Evidence of meeting #60 for Industry, Science and Technology in the 40th Parliament, 3rd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was foreign.
A recording is available from Parliament.
Conservative
Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB
Do you have a dollar value? I only have a short amount of time and I have lots of questions.
President, Communications, Energy and Paperworkers Union of Canada
Arbitrarily you could look at the numbers, and if you reduced it by half, one would calculate that probably far more of the investments would be reviewed, and you could have some comfort that the act is being administered. If you raise the threshold, as some suggest, then it just means fewer get reviewed.
Conservative
Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB
So you're talking about half of the $312 million?
President, Communications, Energy and Paperworkers Union of Canada
It's a suggestion.
Conservative
Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB
Mr. Borgers and Mr. Goldman, what impact would that have? What are your thoughts on that?
Chair, Foreign Investment Review Committee, Competition Law Section, Canadian Bar Association
Lowering the threshold would of course increase the number of transactions reviewed by the Minister of Industry.
Chair, Foreign Investment Review Committee, Competition Law Section, Canadian Bar Association
The acquisitions of cultural businesses are at the lower $5 million threshold at this point.
Conservative
Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB
What impact would that have on foreign investment in Canada?
Chair, Foreign Investment Review Committee, Competition Law Section, Canadian Bar Association
It's hard to predict what impact it would have on foreign investment. It would increase the number of reviews by government.
Anthony Baldanza Vice-Chair, Foreign Investment Review Committee, Competition Law Section, Canadian Bar Association
Might I just build on that? In terms of lowering thresholds, we are constrained under the treaties Canada has negotiated in terms of reverting to a lower review.
Conservative
Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB
Maybe I can have you comment a little further, because there has been talk about having a clear definition of net benefit, for example. I was going to come to that question. As you talk about having a clearer definition of net benefit or having tighter restrictions, what impact would that have from a treaty standpoint, in your view?
Vice-Chair, Foreign Investment Review Committee, Competition Law Section, Canadian Bar Association
I don't think clarifying the meaning of net benefit would conflict with our treaty obligations, so I think there is opportunity there.
That being said, it strikes me that it is something that might be elucidated through guidelines rather than through legislative amendments.
Conservative
Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB
There have been some who have talked about adding things to the net benefit factors that we consider. Would that be something that would have an impact on our trade agreements?
Vice-Chair, Foreign Investment Review Committee, Competition Law Section, Canadian Bar Association
Conceivably, yes.
Vice-Chair, Foreign Investment Review Committee, Competition Law Section, Canadian Bar Association
To the extent that it involves a further restriction on foreign investment, it would conceivably violate our treaty obligations.
Conservative
Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB
Okay.
Mr. Coles made the statement that enforcement is not working at all, and yet, Mr. Goldman and Mr. Borgers, you've actually recommended no change to the enforcement provisions. Can you elaborate on that a little bit? Why would you say that there is no need to change?
Mr. Goldman can go first.
Partner, Blake, Cassels and Graydon LLP , As an Individual
I submit that there is no need at this time to change the enforcement provisions because the sections of the act contain multiple provisions with extensive powers that the minister has, including the ability to resort to the Superior Court to make a range of orders from divestiture to compliance to penalties, and so on. The act does have a very strong structure in it following the monitoring process.
In recent years we've seen some issues falling out of the financial crisis, but when you go back and look at the history of this act, since it was first brought in, in 1985, there really haven't been multiple problems in achieving enforcement or compliance with undertakings that had been given across a very wide range of cases. The powers are there.
There are ways in which it can be supplemented, again without need to amend the act. It may be that the minister's office and the investment review division could be given more staff and more support. It may be that in some instances, particularly in sensitive or high-profile matters and only in exceptional cases, that it is possible to look at what is done in other parallel merger reviews, for example under the Competition Act, such that professional bodies, such as a major accounting firm, are brought in to assist with the monitoring. There are these kinds of support vehicles available to ensure that the powers that already exist in the act, which are quite extensive, are implemented as effectively as possible.
Conservative
The Chair Conservative David Sweet
That takes up all of our time in that round.
Go ahead, Mr. Angus, for five minutes.
NDP
Charlie Angus NDP Timmins—James Bay, ON
Thank you, Mr. Chair. It's a fascinating discussion.
I come from Timmins—James Bay, which is part of international mining. My neighbours are on international mining crews, and we're no strangers to investment. We live by investment and we invest elsewhere.
I'd like to talk about four cases in my region, because I think they lay out some of the issues we're dealing with.
We had De Beers, Georgia-Pacific, Xstrata, and Vale.
De Beers came in and set up public meetings. They signed impact benefit agreements with communities. They have basically tried to have, as well as they can as a massive multinational mining company, an open door policy with regional politicians if there were problems with communities, and they invested $1 billion. We have a major economic driver in our region that we might not have had.
Georgia-Pacific came in after Xstrata and Vale, and we will get to those two characters in a minute. They came in to buy up a company.
Mr. Coles, it was one of your locals that had gone into receivership, one of the largest OSB mills in North America, and there were lots of concerns.
We held public meetings. They weren't official public meetings, but people had concerns. The unions came, the community came, and we asked lots of questions. Georgia-Pacific was approved, and they've invested in the mill and are trying to be, as far as we can see, good corporate citizens. We know that CEP supported that. There's another example. We could have had a mill go down or we could have a mill that's reinvested in. As much as we'd like to have it local, c'est la vie.
Then we have Xstrata and Vale. The issue here isn't just that there were bad or rotten corporate citizens, but that we had the opportunity at that time for a plan between Inco and Falconbridge to merge. These were two companies with an incredible track record. The synergies in the Sudbury basin alone would have transformed the base metal mining industry. They had excellent international reputations.
The question at the time wasn't whether to stop the Xstrata takeover, but to give a Canadian company a chance to get through the regulatory hurdles. This government decided that they weren't going to give the Canadian companies the chance. Then they gave the go-ahead to Xstrata, a company with a pretty poor record. Anybody looking at Xstrata would know they were there for the short term, not the long term.
What have we seen? We've seen them high-grading the deposits. They've shut down the copper refining capacity of Ontario. We've seen Vale basically wage war against Sudbury, Voisey's Bay, and Thompson, Manitoba. If you to talk to labour or to anybody in the industry, they'll tell you that it's the equivalent of the Avro Arrow for Canada's mining industry in losing the power that we had with Falconbridge and Inco to these two corporate bandits.
Mr. Coles, your people were involved in one of these takeovers. Is it a failure of the act, or was this just a basic failure of due diligence?
President, Communications, Energy and Paperworkers Union of Canada
As I said before, I'm certainly not opposed to foreign ownership, because they bailed out a lot of Canadian corporations that had gone bad. The minister made a decision. Whether I agreed with it or didn't, he made the decision, and that's his political right.
My problem again is enforcement. Maybe the lawyers are right. Maybe it's in the act that you can do it, but it's whether the minister wants to do it. Our problem is that promises were made; one corporation won over another by making these promises, and they were never required to live up to them.
It's not that we're anti-foreign investment at all. The problem is enforcement. I'm not a lawyer, but I think it's at the minister's discretion that they weren't enforced.
NDP
Charlie Angus NDP Timmins—James Bay, ON
Mr. Borgers, I'll ask the question to you, then. With U. S. Steel we have three companies that I think have made it difficult for many foreign companies coming in. I've talked to Georgia-Pacific, and they said to me, “Listen, we came in after Vale and Xstrata. We understand that people are feeling pretty raw, and they are double-guessing everything we are going to do”.
Was this a case of just three rogue players who thought they were going to take some assets and didn't play well with the Canadian public? If that's the case, should we learn from that, or, as has been suggest by some, is there a problem that this happened in the first place?