The July 12 Law Times editorial (see
“Hands-off approach to Vale strike the right move) argues that the federal and provincial governments should take a “hands-off” approach when it comes to enforcing promises made under the Investment Canada Act and in bitter labour disputes such as the Vale strike.
It argues the federal government was wrong to take United States Steel
Corp. to court for breaking the promises it made upon buying Canada’s
Stelco Inc. and defends the government’s inaction in charging Vale over
its promises with respect to Inco Ltd.
Our government has a legal duty to ensure foreign investment provides a net benefit to Canada. That’s why foreign corporations that take over prized Canadian assets must make modest, short-term commitments with regard to job creation, production levels, and domestic investment.
It also should be made clear that such commitments are legally binding. They’re not fair-weather wish lists that foreign corporations can unilaterally abandon.
The legally binding nature of these commitments was stated explicitly in the recent Federal Court ruling against U.S. Steel’s challenge of the Investment Canada Act.
When U.S. Steel bought Stelco’s operations in 2007 for $1.2 billion, it made legally binding promises to the Canadian government that it would maintain certain employment and production levels. Vale also made binding commitments to our government when it purchased Inco for $19 billion in 2006.
When massive, sophisticated organizations spend billions of dollars to acquire Canadian assets, they can be expected to factor in the future cost of their production and employment commitments. Why should any foreign investor, especially one with the resources and expertise to anticipate the cost, not be held to its commitments to Canadian workers and communities?
We understand that Vale broke its promises to the government, but to what extent, we can’t be sure. That’s because neither the government nor Vale will tell us exactly what the company promised in return for acquiring Inco. Commitments affecting thousands of working families remain behind a veil of secrecy.
Stakeholders like the United Steelworkers should be entitled to participate in negotiations that affect our members and their communities. If we knew what Vale promised, we could hold it accountable for its legal obligations. A fair process demands nothing less.
The union supports the Canadian government’s action against U.S. Steel and we question why it didn’t take the same approach to Vale, particularly as its massive profits during this period make arguments about economic conditions a red herring.
Vale has remained massively profitable in each and every year since it bought Inco. In Canada alone, it earned a windfall of more than $4 billion from former Inco operations during the first two years following its takeover. Yet Vale was allowed to permanently cut hundreds of jobs from its Canadian operations.
Contrary to the editorial’s suggestion, these were not temporary layoffs, nor were they the result of a company in financial difficulty due to a global recession.
A long and extremely bitter strike at Vale is now over, and the challenging task of rebuilding labour relations and restoring the workforce to its former levels of production must begin.
This was not the first strike by unionized steelworkers who work the nickel mines and plants in Sudbury and Port Colborne, Ont., but it was the longest and by far the most antagonistic dispute in their long history.
It’s no coincidence that this was the first time the employer tried to resume production by using replacement workers. The use of replacement workers in this strike, as in others, guaranteed that the dispute was longer and more acrimonious than it otherwise would have been.
We agree with the editorial that the best solution to a strike is one achieved through fair collective bargaining, not government interference.
However, by not having in place a ban on replacement workers, as exists in British Columbia, Quebec, and the federal sector, the Ontario government contributed to the length and destructive nature of the Vale strike.
It’s our firm belief that with such a ban in place, the dispute would have ended much earlier while the harm that resulted to our members and communities would have been much less.
The appropriate economic and democratic role of governments in Canada isn’t to mandate a hands-off approach but rather to establish the proper legal rules of the game for healthy communities and enforce them when flagrantly broken.
Ken Neumann is the United Steelworkers national director for Canada.
