International Trade Committee on April 10th, 2014

[Jennifer Moore]

It is utterly inadequate to protect the living environment and especially the water supplies of mining affected communities. I think there is a level of ineptness that was demonstrated particularly in the case of the San Martin mine, around dealing with both health and environmental harms, which aren't disconnected.

There had been indications within a couple of years of the San Martin mine opening, complaints of public health concerns that had arisen from the communities. A series of actions on the part of communities and independent supports triggered a study by a forensic unit in the Honduran state in 2007. Instead of carrying out those tests and returning the results to the community, they sat on the results for four years, which gave the company time to pack up and close its operation.

They have yet to expand and further develop those tests to actually do adequate studies to understand the causes and to also address them.

There are also inadequate protections, particularly for a crucial stage of mining, which is closure plans and ensuring that there are fully financed bonds and publicized, sufficient plans in place for mines. Again, that is demonstrated with the San Martin mine—

[Don Davies, NDP, Vancouver Kingsway, BC]

I have 30 seconds left in which I will just ask a quick question for a quick answer.

Do you think that the Honduran government should have to demonstrate progress on human rights and democratic norms to raise its level to an acceptable international norm before Canada extends preferential trade terms? Or do you think that we should give them a trade agreement now on the supposition that this will somehow magically improve Honduras' commitment to human rights and democracy?

[The Chair, Conservative, Rob Merrifield]

A nice short answer.

[Jennifer Moore]

Sure.

[The Chair, Conservative, Rob Merrifield]

Yes or no, then both of you are out of time.

[Jennifer Moore]

No, and I think a free trade agreement with Honduras would do more harm than good.

[The Chair, Conservative, Rob Merrifield]

Fair enough.

Mr. Heidrich, yes or no.

[Pablo Heidrich]

No.

[The Chair, Conservative, Rob Merrifield]

Very good.

Mr. Cannan, the floor is yours.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thanks.

I just wanted to clarify, Mr. Heidrich. You said there hasn't been any real growth over the last few years?

[Pablo Heidrich]

There has been no significant growth, particularly when you take it per capita. The Honduran population has one of the highest rates of growth in the region, and the growth per capita has been minimal, around 1%. That is not really considered growth in a developing country.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

I thought 3% to 4% is what they were averaging in the last few years.

[Pablo Heidrich]

That is the GDP. That is not the GDP per capita.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Another question, as far as any free trade agreements, have you supported any in the past?

[Pablo Heidrich]

Have I supported any in the past? If I had been asked, I think so. Some trade agreements have good potential, for example, the FTA that Canada has signed with Chile or the one it has signed with Costa Rica. In terms of the development of those countries, because the distance in development is much smaller than between Honduras and Canada, I think it can also substantially benefit Costa Rica and Chile as well as Canada.

In terms of market size, I think an FTA with Colombia and Peru can certainly provide benefits for Canada. This is one particular one where I do not see that it would provide benefits to one or the other.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Gildan, the Canadian manufacturer, would be tariff-free and they would have a level playing field with the U.S. and the European Union. Canadian beef and pork would be going into Honduras at a lower price to Hondurans. You see no bilateral benefits to those types of agreements?

[Pablo Heidrich]

Gildan's already there, therefore it doesn't need the FTA to continue to be there. I have never seen any—

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

It would have a level playing field, though, with other competitors.

[Pablo Heidrich]

It certainly had $300 million of profit out of $2 billion of revenues last year.

The main reason, as I said before, why Gildan is there is not to have a level playing field with U.S. firms or European firms. By the way, European firms are not on the same track, but Gildan is there because they have an exception from paying corporate income taxes in Honduras for 20 years. Because of the tax agreement between Canada and Honduras, Gildan can discount 25% nominal tax rate from Honduras, which actually doesn't pay, and therefore, instead of paying 28% corporate income tax in Canada, it pays 3%.

Last year it paid $10 million on $350 million of profit. That is actually a problem for the Canadian federal government and the Province of Quebec in terms of lost taxes. That is something that I would hope Canadian policy and Quebec policy would address.

From the point of view of Honduras, it is certainly their choice to provide these tax benefits. I think that in general the policy on free trade zones is very, very controversial.

[The Chair, Conservative, Rob Merrifield]

Thank you very much, witnesses, for being here and for your testimony.

Our time has gone, and there's a committee waiting, I believe.

With that, we will adjourn.