International Trade Committee on Sept. 27th, 2012

[Don Davies, NDP, Vancouver Kingsway, BC]

I'll tell you where I got my figures. Cornell University studied U.S. Internal Revenue Service investigations of drug-trade laundered money between 2004 and 2007. It found that Panama was tied with the Cayman Islands for first place in the world as a source of tax-laundered money emanating from the illegal drug trade.

Do you have any comment on that?

[Jorge H. Miranda Corona]

It is the opinion of a prestigious university, but it's not an official institution that we could take—

[Don Davies, NDP, Vancouver Kingsway, BC]

Actually, Ambassador, it was a study of the Internal Revenue Service, IRS, investigations between 2004 and 2007 from the U.S.

[Jorge H. Miranda Corona]

Perhaps this is what they thought, and I'm sure that's why the U.S. pushed to sign this agreement with us—

[Don Davies, NDP, Vancouver Kingsway, BC]

Does that agreement have fully automatic information sharing between the two countries? I understand it to be a case-by-case exchange of information. You only release information if it is specifically requested on a case-by-case basis. It's not an automatic sharing treaty.

[Jorge H. Miranda Corona]

I'm not an expert on that. I'm not technically knowledgeable about this trade specifically, but what I could say is that OECD countries such as Italy, Spain, France, Belgium, and the U.S. are happier with what they did with Panama, so I think it will benefit Canada and it will benefit Panama too.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you, Ambassador.

[The Chair, Conservative, Rob Merrifield]

I think this line of questioning would actually be appropriate for the department officials when they come back. They could give you the details of that on Tuesday, I believe.

Go ahead, Mr. Keddy.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Thank you, Mr. Chairman.

Welcome, Your Excellency, to committee. Congratulations on your new posting, and welcome to Canada.

This agreement, as you have heard in some of the preliminary debate, has been around. I think this is the third incarnation and third Parliament now. Certainly I think most parliamentarians would want to support rules-based trading and clarification of rules with countries and emerging economies around the world. I can't imagine that anyone would not support this free trade agreement at the end of the day.

Ambassador, I realize you are new in your role and you may not have all the numbers at your fingertips, but what other countries has Panama signed free trade agreements with in North, Central, and South America? I guess you could expand that to the EU as well.

[Jorge H. Miranda Corona]

We have recently been working seriously toward these negotiations of free trade agreements with other countries of the world and the hemisphere. We recently finished a negotiation with Peru. We are having conversations with countries of the CARICOM, the Caribbean commonwealth. We have celebrated a free trade agreement with the United States of America as well. We approved in October 2010 the free trade agreement with Canada, and it's a law of the Republic of Panama. We are expecting Canada to approve this because it will benefit both countries.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Do you have a free trade agreement with Mexico, or is that a preferred trading agreement? Is there an exceptional agreement with Mexico as well?

[Jorge H. Miranda Corona]

Yes, there is an exceptional agreement with Mexico.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Thank you for that.

My reason for asking that goes back to rules-based trading and equal footing for Canadian companies vis-à-vis our competitors, quite frankly. We already have a free trade agreement with the United States and we already have a free trade agreement with Peru. It would only make sense that these countries sign agreements with Panama, and Panama being in the position it's in—a very, very important conduit for international trade and shipping around the globe and a growing economy that is expected to grow exponentially, as a matter of fact, in the next decade—it would make sense that we would be on equal footing with our competitors.

I'd ask you this as a Panamanian. Since the military dictatorship has fallen in Panama and with the work that's been generated with infrastructure demands on the twinning of the Panama Canal that will carry 5% of the world's trade, how have you seen the standard of living in Panama affected by that exponential growth, by free trade agreements signed with other countries, and the ability for Panamanians to have jobs and opportunity in Panama? Have you seen a serious change in the Panamanian economy?

[Jorge H. Miranda Corona]

Thank you for the question.

Indeed, since Panama achieved the return of democracy in 1990, improvement in the quality of life has taken place, and not just for economic reasons, but in civil laws and the rule of law that we are pursuing.

Also, I have to mention that the economy of my country has grown considerably in the last few years. It's one of the highest-rated economies in the hemisphere right now. That is based upon open trade. The economy of Panama is mostly based on trade. We are not a growing industrial economy; we are a trade economy. We are basically merchants. Trade has always benefited the Panamanian quality of life.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Your Excellency, I have another question that I want to ask. Panama has a growing extractive industry, a growing mining industry, with some Canadian companies involved. One of them was a witness here this week at committee. They are doing a lot of work and a lot of projections in Panama.

How do you see that, as a transformation? These are very, very large extractive projects that will last 20, 30, 40 years, generating billions of dollars for the Panamanian economy. This is a little outside the bounds of the free trade agreement, but it shows that Panama is open for business, open to investment.

How do you see that affecting Panamanian society and the opportunities for Panamanians?

[Jorge H. Miranda Corona]

Let me talk briefly about this. This Canadian company based in Toronto, named Inmet Mining Corporation, is making a huge investment in Panama. Exploitation of the minerals in Panama is expected to last about 100 years.

The investment your country, through this company, is doing in my country is comparable to the investment the United States did when they built the canal. This is something that I want to remark on today, because it will turn the economy, and social and political relations, to a new era with Canada.

Scotiabank is also present in Panama. Also, entrepreneurs, little investors, are opening bed and breakfasts, hotels—little businesses—in Panama. When you go to the beach, you see a lot of Canadian flags right now in some places in Panama.

It's very interesting to mention this. Inmet Mining, in my opinion, and in the opinion of the Government of Panama, is doing a good job, taking the environmental issues in a good manner. They are socializing the project among all the peasants who live in this rural area of the province of Colón, which is north of Panama City.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Easter, you have seven minutes.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

Welcome, Mr. Ambassador. I also would like to congratulate you on your posting. When we look at how Panama's economy is growing—and certainly part of it is the canal expansion project—we see it's certainly to your country's credit. I think others have said that as well.

I am a member of Parliament from Prince Edward Island, so one of the areas I'm certainly interested in, in terms of the free trade agreement, are the tariffs on frozen potato products. Those will certainly come down. I expect you know that those good potatoes are from the wonderful red soil of P.E.I., and we're encouraged to hope to see more movement in that area, with less restriction.

My initial questions are along the lines of procurement. As I understand it, there will be a lot of opportunity in the canal expansion project the government has put forward, and a lot of the procurement related to the canal expansion project is already locked in or complete. Is the canal expansion project on any of the jobs surrounding that specific project—which is to your credit, again, and is going to mean a lot for shipping—already locked up or completed by the United States as a result of their capital investment in their agreement? Is there really much leftover opportunity for Canada, if I could put it that way, in terms of the canal expansion project, or are we looking mainly at other areas?

[Jorge H. Miranda Corona]

Let me begin by saying that the Panama Canal Authority is the institution in charge of procurement for the expansion of the Panama Canal. The Panama Canal Authority is an independent entity of the government. They have their own procurement system. I mention that because sometimes people from abroad tend to think that the Panama Canal Authority is the same as the Government of Panama. It's part of the state of Panama, but they have their own way of dealing with their own activities.

[Wayne Easter, Liberal, Malpeque, PE]

Am I correct that in the procurement process, the Panama Canal Authority would be obligated to abide, if that's the right word, by this Canada-Panama FTA? The state authority is over and above the Panama Canal Authority. I know they're operating as a separate entity, but they have to abide by the rules of this FTA.

[Jorge H. Miranda Corona]

They will.

[Wayne Easter, Liberal, Malpeque, PE]

Again I come back to the question of procurement. Maybe you don't know, and that's fine—I understand that—but is the procurement basically settled on this particular project? I think there is a view that while the Panama Canal is being built, there will be great opportunities there for us as construction companies, etc., but I think that's pretty well a done deal. I think the opportunities are already gone.

[Jorge H. Miranda Corona]

I think it's a great opportunity to continue to look out for opportunities in Panama, because the canal expansion project is open to the world community. When you go to the project, you see Spanish companies, Japanese companies, not just us. Some companies are expected from the U.S. that are very interested in the expansion, but we are open for business with anyone around the world.

I don't have the figures from the Panama Canal Authority on what they are planning to do, if they have bids that are still occurring, but probably they do because of the canal expansion, so we'll have something.

[Wayne Easter, Liberal, Malpeque, PE]

There's no question there will be opportunities once the canal is completed.

[Jorge H. Miranda Corona]

The canal expansion is one of the largest investments in the region right now.