Foreign Affairs Committee on Oct. 8th, 2009

[Gordon Peeling]

The main problem is it's a rush to judgment. It's black and white. There is no balanced process. All the reputational damage is up front. What if the conclusion is wrong in the first instance, or there is no time given to companies to bring their operations into compliance?

This is a very complex world we're living in. The lack of governance in developing countries puts a lot of onus on industry to fill gaps, provide education, provide resources to communities to solve some of their problems, to create economic opportunity, and if you're in an area where there may be three communities nearby, you can get dynamics between communities as to who's getting the bulk of the benefit, etc., and there could be all sorts of reasons for complaint. They can be quite complex, and I don't think this bill gives enough time or recognition to just how complex and difficult some of these issues are.

[Bernard Patry, Liberal, Pierrefonds—Dollard, QC]

Mr. Peeling, we have heard from numerous groups complaining about Canadian companies. We have heard from Central American groups, South American groups, indeed from groups from all over the world, even from Africa.

Has the group that you represent set up mechanisms so that its member-companies can be better corporate citizens? Do you have any means of encouraging or persuading them to act in a reasonable and human fashion when they are working abroad?

[Gordon Peeling]

I actually think there is a dynamic going on.

First of all, if you're using the Multilateral Investment Guarantee Agency related to the World Bank, you're subject to the IFC standards. If you go to those 65 banking institutions around the world—and EDC is one of them, but most of them are private sector banks—all require that companies seeking loans have to meet the Equator Principles, which is just another way of saying the IFC standards. So those are becoming commonplace.

John Ruggie's work will fill a huge gap on the human rights issue, absolutely. But the other reality out there—and this is why we appreciate the fact that government has to come to grips with working with other governments, both in multilateral institutions and on a bilateral basis—is that of improving governance capacity. And it won't be with everyone, because as one of your members has noted already today, there are probably jurisdictions out there that, although they still might be classified within the UN system as developing countries, are quite sophisticated regimes and don't need a lot of help. So we need to target that.

I mentioned the $10 billion or $66 billion of investment out there. It's our desire to make that the most productive investment possible for developing countries, to make sure that in actual fact human rights are not abused, and we want to see benefits flow to local communities. That's why we support the EITI. We don't want these benefits ending up in Swiss bank accounts; they should be down to benefit the countries where that development is taking place.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Peeling.

We'll move to Monsieur Dorion.

[Jean Dorion, Bloc, Longueuil—Pierre-Boucher, QC]

Mr. Peeling, the House of Commons is also currently studying another bill concerning a draft free trade agreement with Colombia. The agreement includes measures to protect Canadian investors in Colombia. Many other free trade agreements that Canada has signed with other countries—often countries which are lagging behind in terms of social, environmental, and human rights legislation, and so forth—include similar measures.

Do you not think that Bill C-300 could help limit abuse of Canadian investor protection measures?

Under the proposed terms of the free trade agreement, if a Canadian company invests in a country which then introduces legislation, such as environmental or worker protection legislation, etc., and the company's profits fall as a result, it can sue that country's government.

Do you think that Bill C-300 will help curtail abuse by Canadian companies abroad?

[Gordon Peeling]

Well, I don't agree with the starting premise that Canadian industry is in the business of delivering abuse abroad. I'd begin from a very different starting point, that we're in the business of trying to do the very best we possibly can in development outcomes.

Things like the free trade agreement we signed with Chile have provisions for side agreements on the environment, and yes, they do include investor protection, etc. Those tools help raise standards in those developing countries, or other countries, Colombia being an example. The Government of Canada is in the process of pursuing a number of foreign investment protection agreements as well. These tools provide at least some protections for industry and investors, but large elements of them are directed towards improving capacity and governance.

When we had the side deal with Chile and what we called the JPAC and the focus on improving environmental governance there and helping them raise their own standards and to improve their enforcement capacity--that's the type of bilateral relationship we believe works best.

The other reality, and we should not forget this, is that Canadian companies want to work with NGOs. NGOs have a lot of skills that we don't have, particularly in the social area. In working with us—and there are many that do—they can help us make sure that development meets the needs of local communities, that benefits actually flow through and are captured at the local level. Because we're in the mining business, we do need to be working with governments and we do need to be working with civil society to improve those outcomes.

Is this bill an added element to all of that? In our view, in light of the government's response to the CSR round table, this bill is redundant.

[The Chair, Conservative, Kevin Sorenson]

Mr. Dorion, you have three more minutes.

[Jean Dorion, Bloc, Longueuil—Pierre-Boucher, QC]

Is it not a universal truth that it is rare for those in power not to abuse that power? Is that not a fairly universal truth? Do you think that being Canadian means that this truism does not apply to our companies?

[The Chair, Conservative, Kevin Sorenson]

Go ahead, Mr. Peeling.

[Gordon Peeling]

I'm not sure I really understood the question, because they switched interpreters on me in midstream, so I lost the question halfway through.

[Jean Dorion, Bloc, Longueuil—Pierre-Boucher, QC]

I can speak a little more slowly to help our interpreters. It appears to me that it is a universal truth that—

[The Chair, Conservative, Kevin Sorenson]

Mr. Dorion, I'm still not getting translation.

Are you getting translation, Mr. Peeling?

[Gordon Peeling]

I am now, but I keep having to flip around to find it.

[The Chair, Conservative, Kevin Sorenson]

Can we hear the English translation, please? Okay. They've switched channels.

[Gordon Peeling]

I am now, but it disappears, and I have to find it elsewhere.

Please excuse me, Monsieur Dorion.

[Jean Dorion, Bloc, Longueuil—Pierre-Boucher, QC]

Not at all, Mr. Chairman.

[The Chair, Conservative, Kevin Sorenson]

We need French to English.

[Jean Dorion, Bloc, Longueuil—Pierre-Boucher, QC]

Is it not a universal truth that those who are in a position to abuse their power always end up doing so? Do you think that simply by being Canadian our companies will avoid this pitfall?

[The Chair, Conservative, Kevin Sorenson]

Mr. Peeling.

[Gordon Peeling]

Let me make a general comment, and I'm not a lawyer. We had lots of legal discussion at the round table and at various points in our hearings across the country. Common law is evolving, and there are accountabilities. Ms. Coumans referred to several instances of companies in court over historic events and recent historic events. We argued long and hard over how big a barrier forum non conveniens is. There were lots of views, but the end point seemed to be, at least from my non-legal view, that this, as a barrier, is shrinking.

Common law will continue to evolve. Legal accountabilities are there, and they are continuing to evolve and are more likely to be there in the future. You know, industry ignores all of that at its peril. We say, and we heard from Mr. Janda, that this is not an extraterritorial application. This is a sanction, not a legal.... So this bill doesn't play on that issue of legal accountabilities.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Peeling. Thank you, Mr. Dorion.

We'll move to Mr. Weston and then to Ms. Brown.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you for being here, Mr. Peeling.

First, let me start by repeating something Professor Janda said. He said that he is proud, as a Canadian citizen, that Parliament is considering this bill and that the eyes of the world are on us. I share that pride. I think we all have to pay tribute to John McKay for his intentions, because his intentions are terrific. I would certainly share my pride, but....

[John McKay, Liberal, Scarborough—Guildwood, ON]

Yes, here it comes, the “but”.

[Voices]

Oh, oh!

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Well, the path to hell is paved with good intentions.

What I see here is a multiplication of dispute resolution functions. My colleague, Mr. Rae, mentioned that we would be in the Federal Court looking at this. There's a national contact point for the OECD guidelines for multinational enterprises. We have a CSR counsellor for extractive industries. The sovereign country itself would use these guidelines as a possible reference point in litigation in the sovereign country.

Furthermore, a litigious quagmire.... You mentioned, Mr. Peeling, that there are no evidentiary rules in this bill. There would be an unfair advantage to any competitor that brought frivolous complaints. There are no repercussions for frivolous complainants, just as in the human rights code, under section 13, we see people able to bring frivolous complaints without any repercussions for them.

With all of that confusion in the background, I look at what we have. This government is committed, in its foreign policy, to democracy, accountability, human rights, and the rule of law. You mention NGOs. I chaired Canadian Food for the Hungry International, and I was in the Congo, like Mr. Dewar, not too long ago, and I see the problems there. Certainly, Canadians, generally, want to help the most vulnerable people in Canada and elsewhere.

I'd like you to just comment on what we are doing independent of this bill. We have this counsellor who's been recently appointed by the government, this new Office of the Extractive Sector CSR Counsellor. We've announced a new centre of excellence, a one-stop shop to provide information for companies and NGOs on this type of issue. We continue CIDA assistance to governments to help them manage their extractive sector. We're promoting internationally recognized voluntary CSR performance and export guidelines. So that provides a gold standard for companies that want to voluntarily comply and attract investors.

Can you comment on what this government is doing apart from the proposed bill?