. After the recent financial meltdown in which up to $50 trillion of wealth vaporized, investors have become increasingly risk averse. The downside of this risk aversion is that there's less capital flowing to emerging markets, as presently most investors just paint all companies with the exact same risk discount based on sovereign risk no matter what their practices are, but the major liability issues at most sites are related to the way the company operates, not the context in which it operates. This is something that checked out in my experiences and those of other experts I've talked to, who examined hundreds of sites around the world.

The current investment practice, aside from unfairly tarring leading responsible companies that happen to be operating in a difficult environment, leads to suboptimal risk-adjusted rates of return for investors. With a credible accountability standard for companies listed on the TSX, investors could be willing to pay more than, say, for a comparable company listed in the London exchange, because they would have more confidence that they were not buying a poisoned bag of goods.

Fourth, I think this bill could offer a maple leaf quality assurance premium to host countries and their stakeholders. We are the world's miners. Mining is not about technological advantage. Any company can do it. In the scramble for resources, what distinguishes a Canadian company from a Chinese company is that a Canadian company has a competitive advantage when it comes to safety, social issues, respect for human rights, community engagement, contribution to local employment, and environmental protections.

Bill C-300 is not perfect, nor is it enough, but by making a move to a credible accountability mechanism, it sends a strong signal that Canadian companies will be on the winning side of the seismic shifts shaping our global economy.

Thank you.

[Jean-François Gascon]

I am going to give my presentation in French. I will leave 15 seconds for those who need simultaneous translation.

My name is Jean-François Gascon. I work for SNC-Lavalin Environment as a Project Sustainability Leader. Through our division, SNC-Lavalin puts sustainable development programs in place during the implementation phases of projects, particularly in mining and other resource sectors.

As my colleague told you, the ultimate goal of Bill C-300 is very commendable. We share that objective, as do many of our clients and partners in Canada. However, I think that the means being used is probably the worst way of meeting that goal.

The biggest problem with the bill is that there is a sense that it is based on three premises which make me rather uncomfortable. The first is that Canadian companies are not good corporate citizens, particularly in developing countries. My experience in more than three dozen countries, especially developing countries—because I lived in developing countries for many years—tells me that the opposite is in fact true. Canadian companies, particularly in the resources sector, actually have a good reputation, especially in comparison to competitors from foreign countries. I am therefore bothered a bit when I see that that is a premise underlying the bill.

The second premise is that the current legal environment is unable to address the problems and meet the objective, which is to encourage companies to be better corporate citizens in developing countries. I do not think there is a need for a protracted debate on that point. The legal environment is more than sufficient today, whether it is banks or export credit agencies like EDC, which are subject to a set of rules, including the Canadian Environmental Assessment Act, which has to be applied to projects outside Canada, especially when there is Canadian funding. I think the current legal environment is more than capable of permitting Canadian companies to manage mining projects in developing countries quite effectively.

The third premise is the one I find the most upsetting, especially for those who have travelled in developing countries. The premise is that developing countries do not have sufficient legal capacity or are not mature enough to solve problems, in particular, problems related to human rights or failure to respect the environment. I think this premise is very harmful. A lobby group or an NGO can say things like that publicly, but when the idea forms the basis for legislation tabled by the Government of Canada, I, as a Canadian citizen, am deeply concerned.

Why is this bill aimed only at projects in developing countries? The answer to that question is obvious. People think developed countries are able to solve these problems and developing countries are not. This is a major issue. Developing countries do not want to be treated like children. I think that paternalism is probably the last approach we as Canadians want to use when it comes to addressing these very significant concerns.

I would like to end with a rather telling example that also indicates a change in the way Canadian companies approach foreign projects, particularly in developing countries. Companies talk a lot about community relations. They talk about the celebrated “social licence to operate”, an approach that on the whole is rather passive. They try to solve problems as they arise. However, Canadian companies are increasingly proactive in their approach. For example, there is a very big mining project, one of the biggest in the world, in Madagascar, the Ambatovy project, in which SNC-Lavalin has invested as part of a consortium that includes a Japanese company, a Korean company and another Canadian company. For the implementation and construction phases of the project, three training centres were set up to train more than 6,000 local workers, which helped maximize local employment for the project. Today, the project employs 10,000 people, 85% of them local workers, which is almost unheard of in the mining industry.

A strategy has also been put in place to maximize local procurement, and to date, companies have bought more than $750 million worth of goods and services produced locally or through a local intermediary. Some of the strategies that have been put in place are designed specifically to not only ensure that project implementation, but also to maximize the local benefits of that type of project. I believe this approach should be promoted ahead of the approach where minimum standards are set and companies that behave badly are punished. We welcomed the Canadian government's announcement of the creation of a corporate social responsibility counsellor position, and I think we have to move toward promoting best practices instead of punishing the worst offenders. Thank you.

[Robert Blackburn, Senior Vice-President, SNC-Lavalin International, SNC-Lavalin Inc.]

Thank you, Chairman and standing committee members.

I'm Robert Blackburn, senior vice-president of SNC-Lavalin International, and I'm accompanied by my colleague, Jean-François Gascon, who is the leader of our project sustainability group and environment. We're going to jointly make a very brief presentation.

SNC-Lavalin is one of Canada's largest engineering construction groups. Our key sectors of activity are mines and metallurgy, chemicals and petroleum, power, and infrastructure construction, ownership, and management. In 2008 half of our revenues of $7.1 billion were for work outside Canada, of which, interestingly, only 3% came from the United States, and 13% came from Africa, which has traditionally been our principal geographic market outside Canada. We're currently working on every continent, with approximately 10,000 projects under way in 100 countries. We have an employee workforce of about 22,000 around the world.

I want to make six main points, after which Jean-François will brief you on his experience and observations in dealing with project sustainability issues in Africa and elsewhere.

First, we're sympathetic to the objectives of Bill C-300. However, we have serious reservations about the need for and proposed approach of the bill. Contrary to what seems to be an underlying assumption of the bill, Canadian mining and oil and gas companies generally have a very positive record and reputation internationally. The uncertainties created by the proposed bill would place their activities in jeopardy, and they would be at a severe disadvantage with their competitors in global markets.

Next, Bill C-300 would affect SNC-Lavalin, because although we're not a mining or oil and gas company, we provide services to Canadian and foreign clients in these sectors in developing countries. In addition, we sometimes take small equity stakes in clients' projects, thus aligning our interests with theirs. Our investment in Ambatovy in Madagascar is an example where we're following industry-leading Canadian Mining Association voluntary guidelines—very strict guidelines.

In his testimony, Jim McArdle of EDC—Export Development Canada, that is—referred to 139,000 Canadian jobs sustained in 2008 alone by EDC export support and investments in the extractive industries. Several thousand of these are SNC-Lavalin employees in Canada and around the world.

Thirdly, it is important that the rules affecting Canadian companies be comparable with those observed by competitors based in other countries. Any project that benefits from export credit financing, as well as any project financed by most large banks following the Equator Principles, must meet stringent rules for environmental and social assessment of projects, as set out in the OECD recommendation on common approaches to the environment. They must also observe ongoing requirements during implementation and operations phases as set out by the same OECD and World Bank guidelines. Not only does the project proponent have to meet these criteria, but the financing agency requires that the proponent issue regular progress reports explaining how the commitments are being met. The EDC typically conducts audits for performance as well.

Finally, the EDC and World Bank regimes require the disclosure of a considerable amount of information in the form of environmental and social impact assessment reports, and often ongoing progress reports. The way in which a Canadian mining or oil and gas company develops and implements a project receiving such financial backing is thus very transparent. The same cannot be said for companies from countries that do not adhere to the OECD common approaches to environmental and social policies, and we can think of some, in Sudan and elsewhere.

My fourth point is that complaints and sanctions proposed in the bill would pose significant threats to companies' reputations, since with or without substance, each complaint calls for some level of ministerial investigation. There seem to be no sanctions against frivolous or vexatious complaints that could conceivably be launched not only by individuals but even by disgruntled competitors. Many of the complaints that you may have heard in this committee or elsewhere in print are not only inherently unprovable but cannot reasonably be defended against. The launching of a ministerial investigation would harm a reputation, whatever the outcome. Furthermore, it is not clear what resources and host government cooperation would be necessary for such investigations. These countries do have their own laws, as has just been stated, which are usually very effective.

In any case, the process would seem to be a duplication of the recently announced federal CSR strategy, with a CSR counsellor and the national contact point for the OECD and MNE guidelines .

My fifth point is a comment: that in the past twenty or so years, considerable progress has been made in Canada to bring industry and NGOs closer together and away from the adversarial zero-sum game of old. Examples include the National Round Table on the Environment and the Economy, an EDC consultative process regarding its environmental review directive.

Ultimately, Bill C-300 may well do little good for the environment and local communities where projects are implemented in the third world. It will certainly not boost Canada's competitiveness.

Finally, I think that the burdens and uncertainty of the bill's approach to standards and international enforcement would militate against Canada's hope of expanding into new and fast-growing markets around the world. Our bottom line was well stated by Jim McArdle of EDC, when he said:

If this bill becomes law, we believe that our opportunities to be on the field would be severely limited. Instead, we as Canadian companies and EDC would be on the sidelines hoping that the other companies who remain in the market do the right thing from a CSR perspective.

Thanks for your attention. I'll now ask Jean-François Gascon to share his experience with you.

[Professor Daviken Studnicki-Gizbert, Associate Professor, Department of History, McGill University]

Good morning. Thank you very much, Mr. Chair and the members of the committee. I appreciate the opportunity to share some of the research we've been doing at McGill with the committee this morning.

The statement I am going to present is based on the collective work of a research group that I coordinate at McGill. It's called MICLA. It examines the different projects across Latin America that are organized by Canadian mining companies. The testimony I'm giving is also based on my personal experience in the particular case of Cerro de San Pedro, which is a mining town on the outskirts of San Luis Potosi, in Mexico.

The issue of proof and documentation has come up a number of times in this committee, so I should say here that our research is based on a broad range of sources. These are documents released by the mining companies, technical reports from engineering firms, press files, legal documents, as well as reports filed by NGOs, international organizations, and national governments. These documents have been supplemented by field interviews with people living near a Canadian mining project, and interviews with community delegations that have come to Canada over the years, and with mining executives, NGOs, and scientists.

My comments today focus on Mexico. Mexico is the host of the largest number of Canadian mining projects in Latin America, and it's the country where the data is the most complete.

I'd like to focus on three points. The first is that Canadian mining in Mexico is a high-risk form of economic activity. The second is that while conflicts have arisen between Mexican communities and Canadian mining companies, these are surprisingly few. And third, the Canadian government, especially as represented by its consular staff, appears ill-equipped to address the growing public backlash against our companies in that country.

I believe it is important to get a better understanding of the context in which our companies currently operate. If you consolidate project data with data on the environments and communities around them, you quickly get a profile of a high-risk industry. It combines a form of operation that has a high impact on its surroundings with the presence from one end of Mexico to the other of a densely populated area characterized by multiple uses, complex land tenure and significant social strife.

Canadian mining companies first entered the Mexican mining sector in the 1990s. They brought with them billions of dollars in equity. Because our companies dominated the sector, they currently own approximately three-quarters of the projects. They have arguably been the main driving force for the recovery of the mining industry in Mexico. Investment aside, they cleared the way for significant modernization of mining techniques. The biggest change is probably “large tonnage, low grade” mines, which are usually open pit.

Most of the projects carried out by our companies are gold, silver and copper mines. The majority of those mines are open pit. I do not want to praise nor do I want to criticize this type of mining, but first off, it is new; second, it has significant long-term impact on the land and water around it; third, there are contamination risks; and fourth, it requires huge investments. We are talking an average of a hundred million dollars for every project. These rural communities, many of which are very poor, are literally awash with money.

There are currently 519 mining projects developed by companies registered in Canada. They hold large concessions of many hundreds to thousands of hectares each--the average is about 15,000 hectares--and when you put this together we get a significant portion of Mexico's national territory.

I put this out because I want to talk about the actual social geography in which these companies operate. It's a social geography that's very different from that of mining in Canada. Mining projects are situated in areas where the average population density is about 49 inhabitants per square kilometre. To give you a reference for that, it's about equivalent to the area around Chelsea, so fairly densely populated but quite rural. The people who live there are predominantly small-hold farmers, which means that they depend on land and water for their livelihoods. In areas like Guerrero, Oaxaca, and Chiapas, many of these farmers are indigenous, which means that they have special rights to consultation under ILO 169, to which Mexico is a signatory. But it also means that they have special liabilities, which means that those rights are often ignored. The majority of the projects that we've surveyed, close to three-quarters, overlap with what are known as ejido lands. This is a collective form of land tenure accorded to rural communities after the Mexican revolution, and the laws regulating ejido lands are very strict. They make ceding land, changing land use, or even renting land very difficult, and this can trigger conflicts within as well as between communities.

Finally, in a general way, the Mexican countryside is currently facing its most serious crisis in generations. The violence surrounding the drug trade is on the rise. There's been an upswing in guerrilla activity and in the militarization of the hinterland. The number of cases of alleged corruption at the local and state level is also growing. So this is the context: a large number of projects that will impact heavily on the resources needed by local communities, competing claims on land use that are legally complex but which must be resolved in the context of deepening violence and recourse to extra-legal means of “getting things done”. And this is what I mean by high-risk enterprise.

Public debates over mining have tended to turn around conflicts that emerge between mining companies and local communities. An important line of our research has therefore been to better understand the factors and dynamics that lead to these conflicts. Surprisingly, in recent years only 13 projects operated by 11 Canadian mining companies have been embroiled in open conflict. We need to compare this with the over 500 projects in development across Mexico. The Mexican pattern generally holds across Latin America as a whole. For some 1,300 Canadian mining projects ongoing across the region, we count around 50 with attendant conflicts.

These 13 cases in Mexico depict a range of trajectories. We have seen communities put up blockades to stop mining operations and force the company to negotiate. In some cases, negotiations was successful in resolving the dispute. In others, the company called in the police to take down the blockades and arrest the organizers, often with excessive violence.

The violence has sometimes taken the form of attacks. These attacks have been perpetrated by people linked to the company against people opposed to the mine. We are talking about assault and, in two cases, murder. The latest one just happened. Last Saturday, November 27, Mariano Abarca Roblero, a manager from the community of Chicomuselo in the state of Chiapas, was gunned down in front of his house by two assailants.

A few days before he died, he requested state protection because he had been publicly threatened. The threats were allegedly made by two representatives of Blackfire, a company registered here in Canada. Before he was murdered, Mr. Abarca organized several public consultations in communities near the Blackfire project. After the communities rejected the mine, Mr. Abarca coordinated a number of blockades. That was in June and July past. He died because he wanted to protect his community.

What is the significance of these findings? I find three.

First of all, while Canadian mining in Mexico is a high-risk enterprise, the numbers show that the Canadian companies are so far capable of managing this risk. I've personally met with people from Mexican communities who recognize the good faith in negotiations of Canadian mining managers and are happy to work with the company. In this respect, the government's existing CSR strategy can only help our companies improve their track record on community relations and environmental impacts. This is the kind of preventive work that absolutely needs to be done if companies and communities are to interact in a healthy and peaceful way.

I find that there's been a false dichotomy that's crept into the debates in this committee, one that pits Bill C-300 against the government's existing CSR strategy. We obviously need both of these things, and they need to work together.

Second, this committee has heard concerns that Bill C-300 would expose the Canadian mining industry as a whole to hounding by communities and their allies seeking redress, that the number of complaints would overwhelm DFAIT's capacity to address them in a satisfactory manner, that the CPPIB would not be able to maximize earnings for pensioners, that the TSX would lose a significant percentage of its equity, that the Canadian industry would lose its reputation and its competitive advantage.

Each of these arguments assumes that Bill C-300 will somehow open the floodgates of woe and complaint. With over 500 projects, Mexico represents a major chunk of the Canadian mining industry's overseas activities. Thirteen cases over the last five years is hardly a flood of problems. I think the industry and the TSX can breathe more easily.

More importantly, Mexicans are pragmatic. If they can find satisfaction through successful negotiations with a company or through appeal to the Mexican courts, they will do so and they have done so. So even though there were 13 cases, most of them are resolved locally, without appeal even to government authorities in Mexico.

Third, there are on occasion serious problems that arise from the activities of Canadian mining companies in Mexico. This needs to be made absolutely clear. We have to stop pretending that every single project and company is beyond reproach, that NGOs are making up vexatious and fraudulent claims in order to save their jobs.

Yes, the conflicts that arise are complex in their origins and in their unfolding. Yes, there are many sides to the story. But there are also certain incontestable and documented facts. People have been killed; people have been physically aggressed; people have suffered damage to their property, their lands, and their water without adequate compensation or redress. People have been dispossessed of their rights.

I would like to lay out in more detail one such case.

[The Chair, Conservative, Kevin Sorenson]

Good morning, colleagues. This is meeting 44 of the Standing Committee on Foreign Affairs and International Development on Thursday, December 3, 2009.

Our orders of the day include a return to our committee's study of Bill C-300, an act respecting corporate accountability for the activities of mining, oil, or gas in developing countries. We have a number of people who are going to testify before us today. We have votes at 10:15, so we've asked the guests if they are willing to appear together and they have agreed.

Committee members, you should have a steering committee report in front of you. On Tuesday morning your steering committee met and a number of items were discussed. I'm going to give you one moment to take a look at that report, which we put before you for your consideration today.

On the first point of that report, you'll note that the steering committee recommends that the minister of CIDA appear before our committee on the supplementary estimates. She has been invited and is scheduled--

Bill C-470

[Jim Abbott, Conservative, Parliamentary Secretary to the Minister of International Cooperation]

Mr. Speaker, one of the things that I think that we should be taking a look at, bearing in mind that of course we are governed by the documents that are currently on the Table, is the issue of the additional expenditures that would be required by a given department from time to time, as a result of private members' legislation.

Let me give an example. We presently have Bill C-300 before us at committee. If we were to take a look at the documents on the Table of this House, there may be some question as to whether that bill, should it succeed to come back to the chamber, would require a royal recommendation. Perhaps within the documents on the Table, there are a number of questions about that.

There is no question, however, with respect to that bill, and perhaps with respect to my Liberal friend's bill, that there will be either a complete reordering of finances within a given department in order to take care of the requirements of being able to enact a piece of legislation that again is not specifically covered by the documents with which we govern ourselves.

Mr. Speaker, I know that you are a very knowledgeable traditionalist, in terms of taking a look at what has gone before and what the rules of the House are. I invite you to take a look at the additional aspect with respect to a royal recommendation where, for example, if I may use the example of Bill C-300, we received testimony just this morning from the Department of Foreign Affairs and International Trade, that in order for that bill to be enacted, it would require many millions of dollars of expenditure by the department.

In other words, Mr. Speaker, that is not covered by the specific rules that you have on the Table in front of you, and perhaps the advice that you would normally receive by the Table.

However, the fact of the matter, nonetheless, is that there will be a further expenditure, either that or a starving of current programs that are run by DFAIT or run by my minister, the Minister of International Cooperation.

So, Mr. Speaker, when you are looking at this intervention by my Liberal friend, I do invite you to take a look at it in the broader picture. Because there are other private members' bills that are going to be coming back to this chamber, which may or may not be successful. However, in the event that they are successful, you are going to be challenged with the fact that, in spite of the specific wording within the given bill that comes back, nonetheless, the government's hands will be tied and the President of the Treasury Board and the government will have to make other financial considerations other than what is currently contained on the Table.

[Catherine Duhamel]

No, no. I would clarify what I just said in my presentation:

“As to the way in which complaints are dealt with, the rules of procedural fairness and natural justice apply to all administrative bodies established by a Canadian act. It is assumed that Bill C-300 complies with the Constitution and with the principles of procedural fairness.“

[The Chair, Conservative, Kevin Sorenson]

Welcome back. We'll call the meeting to order again.

In the second hour, we're continuing in our study of Bill C-300. We're very pleased to have, from Alternatives Canada, Catherine Duhamel, an international human rights lawyer.

Ms. Duhamel, I welcome you to our committee this morning and invite you to make your initial presentation. We hope that you will have the time as well to take some questions from our committee.

Welcome.

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

I think it's interesting; your department is taken very seriously by all Canadians, and certainly by this committee, and I'd just like to read, again, the closing statement of your presentation:Insofar as the analysis undertaken of the potential impact of Bill C-300 on DFAIT, it could restrict our ability, in areas where we most need to engage, to influence a positive outcome and ultimately limit the ability of this department to make positive contributions in the area of corporate social responsibility.

In other words, in spite of all its good intentions--everyone in this room, including me, support the intentions of the bill--the fact of the matter is that you have given us a shopping list of items where you would have tremendous difficulty in continuing to do the good CSR work that DFAIT is undertaking. I did want to underline that, because I take your testimony as being expert testimony.

I give the floor to Mr. Goldring.

[Francine Lalonde, Bloc, La Pointe-de-l'Île, QC]

In the absence of any other framework, you already make sure that you identify the wrongdoing to the extent that you can and you consult a number of people about it. You already have a mechanism that allows you to establish responsibility.

What else would you have to add in order for you to be able to comply with Bill C-300?

[Grant Manuge, Director General, Trade Commissioner Service, Operations, Department of Foreign Affairs and International Trade]

Thank you very much, Mr. Chair.

Thank you for inviting the Department of Foreign Affairs and International Trade-- “DFAIT”, as we refer to it--to return to this committee.

Today we would like to build upon previous testimony made by this department and comment on the potential implications of implementing Bill C-300, the challenges of the quasi-judicial process it would create, and the CSR-related activities in which DFAIT is currently engaged as part of our mandate when it comes to fostering the expansion of Canada's international trade and commerce and coordinating Canada's international economic relations.

Officials at the department have been following closely the committee's study of Bill C-300 and have carefully reviewed your comments and questions, as well as the testimony provided by the many witnesses and stakeholders who have appeared since the department last appeared in June.

During that appearance, officials spoke of the new corporate social responsibility strategy tabled by the government in March, the work of the national contact point and the network of foreign service officers around the world. It was also noted during that appearance that departmental officials had some concerns with the proposed implementation of this bill. That appearance was followed with a written submission outlining these concerns and questions.

Since that time, many issues have been raised by the various stakeholders. You have heard from the industry, civil society organizations, Export Development Canada, the Canada Pension Plan Investment Board and some of our partner departments.

Rather than focusing on areas that have already been substantively addressed by others, DFAIT would like to use its time today to raise a number of issues that would have considerable impact on this department and on its work. These issues include the use and operation of the Special Economic Measures Act; the question of applying international human rights standards to non-state actors; the way in which DFAIT provides CSR support to Canadian companies, including those in the mining, oil and gas sector; and the foreign policy implications of the bill.

To highlight some of these issues, it might be useful to undertake a close examination of the implications for this department of setting up and conducting an examination process as it is set out in the bill.

As the department that would ultimately be responsible for implementing and applying many of the provisions of this legislation, we needed to look carefully at what would be asked of us should this legislation pass. In so doing, we felt it was important to carefully examine the provisions of the legislation as it currently stands and to assess the various implications, some of which I will mention here.

Bill C-300 asks the ministers of the Department of Foreign Affairs and International Trade to draft a set of what appear to be mandatory regulations using a number of internationally recognized, voluntary guidelines and one policy that is internal to the International Finance Corporation. This is challenging, because these instruments are currently drafted as guidelines, and not regulations, so that they remain flexible enough to embrace the wide range of complex circumstances and conditions under which firms from Canada and other countries operate in countries around the world.

The bill also asks the ministers to incorporate human rights standards and “any other standard consistent with international human rights standards”. In this regard, Dr. John Ruggie, special representative of the UN Secretary-General on the issue of human rights and transnational corporations and other business enterprises, noted in his report of April 22, 2009, that “human rights instruments were written by States, for States. Their meaning for businesses has not always been understood clearly by human rights experts....” It would be difficult to determine which international human rights standards to apply and how those standards should apply to non-state actors prior to the completion of the work of Dr. Ruggie.

This point also serves to highlight the fact that Bill C-300 would require DFAIT to build or acquire the capacity to investigate and adjudicate claims of human rights abuse and environmental degradation. In addition, ministers would need to take into account not only the legal risk of making a determination, which could be subject to judicial review, but also potential impacts such a determination might have on local communities, host governments, Canadian companies, civil society organizations, and other stakeholders.

As noted in our earlier submission, the link between the actions of a Canadian extractive company and grave breaches of human rights by states is unclear and does not seem to be consistent with the purpose of enhancing corporate social responsibility abroad.

Bill C-300 requires the Department of Foreign Affairs and International Trade to set up a quasi-judicial process. That process would need to meet all the requirements of due process, procedural fairness, and natural justice. Foreign Affairs and International Trade currently does not have the ability to function as a quasi-judicial body. There is no provision within the DFAIT Act to house such a mechanism.

In order to set up a process to accept or reject complaints, conduct examinations, and make decisions based upon those examinations, a carefully drafted framework would be required, firmly respecting the principles of natural justice. This extensive regulatory framework would be required to ensure that rights are being protected.

The issues outlined above also raise questions as to whether or not DFAIT officials have the right skills or will have sufficient resources available to train or recruit individuals with the appropriate professional competencies to do this work.

It may be helpful to review the current practice of the department when DFAIT officials are presented with allegations of wrongdoing by a Canadian company abroad. When the department learns of such allegations, we take these very seriously and try to play a constructive and helpful role. Our heads of missions and foreign service officers in Canada and abroad consult and work closely with companies and the affected communities, and with governments, indigenous peoples, and civil society organizations to facilitate an open and informed dialogue among all parties.

In the event that the territory in which the alleged activity took place is not a signatory to the OECD guidelines for multinational enterprises and does not have their own national contact point, or NCP, we would offer the services of Canada's NCP to the affected individuals, communities or their representatives.

The Department of Foreign Affairs and International Trade currently chairs the interdepartmental committee that is Canada's national contact point (NCP) for the OECD guidelines. These guidelines are a key element of Canada's CSR approach.

The NCP promotes the guidelines, handles inquiries, and can foster a constructive dialogue between stakeholders when issues arise. If the allegations fall outside the scope of the OECD guidelines, the department could offer the services of the newly appointed Extractive Sector CSR Counsellor to the affected communities for issues that fall within her mandate.

The department's approach to engaging with stakeholders in the event of such allegations is one that reflects the principles that guide Canada's foreign relations and the observance of Canada's commitments under international agreements and obligations, including respect for the sovereignty of states.

It is an approach that is consistent with the way states in general work with one another when issues such as these are raised. It also demonstrates a commitment not only to help companies perform better and act in a socially responsible manner but also to work with host governments and local communities to enhance their ability to manage natural resources and benefit from the development opportunity afforded to them by such endowments.

When amending the DFAIT Act to put constraints on the kind of support officials are able to provide to Canadian companies in certain circumstances, it might be useful to note what some of those activities are. It will be challenging to draw a distinction between the activities of DFAIT officials that promote and support Canadian companies, and would have to be withdrawn in the case of a negative determination by the ministers, and activities that could be considered improving overall CSR performance.

These activities include hosting sustainable development and CSR conferences, seminars, and workshops; assisting Canadian delegations of indigenous peoples to meet with groups of indigenous peoples in other countries to talk about CSR and natural resource development; visiting mining sites and speaking with stakeholders; providing information about Canadian policies and programs to foreign governments; assisting in bringing foreign delegations to trade shows, such as GLOBE and PDAC, to meet with Canadian companies and learn about new technologies and approaches to natural resource development; advising companies with respect to the local cultural, political, and social environments and encouraging them to develop CSR best practices; participating in dialogues with civil society organizations and other stakeholders to better understand the range of issues and concerns and to adapt our policies and practices accordingly; sharing advice and information with partners across government and working together to create a whole-of-government approach to promoting CSR; actively supporting the creation of the CSR centre of excellence; and engaging on CSR at the bilateral and multilateral levels in a vast array of fora and through a wide range of instruments.

In summary, the experience of this department has demonstrated the value of seeking to facilitate dialogue to identify shared objectives among multiple stakeholders and build a consensus about how they can be most effectively realized. This requires flexibility, creativity, balance, and readiness to adapt approaches to specific circumstances, particularly in light of the highly complex political and economic situations that exist in many developing countries. This is particularly true if the goal is not only to promote respect for human rights but also to work toward remedy where the potential exists for behaviours inconsistent with the proposed guidelines.

Insofar as the analysis undertaken of the potential impact of Bill C-300 on DFAIT, it could restrict our ability, in areas where we most need to engage, to influence a positive outcome and ultimately limit the ability of this department to make positive contributions in the area of corporate social responsibility.

[The Chair, Conservative, Kevin Sorenson]

Good morning, colleagues.

This is meeting 43 of the Standing Committee on Foreign Affairs and International Development, Tuesday, December 1, 2009. Our orders of the day include a return to our committee's study of Bill C-300, An Act respecting Corporate Accountability for the Activities of Mining, Oil or Gas in Developing Countries.

On our first panel today we have, from the Department of Foreign Affairs and International Trade, Grant Manuge, the director general of the trade commissioner service, operations; Mr. James Lambert, the director general for Latin America and the Caribbean; Sabine Nölke, director of the United Nations human rights and economic law division; and Ms. Sara Wilshaw, the director of trade commissioner service support.

We welcome you to our committee this morning. I'll invite you to make your opening statements, and then we'll proceed into the first and second round of questioning.

I want to remind the members of our committee today that we are going to try to adjourn this by 10:15 to 10:30, somewhere in there, and move into steering committee. We'll really be on the time clock today in terms of the seven-minute rounds for questions and answers.

Mr. Manuge.