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