Foreign Affairs Committee on Nov. 19th, 2009

[The Chair, Conservative, Kevin Sorenson]

Merci.

Mr. Beatty.

[Perrin Beatty]

Thank you very much, Mr. Laforest, for your welcome to the committee.

Let me respond to you, first of all, with regard to the text of our statement. It was circulated neither in English nor in French to members of the committee. I would have liked to have been able to have had a final version to put in writing in front of all of you. We were fine-tuning that while I was in Washington, as recently as last evening, based on testimony before the committee that took place, I believe, yesterday. So it simply wasn't logically possible to do so. Had we tabled a statement before the committee, we'd have done so in English and in French.

The second question you asked is whether in essence there is anything good about the bill. Yes, I think the intentions behind the bill are certainly good. All of us subscribe to the belief that Canadian companies should adhere to the highest possible standards.

I personally believe, the business community believes, and the mining sector believes that Canada's reputation for maintaining the highest standards in the world is a competitive advantage for us. We do not want to see instances where people fall well off the norm or fall below best practices. We want to encourage everybody to follow the highest possible standards.

So the intent is right; the problem is that the mechanisms contained in the bill could be exceptionally damaging and could undermine the very intentions that the bill expressly seeks to achieve.

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

In your preliminary statement, you also claimed that the bill is based on ideology. Could you tell me what ideology?

Do you think the ideology of business development, of development at any cost, always trumps the ideology of human rights? Is that your position?

[Perrin Beatty]

Mr. Laforest, let me simply clarify. I didn't say the bill was based on ideology—I don't think it is. I think the bill is based on the very best possible intentions, which is to ensure that we adhere to high standards in our activities around the world. My concern is that people whose activities are based on ideology, who are inherently opposed to the extractive industries in principle or to the operations of Canadian companies abroad, and whose approach is essentially ideological could use the mechanisms contained in the bill to damage the Canadian interest and damage the interests of the peoples and the communities where those companies are operating. That's my concern.

The bill builds into it, through these mechanisms, an incentive for people. There are no penalties for somebody who recklessly damages the reputation of a Canadian company. There are very strong incentives for our competitors internationally to do what they can to undermine the competitive position of Canadian companies operating abroad, and this mechanism contained in the bill delivers to them a tool that can be used to recklessly damage the reputation of Canadian companies. That's where our concern was, not, certainly, with the philosophy underlying the bill or the desire that we know the bill's author has to see the highest possible standards followed.

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

You are aware that there have been cases of very significant environmental damages caused by mining companies these past few years--companies that support regressive governments, the murder of people associated to union groups. Speaking against a piece of legislation that would still allow a modicum of control on the behavior of corporations... Unlike you, I believe that doing nothing would only encourage those ideologues. If we do nothing, they will not stop what they are doing, they will continue to spread their ideologies which can sometimes be very damageable.

[Perrin Beatty]

Mr. Laforest, may I get some clarification from you? Are you suggesting for a second that any Canadian company would support the assassination of trade union officials?

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

That is not at all what I said. I only said that we have seen such situations and that a piece of legislation such as C-300 would allow us better to control the operations of those companies, especially in countries where we have seen such situations. I am not saying that companies have contributed to this, absolutely not.

[Perrin Beatty]

Let's by all means address any real issue that exists. If there are deficiencies that are real that exist in the operation of Canadian companies, let's address them. This is precisely the point I was trying to make earlier. We have to be exceptionally careful not to recklessly or carelessly damage the reputation of Canadian companies, particularly when Canadian companies really set the benchmark for the rest of the world today in terms of the standards they meet. Let's improve upon those. Let's work with the companies. Let's ensure there is the maximum benefit for the communities in which they're operating, but let's do so in a way that does not damage those very companies that may be world leaders in terms of the standards they set.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Beatty.

Mr. Abbott.

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

Thank you for attending, Mr. Beatty.

I'd like to point out--and this has no reference whatsoever to the previous questioning. I wanted to put on the record that it's fashionable in some quarters to not speak too highly of organizations like the Canadian Chamber of Commerce, as if they are some kind of a bogeyman, or whatever the case may be. The fact is that your organization represents the heartbeat of the economy of Canada. I know many of my colleagues have a tremendously high respect for your organization, as we do for you, since you earned an excellent reputation as a former minister of the crown, and I thank you for being here.

The question I have for you is, could you give us your best guess as to the percentage of equity on the Toronto Stock Exchange and on the Vancouver Stock Exchange that would be represented by extractive companies that would potentially be affected by Bill C-300?

[Perrin Beatty]

I can't give you an accurate figure, but the answer is that it is very substantial.

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

So very substantial--20%, some number like that. I mean, we don't know what the number is, but as you say, it's very substantial.

[Perrin Beatty]

It's very substantial, and you could certainly get the information from the TSX.

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

As we heard from the EDC, they have basically been backing, in 2008...if I recall, it was way over $20 billion, in that year, of extractive industry activity--in that one year. If that were removed, as EDC indicated they wouldn't be able to work with this bill, and if CPP were also constrained, what impact would that have on the Toronto Stock Exchange and the Vancouver Stock Exchange, and hence on economic activity in Canada?

[Perrin Beatty]

It would be very negative for economic activity in Canada.

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

I recognize your caution, and I think I understand your reason for caution, but I wonder if you could give us a better description. What would it do? I'm given the impression that it would be immense. I don't want to use the word “catastrophic”, so I won't. Would you agree with my characterization?

[Perrin Beatty]

It would certainly be very significant. Yes, I try to be cautious in what I say at all times. I would rather understate the impact than overstate it. But suffice it to say, a very significant part of the securities traded in Canada are in fact in the extractive industries. Having said that, much of the activity of those industries is domestic as opposed to foreign, so not all of that would be affected. But a significant portion of that is foreign activity, and it would have a negative impact on the economy of Canada as a consequence, and certainly a negative impact upon the welfare of those people who are working for those companies or invest in those companies.

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

There are many tens of thousands, if not hundreds of thousands, of people employed by those companies even here in Canada.

[Perrin Beatty]

Yes, and there remain all sorts of pensioners in Canada whose pension incomes depend upon investments they have in those companies as well, who expect those companies to maintain high standards in everything they're doing, but also expect that we as a country and you as a government will do what you can to ensure that these companies are fairly dealt with.

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

Good. Thank you.

[The Chair, Conservative, Kevin Sorenson]

Mr. Goldring.

[Peter Goldring, Conservative, Edmonton East, AB]

Thank you, Mr. Chairman.

Thank you for appearing here today. I do appreciate your comments, and particularly your comments relative to Talisman and what happened there. I do want to underscore the concerns here expressly expressed by EDC, but also relative, I suppose, to my 30 years of prior experience, too, of being involved in and around the extractive industry, and knowing full well the high standards they maintain--not just high standards, but pride in high standards. It's not just simply a buzzword, it's not just something they put on their letterhead; it's something they actually actively participate in. It's quite something to see, too--the standards.

There is the concern here of the chilling effect, I guess we could say, of EDC's concerns that the industry will look upon this bill as being rather a specification on how to deal with quotations or planning in other countries. If they have to subscribe to the perceived onerous details of this specification to compete in a foreign country, is it better for them, easier for them, to do this competition by locating their corporations in another country and competing from there, much like we have Canada Steamship Lines located in Barbados, because it's obviously a country of preferred flagging source rather than their being flagged from Canada? Is this what can happen? Can these Canadian corporations move out, relocate, so they can operate from an office in another country where they wouldn't have to subscribe to the perception of this bill?

[Perrin Beatty]

Yes, there are a number of concerns here, but the bottom line is one thing: this bill discriminates against Canadian companies. It puts an onerous regime in place for Canadian companies that does not apply to companies from other countries that are operating in exactly the same context as the Canadian companies are internationally.

Does it create an incentive for Canadian head offices to leave Canada and go abroad? Yes, it does. Does it create a disincentive for Canadian companies to take over operations that are deficient today and bring them up to global standards, up to Canadian standards? Yes, it provides that disincentive.

Does it provide a competitive disadvantage for Canadian companies that may be maintaining higher standards against a foreign company that maintains a lower standard? Yes, it does.

In all of the areas, the perverse impacts of the bill could work directly against the expressed intentions of Parliament and of the bill's authors.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Goldring. No more questions.

Ms. Brown, you had a very quick one.

[Lois Brown, Conservative, Newmarket—Aurora, ON]

Yes. Thank you, Mr. Chair.

Mr. Beatty, I'd just like to pick up on that thought. I think your quote was that it undermines the objectives that the bill hopes to achieve. I wonder if you could talk about the capacity building that Canadian companies now do in the countries in which they operate. Are they contributing to the social welfare of the countries in which they're operating?