Industry Committee on March 5th, 2008

[Michael Byers]

I am an expert in international law; I'm not an expert in domestic law. But in my reading of the Remote Sensing Space Systems Act, it is bridging the divide between domestic and international law, and given that this satellite is a component of our foreign policy and our capacity to assert sovereignty in places like the north, the responsibility when dealing with the sovereignty, defence, and national security dimension is specifically vested in the foreign minister. He is the point man on this issue.

I agree that this committee has an important role to play and I would like to suggest that in the context of your dealing with the Investment Canada Act you should have a very clear view as to the parallel and slightly different test that exists for the Pearson Building. How you do that is up to you, obviously, but you need to have this in mind.

There is no question that generally speaking the Canadian government has more than sufficient powers to block the sale.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

I have a question of a more general nature for all of the witnesses.

You stated that MDA received a substantial amount of funding from Canada. Elsewhere, Mr. Thompson said that the jobs will not stay in Canada. Mr. Staples observed that the losses in terms of technologies and researchers would be sizeable. It may be that the jobs lost are tied to this expertise. In addition, ATK has acquired war-fighting technology and produces, among other things, land mines that are illegal under the international agreements to which Canada is a party. That concerns me. In my opinion, this is a very bad transaction that must be blocked.

I would like to hear your views on the subject.

[Michael Byers]

The issue of ATK's activities is not one that concerns me so much. I understand there are people who are concerned about the fact that ATK produces land mines or depleted uranium shells, but I don't see a legal violation of the land mines convention inherent in what is proposed. There is, as Mr. Thompson said, a question of our upholding the spirit of that convention, but not the legal terms itself.

A final point to make on this is that I'm darned proud of the satellite. This is Canadian technology, Canadian scientists, the Canadian government at their very best, and it has to do with the 40% of this great country that is the Arctic. I would like to maintain that pride and be able to show my children RADARSAT-2 and say that this is ours, that we're the best in the world at this and this is what is defending our north, along with all the other things this government has done to assert our sovereignty.

[The Chair, Conservative, James Rajotte]

Did anyone else want to comment?

[Steven Staples]

I have just one point. From the company's president himself, John Shroyer--and this maybe even goes beyond the ITAR issue--he says they want us to be able to move the technology, the piece of that RADARSAT-2 they're after, and we think they're after a specific component of the technology, to transfer that technology to ATK U.S. Space, and go after what we believe is a very significant, growing U.S. classified market. So this even goes beyond regular ITAR, which is fairly run-of-the-mill. They have a vision for this system, which will go into the black part of the Pentagon's programs, that Alliant Techsystems has become very adept at operating. Even if we do lick the ITAR problem, the future application of this may be so classified that even that will be exempt.

[The Chair, Conservative, James Rajotte]

You have one minute.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

If the employees of this company located in Sainte-Anne-de-Bellevue, Quebec, were to keep their jobs, would they be subject to the provisions of the Patriot Act? Strategic information is involved. Would these employees be investigated in connection with their confidential information?

[The Chair, Conservative, James Rajotte]

Does anyone want to take this one?

[Michael Byers]

I can only suggest that this is an issue the committee should pursue, but in addition to that, let me say one more thing. To block this sale is not to deny the U.S. government legitimate access to the imagery from the satellite. It can purchase this imagery on the open market, and it has access control over to whom and what kind of imagery is produced and sold under a treaty that was signed between Lloyd Axworthy and Madeleine Albright a number of years ago. This satellite is doing good work for the U.S. government, and keeping it in Canada is not going to prevent U.S. access to the imagery.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Ms. Brunelle.

Mr. Garneau, do you want to comment briefly?

[Marc Garneau]

Mr. Chair, I have a comment.

[The Chair, Conservative, James Rajotte]

Yes, just briefly, Mr. Garneau.

[Marc Garneau]

When I was with the Space Agency, the Patriot Act was certainly a problem for government employees because they were in direct conflict with the Canadian Human Rights Act. I can't say if private industry has any latitude to get around the Patriot Act.

[The Chair, Conservative, James Rajotte]

Merci.

We'll go to Mr. Carrie, please.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Mr. Chair.

I want to echo Mr. Byers' comments that I too am very proud of this satellite. I had the opportunity of seeing it launched, and I'm proud of the Canadian aerospace industry altogether. When I look at this, it's something that I think all members like to promote and be very proud of.

I did want to acknowledge Mr. Brison's comments about ITAR, and I just want to let him know that Minister Bernier is seeking exemptions under ITAR. I think that's very important.

I'd like to make a couple of statements. First, the government has not made any decisions under the Investment Canada Act about the proposed sale of MDA. Second, any statements about the decision or the impact of the decision nationally or internationally at this time is completely speculative.

I'd like to jog the memories of members that the contracts for RADARSAT-2 were signed in 1998 by the previous Liberal government with MDA, while MDA was a subsidiary, wholly owned by Orbital Sciences Corporation, a U.S. multinational.

We're talking about Canada giving up a great deal, or the deal. It seems that this has never been entirely in Canadians' hands at all, or in the Canadian government's hands.

Mr. Byers, you wrote in the Toronto Star, I think, on January 22, and I was wondering if you could explain it further:

Shockingly, Canadians began to lose control over Radarsat-2 before it was even built. When Jean Chrétien decided to privatize the construction process in 1998, MDA started marketing the satellite's capabilities to defence contractors and foreign militaries. Six years later, the company announced a deal with the U.S. air force to support “in-theatre support for the war fighter.”

I was wondering if you could elaborate on that a bit, because it seems this has never been 100% in Canadians' hands, with it being a private company. What do you mean by Canadians' hands?

[Michael Byers]

It's a very good question. Thank you for it.

The history of RADARSAT-2 is linked to the exceptional character of the technology, the fact that it was so cutting edge. Having this three-metre resolution and its ability to see at night through clouds was something that concerned the United States in terms of having this imagery available on the commercial market, available for anyone to buy. So a prolonged struggle occurred that involved, initially, NASA refusing to actually launch the satellite for MDA, and also ITAR issues that were thrown in the way.

Monsieur Garneau would know more about this history than I do, but the point here is that in order to actually get the satellite up and to satisfy our American allies, we did make concessions, and some of them are perhaps more significant than is publicly known, because there's actually a confidential annex to the treaty that Mr. Axworthy and Madame Albright signed.

The point here is that we still have priority access to this satellite. If we have reason to think there's a Liberian-flagged single-hulled oil tanker coming towards the Northwest Passage, we can get imagery of it right away and we can continue to track that vessel.

[Colin Carrie, Conservative, Oshawa, ON]

That's a big concern.

[Michael Byers]

The real question is not to what degree have we made concessions and partnered with the United States, because we do obviously have a common interest in most situations, but how do we get that satellite when we really need it for something that is inherently Canadian in its interest and may not be seen as an issue of such great concern to our American friends? Who has shutter control? Who is the licensee?

We can work with the United States in sharing this imagery, but we need to have that ultimate control if we are to use the satellite for what it was built for, which was primarily to assert sovereignty in the north.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much.

Maybe we can talk to Monsieur Garneau about it, then, because we hear a lot about the deal, that we're giving up a great deal.

Mr. Garneau, you were president of the CSA from November 2001 to November 2005, right?

[Marc Garneau]

Correct.

[Colin Carrie, Conservative, Oshawa, ON]

I read a comment from January 12, 2008, on CBC news. You said the concern is that we might not have 100% control of that satellite from now on.

Because you were there during this time period, could you clarify? From what I'm reading and what I understand, we've never had 100% control. Can you explain what you meant by that? Did we ever have control?

[Marc Garneau]

Yes. Let me first of all correct something, or not correct, but clarify something you said previously, which was that in 1998, MDA was a wholly owned subsidiary of Orbital Sciences.

I just want to make the point, for the benefit of the committee, that the MDA of 1998 was not the same-sized MDA that exists today. In particular, the considerable manufacturing capability of MDA, which was used heavily in building RADARSAT-2, which is located in Sainte-Anne-de-Bellevue, was not part of the MDA of 1998 and is an extremely important element in the current space systems package we're talking about selling.

The RADARSAT program, of course, started way back in 1998, even before I was there. Just to put it in context, the United States was initially unhappy that Canada was going to work this public-private partnership whereby, ultimately, the control of the satellite would go to a Canadian commercial company. They felt that there was a threat that the data might fall into the wrong hands if a commercial company were marketing the imagery, as opposed to it being under the control of the government. And that, of course, led to Bill C-25, I believe it was called, which was passed a couple of years ago by Parliament.

Another significant thing, though, is that the United States said you cannot, in building RADARSAT-2, use a U.S., an American, bus. A satellite bus, if I can use the analogy to a body, is the torso. It's not the arms or the legs or the head, which are the other parts of the satellite. It's just the torso. The bus is central to all satellites. Consequently, in the end, MDA had to go to Italy to get the bus for RADARSAT-2. This is an example of the United States not being entirely comfortable with Canada proceeding with the RADARSAT-2 program. However, we did go ahead with it and successfully launched it.

[The Chair, Conservative, James Rajotte]

You'll have a chance in the second round. Thank you.

We'll go now to Ms. Nash, please.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you, Mr. Chair, and thank you to all the witnesses for coming here today on fairly short notice.

Mr. Byers, my first question is to you. You talked about the importance of being able to get the satellite when we need it, and my understanding is that this was covered under Bill C-25, an act governing the operation of remote sensing space systems, which was designed largely with RADARSAT-2 in mind. Clearly, the government in 2005 felt that controlling this technology was a matter of national security. So what has changed, and are these provisions no longer important?

[Michael Byers]

When the legislation was adopted in 2005, I don't think anyone envisaged a sale of the satellite to ATK. Maybe someone did. I certainly didn't. And I would have imagined that there might have been a national security test, not just included in that legislation but made more explicit in terms of possible links to the Investment Canada Act or something like that.

In any event, a couple of things have changed. Most importantly, perhaps, the satellite has been successfully launched. We're no longer talking about a hypothetical. We're talking about a working product. It is taking imagery as we speak; I've seen some of this imagery, and it is extraordinary.