Foreign Affairs Committee on May 25th, 2010

[The Chair, Conservative, Dean Allison]

Welcome to meeting number 19. Pursuant to the order of reference of Wednesday, March 3, 2010, we're going to continue our work on Bill C-300, an act respecting corporate accountability for the activities of mining, oil, or gas in developing countries.

I want to start off by welcoming those who are appearing via video conference.

I'm going to start with Karin Lissakers, who is with Revenue Watch Institute. She's coming to us from New York. Karin, thank you very much for joining us today. We're then going to move to my next teleconference. I have Shanta Martin, from Amnesty International. Sitting next to Shanta is Robert Anthony Hodge, who is with the International Council on Mining and Metals. We'll finish off with Shirley-Ann George, who is from the Canadian Chamber of Commerce.

If you can try to keep your remarks under ten minutes—I believe that's what the clerk probably asked you to do—we can get your opening statements in, and then we'll be able to go around the room and have some questions and answers. We'll take as long as we need. If we need the full two hours, that's great. If we go for an hour and a half, that will determine the number of questions that are available here.

Karin, thank you very much for being here from New York. I turn the floor over to you to give your opening comments for ten minutes.

[Karin Lissakers, Director, Revenue Watch Institute]

Thank you very much, Mr. Chairman and honourable members of the committee.

I'm very pleased to be provided time today to address the committee. I believe that Bill C-300....

[Technical difficulties]

There are many voluntary codes for multinational corporations, including the UN's voluntary principles on security and human rights; the Global Reporting Initiative; the Equator Principles; the sustainable development framework of the International Council on Mining and Metals--and we have Tony Hodge from ICMM here; and the Kimberley Process for diamonds--to name just a few. Of course many companies unilaterally adopt corporate guidelines but strive to meet international best practice standards throughout their global operations.

The extractive industries transparency initiative--EITI--has attracted the participation of more than 30 countries and the support of many more. Canada indeed became an EITI-supporting government last year, seven years after the EITI was launched. Forty-nine major petroleum and mining companies actively participate in the disclosure process under EITI, and the initiative has the backing of investors who manage more than $16 trillion of funds.

There are many reasons for this global movement toward new standards for extractive companies. First of all, the people in resource-rich countries no longer remain silent in the face of abuses of their rights. You have seen the protests against abusive labour practices or environmental damage, from Sudan to Peru to Ecuador. Because the people are more aware and more engaged, politicians are more sensitive. In the recent presidential election in Ghana, the strongest theme was perhaps the need for Ghana to set strict environmental and social and transparency standards for the management of its new oil sector.

Large institutional investors such as public pension funds--you can take the sovereign wealth fund of Norway, the California pension fund, and so on--increasingly discriminate against companies with a reputation for social or environmental abuse. The governments of capital-providing countries do not want to appear to or actually condone or support abusive practices, because doing so damages the long-term national economic and political interest.

Thus, OECD countries develop common standards that are then applied statutorily in each member country, for example, outlawing bribery of foreign government officials by their own multinationals that are trying to advance business. A similar process takes place through the EU in setting standards. For example, its raw materials initiative seeks both to secure access to raw materials for Europe and to apply high standards to those investments.

Of course many large multinational corporations recognize that reputation risk is high. Following best practice is in fact better for the bottom line over the long term. It is clear that it's not just American, Canadian, European, or Australian companies that have come to that realization. We see now that Chinese extraction companies are seeking partnerships with top-tier western mining and oil companies. It is not because they need access to capital, but because they certainly want to learn the technology skills of those companies. We have also been told by a number of people that because they seek to enhance their own reputation in the international markets they want to be seen as first-class investors in extractive companies.

One of my legal team members at Revenue Watch just returned this week from an event hosted by the Chinese Academy of Social Sciences in Beijing, where the focus was on corporate social responsibility practices, particularly in extractive industries, and the EITI secretariat was invited to participate in the discussion.

Two weeks ago we were approached by a group of consultants who work in Russia who said that they had been approached by a number of large Russian mineral corporations that wanted to find out how they could do better on the corporate social responsibility front. They asked if we could help with some advice and with perhaps organizing some events.

So these ideas are taking hold, and the recognition that these good practices are essential to successful business is taking hold. Globalization means that the old model of a double standard for business maintaining one set of practices at home and another lower set of standards abroad is no longer viable. As the editor of the Oil & Gas Journal put it in an April 19 speech:

Here's a bedrock reality. For international oil and gas companies and service firms not owned by governments, the licence to operate isn't what it used to be. That condition changed and business as usual won't change it.

Many companies will argue that we should stick with voluntary principles. I believe that's one of the arguments that's been raised against Bill C-300. But that is not where the world is going. Voluntary principles are useful as a stage for developing consensus around what the good practices and standards should be. But once a majority recognizes the value of a public good—and that is what good practices are—a voluntary approach is impractical and inefficient. Moreover, I would argue that governments have both a right and an obligation to set rules for the use of public funds that reflect the norms and principles of their own taxpayers.

Even if you look at existing so-called voluntary initiatives, you will see that they have binding elements. The EITI, for example, is voluntary for countries but mandatory for companies operating in the implementing countries. The EITI has strict rules even for the implementing governments, backed up by a compliance review mechanism and penalities for non-compliance.

Voluntary standards that have been worked out among stakeholders in various fora become the benchmark for mandatory behaviour. The ICMM--International Council on Mining and Metals--sustainability framework is binding on each of its 17 member companies, with reporting and assurance procedures based on the Global Reporting Initiative's G3 sustainability guidelines, for example. This prevents free riding by companies that want the prestige of the ICMM brand but do not want to meet its standards.

The World Bank's investment arm, the IFC--International Finance Corporation--requires that companies with which it co-invests in extractive projects publish their payments to the government according to the EITI model, as well as following the bank's own environmental and social standards, of course. The U.S. government political risk insurance is available only to extractive projects in countries that have adopted EITI-like transparency standards for extractive industries.

The Initiating Foreign Assistance Reform Act of 2009 also requires that OPIC, which has many of the functions of Export Development Canada, adopt a comprehensive set of environmental transparency and internationally recognized work rights and human rights requirements that will be binding on OPIC and on the companies it supports. These standards may be no less rigorous than those of the World Bank, although it is a different standard.

On the transparency front, last week the U.S. Senate considered an amendment to the financial regulatory reform bill that would require all extractive companies listed in the U.S. to publish what they pay to governments, country by country and by type of payment. The amendment had the support of the administration and according to its sponsors had the support of well over half of the members of the U.S. Senate. The amendment was not moved on a technicality, but I expect it to be taken up by the U.S. Congress later this session.

The International Accounting Standards Board is developing a new financial reporting standard for extractive companies. The international financial reporting standards will be binding on companies operating in 110 countries, including China and, indeed, Canada.

Finally, the most recent development on this front: the Hong Kong Stock Exchange has just issued new rules for minerals companies. The new rules require that as part of their listing minerals companies disclose, among other things, project risks arising from environmental, social, and health and safety issues; compliance with host country laws, regulations, and permits; and disclosure of payments made to host country governments in respect of tax, royalties, and other significant payments, on a country by country basis. They have to report that they have sufficient funding plans for remediation, rehabilitation, enclosure, and removal of facilities in a sustainable manner. They have to report on the environmental liabilities of their projects or properties; their historical periods of dealing with the concerns of local governments and communities on the sites of mines, exploration properties, and relevant management arrangements; and any claims that may exist over the land on which exploration or mining activity is being carried out, including any ancestral or native claims. These new rules for the Hong Kong Stock Exchange will take effect on June 3.

I believe that Bill C-300 is fully consistent with this global movement toward setting minimum standards for responsible extraction of non-renewable minerals. I would say that it falls short in only one area, and that has to do with transparency. I'm quite surprised and disappointed, frankly, that Bill C-300 does not address the transparency of payments to government. That is a central feature of many of the initiatives I've mentioned, and is widely recognized as a way to reduce social and political instability and corruption in resource-rich countries. Your government's money is supporting investment with Bill C-300, and its future readings will be amended to address this shortfall.

Overall, I would say that Canada, as the leading provider of capital to extractive industries and home regulator of a large section of the international mining industry, has a responsibility and an opportunity to lead rather than to lag the global movement toward establishing sound standards for extractive industries.

Thank you very much.

[The Chair, Conservative, Dean Allison]

Thank you, Ms. Lissakers.

Now we're going to move to Ms. Martin from Amnesty International for ten minutes.

[Shanta Martin, Head of Business and Human Rights, International Secretariat, Amnesty International]

Thank you, Mr. Chair and committee members.

We're actually getting quite a lot of feedback, and I'm hoping that you will be able to hear my comments fairly clearly.

[The Chair, Conservative, Dean Allison]

Yes, we can.

[Shanta Martin]

I understand that my colleague Alex Neve, who’s the director of Amnesty International Canada, has already presented to the committee, so I don't want to go over old ground in terms of information he's already provided. What I would like to do is ground the discussion I would like to have with the committee around the international perspective in terms of, in particular, the position Canada finds itself in within this international context. Lastly, I'll just briefly comment on the benefits that would derive from the fact of inquiries being made by a Canadian government authority.

Turning to the first point, there's no doubt that Canada can and should introduce legislation that withholds public support to companies that fail to respect human rights abroad, and that doing so would be consistent with Canada's international legal duties. That includes the framework enunciated by the United Nations special representative to the Secretary General on business and human rights issues. According to the special representative, and I'm quoting here,

The root cause of the business and human rights predicament today lies in governance gaps created by globalization.... These governance gaps provide the permissive environment for wrongful acts by companies of all kinds without adequate sanctioning and reparation.

It’s in many respects in response to that predicament that the special representative has outlined a framework—the protect, respect, and remedy framework--which articulates the state duty to protect against human rights abuses from third parties, including by business; the corporate responsibility to respect all human rights; and the need for greater access to effective remedies for the victims of any human rights abuses.

Under international law, there’s no doubt that states are the primary duty-bearers, and given that this discussion is with parliamentarians, I'd like to focus my comments specifically on the pillar enunciated by the special representative, being the state duty to protect.

As I've just said, states clearly have a duty to protect against human rights abuses by non-state actors, and that includes business. There are a number of means by which states can actually undertake this activity, and there are a number of documents that already exist that provide guidance to states to pursue this duty or to fulfill this duty. In many respects, to help states interpret how to fulfill that duty, the UN treaty-monitoring bodies have recommended that states take all necessary steps to protect against such abuse, including to prevent, investigate, and punish the abuse, and to provide access to redress.

Clearly, and certainly as articulated by the special representative, the state duty to protect has both a policy but also a legal dimension. While policies that encourage corporate responsibility for human rights do have a role, so too does legislation. In elaborating the state duty to protect, the special representative has noted--and here I'm quoting from the special representative's 2008 report to the Human Rights Council:

There is increasing encouragement at the international level, including from the treaty bodies, for home States to take regulatory action to prevent abuse by their companies overseas.

In the advance copy of his most recent report, which will be delivered to the Human Rights Council in the next week or so, the special representative further notes that all states have the duty to protect against corporate-related human rights abuses within their territory and/or jurisdiction. It is not limited alone to territory.

He explains that there is a critical distinction between jurisdiction exercised directly in relation to actors or activities overseas and domestic measures, such as Bill C-300, that have extraterritorial implications. The special representative also emphasizes that states should make greater efforts to ensure that companies based in or conducting transactions through their jurisdictions do not commit or contribute to human rights abuses abroad, and help remedy them when they do occur.

What does this mean in the context of Canada? Well, certainly Canada has positioned itself as an extremely influential player in the global mining sector, and it should ensure that this role is fulfilled consistent with Canada's international human rights obligations, including promoting respect for human rights by Canadian companies and holding them accountable if they do not.

If I might, I would very briefly quote from the Canadian government’s own corporate social responsibility strategy:

Canada is a particularly strong player in the global mining sector. Canadian financial markets in Toronto and Vancouver are the world’s largest source of equity capital for mining companies undertaking exploration and development. Mining and exploration companies based in Canada account for 43 percent of global exploration expenditures. In 2008, over 75 percent of the world’s exploration and mining companies were headquartered in Canada. These 1293 companies had an interest in some 7809 properties in Canada and in over 100 countries around the world.

There's no doubt that the extractive industries are well known for having extensive potential and actual impacts on human rights. These include the impacts on the rights to health and water and the rights of indigenous peoples to free, prior, and informed consent. It's very frequent that the rights of women are disproportionately affected within these contexts. Given that situation and in light of the comments of the special representative, it is entirely appropriate that Canada should introduce legislation that would lead to repercussions for Canadian extractive industry companies that fail to respect human rights in their operations abroad.

Given the level of Canadian-listed or Canadian-based extractive industry companies, it may not surprise the committee to hear that the proportion of cases received by Amnesty International regarding alleged human rights abuses associated with projects involving Canadian companies is very high.

I have already provided the committee with a number of reports, urgent actions, and other publications wherein Amnesty International has raised concerns regarding such human rights abuses. In the order of the list I've provided to the committee, the cases relate to mining operations involving the following Canadian companies, usually through--

[Technical difficulty--Editor]

[The Chair, Conservative, Dean Allison]

Okay, I think we have audio and video now.

If you could continue your comments, we'll add your time back on. You have about three minutes left. Can you hear us?

[Shanta Martin]

Can I just ask, what was the last thing that was heard?

[The Chair, Conservative, Dean Allison]

You were just starting page 5 of your remarks.

[Shanta Martin]

Okay.

I articulated the names of the companies involved in the cases that have been provided to the committee.

[The Chair, Conservative, Dean Allison]

You started on that. That’s correct, yes.

[Shanta Martin]

Would you like me to repeat those?

[The Chair, Conservative, Dean Allison]

Sure. You have three minutes, so however you want to finish that off.

[Shanta Martin]

I might move on because I do believe you have a copy of the comments that I have made. In that is the articulation of the companies I just mentioned. I was just about to--

[The Chair, Conservative, Dean Allison]

Ms. Martin, just to let you know that we haven't distributed those copies yet because they haven't been translated. I do have a copy because I was following along with your presentation. When they're interpreted in both languages then they will be distributed at some point. Just to let you know they don't have them.

[Shanta Martin]

Very quickly, the cases that have been provided by Amnesty International involve the Papua New Guinea case Barrick Gold Corporation and an El Salvador case involving Pacific Rim Mining Corporation; three Mexican cases involving New Gold, Blackfire, and Teck and Goldcorp; two Guatemalan cases involving Hudbay Minerals and Goldcorp; and an Ecuadorean case involving Copper Mesa Mining Corporation.

[Technical difficulties]

[The Chair, Conservative, Dean Allison]

Sorry about that, Ms. Martin.

Let's try that one more time.

[Shanta Martin]

Sure. I would beg a little bit of indulgence, then, in terms of the timing and perhaps take a minute over the three minutes that were left.

I was saying that a human rights impact assessment undertaken at Goldcorp's Marlin mine in Guatemala has recently been released and found that Goldcorp had failed to respect the rights of indigenous peoples in Guatemala. We've also recently been given a copy of a letter from the Inter-American Commission on Human Rights that makes clear that the commission has written to the Government of Guatemala calling for the immediate suspension of operations at the Marlin mine.

There is also the most recent Canadian court discussion regarding a case brought against Copper Mesa and the Toronto Stock Exchange, wherein the judge noted that whilst he can understand the concern on the part of citizens of countries in which Canadian companies do business to ensure that the actions of those companies are carried out with the same care and attention as if they were conducted in Canada, this would be a matter for legislatures and not the courts. In other words, Mr. Chair and members of the committee, this really is a matter for you.

Now, I want to make clear that Amnesty International is not alleging that in all of the cases I've highlighted the Canadian company involved is responsible for the perpetration of the abuse. We have also documented human rights abuses associated with state decisions and actions. At times these may appear to be designed to facilitate extractive industry operations, but the role of the company, if any, may be less than clear.

While the authorities of the state in which the abuse occurred should be the authority responsible for identifying those responsible for the human rights abuse, the capacity and willingness of these authorities is often weak, and that is particularly true in developing states that are highly dependent on the investment of foreign mining companies. When the companies operating the mines are reticent to call for an independent investigation, the readiness of the host state to act is further undermined.

This brings me to my final point, which is with regard to the appropriateness of examinations being undertaken by a Canadian authority. In the circumstances I've outlined, where the host state is often unwilling or unable to conduct a full, fair, and impartial investigation that would lead to holding the perpetrators of human rights abuses accountable, examination of the issue by the Canadian government would be of great value. Now, that's not only in the context of where a state might be unable or unwilling, but also that the investigation or examination of the issue by the Canadian authorities could supplement the investigations undertaken by a host state where such investigations occur. That would offer the opportunity to delve into and clarify the situation to the benefit of both the victim of the human rights abuses as well as any companies that may be unjustly accused.

One of the things I would very briefly like to comment upon is some recent testimony provided to the committee. I understand the committee has heard from representatives of the International Human Rights Clinic at Harvard Law School, and also from the New York University School of Law, and that their statements pointed to the failure of any independent investigation to occur or result in accountability of perpetrators of human rights abuses around the Porgera mine.

What I do want to raise is that Amnesty International's recent experience in investigating human rights abuses by police resident at Barrick's Porgera mine in Papua New Guinea reveals a similar pattern. Amnesty International's investigations are documented in the report that has been provided to the committee, which demonstrates that aspects of the police activity in Porgera were carried out in violation of both domestic law and international human rights law.

People's homes were burned, people were forced to flee, and there were no legal safeguards to protect those affected by the police operations or to ensure respect for their human rights. There is significant evidence that the police aimed firearms at residents and threatened them while destroying their property and burning their houses, and on at least one occasion severely beat a man and his son during an interrogation in one of the villages. There are also allegations of rape by police officers, which warrant further investigation.

Whilst Amnesty has raised these concerns and presented our findings to the Government of Papua New Guinea, there has been no independent investigation undertaken by the authorities. We have also urged Barrick and the Porgera Joint Venture to call for a full and independent investigation.

I note that after several months of asserting that there were no human rights impacts as a result of the police activity, in December last year Barrick and Porgera Joint Venture privately accepted to Amnesty International that the police had forcibly evicted people from their homes and burnt down their property. The companies told Amnesty International that an investigation by the authorities was warranted. They even asked Amnesty International to provide them more time prior to launching our report, including time to urge such an investigation.

We took this request on good faith and delayed releasing our findings for over a month. Yet to the best of our knowledge, despite evidence that the activity was unlawful and contrary to the human rights of those impacted, Barrick and its subsidiaries have still not urged an independent and full investigation, and no further information has been provided by them to us. Perhaps the situation would be different if the Canadian government had inquired into the situation. I understand that Barrick has received significant support from Export Development Canada on projects other than the Porgera mine, which might cause the company to be more open to inquiries from the Canadian government.

In closing, I would like to reiterate the importance of Canada taking the steps needed to provide guidance on the state's expectations regarding corporate responsibility for human rights, to put in place an effective and independent fact-finding mechanism and to establish an accountability mechanism. Not only would this send a very clear message to Canadian companies, it would also be a message heard by other states, including other home states, other companies, and most importantly by the people whose human rights might be at risk by the extractive operations of Canadian companies and companies from any state.

Thank you.

[The Chair, Conservative, Dean Allison]

Thank you, Ms. Martin. And thank you also for putting up with our little glitches there with the video.

I'm now going to turn it over to Mr. Hodge, from the International Council on Mining and Metals. Sir, the floor is yours; ten minutes, please.

[Robert Anthony Hodge, President, International Council on Mining and Metals]

Thank you very much, Chair, and honourable members of the committee.

ICMM was created in 2001 as a change agent within the industry. Our charge as a secretariat is to work collaboratively with members to improve environmental and social performance, guided by the principles of sustainability. We are not a lobby organization.

We have 19 corporate members now and serve as an umbrella for some 30 mining associations around the world, through which we have potential reach to another 1,500 companies. Those companies are not bound by the core commitments that bind our 19 core members.

Of particular relevance to this discussion are programs that strengthen the socio-economic contribution of mining activities at local and national levels, our work on human rights and grievance mechanisms, and strengthening relationships with indigenous peoples. The ICMM and its members are also active partners with governments, including Canada's, and civil society in initiatives such as the voluntary principles on security and human rights and the extractive industries transparency initiative. I've given you other notes about ICMM on my submission.

I very much appreciate this opportunity to address you. I believe that this discussion in Canada around corporate social responsibility provides a special opportunity to bring positive change and a special opportunity for Canada to demonstrate leadership in the international arena. I agree that the performance of a small minority of mining companies has been unacceptable. This is not representative of the overwhelming majority of the industry.

At the same time, I am sorry that the response of the federal government to the consensus-achieving CSR round table process was so slow. One result has been a significant increase in the acrimony of relationships in and around the mining industry in Canada, to no one's gain.

I have two overarching messages. One, we strongly endorse the notion of accountability. There is a role for appropriate mechanisms for resolving complaints and delivering remedies. Some of these may well be in the form of rules and binding standards. Two, the design as proposed in Bill C-300, however, will not serve to bring positive change as sought by the stated goal of the legislation.

I wish to put before you three key trends that affect the environment in which we are operating.

First, over the past two decades the world has seen a marked improvement in the way in which social and environmental implications of mining projects are managed, along with an acceptance of the concept of an unwritten social licence to operate based on early and ongoing engagement with affected communities.

Second, a significant and continuing shift has taken place in the global economy towards emerging markets in China, India, Brazil, and South Africa. These are major players, and they are frankly skeptical of initiatives that they perceive as western constructs unless they are part of the design process. They are no different, quite frankly, from anyone else.

Third, over the past four years a major process has been under way to construct a framework within which business impacts on human rights can be managed and accountability can be assigned. This work is led by the UN Secretary-General's special representative, Professor John Ruggie, whose “protect, respect, and remedy” framework has achieved a high degree of consensus in what previously has been a contentious area. His work on operationalizing the framework is due to be completed within the next year.

I have five arguments to make about Bill C-300.

First, our experience is that to be effective, any complaints mechanism needs to be embedded in a carefully and collaboratively designed system of dispute resolution. We are strongly supportive of Ruggie’s “protect, respect, and remedy” framework.

We have also learned that redress to concerns raised by citizens, communities, and others is essential at three levels. The first level is the local community and company level. This is always the first line of action, and the most effective. The second is the national level, and here Peru's ombudsman office, which includes 50 local offices to ensure connection to the community level, is a good example.

Third is at the international level, and I also mention the OECD guidelines for multinational corporations and the OECD national contact points; the compliance advisor and ombudsman of the International Finance Corporation; and the Multilateral Investment Guarantee Agency.

Recognizing the need to have an integrated approach, Ruggie’s work is pulling all of this together. Bill C-300 seems to be proceeding without cognizance of and out of step with this work and the internationally supported insights it embodies.

Bill C-300 risks being duplicative, perhaps undermining the above initiatives. In practice, will a hierarchy prevail if complainants register a complaint with all of these? If so, which will take precedence? If not, how should the Government of Canada or complainants interpret contradictory rulings? Bill C-300 answers none of these questions.

On argument two, the great majority of disputes are best resolved through mechanisms that have local ownership and where the means of investigating conduct are close to the affected community or region. The aggrieved people are more likely to feel properly involved, and the people or institutions involved in resolving the situation are more likely to understand the context and cultural dynamic that may be at work.

This raises the issue of what happens with marginalized groups that may be out of favour with a host government. This is a real issue, but whether or not Canada wishes to assume sole responsibility--as implied in Bill C-300--for protecting these groups and individuals is an issue that should be addressed explicitly.

[Technical difficulties]

[The Chair, Conservative, Dean Allison]

Mr. Hodge, you were just starting on argument three when we lost you.

[Robert Anthony Hodge]

Thank you.

Argument three is that on its own, the remote ruling of Bill C-300 focuses on the negative and provides no incentive for ensuring that the interests of the parties involved are addressed—community, host country, indigenous people, or company.

Argument four is that Bill C-300 will alienate a number of developing countries at a time when the kind of leadership Canada has provided over the years is needed more than ever before. This is because its approach is based upon a model of the world where Canada will seek to regulate the behaviour of extractive companies over the heads of host country governments. This will be seen as undermining of national sovereignty and of a “west knows best” mindset. Frankly, we would do better to put funding into strengthening the enforcement capacities of some host countries in areas like environmental and social regulation, rather than substituting our own judgments for theirs.

Argument five is that while standards drive ICMM members’ performance, the standards to which companies would be held accountable under Bill C-300 are unclear and subject to development within 12 months of the bill coming into force. This leads to considerable uncertainty regarding the scope of what companies may ultimately be held accountable to. To complicate the issue, the IFC standards and guidelines and the OECD guidelines for multinational corporations are both currently under review. As a matter of principle, it is difficult to support legislation where it is not possible for companies to understand the standards and criteria to which they will be held accountable.

In closing, here are a few suggestions and thoughts about moving forward. Canadian parliamentary process must, of course, run its course. However, regardless of the outcome, Canada should use this as a catalyst for discussion with mining countries from the political north and south, and with partners in business and civil society, in terms of effective encouragement of corporate social responsibility. Corporate responsibility has a number of facets—ethical, legal, and economic. All these need addressing in a systematic approach that encourages positive change.

So my message is not one of inaction. Within Canada the CSR round tables generated an agenda for action and these should be taken forward. Meanwhile, Canada has an opportunity to be a prime mover in the international debates about accountability and providing redress for those whose rights are infringed. But we do not strengthen our voice by acting unilaterally. Rather, with initiatives such as John Ruggie’s final report to the UN Human Rights Council and the ongoing revisions to the OECD guidelines and the IFC performance standards, there is an active agenda for progress.

Over the past 20 months,I have been privileged to be able to travel broadly across the world, meeting and interacting with individuals from many countries and cultures. I'm always struck by the special reaction when I identify myself as a Canadian. Canada has a special role in the world arena. There is a remarkable respect out there and an expectation that we work with others, that we do not impose our will on others. I hope the results of this discussion will be consistent with that respect and these expectations.

Thanks again for the opportunity to address you.

[The Chair, Conservative, Dean Allison]

Thank you, Mr. Hodge, as we work through our technical glitches hopefully for the last time here.

We're going to wrap up with Shirley-Ann George, who's from the Canadian Chamber of Commerce.

Ms. George, welcome back. It's good to see you. We're going to finish off with your comments. You have ten minutes. The floor is yours.

[Shirley-Ann George, Senior Vice-President, Policy, Canadian Chamber of Commerce]

Thank you very much, Chairman Allison.

It's a pleasure to be back in front of this committee. As you know, we represent the broad base of Canadian business, with over 175,000 members.

It is a pleasure to appear before this committee again on Bill C-300. We have resubmitted the presentation that was given by our president and CEO last November. I will not take you through all of that again. Rather, my presentation today will outline the key reasons why our views on this bill have not changed since we last appeared. In fact, we feel more strongly than ever about the harm this bill would cause while at the end of day giving no more protection to people in developing countries where Canadian extractive companies operate.

Bill C-300 would cut off companies from government resources when they are alleged--not proven, but alleged--to have behaved badly and when they most need help. Bill C-300 would leave the situation unresolved. It would leave the alleged parties no better off--and potentially worse off. It would leave the company in no position to take any measures to make things right if that were proven to be necessary. It would leave in tatters the reputation of Canada, the Canadian government, and one of our most important industries and economic contributors.

Also, we cannot ignore the impact of reducing the activities of our large extractive companies on the hundreds of smaller firms that serve them, including some companies that reside in your ridings. With the projects of larger companies curtailed, the spillover impacts on Canada will soon be felt.

Canada is a world leader in the extractive sector, and the Toronto Stock Exchange is the world’s largest mining sector capital market. Bill C-300 would change that. It would drive Canadian extractive companies, the vast majority of which do behave responsibly and are considered to be globally responsible leaders, to move their base of operations outside of Canada.

Their motivation would be not to escape the punitive measures of Bill C-300, but to allow themselves to operate on a level playing field with their international competitors. On this, they know they can compete. On an unlevel playing field, they know they cannot. Competitors will not have to be constantly looking over their shoulders to see where the next accusation is coming from.

Mining is similar to building a new highway across the middle of your hometown. No matter how much it's needed, and no matter how diligent you are in your preparations, there will be a group that will remain bitterly unhappy. And there are anti-mining groups who make hearsay accusations without the needed due diligence.

This bill provides a taxpayer-funded platform for organizations whose existence depends on their ability to make accusations against extractive companies and for those that wish to do mischief to Canadian companies. Our extractive sector companies’ international competitors could use the Bill C-300 process to damage the reputation of our companies and tie up their financing arrangements, as well as delay their entry into new projects and the takeover of existing ones.

Also, if Bill C-300 were passed, many Canadian companies would not take the risk of pursuing new ventures in countries with weak governance. This could be devastating to countries that depend heavily upon the economic contribution of Canada’s extractive companies.

In Africa, for example, Canadian mining companies had more than $19 billion in assets in 2008. These companies contribute many, many, many times more than the Canadian government does. The impact upon this region of the closing down of projects, or even their curtailment, would be hard and swift for the world's most vulnerable.

Canadian companies would also shy away from taking over operations where companies are behaving inappropriately and then bringing them up to international standards. Why would they do so when the prospect of penalties and reputation damage lies before them? And who would lose most? The very people that the bill means to protect.

Sanctions proposed in this bill could be very serious and potentially devastating for Canadian extractive companies and for their employees, both at home and abroad. It would also harm the projects and the people in the developing countries. To be cut off from EDC financing and political risk insurance, as well as being blacklisted for Canada Pension Plan investment, would mean the cancelling of projects and the cutting of jobs.

It is the view of the Canadian Chamber that Canada shows true leadership by working with companies to give them the tools to prevent getting into difficulties and, even more importantly, to continue working with them to help remedy the situation and preserve Canada’s reputation if they do. Cutting and running is not the answer.

Some have alleged that Canadian extractive companies want to cling to the status quo. This is not the case. Canadian extractive companies know the competitive advantage afforded to those with solid reputations for responsible conduct. What this is about is measuring companies internationally by the same existing high performance standards and not putting Canadian companies at a competitive disadvantage.

The standards that were cited by some of the other speakers are good standards. They were developed on an international basis and applied across all companies operating in those countries. They don't target companies from one specific country.

It's also about the reputational and economic harm of the process that invites allegations against Canadian companies without any risk to those who make them.

Bill C-300 is a classic example of a well-intentioned bill that causes massive unintended consequences. Because this bill was written by those who do not understand the extractive sector, it also will not achieve its purpose.

It is our recommendation that you take a step back and look at what should be done. This committee can meaningfully contribute to improving socially responsible behaviour. You can better understand the industry. My understanding is that this committee has not visited even one Canadian mining site in a developing country. You should go to see them. You should find out what's going on.

You could understand and contribute to international CSR guidance tools, such as the updating of the OECD guidelines for multinational enterprises that is under way today. You can review and support more CIDA projects to help build good governance in areas where Canada has mining interests. This would be a significant contribution. You can make sure that the CSR counsellor that was put in place--in part because this bill was tabled and the government responded by putting in place more than what they had originally intended--and the report that's given annually is important, by giving it your priority review each and every year and not forgetting it when you move on to the next thing, and by ensuring that the department provides adequate resources to that office. These measures will make a difference.

As we have said, while it is well-intentioned, Bill C-300 cannot live up to those intentions. It would cause significant harm to Canada's world-leading extractive companies, the broader business community, and Canada's overall reputation and economic competitiveness.

The Canadian Chamber of Commerce asks each of you to vote against this bill.

Thank you.

I would be pleased to answer any of your questions.

[The Chair, Conservative, Dean Allison]

Thank you, Ms. George.

Let's get right to questions.

We're going to start with Mr. McKay, for seven minutes, sir.