U.S. Steel Suffers Another Defeat in Federal Court

Foreign Corporations Must Be Held to Account for Breaking Promises to Canada: United Steelworkers

TORONTO, May 27, 2011 /CNW/ - For the second time, a federal court has upheld Canada's right to enforce legislation to ensure Canadians benefit from foreign corporate takeovers.

"The Federal Court of Appeal has dismissed a challenge by U.S. Steel and confirmed that the Investment Canada Act and its penalties can be enforced against foreign corporations," said Ken Neumann, Canadian Director of the United Steelworkers (USW).

"The courts have now made it clear - twice - that the penalties set out in the Act are legitimate, as is their purpose to protect Canada's economy and enforce promises made by foreign investors," Neumann said.

"We hope this brings an end to US Steel's efforts to delay or avoid being held to account for breaking its commitments to maintain employment and production levels at the former Stelco operations in Canada."

In order to gain Canadian government approval to buy Stelco in 2007, U.S. Steel pledged that the purchase would provide a "net benefit" to Canada, as required by the Investment Canada Act. U.S. Steel's legally binding commitments included promises to maintain jobs and production levels at the former Stelco.

Instead, U.S. Steel shut down former Stelco operations and laid off hundreds of Steelworkers.

This week's appeal court decision upholds a Federal Court ruling last year dismissing U.S. Steel's challenge to the constitutionality of the Investment Canada Act's enforcement mechanisms. The appeal court's decision clears the way for the government's case against U.S. Steel to proceed.

"The federal government must now push forward with its case against U.S. Steel and enforce the Investment Canada Act to the fullest extent," Neumann said.

While the court case against U.S. Steel proceeds, the company continues to lock out 900 workers at the former Stelco operations in Hamilton. The lockout and shutdown of Hamilton operations is into its seventh month.

The Investment Canada Act allows penalties including fines and forced divestment of assets for foreign corporations that break binding commitments made as part of a takeover of a Canadian company. However, such sanctions have never been imposed - given that the U.S. Steel case marks the first time the government has pursued a foreign corporation for violating the Act since it was enacted 27 years ago.

"The U.S. Steel case is only the latest example of foreign takeovers of our industries and resources that have led to job losses, plant shutdowns and economic hardship for Canadian communities," Neumann said. "It is more clear than ever that our government must adopt stronger legislation to defend Canadian jobs and communities and ensure foreign investment provides a legitimate 'net benefit' to our economy."

SOURCE United Steelworkers (USW)

For further information:

Ken Neumann, USW National Director for Canada, 416-487-1571; /
Bob Gallagher, USW Communications, 416-434-2221, 416-544-5966, /
bgallagher@usw.ca /


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