Foreign Affairs Committee on June 8th, 2010

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

Welcome to politics.

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

But you know that they were at that round table. The NGOs, mining companies, the government and academics were all there. They all agreed on that together.

What can you tell us about that, Professor Macklin?

[Prof. Audrey Macklin]

I would like to add something to that.

Because all this bill can do is affect government funding, it's not in a position to put a halt to anything. It simply determines whether, for example, export credit will be provided by Canada, whether the Canada Pension Plan will invest in this company, and so on. It's not about being able to put a halt to activities. It is more of an incentive program, subject to, I suppose, the impact of the Special Economic Measures Act. But that doesn't go as far as your fear.

That is my response.

[The Chair, Conservative, Dean Allison]

Thank you very much.

We're now going to move over to Mr. Van Kesteren. Are you going to split your time with Mr. Lunney?

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Yes. Thank you, Mr. Chair.

Thank you for appearing before the committee. We believe on this side—and I think there are others, too—that the bill has some serious flaws. For instance, we all have a colleague who formerly was an international trade lawyer. He looked at the bill and his interpretation was that it's going to be challenged under international law. Those are some of the areas.

The other thing that concerns me is as a law professor, Professor Macklin, I'm sure that you teach your students the law of unintended consequences. We hear that a lot here. You know, it's right. Oftentimes we'll think of a law that really sounds good, and the opposition will come back and they'll say, “Listen, this is what could happen”. That's an area we have some real serious concerns about too. The other, which hasn't been mentioned at all and it should be mentioned, is that the CSR counsellor is in place to do a lot of the things you've talked about.

I appreciated your presentation. I thought you gave a balanced approach. You mentioned, too, that the intent—again that intent—is fairly obvious. But what about the argument that the bill doesn't go far enough? For instance, could it be argued that a shipping company that takes the extracted minerals would also fall under this as well? That's directly responsible.

Just let me finish my thought. I guess the point I want to make is what's good for the goose is good for the gander. If we're going to encourage our way of life, the very things we hold dear, the things we cherish, and our rights in the democracy we live in, why wouldn't we take that further? Why wouldn't we include, for instance, the service sector, which is I believe at this point the largest part of our economy, or what about telecommunications in a country like Saudi Arabia, which has serious human rights violations? Wouldn't that apply as well? I'm asking you generally. If this is right for the mining industry, why wouldn't it be right for all those other industries?

[Prof. Audrey Macklin]

In terms of the reach of this statute—and you mentioned something about shipping companies--I'm not entirely clear. Let me give what I think might be an answer based on what I think your question was about.

On the issue of what might be called the relationship of intent--how close, is it enough, do you have to intend to do things that are in breach of the voluntary principles--is it enough if you know there's a risk that you might come into violation? What happens if you are connected to somebody who's connected to somebody who might be violating them, and so on?

So those are issues that I think certainly warrant attention, and those are the sorts of things that typically in government legislation of this sort remain to be worked out, both through the level of regulation, through the Governor in Council, and then through guidelines and policies that are developed by the body implementing it.

So I don't deny that one has to give thought to those issues, but as I understand it—and I speak to you, as a parliamentarian, perhaps of greater expertise in this—when I teach administrative law, I say “Here is what the statute says; there are many things that remain to be worked out through regulation and guideline, levels of specificity that are perhaps beyond the level of detail that parliamentarians want to deal with”. On the one hand I agree, you would want to address those. But I think that the statute itself probably is not the place where you need to do that. You would need to do that in regulation and then in guideline, and that's something that certainly the government of the day has some control over.

On the point of where you stop with all of this, I'm not sure I agree with you about the advantages of that kind of reach that you suggest. But if you think that's good, I would say that if you think that's where this leads—again, I'm not sure that would in fact be perfect—I would just say it's important not to let what you see as perfect be the enemy of the good. If this is good, the fact that there is something you think might be logically better or perfect is not a reason not to make a move on this.

Would it require further movement? No, of course not. You legislate as you see fit. You don't have to legislate any further than you do. You're never forced into legislating.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

But don't you see this as somewhat restrictive, or possibly even an attack on the mining industry when we have so many engagements with foreign nations, nationalities, and different cultures? Why this, why not that? Are we not trying to impose the--

[Prof. Audrey Macklin]

I wouldn't see it as an attack. I think it is the case that the extractive industries often find themselves in highly conflictual situations, because of course, unlike other industries, they can't choose to set up operations in the places that are necessarily the most--how should I put it--secure, with the most stable rule of law, infrastructure, and so on. They go where the resources are. So not surprisingly, extractive industries, more often than many other industries, find themselves in situations in which they are subject to allegations of the sort that Mr. Shrake described.

So I think it is that context of the extractive industries, not a particular demonization of the extractive industries, that might be a good place to start, if you will.

[James Lunney, Conservative, Nanaimo—Alberni, BC]

I want to quickly come back to a comment you made earlier, Ms. Macklin, about this being no more or less than a mechanism. We agree. We're talking about a mechanism for CSR accountability. Canada's very engaged in this. We all know about OECD guidelines, Equator Principles, International Finance Corporation mechanisms for accountability, and so on.

What I'm concerned about is that you said the minister has a mechanism to dispense with frivolous claims. What I find distressing about the scenarios that I see developing is just exactly what we see at the table today, where you have very vexatious allegations being made about a company, about who's responsible for what's going on there, about who's the victim and who isn't. Then you bring in a case involving a state itself that is now retracting on international obligations, investments, and contracts, and is taking back property, for example, that they had already committed to a project, thereby undermining its viability.

How do we expect our minister to be able to act quickly in a state like that, where witnesses may be intimidated and where allegations and who is actually accountable are not simple to sort out? Are we not then dragging the reputation of our state into the face of another state that may very well not appreciate that? We have mechanisms we're working on. Why not allow our CSR counsellor to take that position, rather than bringing the minister of the crown into this conflict to try to resolve something that may not be resolved quickly?

[Prof. Audrey Macklin]

As I understand it, one reason the minister is named here is that it's a private member's bill, and you can't set up an ombudsman with public.... I understand there are limits on what a private member's bill can propose. I don't take a position on whether the minister is necessarily the only person who could be doing this, but what I understand the special counsellor to be able to do is not the same as what is proposed in this bill.

Secondly, with the greatest of respect to Mr. Shrake, I'm not in a position, nor is anybody around this table, to make a decision about whether this is a frivolous or vexatious complaint. We just aren't.

[James Lunney, Conservative, Nanaimo—Alberni, BC]

So that was my point. Why would a minister be in a position?

[Prof. Audrey Macklin]

Right. That's why we would want somebody who is in a better position to do it. Exactly. We want somebody who can sit down and look at the allegations. Now, you say it's time-consuming. I expect that it is time-consuming, as is the whole trial by media that this company has already been undergoing.

So yes, things do take time. There's no getting around that. But this would not halt activity. It is going on concurrently with the activity that is taking place in the other country. So there's no kind of injunction that would be imposed to stop the activities of Pacific Rim while such an investigation was taking place. That's not how it would work. I stand to be corrected, mind you.

[The Chair, Conservative, Dean Allison]

Okay, I'm going to stop it right there. We're a little over time.

We'll move to Mr. Dewar.

[Paul Dewar, NDP, Ottawa Centre, ON]

Thank you, and thank you to our witnesses today.

I guess, Mr. Shrake, I want to start with you. I just want to get at some background. So you presently receive support from EDC, from the Export Development Corporation. No? Okay.

Have you had time to go through the whole bill? Have you read the whole bill?

[Thomas Shrake]

No.

[Paul Dewar, NDP, Ottawa Centre, ON]

I think that's important, because I understand why you want to be here, because of some of the things that were stated at committee, but our focus as legislators is the bill in front of us. Maybe to help you with this, I think you've already got a sense of where we're going. This is not about over-reaching the grasp of saying we're going to dictate terms. I think it was put forward quite correctly by the professor. We're actually looking at how we can put accountability into taxpayers' investment in the extractive industry.

I find it a little strange--maybe a bit of a non sequitur--and I'm not sure if all government members believe this, when they say, “Well, what about other sectors?” The fact of the matter is that Canadian mining companies have the largest reach in the entire planet in terms of their activities, so we think it's relevant to look at that. In fact, the government agrees, and their counsellor doesn't talk about the service industry. It doesn't talk about shipping. It talks about the extractive industries. That's their own policy. So presently they have a counsellor they've put in place.

Our predicament is that if you wanted to go to the counsellor right now, and it would be up to you to do so--the office is still getting set up, and that's another issue--you could go to Ms. Evans and say, “Look, we're being attacked by NGOs who have these outrageous allegations and we'd like you to look into it”. The problem for you is--as would be the problem for NGOs--you'd have to have compliance of the other party.

What we want to see, and where the professor is absolutely right, is that this bill says the minister. What everyone on this side believes should happen is what the round table proposed: to have an ombudsman who is outside of that ambit, so someone who can look at it, which is what industry and civil society agreed to. I guess what I want to say to you in terms of the context of this bill and where the spirit of the bill is and where we think it should be going is not about over-reaching in terms of our ability to dictate terms; it's about setting up the criteria for accountability.

In fact, in your case you can't have your situation dealt with by the counsellor who they've put in place unless the other party agrees to it. In other words, if you go to the counsellor right now and say “I'd like this to be looked into, because it's affecting our company's reputation”, they have to go to the other side with whom you have the quarrel, and they can say “No, I don't want to talk to you”, and the counsellor can't do anything, has no power. What we want to see--and this bill is the first step in contemplating and hoping that the government would adopt an ombudsperson--is to allow them to investigate independently. If the NGOs say “I don't want to look into this”, then you're shut down. We want it to be open.

I'm just wondering if you're aware of that process. That's the spirit of what we're talking about, at least from my perspective, and that's why I support the bill.

[Thomas Shrake]

I feel out of place. I came in at the end of the game, at the end of the movie. I really haven't followed this legislation. I have so many things to do that it's just not on my radar screen. I frankly work way too much at this point, and maybe I'm wrong for not paying more attention to the bill, but again, I'm an American. I feel like this is a sovereign issue. I'm not sure I should be commenting that much on what my opinion is. I'm here so that you can understand my example and so you can figure out how to deal with it, but I just want to make sure that everybody understands what really is going on.

[Paul Dewar, NDP, Ottawa Centre, ON]

I'll be frank with you, it doesn't apply to you, so I don't know why.... I understand your grievance of what was said, and that's a fair comment. You have to protect the reputation of your company. It's nothing against you, but it's a bit of a non sequitur to have you here if you don't receive Canadian funds and there's no applicability here of the bill.

You don't have to object. I'm just saying we have someone here the bill doesn't apply to.

[James Lunney, Conservative, Nanaimo—Alberni, BC]

It very much applies.

[Paul Dewar, NDP, Ottawa Centre, ON]

Well, I just want to be clear here. I just wanted to know, for the record, do you receive any money from the EDC? This bill applies to the EDC, so I don't know. You don't receive support from the Canadian government at all. No? Okay.

I don't know if Mr. Lunney's read the bill.

Ms. Macklin, I'll go to you on this. Do you understand the intention--I think you did in your comments--where we would like to see this in the hands of an ombudsperson? And would you prefer that over the minister in terms of legislation?

[Prof. Audrey Macklin]

I don't want to take a really strong view on this. I think there may be benefits to having this in the hands of somebody who is independent, if that is possible. Beyond that, I feel somewhat constrained in expressing a strong view.

I was a member of the round table. The round table thought there was merit in having an independent person deal with this. There are reasons that an independent decision-maker is beneficial to the government of the day. So saying that it should be an independent person is not a criticism of any particular government or minister; it's precisely so that no government of the day is subject to undue pressures in how something should be dealt with.

So that's a general endorsement of why independent decision-making can be appropriate or useful, and I think that was the thinking among those of us on the round table. I do want to remind you, of course, that the people on the round table were not just civil society or academics. They were people who are very active in the mining industry today and who are active as representatives of the organizations. These are not people who are going to endorse anything they felt to be inimical to the interests of their industry.

[The Chair, Conservative, Dean Allison]

Thank you very much. That concludes the first round.

I think we have time for two more interventions, so we're going to go to Mr. Abbott and then probably back to Mr. McKay and Mr. Pearson.

Mr. Abbott, for five minutes, sir.

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

Mr. Shrake, I think there's been a misunderstanding of your testimony, certainly on the part of some opposition members. The fact of the matter is that you have given us an absolutely classic example of the kind of thing that happens when there are unfair charges, and it is the position of the government that Bill C-300 would just increase the pile-on.

I believe that you have Canadian equity in your company; therefore, you would be subject to Bill C-300. As I say, there are already these egregious, unfair, and outrageous charges that have been made against you and your company that would be exacerbated very substantially by the imposition of Bill C-300. Now the interesting thing is that there has been a total ignoring of the function of the CSR counsellor, who is in place and is coming up to speed—notwithstanding the cynicism of my friends on the other side of the table. The fact is that all of the things they have said they want to happen under Bill C-300 are going to be happening, and are in fact happening, under the CSR counsellor. So I thank you very much for your testimony.

The question that I have of you is that it seems to me that you have come here with this story. If you were approached by the CSR counsellor with the claims of these NGOs, would it not be...? In fact I think you've indicated that it would only be responsible to respond to the CSR counsellor and that you would be very happy to react to that CSR counsellor. Given the fact that it is voluntary compliance, you would be pretty happy to volunteer, and any responsible company would be happy to volunteer, wouldn't they?

[Thomas Shrake]

I have volunteered and would volunteer in any forum put before me.

I did visit with the Canadian embassy in El Salvador and the American embassy. I've kept everybody informed as to what was going on. I've kept the Government of El Salvador officials informed as to what's going on. We've tried very hard to communicate, but once you get to the point where you've been damaged, where you really don't have enough money to fight the media campaign, you're way behind the eight ball.

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

Professor Macklin, I can't recall your exact words, but your implication was that Bill C-300 would not put an end to projects, or something of that nature. Is that a fair characterization? I just need to understand that first before I ask my question.