International Trade Committee on March 8th, 2011

[Martha Hall Findlay, Liberal, Willowdale, ON]

It's not legally separate because the value of assets is tied to liabilities.

[A voice]

Exactly...[Inaudible--Editor]...different assets.

[Don Stephenson]

That is another point that might be useful to you.

[John O'Neill]

With respect to the assets that were expropriated and the properties about which there are allegations of enormous environmental remediation costs--and I don't know whether or not they're true, but I suspect they are--they're different assets.

For one asset that was expropriated--the newsprint mill--certainly there are environmental remediation costs that will have to be undertaken by the province, from our discussions with the province, but the other assets, the hard assets, that were expropriated are hydroelectric facilities. The remediation costs that the Government of Newfoundland was talking about didn't relate to those facilities. They related to other properties that Abitibi had either owned or operated in the last 100 years in Newfoundland, but they weren't the subject of an expropriation.

[The Chair, Conservative, Lee Richardson]

Thank you.

Unfortunately, we're at the hour, we have still Mr. Holder to wrap up.

You have five minutes, in and out, as they say.

Thank you, Mr. Holder.

[Ed Holder, Conservative, London West, ON]

Thank you, Mr. Chair.

I would like to thank our guests.

I have had the privilege to be in the great province of Newfoundland and Labrador three times in the last year, and I have a great affection for the province. I say that because whenever there are these kinds of issues with provinces, it strikes me that this was probably the most probable and expedient resolution to this circumstance.

Ms. Hall Findlay made some comment about the negotiation process and it prompted some thoughts in my mind in terms of jurisdictional responsibility. When do we get in and at what time?

I got a sense, Mr. Stephenson, through your comments, that it looks as though we get in once the deed is done, obviously, and we have to deal with it. You made a very interesting comment when you said that clearly a company was expropriated and compensation was due. I understand that.

When does the federal government get involved? Can you just clarify that for my understanding, please?

[Don Stephenson]

Well, legally and in practice the Government of Canada typically will not get involved until there is a notice of intent in respect of NAFTA chapter 11 or one of our other investment treaties.

I take the point, at least at the level of simple logic, that the Government of Canada might wish, as the one responsible for the exercise of international treaties and the financial liability in the end that might accrue, to participate in discussions with the provinces or with investors prior to a notice of intent.

But legally, these are decisions that are made by provinces, territories, and municipalities, and I think it's a really tricky question at best as to when the Government of Canada should involve itself in those decisions.

[Ed Holder, Conservative, London West, ON]

Because it really comes to, I guess, Mr. Simms' question, when he said--and I think we would all agree with this as a general concept--wouldn't it be great to put the dollars into remediation if that were our situation.... I'm even wondering if that isn't the cart before the horse, as we say in Cape Breton. I'm trying to understand. Could we have put federal dollars into remediation first? Would that even have been an option for us? Or does it really have to wait until chapter 11 comes into play and then we would deal with the part that we are compelled to deal with?

[Don Stephenson]

Well, the Government of Canada, I suppose, was certainly at liberty to make an investment in addressing the remediation costs with regard to these facilities. Whether or not that would have avoided a challenge under NAFTA in respect of the expropriation of these assets, I don't know.

[Ed Holder, Conservative, London West, ON]

So one is clearly separate from the other, then. There is no causal connection between the two. If one were to choose to take a remedial approach, as it were, as desirable as that may well be, that has nothing to do with the challenge under chapter 11 in the negotiations we had to deal with.

[Don Stephenson]

Not legally, and whether or not these things could have been negotiated as a settlement is at this point speculation.

[Ed Holder, Conservative, London West, ON]

Can we talk about that settlement for a moment? It strikes me that this was the most expeditious approach to take, it seems, at least from the testimony you've provided.

This is hypothetical. I guess as I ask the question I'm thinking, had we not settled as we did, what would have been plan B?

[Don Stephenson]

To defend ourselves before a NAFTA tribunal in respect of the issue, and that issue would have been exactly the same one, the value of these assets, because compensation would surely have been awarded.

[Ed Holder, Conservative, London West, ON]

Is it fair to say that had that been the approach it would have been a much more extended process and potentially more costly?

[Don Stephenson]

Well, certainly in respect of the litigation, it would have been costly. They are costly procedures and they would typically take many months to prosecute.

[Ed Holder, Conservative, London West, ON]

It's interesting. I think this is about fairness under the rules we have. Mr. Keddy made the point about this being a rules-based process, and I think whenever we've argued anything, whether it be on dealing in free trade with other countries or in this case here of provisions in terms of disputes under chapter 11, it is a rules-based process. It's great that at least that's in place to expedite, and at least we had the option to deal with that.

I have this question, because you made some passing comment. I'm not sure if it was in your question and answer period with Mr. Julian. Do we have a history of supporting provinces in other disputes like this? I'm just trying to get a sense in terms of your experience with that. Is this an absolutely uncommon practice or would you say this is on some kind of regular basis?

[Don Stephenson]

There have been only a handful of challenges under NAFTA that relate to provincial measures. This is the only case in which compensation was provided for a provincial measure, so there are very few precedents to go by.

I suppose in respect of international trade more generally—WTO matters, for example—it is standard practice for the Government of Canada, as the signatory to the international treaty, to defend provinces.

[Ed Holder, Conservative, London West, ON]

It would seem to me, then, that the great Province of Newfoundland and Labrador would have been glad that the Government of Canada was there in this kind of circumstance.

[The Chair, Conservative, Lee Richardson]

You're over time.

[Ed Holder, Conservative, London West, ON]

I'm sorry, I didn't realize it. It's such an interesting dialogue with our guest.

[The Chair, Conservative, Lee Richardson]

Oh, was it a dialogue?

[Ed Holder, Conservative, London West, ON]

Yes, sir.

[The Chair, Conservative, Lee Richardson]

I'm sorry. I thought it was a monologue.

[Ed Holder, Conservative, London West, ON]

We were sharing. It was good.

[The Chair, Conservative, Lee Richardson]

There you go.

In any event, we have run out of time.

I want to thank our witnesses for giving us a great start to this and enlightening the panel on this important issue.

I'm going to take a two-minute suspension while we bid farewell to these witnesses and welcome a second round of witnesses.

Thank you.