Friday, May 09, 2008
Ottawa blocks the sale of space company to the U.S.
Canada's Federal Industry Minister, Jim Prentice, has confirmed that the federal government will block the sale of Canada's leading space company to a U.S. defence manufacturer on the basis that the deal would not be in Canada's best interests.
U.S. defence manufacturer, Alliant Techsystems, wanted to purchase the Canadian firm, MacDonald, Dettwiler and Associates (MDA). MDA built a satellite, the Radarsat 2, with $400 million of Canadian tax dollars. The satellite, which allows observation of Canada's Arctic, can see through clouds and nighttime cover and spot any vessel larger than three metres in length. MDA is also the company that built the Canadarm, the robotic limb used on the space shuttle and the International Space Station.
If the sale had gone through, the satellite could be subject to control by the U.S. government under the Patriot Act or other American national security laws. This could have affected Canada's ability to use the satellite in the event of a national emergency or a territorial dispute with the U.S. (such as the dispute over the Northwest Passage), thus undermining Canadian sovereignty. The sale was opposed by politicians from all parties who were concerned that U.S. security laws could force Alliant to withhold satellite images from Canada, or allow U.S. agencies to obtain such data even if Canada banned its transmission.
SGM's Steven Shrybman was retained by the public interest group, Rideau Institute and the Canadian Auto Workers union (which represents some MDA employees) to oppose the sale. He raised the concern regarding the application of U.S. law, telling the House industry committee that, if the sale took place, U.S. law would apply to Alliant and its subsidiaries and it would have no option but to comply.
This is the first time the federal government has ever rejected a takeover in thousands of foreign-investment reviews since the Investment Canada Act went into effect in 1989.
