Evidence of meeting #48 for International Trade in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was case.
A recording is available from Parliament.
9:35 a.m.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
If there's anything you could forward to the committee, I'm sure it would be useful in our deliberations to understand the economic impacts.
By my count, Mr. Chair, I have three seconds, so—
9:35 a.m.
Conservative
The Chair Conservative Lee Richardson
Well, thank you, Mr. Trost.
We have an opportunity, if we get through this very quickly, to at least to start a second round.
These are five-minute rounds for questions and answers, and we're going to ask Ms. Hall Findlay to begin.
9:35 a.m.
Liberal
Martha Hall Findlay Liberal Willowdale, ON
Thank you, Mr. Chair.
Thank you very much, gentlemen.
Mr. McMahon, as an aside, I just want to thank the Fraser Institute for its commentary in recommending that the current Harper government follow the lead of the prior Liberal governments in its economic policies. Thank you very much for that. I thought that showed great insight.
I'll just throw in my background—not necessarily a philosophy background, but an international law background—and suggest that entering into international trade treaties is not a giving up of sovereignty, but is, in fact, an exercise thereof. Entering into contractual arrangements is, in fact, an exercise of our sovereign ability to do that, but that's a much longer conversation.
Some interesting issues have been raised, Mr. Sinclair, and the challenge we have now is that we're not going to answer these in five minutes, so I will be asking for some further discussion, actually. On the issue of property rights, there's a very big difference between an ownership right and a right to use. If you have a contract to have a three-year supply of widgets, for example, and the widget supplier cuts that off after a year and a half, then you will have a legal claim against the supplier of widgets for the loss you will have suffered with regard to lack of access to those widgets for the subsequent year and a half.
I don't know that compensating somebody for an early termination of a right to use water or an early termination of a right to use wood or timber, or have access to that, is a bad thing. I don't know, and I don't know that it necessarily needs to be a denial of the underlying ownership rights of those resources to provide compensation if, in fact, there was an arrangement to use and that arrangement gets terminated early.
As I said, we're not going to be able to answer these questions in five minutes, but I would like to have a longer conversation because, like you, I feel we have to make sure we maintain that ownership right and the rights that come with it with the provinces and the territories.
Here is my other challenge. We've heard that perhaps there's been abuse of nationality of enterprises to take advantage of chapter 11. We've heard challenges with possible arbitration panel biases that need to be addressed. We have very clearly a lack of communication, and this is the one I will finally ask your thoughts on now and again for further discussion because, as a perfect example, the country is in the middle of negotiations with Europe. I think the opportunity here is to learn from some of the challenges that the NAFTA provisions have created to allow us, in our discussions with Europe, to perhaps word things better--to be clearer on nationality, for example, and to address some of the challenges we've seen in a clearer way.
Any thoughts you might have on that, after this, would be very helpful.
Finally, the most important thing I have come away with from the AbitibiBowater issue is the extraordinary lack of communication that allowed the federal government and Canadian taxpayers to be on the hook for a claim that could conceivably have had that compensation.... I don't disagree at all with the idea of compensation, but it could have allowed that compensation to go to other aspects of liabilities, such as the remediation and the pensions that never happened.
It's very frustrating to hope for responses in five minutes.
9:35 a.m.
Senior Research Fellow, Canadian Centre for Policy Alternatives
I'll just address one point very briefly. I think it is extremely exaggerated to say that this principle of public ownership of resources with no automatic right of compensation would be an immense blow to the Canadian economy, when for public reasons--including both pro-development and controlling development for environmental and other reasons when property rights are amended--the Canadian economy and our natural resource economy has operated that way for over a century. Governments and companies normally act reasonably toward each other. They have a mutual interest in developing these resources.
We are currently operating under these rules. It's the excessive, open-ended version of property rights under NAFTA that is beginning to destabilize those understandings.
I'll leave Mr. McMahon some time to respond.
9:40 a.m.
Vice-President Research, Fraser Institute
Well, first, on your opening gambit, it is true that it is an act of sovereignty to negotiate trade treaties, but once you do that, they actually limit your sovereignty. They say that you cannot do this or you must do that. In the case of NAFTA, it is the required compensation. The Canadian government's sovereignty over walking away from that is limited. The Canadian government's sovereignty over throwing up tariffs outside the treaty is limited. Yes, you use your power to negotiate the treaty, but then the treaty puts constraints on the exercise of sovereignty.
As for property rights to natural resources, you can call them contractual agreements, if you wish, or you can call them property rights, but the fact is that if you and I have an agreement that I am allowed to use something or can receive a supply of widgets, in your case, for a certain period of time, cancelling that agreement without compensation is a violation of either property rights or contractual rights. You're quite right that in five minutes we don't have time to get into whatever fine distinctions there are between the two, so at this point, I'm quite happy to use the muddy terms “property rights” or “contractual rights”. We can work out the details of the definitions later.
9:45 a.m.
Conservative
The Chair Conservative Lee Richardson
Thank you.
We are going to run over time, but we started a bit late, so I'm going to give you the final one, Mr. Keddy. Be in and out in five minutes.
9:45 a.m.
Conservative
Gerald Keddy Conservative South Shore—St. Margaret's, NS
Thank you, Mr. Chairman, and welcome to our witnesses. It'll be five minutes from me; no worries.
I want to go back for a moment, Mr. Sinclair, to your statement about property rights. I've always been amazed--no disrespect to the lawyers in the room--that if you want a different opinion, you just ask a different lawyer, and I think you stand to be corrected on property rights.
There certainly are lots of property rights in Canada regarding water. They simply don't regard and treat water as a commodity. You should be clear in what you're saying. There are all kinds of pre-1867 water rights in Canada and post-1867 water rights in Canada, lots of them, for using that water to generate electricity, turn a mill, and do other things. Simply, it is not a commodity to be exported. That's the fine line.
Would you agree or disagree?
9:45 a.m.
Senior Research Fellow, Canadian Centre for Policy Alternatives
I wouldn't agree with that characterization of my comments, because I was talking specifically about access to publicly owned resources.
9:45 a.m.
Conservative
Gerald Keddy Conservative South Shore—St. Margaret's, NS
Thank you.
Let's talk about publicly owned resources. First of all, I'm not clear that there was a lease agreement for AbitibiBowater in Newfoundland. I don't know if it was a lease agreement or if they actually owned the property.
It was a lease agreement. Do we know that? There is a difference. You can talk about using natural resources in a lease agreement, and absolutely, that lease can be mitigated at the end of the lease or by due process within it, but within the terms. If you own the property, that's when expropriation comes in. You don't expropriate in the case of a lease agreement, to my knowledge.
As for timber rights, why is there the idea that timber rights are somehow different from any other property? They're no different from any other property. If you follow your summation and your explanation of this, which I'm trying to do, then as a private landowner, I don't own my property. I'm only leasing it somehow from the government, as long as I pay my taxes on it. I don't think most Canadians would agree with that statement. I think they think that they own it, but that it can be expropriated for the so-called public good in certain instances. However, until those instances occur, we own our property. In different provinces, there are different regulations involved. I think in Nova Scotia we get the first seven feet or 10 feet of surface. After that, the mineral rights can be opened to somebody else, but we own our property.
I don't know how you can say that it's different, somehow, because there are timber rights involved.
9:45 a.m.
A voice
Your next witness will clear that up.
9:45 a.m.
Senior Research Fellow, Canadian Centre for Policy Alternatives
Again, I want to insist on the point that we're addressing today, which is compensation for access to publicly owned resources.
9:50 a.m.
Conservative
Gerald Keddy Conservative South Shore—St. Margaret's, NS
No, we're talking about privately owned resources.
March 10th, 2011 / 9:50 a.m.
Senior Research Fellow, Canadian Centre for Policy Alternatives
Where the investor doesn't own the resources, there can't be an expropriation. Expropriation is the taking of property. If there is no proprietary right, there is no expropriation.
9:50 a.m.
Conservative
Gerald Keddy Conservative South Shore—St. Margaret's, NS
If there wasn't an expropriation, why would the Province of Newfoundland bring in legislation so the company couldn't sue them?
9:50 a.m.
Senior Research Fellow, Canadian Centre for Policy Alternatives
The legislation expropriated certain assets, and it returned rights—the rights I'm now talking about—to timber and water to the crown.
9:50 a.m.
Conservative
Gerald Keddy Conservative South Shore—St. Margaret's, NS
Absolutely, without question, but I'm not clear on whether they owned it wholly or they leased it. Your original statement didn't differentiate between leasing and owning. That's my question.
If the position of the Council of Canadians is that no Canadian owns property, I think you're going to have a difficult job convincing them of that.
9:50 a.m.
Senior Research Fellow, Canadian Centre for Policy Alternatives
Well, I don't represent The Council of Canadians.
9:50 a.m.
Senior Research Fellow, Canadian Centre for Policy Alternatives
My statements are on the record. You can check them against your memory.
9:50 a.m.
Conservative
9:50 a.m.
Senior Research Fellow, Canadian Centre for Policy Alternatives
You raise some interesting points. This is a complex issue, and I would agree with that.
9:50 a.m.
Conservative
Gerald Keddy Conservative South Shore—St. Margaret's, NS
I think they are interesting points. The issue here--and I don't think anyone is arguing it--is a very difficult one. No one is happy with the situation. I'm sure AbitibiBowater is not happy with the situation. The labour union in Newfoundland is not happy with it. I don't think the Government of Canada is happy about paying $130 million.
To Mr. McMahon's earlier point that we try to avoid this in the future, in the meantime there has to be a process for compensation. It's never going to involve everybody. It's never going to be broad enough. It's a--
9:50 a.m.
Vice-President Research, Fraser Institute
If we can violate our contracts without compensation, we violate the rule of law and we suppress investment in Canada. No one will believe us.
9:50 a.m.
Conservative
The Chair Conservative Lee Richardson
Thank you, Mr. Keddy, and thank you to our witnesses. We have just begun; in any event, I appreciate the beginning.
We're going to have another round in a few minutes. I'm going to ask for a two-minute break while we bid our witnesses farewell and welcome additional witnesses.
We'll suspend for two minutes.
Thank you.
10 a.m.
Conservative
The Chair Conservative Lee Richardson
Welcome back to the second round of witnesses in our continuing study of the AbitibiBowater settlement. In this second round, we have Jean-Michel Laurin, vice-president of global business policy for the Canadian Manufacturers and Exporters. Welcome back, Monsieur Laurin. It's good to have you here.
We also have David Coles, who is the president of the Communications, Energy and Paperworkers Union of Canada. Welcome, Mr. Coles, and thank you for being here.
As individuals, we have replacement witnesses, for a reason I'm not entirely sure of. I want to thank Michael Woods, a partner of the trade and competition group from Heenan Blaikie, and Alexandra Logvin, who is a lawyer in the litigation group for Heenan Blaikie, for coming at the last minute.
I understand that this was somewhat thrust upon you, and I appreciate your taking the time to come on short notice to fill in here. I'll let you explain that further as you begin to speak. I don't know if you have an opening statement prepared, but I will ask our other witnesses in this case to try to be brief, because we only have about 45 minutes to go.
We will begin with opening statements. I'm going to ask again that we might condense them a bit in order to get into questions. We'll start with our witnesses now.
First we have Mr. Coles, the president of the Communications, Energy and Paperworkers Union of Canada.
Please go ahead, Mr. Coles.