Industry Committee on April 1st, 2008

[Daniel Friedmann]

Yes.

There are three things here. We have a contract with the Canadian Space Agency to deliver imagery. It's a straightforward contract that's been honoured. We have a licence from the Canadian government to a Canadian entity, irrespective of who owns it, to operate the satellite according to Canadian law, and that continues. MDA owns the RADARSAT-2 technology and the next technology, which is really what we should be worried about, and we have bid that to the Canadian government. That will be owned by MDA, but they desperately want to build the RADARSAT constellation with our employees for the government.

[The Chair, Conservative, James Rajotte]

Here in Canada.

[Daniel Friedmann]

Here in Canada, absolutely. And that will be a requirement of the contract. If you read the RFP, the enlightened situation here in the government has been that they want the work done in Canada by Canadians. That's what's important and that's what other countries have copied ever since.

[The Chair, Conservative, James Rajotte]

You mentioned Canadian export permit approval, but I have a note here saying that the RADARSAT-2 satellite is subject to an operating licence issued by the Government of Canada; the operations of the satellite may not be transferred to any other person without the approval of the Minister of Foreign Affairs under the Remote Sensing Space Systems Act.

So if, for instance, ATK wanted to use the satellite, or its technology, to gain certain information, but the Canadian government was uncomfortable with that, the Canadian government under this act could....

For instance, could they deny the actual obtaining of that information? Or could they just deny the transfer of that information?

[Daniel Friedmann]

Both.

[Indra Heed]

Yes, both.

The section you're referring to is in regard to the transfer of the licence. That is a distinction to be made between any access to the data, which is covered under a certain part of the regulations.

[The Chair, Conservative, James Rajotte]

So in terms of all the data gathered by RADARSAT-2, the control over all the data that RADARSAT-2 will get will remain in Canadian hands.

[Daniel Friedmann]

Yes.

[The Chair, Conservative, James Rajotte]

Well, it really begs the question of what's the benefit, then, to ATK of this agreement. It's simply in the technology.

[Daniel Friedmann]

No. We have the right to market data internationally according to Canadian government rules of who has priority and everything else, and our international customers are comfortable with that, including the U.S. government. They know Canada comes first, and so on. And they still have use for that data. That data will be sold over the next seven years. That's a value.

[The Chair, Conservative, James Rajotte]

One of the issues certainly raised through the media is with respect to the Northwest Passage, with respect to that, obviously, in the north, there being some disagreements over sovereignty issues. It was raised, I believe, by Mr. Brison.

If the U.S. government, or ATK as a U.S. company, wanted to obtain information that was seen perhaps in our national interest as not being in our interest, the Canadian government would be able to deny the transfer of that information.

[Daniel Friedmann]

Absolutely. The minister has shutter control. He can close the shutter of the satellite.

[The Chair, Conservative, James Rajotte]

Under the Remote Sensing Space Systems Act.

[Daniel Friedmann]

Yes, and the Canadian citizens who are in a Canadian government facility cannot violate that.

[The Chair, Conservative, James Rajotte]

And there's absolutely no way that American law, any security or any type of American law, can take precedence? There is absolutely no way that would ever take precedence over the Remote Sensing Space Systems Act?

[Daniel Friedmann]

Not to my knowledge. I don't know what the government has agreed to. I am sure the government didn't put up a satellite without talking to the United States. You have to ask the government what they'd do.

But from our perspective, we follow what the Canadian government tells us to do. From ATK's perspective, they've put it in writing. They follow what the Canadian government tells them to do.

If the Canadian government decides to give a big gift to the U.S. government for some reason, that I can't answer.

[The Chair, Conservative, James Rajotte]

Okay. I think that just gives me more questions than I had, but my time is up, and since I cut everybody else off, I'm going to cut myself off.

I am going to go to Mr. Simard and then Mr. Stanton.

[Raymond Simard, Liberal, Saint Boniface, MB]

Thank you, Mr. Chair.

I have actually two quick questions. My first one is with regard to your last comment. I guess it begs the question of how binding a Canadian act can be on a wholly owned foreign corporation. I think we have to do our homework when it comes to that. So it's not a question; it's more a comment.

Secondly, I think this question might have been posed to the people at CSA, but the Canadarm, Dextre, all our contributions to the overall U.S. and world space program have made it so that we can now contribute. We can participate with our astronauts and all that. We've basically taken a bit of space—pardon the pun. We've become a partner.

How does this sale affect that, in your opinion?

[Daniel Friedmann]

It has no impact at all, except that it can make it easier in the future.

So if Canada wants to contribute, and I hope it will, to the next space exploration program in the United States and it wants to contribute a particular piece of hardware, it can contract for it from us or from anybody else in the world and contribute and get all those benefits. The fact that we have a U.S. partner might make it easier to do so, but it's basically, as I said in my opening remarks, completely up to Canada.

[Raymond Simard, Liberal, Saint Boniface, MB]

Thank you, Mr. Chair.

[The Chair, Conservative, James Rajotte]

Mr. Stanton.

[Bruce Stanton, Conservative, Simcoe North, ON]

Thank you, Mr. Chair. I have a short question in clarification.

Is amendment nine solely to change the name of the licensee?

[Indra Heed]

Actually, it's in that vein. The name may change later on, in due course, but it's to provide an update to the corporate information that will result as the transaction closes.

[Bruce Stanton, Conservative, Simcoe North, ON]

Okay.

Just to wrap up here, then, Mr. Friedmann, could you give us a short paragraph on what you consider to be this transaction's net benefit to Canada and to Canadians?

[Daniel Friedmann]

Okay. What this transaction does is provide our existing Canadian company, with its Canadian facilities and Canadian employees and Canadian management, access to the key jobs in the United States, the next generation of space exploration and the next generation of remote sensing. By being able to bring part of that work to Canada, we maintain a viable, growing Canadian entity from which the Canadian government can buy and from which our employees can live in this country, which is what they want to do.

We need that access to be long-term viable. This is the absolute best solution from an employee and a Canadian point of view.