February 3, 1959

PIPE LINES

NORTHERN ONTARIO PIPE LINE

PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Hon. Donald M. Fleming (Minister of Finance):

Mr. Speaker, I should like to make a brief announcement concerning the financing of Northern Ontario Pipe Line Crown Corporation. Hon. members will recall that in November, 1955 the former government entered into an agreement with Trans-Canada Pipe Lines Limited for the construction and rental to Trans-Canada Pipe Lines Limited of the northern Ontario section of an all-Canadian natural gas pipe line.

To launch the project and to enable Trans-Canada Pipe Lines Limited to enter into contracts to buy and sell gas and to finance construction of its portion of the line, an arrangement between the government of Canada and Trans-Canada Pipe Lines Limited regarding an assured rental of the northern Ontario section on a firm contractual basis was entered into. To determine the rental a firm interest rate was fixed at 3i per cent. Concurrently an agreement was entered into with the province of Ontario whereby the province agreed to lend to the crown corporation which was to be set up to construct the northern Ontario section of the line one-third of the cost or $35 million, whichever might be less.

The interest on the capital investment of the two governments was to be payable at rates related to the respective rates of interest prevailing for outstanding obligations of Ontario and Canada, and was to be agreed upon prior to the commencement of the construction of the northern Ontario section.

Although the lease with Trans-Canada Pipe Lines Limited was based on a firm interest rate of 3J per cent, no firm arrangements with Ontario were made by the former government regarding the rate of interest on the province's share of the advances, and in the absence of any agreement on the interest rate no advances have been made by the province of Ontario. Consequently the crown corporation has been financed entirely by advances by Canada. To the 31st January, 66968-9-40

1959 we have advanced a total of $112,750,000 to Northern Ontario Pipe Line Crown Corporation.

In the course of recent discussions concerning the rate of interest which was to be paid on any advances that might be made by the province of Ontario, Premier Frost has taken the position that Ontario should not be called upon to make any advances to the crown corporation at anything less than the going rate of interest; that is to say, the rate of interest which the province of Ontario itself must pay on moneys it borrows, and that rate is somewhat higher than the rates prevailing at the time the original agreement was made and construction commenced, and certainly higher than the 3| per cent rate.

We have searched the records carefully and can find no place where in any discussion or any exchange of correspondence which occurred between the government of Canada and the government of the province of Ontario there was any stipulation on the part of the former federal government as to the rate of interest at which the loan was to be made by the province of Ontario; and having nothing in that respect to rely upon the government has concluded that as the main pipe line of the northern Ontario section has been substantially completed on the basis of federal funds-although there will be some additional capital outlay for compressor stations-and as gas is now flowing through the lines, there is no point now in asking the province to advance any share of the moneys as originally agreed.

The fact is that if the province of Ontario were to advance moneys to this crown corporation at the rate of interest which it must pay on its public borrowings it would simply mean a deficit on the part of this crown corporation which the federal treasury would have to make good. Accordingly, Mr. Speaker, the government has decided that under the circumstances it has no alternative but to provide all the funds required to complete the construction of the northern Ontario section of the pipe line.

Topic:   PIPE LINES
Subtopic:   NORTHERN ONTARIO PIPE LINE
Sub-subtopic:   RESPECTING FINANCING
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CANADIAN RADIO PATENTS LIMITED

STATEMENT ON TALKS HELD IN WASHINGTON ON JANUARY 29

PC

Edmund Davie Fulton (Minister of Justice and Attorney General of Canada)

Progressive Conservative

Hon. E. D. Fulton (Minister of Justice):

Mr. Speaker, I should like to give the house a brief report on the talks held in Washington

618 HOUSE OF

Statement on Canadian Radio Patents Ltd. on Thursday, January 29, between myself and Hon. William P. Rogers, Attorney General of the United States, concerning the extraterritorial effects of actions launched in United States courts under United States antitrust laws.

I was accompanied by Mr. T. D. MacDonald, director of investigation and research of our Department of Justice and by officials of the Canadian embassy in Washington. On the United States side, in addition to Mr. Rogers, the talks were attended by senior officials of his department and by an official of the United States state department. For the background of the discussion I should refer hon. members to my statement on January 19, 1959, reported on page 25 of Hansard. The talks were held in accordance with the arrangements outlined there.

In the course of those talks I outlined our concern about the effects in Canada of antitrust actions commenced by the United States government in United States courts. While our concern in this matter is of general application, it was illustrated and discussed particularly in the light of the current antitrust suit commenced on November 24, 1958, in which three companies in the United States are named as defendants and a number of companies incorporated in Canada are named as co-conspirators.

This suit arises out of the alleged activities of all of these companies in connection with a Canadian organization known as Canadian Radio Patents Limited. This is a company which was formed in 1926, to which the leading companies in Canada have assigned their patent rights. This company has in general licensed those patents only to firms intending to manufacture in Canada, and it is a significant fact that this organization has never since its inception been charged with any offence against any Canadian law. It is also significant that we have in Canada today a healthy and expanding radio and television appliance manufacturing industry, and that only a very small proportion of Canadian domestic requirements in this field is imported from the United States.

In the course of our discussions I made it clear that I was not commenting on the merits of the antitrust case in the United States in so far as it sought only to bring United States law to bear upon United States companies in respect of their conduct in the United States. I also made it clear that I was not discussing the merits of Canadian Radio Patents Limited as such.

I emphasized that what we are concerned about is the possible effect of the decree asked for in the United States in so far as it may require directors of Canadian companies to take certain actions with respect

to the operations of those companies in Canada, which actions would not be dictated by the requirements of Canadian law, or be in accord with Canadian business or commercial policy, but would be dictated by requirements of United States law and be in accord with United States policy.

I made clear that in our view such a result could only be regarded as an infringement of Canadian sovereignty. I suggested that if the United States government has any feeling that actions in Canada in this or in any other field are counter to United States interests or involve any infringement of arrangements with respect to commerce between our two countries, the proper course for them is not to seek to alter the situation in Canada by means of unilateral action in United States courts, but rather to raise the problem with the Canadian government and express their views through the usual channels.

I further stated that it is our view that in matters of this sort the ultimate decision as to what is done in Canada must be the responsibility of the Canadian government, and that we felt that the answer to the problem lies in the exercise of restraint by the United States government in seeking from their courts or applying measures that interfere directly, substantially and deliberately with matters that are essentially matters of Canadian commerce within Canada.

In particular, I emphasized our view that to follow any other course could only be based on the unacceptable proposition that foreign subsidiaries of United States parent companies are merely projections of United States trade and commerce and subject to United States policy in priority to the laws and commercial interests of the countries in which such subsidiaries are incorporated and carry on business.

The United States Attorney General assured me that the action taken by the United States government in this or any other antitrust suit is not taken by them with any intent of infringing the sovereignty of Canada but is taken only in discharge of the responsibility resting on their government to enforce the United States antitrust laws in their own country. He expressed the view that no threat to Canadian sovereignty is involved and also his concern that the contrary view should have been taken. He emphasized that the United States government did not take the position that United States laws should supersede the laws of any other country, but acted only in accordance with what it regarded as its obligation to ensure that all persons in any way subject to the

United States laws, including American antitrust laws, lived and acted in accordance therewith.

As a result of these talks it was readily agreed that in any similar situation in the future, discussions will be held between the two governments at the appropriate stage when it becomes apparent that interests in one of our countries are likely to be affected by the enforcement of the antitrust laws of the other. Such discussions would be designed to explore ways and means of avoiding the sort of situation which would give rise to objections or misunderstandings in the other country. It was, however, made clear that each government would have to reserve its ultimate responsibility to decide for itself what action it should take, and that such consultations should not be regarded in any way as necessarily implying approval of the action ultimately taken.

I believe that the arrival at an understanding on prior consultation is a real accomplishment. At the same time I do not wish to over remphasize the extent or effect of this understanding regarding consultation. It should be realized that there was revealed in the course of these discussions, a wide divergence between our two views as to what amounts to an infringement of sovereignty and as to the restraint which one country should exercise in seeking decrees from its own courts when those decrees may have effects within another country. Until there is a satisfactory reconciliation of views on these points there can be no guarantee that causes for complaint will not arise again.

While I believe that I should in fairness place these facts squarely before the house, nevertheless I repeat that in my view the talks may prove an important and useful first step toward an improvement in the situation, by enabling each side to understand what is the other's point of view, and by opening the door to further consultation which may in turn lay the ground for progress in the reconciliation of those views.

Topic:   CANADIAN RADIO PATENTS LIMITED
Subtopic:   STATEMENT ON TALKS HELD IN WASHINGTON ON JANUARY 29
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LIB

Lester Bowles Pearson (Leader of the Official Opposition)

Liberal

Hon. L. B. Pearson (Leader of the Opposition):

Mr. Speaker, the minister has made a statement about a matter which is causing a great deal of concern in this country, because it represents what certainly seems to be unwarrantable and indefensible interference by the United States in the affairs of Canadians. The minister has indicated that as a result of his discussions in Washington on this matter with the appropriate member of the United States government he has received an assurance of consultation on matters of this kind to avoid this particular situation arising in the future.

66968-9-401

619'

Statement on Canadian Radio Patents Ltd.

While we all welcome that assurance, Mr.. Speaker, I cannot help but point out that similar assurances were received in regard to consultations last summer during the course of the President's visit to Ottawa, and they were repeated in this house by the Prime Minister on July 11. We must hope, therefore, that these assurances will be more effective in their implementation than they seem to have been in the last six months.

There is an item in the supplementary estimates which concerns the administration of the Department of Justice, that will be coming up shortly. During that discussion we on this side of the house propose to go into this subject in more detail than is possible at this moment.

Topic:   CANADIAN RADIO PATENTS LIMITED
Subtopic:   STATEMENT ON TALKS HELD IN WASHINGTON ON JANUARY 29
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CCF

Hazen Robert Argue

Co-operative Commonwealth Federation (C.C.F.)

Mr. Hazen Argue (Assiniboia):

As we of

the C.C.F. have said on other occasions, Mr. Speaker, we feel it is most regrettable that companies in Canada which are subsidiaries of United States companies would appear to be required to follow laws laid down in the United States, contrary to the policy of the Canadian government and contrary to Canadian law. Without talking at this moment about the principles involved, I can say most emphatically that we agree with the principle that companies in Canada should follow Canadian law only and should not be required in any way, shape or form, to follow laws laid down in foreign countries.

We think it is time the Canadian government not only talked in this manner to the United States, but considered introducing in our parliament a law which would make it crystal clear that companies operating in Canada must obey Canadian laws and must operate in our commercial interests. In addition, it should be made clear that in any instance in which there appears to be a conflict between the commercial interest of this nation and the law of some other country, our law and our commercial interest only should apply.

Perhaps this is a difficult subject upon which to make this kind of statement, because there is evidence that we have in Canada a trust so far as the Canadian radio patents pool is concerned. I want to point out immediately that the Ilsley royal commission is inquiring into this subject and will be making a report to parliament. It may be that Canada should take its own action so far as the monopoly in this field is concerned, but that in no way detracts from the statement I have made that in principle Canadian law and Canadian interest only should govern the actions of Canadian companies.

I want to repeat to the minister a request we made in this house in another form and on another occasion. I do this not in any

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Inquiries of the Ministry partisan political way. I would ask the minister to give consideration to referring this general question to a committee of this house so there may be a discussion of the whole broader question of the actions of Canadian companies so far as foreign orders are concerned, possible refusals in the interests of parent companies, and so on.

We do feel that the minister is thoroughly justified in laying down the principle he has laid down at this time. We hope, we trust and we expect that the method of handling these disputes in the future will be more satisfactory to Canada than the result of similar assurances given in this house last year.

Topic:   CANADIAN RADIO PATENTS LIMITED
Subtopic:   STATEMENT ON TALKS HELD IN WASHINGTON ON JANUARY 29
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PC

Edmund Davie Fulton (Minister of Justice and Attorney General of Canada)

Progressive Conservative

Mr. Fulton:

I recognize that it is not desirable to debate this subject at this time. As the Leader of the Opposition has said, there will be an opportunity to discuss the subject later, probably today. I rise therefore at this moment only for the purpose of referring to what the leader of the C.C.F. party said a moment ago. He stated that there is evidence that we have in Canada a trust so far as radio and television patents are concerned. I have made it clear in all my discussions that I am not defending the merits of Canadian Radio Patents Limited as such. But I should also make it clear that we have no evidence of the nature suggested by the hon. gentleman at least if he refers to a combine or monopoly. If there is such evidence we should be grateful to have it brought to our attention.

Topic:   CANADIAN RADIO PATENTS LIMITED
Subtopic:   STATEMENT ON TALKS HELD IN WASHINGTON ON JANUARY 29
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LABOUR CONDITIONS

BRITISH COLUMBIA-REQUEST FOR CALLING OF PROVINCIAL-MUNICIPAL CONFERENCE ON UNEMPLOYMENT


On the orders of the day:


LIB

Lester Bowles Pearson (Leader of the Official Opposition)

Liberal

Hon. L. B. Pearson (Leader of the Opposition):

Mr. Speaker, I should like to ask the Prime Minister whether he has received, as I have, a telegram from the British Columbia federation of labour and its affiliates demanding immediate action to alleviate unemployment in British Columbia and requesting the immediate calling of a conference of provincial and municipal governments to meet the unemployment crisis. If he has received such a message, I should like to ask what action he intends to take with regard to it.

Topic:   LABOUR CONDITIONS
Subtopic:   BRITISH COLUMBIA-REQUEST FOR CALLING OF PROVINCIAL-MUNICIPAL CONFERENCE ON UNEMPLOYMENT
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PC

John George Diefenbaker (Prime Minister)

Progressive Conservative

Right Hon. J. G. Diefenbaker (Prime Minister):

Mr. Speaker, I will take that question as notice.

[Mr. Argue.)

Topic:   LABOUR CONDITIONS
Subtopic:   BRITISH COLUMBIA-REQUEST FOR CALLING OF PROVINCIAL-MUNICIPAL CONFERENCE ON UNEMPLOYMENT
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CRIMINAL LAW

REQUEST FOR REPORT OF ROYAL COMMISSION ON SEXUAL PSYCHOPATHS


On the orders of the day:


CCF

Harold Edward Winch

Co-operative Commonwealth Federation (C.C.F.)

Mr. Harold E. Winch (Vancouver East):

Mr. Speaker, I should like to direct a question to the Minister of Justice. Will the minister inform the house as to when he will file the McRuer commission report on criminal sexual psychopaths, and also when copies of this report will be available to members of the House of Commons.

Topic:   CRIMINAL LAW
Subtopic:   REQUEST FOR REPORT OF ROYAL COMMISSION ON SEXUAL PSYCHOPATHS
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PC

Edmund Davie Fulton (Minister of Justice and Attorney General of Canada)

Progressive Conservative

Hon. E. D. Fulton (Minister of Justice):

Mr. Speaker, the hon. gentleman was kind enough to give me notice of his question. On inquiry I find that the report has been received, that it has now been translated and is in the course of being printed. As soon as it is printed in both languages the report will be tabled in parliament, and I will do what I can in order to make sure that copies are available for hon. members.

Topic:   CRIMINAL LAW
Subtopic:   REQUEST FOR REPORT OF ROYAL COMMISSION ON SEXUAL PSYCHOPATHS
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WATER RESOURCES

February 3, 1959