Industry Committee on April 3rd, 2008

[Steven Shrybman]

I think both departments have a critical role to play, though the statutory mandates they have are quite different.

MDA has to maintain control of the licence of the satellite and control over its satellite unless it seeks a transfer of the licence to another company, and that transfer application has to be approved by the Minister of Foreign Affairs. In exercising his authority under the act, the minister has to have regard--and I'm reading from the Remote Sensing Space Systems Act for Canada--“to national security, the defence of Canada, the safety of Canadian Forces, Canada's conduct of international relations, Canada's international obligations” and certain “prescribed factors”. There are two prescribed factors relating to economic development that have been promulgated by regulations under the act. Those are pretty explicit criteria, and unless they're satisfied, the minister cannot authorize the transfer of the licence from MDA to any other corporation.

Our legal opinion is that there is no reasonable basis, given the fact that U.S. law will apply to this satellite, for the minister to approve that sale, given the explicit criteria of Canadian law.

[The Chair, Conservative, James Rajotte]

Ms. Phillips.

[Carol Phillips]

That's the reason, in fact, that we entered into this legal opinion with the Rideau Institute. The sale of this company is being treated as just another sale under the industry minister, as if it were a widget producer. We wanted to make sure that we were very clear about how many other considerations need to be made. That's why we were very pleased to have this legal opinion and to have reconsideration. The industry department has not turned back or blocked a single sale to a foreign-owned company, and we just wanted to make sure this wasn't regarded as just another ordinary sale. This is different.

[The Chair, Conservative, James Rajotte]

Thank you, Madam Brunelle.

Professor Royer wanted to comment as well.

[Alain Royer]

In my view, several departments should be concerned by the sale of RADARSAT-2, including Environment Canada, Natural Resources Canada and Public Safety Canada. All these areas are directly impacted by the satellite.

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

Do I have some time left?

[The Chair, Conservative, James Rajotte]

The time is up, unfortunately. Merci, Madame Brunelle.

We will go now to Mr. Van Kesteren, please.

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

Thank you, Mr. Chair, and thank you, witnesses, for appearing.

Really briefly—I don't want to get into a dialogue, and I appreciate CAW's concerns with the legal implications—you do admit that this is your legal opinion. Is that correct? This is your legal opinion.

[Steven Shrybman]

Yes. Is that directed at me?

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

That's all I wanted, and that's important—

[Steven Shrybman]

Yes, it is my legal opinion, and of course the basis for it is set out in the opinion, and the statutory provisions that apply are there.

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

And we're glad you came down, and I can understand why the union would want to be a part of this discussion too.

My question is what you think the percentage would be of employees at all the facilities who are shareholders in the company. Have you any idea?

[Dawn Cartwright]

With respect to that, I believe that Mr. Friedmann made reference to shareholders in his presentation on Monday, but we don't have access to that kind of information with respect to the total number. Perhaps ATK may know.

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

That's fair, I suppose. The reason I bring that up is that 99-point-whatever—say it's 99—percent of the shareholders voted in favour of this transaction, so I think we want to make sure that when we.... Set aside the fact that we're talking about the legal implications, we also want to make sure of the workers' concerns.

I got this e-mail this morning and I think there were others who got this as well. It says the following:

Good morning. As president of the CAW Local 188 Bargaining Committee for MDA Ste-Anne-de-Bellevue, I have over the course of three months since the announcement of the sale the opportunity to converse with the members I represent about the impact of the change of this ownership.

I can tell you that a large majority of the members see positive changes resulting from this return to American ownership for this division.

Many also are frustrated by certain organizations in the country spreading fear, uncertainty and doubt, not to mention outright misinformation, about the impact of being owned by an American firm.

This division of MDA was originally part of RCA Corporation, then became Canadian-owned when purchased by SPAR Aerospace Limited, reverted to American ownership under EMS, and Canadian again under MDA.

And it's signed by the president of the committee of the negotiators. I'm translating from the French.

So I'm puzzled. I'm getting mixed messages from you, and I'm getting mixed messages from your rank and file.

[Carol Phillips]

Let's be very clear on a couple of things.

For the shareholders, this is absolutely a good deal. They can put a lot of money in their pockets. There is no doubt--no doubt--that they can put a lot of money in their pockets. Is it a good deal for the shareholders of Canada who invested in this technology? I would say no.

In terms of our membership, there is no doubt. If you were to ask manufacturing workers in Canada today if they feel secure in their jobs, if they feel secure in the funding that the Canadian Space Agency has been releasing, they would give you an emphatic no. They do not feel secure about manufacturing in this country, and they do not feel secure about the commitment to any kind of space policy or the release of funds from the Canadian Space Agency.

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

Forgive me. I read in here that it says “a large majority of members see positive changes”. You're not giving your rank and file a lot of credit when they look at the situation.

My question is this. Do you come here as representative of the vast majority of your workers? Do the vast majority of workers say no, we don't want this deal to happen? That's my question.

[Carol Phillips]

Roland.

[Roland Kiehne, President, MDA Space Missions Group]

Obviously I'm the representative of the workers in the robotics division in Brampton, and it's true that our members are absolutely in favour of the deal to ATK. But that's not surprising. Given the fact that for a number of years the Canadian Space Agency has starved MDA and that there was no alternative provided, it made complete sense for our members to embrace the deal.

ATK, for its part, has neither publicly indicated its long-term commitment to the robotics division in Brampton nor disclosed its business plan and how the robotics division fits into that business plan.

So it makes complete sense to us that our members would be afraid and that they would embrace this deal, because no alternative was provided.

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

Okay, we'll go on.

[The Chair, Conservative, James Rajotte]

You have less than a minute, Mr. Van Kesteren.

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

I just want to point out that the funding was reduced way back in 1998. I guess I'm just a little bit puzzled. I'm hearing mixed messages here.

That's all for the line of questioning I have, Mr. Chair.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Van Kesteren.

We'll go to Ms. Nash, please.

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

Thank you, Mr. Chair.

Good morning to the witnesses.

I want to pursue the question around the applicability of U.S. law should this sale go through. I want to ask those who are giving legal opinions.

Under the U.S. Land Remote Sensing Policy Act of 1992, as I read it, in the regulations there are conditions that would apply to the licence, and these conditions would apply whether the licence is held in Canada or in the U.S. I'm quoting from these regulations. It says:

The licensee shall maintain operational control from a location within the United States at all times, including the ability to override all commands issued by any operations centers or stations.

This is the so-called shutter control right of the U.S. government.

Further, it says:

The licensee may be required by the Secretary to limit data collection and/or distribution by the system as determined to be necessary to meet significant national security or significant foreign policy concerns, or international obligations of the United States...

Now, I understand that foreign policy concerns and national security concerns are not defined, so they could be quite broad. This leads me to believe, in spite of the categorical assurances we've been given about Canadian control and Canadian law applying, that will not be the case once MDA is sold to ATK.

Can anyone comment on that?

[Steven Shrybman]

I think your reading of the U.S. regulations—and I referred to them earlier—is quite accurate.

It is conceivable that the Canadian legislation would apply as well to this satellite. I think it's unlikely, but it's possible. To the degree that Canada can claim jurisdiction under Canadian law if the subsidiary is operating in Canada and is based in Canada, there's an argument that Canadian law would apply as well.

There's no question that U.S. law applies, so it's conceivable that ATK could be given competing directions from U.S. and Canadian regulators. I don't think it will have much difficulty, being a U.S. defence industry contractor, in figuring out which directions to abide by. Somehow I think that Canada will cede its jurisdiction with respect to its own regulatory requirements.

We haven't seen the licence, as I understand, or any amendments that are being proposed to it. That may well make that very apparent. But there is no question that U.S. law and regulations will apply to a subsidiary of ATK whether it's based in the United States or Canada, and that includes the stipulation that requires the company to maintain control over the satellite systems in the United States.

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

Ms. Stojak.