Industry Committee on April 3rd, 2008

[Carl Marchetto]

I don't know how to go there other than to commit to you that the undertakings have been filed. They're very robust and far beyond what has been the trend in expenses and commitment currently.

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

But you did not share any of that with us today.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Marchetto. Thank you, Ms. Nash.

I have the final Conservative spot here.

I'd just like to follow up on what a lot of the members have raised. And Mr. Simard really jogged my mind when he said “not to my knowledge”, because we heard that phrase both today and on Tuesday.

My big concern is that we have statements saying it all stays within Canadian control and Canadian laws will apply, but we have a markedly different legal opinion presented here today. I don't know, offhand, which one is correct.

But Mr. Friedmann argued on Tuesday that there was not enough work in Canada for MDA; MDA therefore needed a U.S. partner, ATK, in order to have access to U.S. contracts.

On Tuesday he said, “The control and access of the satellite is according to Canadian law, and there's no way to do anything other than what Canada says. The company is owned by a U.S. company, but it operates under Canadian law...”. He mentioned Canadian export permit approvals.

But won't it inhibit MDA, as a subsidiary of ATK, in terms of accessing U.S. contracts if this is seen as an entity that is completely under Canadian law? If the position of both ATK and MDA is that this Remote Sensing Space Systems Act applies at the end, won't the U.S. government, or anyone else giving contracts at this end, be less likely to give contracts if they know there's always a possibility for the Canadian government to say no at the end?

[Steven Cortese]

Again, Mr. Chairman, those restrictions and limitations apply to RADARSAT-2 and are unequivocal. To the extent that future satellites are built, be they commercial or for the Government of Canada, the Government of the United States, a government in Europe, or the European Space Agency, they would be subject to the terms and conditions associated with that specific transaction.

What I think we've tried to respond to is the regime and control that exists over RADARSAT-2, because that exists in contracts today. It's very hard to speculate or hypothesize about future contracts and future systems, because those will be determined on a case-by-case basis.

[The Chair, Conservative, James Rajotte]

Isn't the real reason that ATK is purchasing MDA not access to RADARSAT-2 and the images, but access to the technology, so that it can build its own satellites and then sign contracts on its own with satellites built with the technology?

[Carl Marchetto]

Absolutely.

What hasn't been talked about in this whole value proposition is that it's not only about MDA's capability in building hardware, whether it be radar systems or RF assistance for communications. Not many people have mentioned the most valuable part of the value chain, which is out in Richmond. Folks build ground stations, manipulate the data--it's data when it comes down from the satellite--apply the appropriate algorithms, and then deliver knowledge and information. That is a part of space that we haven't talked about today. That is a very important aspect of why our two companies are getting together. It's not just about hardware. It's not just about radar. It's also very important to know how we get information to our customers in the appropriate way.

[The Chair, Conservative, James Rajotte]

But if the sale goes forward and MDA is a subsidiary, and if ATK then builds, say, newer satellites using the technology of RADARSAT-2, the Remote Sensing Space Systems Act, the Canadian law, would not apply to the new satellites. Is that correct?

[Carl Marchetto]

Again, it would be dependent upon what customer it is. Is it commercial? Is it specific to a military application? There are many different circumstances here. But we would take the capability here and leverage it against the opportunity.

[The Chair, Conservative, James Rajotte]

I appreciate your time and I'm being respectful, but as a chair I have to say there are some real questions out there. We're seeking clarification. If this simply remains under Canadian hands, I don't see the benefit to ATK of purchasing MDA. I mean, you're spending well over a billion dollars for MDA. There has to be a benefit at the end of that. And if this simply remains under Canadian hands, which seems to be the message we heard on Tuesday, I don't understand the benefit, then, to ATK.

[Carl Marchetto]

What needs to be under Canadian hands is the data and the control of RADARSAT-2. I think we should all recognize that what MDA represents in the community is far beyond what RADARSAT-2 is today.

[The Chair, Conservative, James Rajotte]

To clarify this again--and my time is running out--your assertion with respect to RADARSAT-2 is that Canadian law, the Remote Sensing Space Systems Act, will have precedence over the U.S. law, but if a new satellite is built, the U.S. law, not the Canadian law, will apply.

[Steven Cortese]

Again, it would depend on the customer and the terms of that. As Canada and the U.S. in the past--as evidenced both in RADARSAT-1 and RADARSAT-2--have entered into agreements related to what those controls and authorities would be, it's hard for us to speculate, not knowing what the Government of Canada might have in mind as it relates to a future space program, about the terms and conditions they would seek from commercial providers and what conflicts or accommodations would be associated with other governmental controls. Again, it would be dependent on what the Government of Canada was seeking.

[The Chair, Conservative, James Rajotte]

You're saying that's if CSA was a partner in contracting building of a future satellite and they could attach conditions with respect to Canadian law. But if it was, for instance, a U.S. space agency that contracted to build a satellite, then it would fall under American law.

[Carl Marchetto]

Yes.

[The Chair, Conservative, James Rajotte]

Okay. I have more questions, but my time is up.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Mr. Chair, on a point of order.

[The Chair, Conservative, James Rajotte]

A point of order, Mr. McTeague.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Building on your comments, Chair, and the comments that have been made here, I think it would be advisable for the committee to consider, in a non-partisan way, the introduction of the invitation to the Minister of Foreign Affairs to clarify this.

I leave this to your discretion, Chair. Again, it's a matter that I think is designed to be constructive. I would certainly seek your advice and the help of the committee in that regard.

[The Chair, Conservative, James Rajotte]

I appreciate that, Mr. McTeague.

You are in fact correct. The motion that was passed did include invitations to the Minister of Foreign Affairs. We have invited him. He was not available this week. We have invited him again, and we will follow up on that invitation.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Thank you, Chair.

[The Chair, Conservative, James Rajotte]

Ms. Nash, on a point of order.

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

Yes. I was also going to ask about the Minister of Foreign Affairs.

Second, given that there are still so many outstanding questions about law, and specifically international space law, there is a leading world expert at McGill University, Dr. Jakhu, and I am suggesting that we perhaps also bring Mr. Jakhu to our committee and have him clarify the interrelationship of these two remote sensing space acts.

[The Chair, Conservative, James Rajotte]

I don't know whether the committee would agree to that, but with respect to having the ministers, we have invited three. I think you can certainly talk to your colleagues. I suspect there would likely be support to bring that person forward.

Thank you.

Gentlemen, I want to thank you very much for your time in coming here. We appreciate it very much.

[Steven Cortese]

Thank you.

[The Chair, Conservative, James Rajotte]

The meeting is adjourned.