House of Commons Hansard #85 of the 40th Parliament, 3rd Session. (The original version is on Parliament's site.) The word of the day was countries.

Topics

Canada-Panama Free Trade Act
Government Orders

10:05 a.m.

South Shore—St. Margaret's
Nova Scotia

Conservative

Gerald Keddy Parliamentary Secretary to the Minister of International Trade

Mr. Speaker, it is a pleasure to join the debate on the free trade agreement with the country of Panama. It is an opportunity that I would not want to miss.

Trade is important in my part of the world on the east coast of Canada and in the province of Nova Scotia. We have a long history of trading with all of the east coast areas, such as the Caribbean and Panama. For the life of me, I find the opposition to this agreement a bit difficult and ingenuous.

We already have a long-standing trading relationship between Canada and the country of Panama. We are only trying to set clear parameters and rules and have them apply to that trading relationship but for some reason some people and parties in this place are completely against having rules-based trading. For the life of me, it makes no sense.

As all members in this place know, this is a time when we need to open doors for Canadians, to level the playing field, to create new commercial opportunities and to work with our partners around the world to help Canadians succeed. Panama is a perfect example of a partner with great potential. Canadian manufacturers, exporters and producers, including small and medium-sized producers, need access to markets like this one in order to compete.

In 2009, our two-way trade in merchandise totalled $132.1 million. Key Canadian products, including machinery, motor vehicles and parts, pharmaceutical equipment and pulse crops were some of the driving forces behind this success. Canadian businesses want a deeper partnership with Panama so that they can take full advantage of this dynamic market and what it has to offer.

It is time to deliver on what our businesses and economies need to succeed.

Once the Canada-Panama free trade agreement is in place, trade in these and other products, like pork, beef, fish and seafood, paper products, construction materials and equipment, would become easier for Canadian companies.

Members of the House should recognize just how the Canada-Panama free trade agreement would benefit other regions. Let us take Quebec, for example. In 2009, Quebec merchandise exports to Panama totalled $30 million. These exports fell mostly in the areas of meat, vehicles, machinery, pulp and paper board, pharmaceutical products and scientific precision instruments.

Once implemented, the free trade agreement will eliminate current Panamanian tariffs on vehicles of up to 15%. It will eliminate current tariffs on pork of up to 70%. These are just a few examples of how this agreement would benefit Quebec sectors of export interest.

We have also mentioned in the House, Panama's focus on infrastructure investments which also present great opportunities for growth and infrastructure-related exports, such as machinery, a strong sector in Quebec and Ontario. I do not understand why the Bloc Québécois is against the bill that would provide so many economic opportunities for Quebec.

In Ontario, merchandise exports to Panama totalled $29.3 million in 2009. The key products driving these exports were pharmaceuticals, industrial and electrical machinery, vehicles and scientific and precision instruments. The free trade agreement would eliminate current Panamanian tariffs on a variety of products that are of interest to Ontario exporters. For example, once in force, the agreement will eliminate current tariffs on pharmaceuticals of up to 11%. The agreement will also eliminate current tariffs on industrial and construction machinery of up to 15%.

As everyone in the House knows, these difficult economic times have made our manufacturing sector vulnerable. This sector, in particular, needs new opportunities for growth and our government is acting by providing these opportunities through the Canada-Panama free trade agreement.

Canadian exports, particularly goods, are already at a disadvantage when compared to many of our main competitors. If we delay the passing of this agreement, like the NDP and the Bloc Québécois would want us to do, we risk seeing Canadian exporters and investors further disadvantaged in Panama. We would be setting our companies up to compete on an uneven playing field in a market where we see economic potential.

The Canada-Panama free trade agreement would also benefit Canadian businesses in the western region of our country. In 2009, total merchandise exports from western Canada amounted to $22 million.

In Manitoba, producers of precious stones and metals, as well as those of iron and steel, would benefit from the elimination of current Panamanian tariffs of up to 15% on their exports. Our agricultural producers in Saskatchewan would be able to export their pulses and cereals without facing tariffs of up to 15% and 40% respectively.

More broadly, Panama maintains tariffs averaging 13.4% on agricultural products with tariffs reaching peaks as high as 260% on some of those products. This agreement would eliminate tariffs on 94% of agricultural exports from Canada to Panama.

The power-generating machinery and information and communication technology sectors in Alberta would benefit from the elimination of Panamanian tariffs of up to 15% on their exports to that market.

In British Columbia, exporters of fats and oils would see the elimination of Panamanian tariffs of up to 30%, while wood producing exporters would be able to export their product to Panama without facing tariffs of up to 15%.

Closer to home, in Atlantic Canada, we would also benefit from the Canada-Panama free trade agreement. In New Brunswick, producers of frozen french fries would no longer be faced with Panamanian tariffs of up to 20%. Paper and paperboard producers would see the elimination of tariffs of up to 15%.

Nova Scotia exporters of Christmas trees would be able to have their products enter the Panamanian market without tariffs of 15%. Vehicles and parts exporters from the province would also benefit from the elimination of current Panamanian tariffs of up to 20% on their products.

I want to raise one more point before I conclude my speech. I am sure everyone in the House read the Edmonton Journal this morning and Paul Vieira's article out of the Financial Post that was in there. He states, which is worth repeating:

It's easy to brush off or ignore the federal government's attempt to play up the virtues of its recently negotiated free-trade deal with Panama. The country has a GDP of $28.2-billion, which pales in comparison with Canada's $1.5 -trillion economy, and exports to Panama were a rather meagre $91-million last year.

If that is all that people can see in this agreement, then it all stops there. We need to look to the future, and not just for the future of Canada but also for the future of Panama.

Rather than focus on the country's size, we should focus on the crucial piece of infrastructure in that Central American country, the Panama Canal. Experts tout that the super tankers coming from China will need to pass through a bigger and refurbished canal set to open in 2014 to drop off goods to the U.S. ports and the Canadian ports in the Gulf and Atlantic coasts.

The way Asian trade has been growing and will resume growing once we get a recovery with momentum, it will overwhelm existing Pacific ports. Panama is the key country in the trading block known as the Central American and Caribbean region, or the CAC. This part of the world is small but its economies are indeed growing and are expected to advance at a slighter faster pace than many of the advanced economies in the years ahead.

There are advantages for Canadian companies in this region, as the companies are relatively easy to get to. They are in the same time zone. At least, when it comes to most of the Caribbean, language is not a barrier as English is widely spoken or understood, as well as French, leading some companies to eye the area as possible locations for call centres or other back-office operations. Canadian banks have invested heavily in the Caribbean. Mining companies are also active in the region.

Why would we not want to increase trade with Panama? Why would we not want to put rules-based trading in place where we already have trading? Why would we not want to strengthen our trading agreement with Panama with the inclusion of an agreement on labour and the inclusion of an agreement on the environment? Why would we not want to see life for Panamanians improve?

I, for the life of me, cannot understand the opposition to this deal.

Finally, it has been a pleasure to speak to this bill and I move:

That this question be now put.

Canada-Panama Free Trade Act
Government Orders

10:15 a.m.

Liberal

The Speaker Peter Milliken

The motion is in order.

Questions and comments on the speech, the hon. member for Halifax West.

Canada-Panama Free Trade Act
Government Orders

10:15 a.m.

Liberal

Geoff Regan Halifax West, NS

Mr. Speaker, at the beginning of his speech, my hon. colleague from South Shore--St. Margaret's spoke about the long trading history our province of Nova Scotia has had the Caribbean region.

I think of the Caribbean region as a little more than Central America as the history of trade because we think of the many years over which Nova Scotia would ship fish to the Caribbean and then the ships would not come back empty. They would come back with things like molasses and sometimes some other liquid products from sugar cane that were well known and a source of considerable wealth in his part of Nova Scotia and other parts of Nova Scotia. Particularly during the time of prohibition in the U.S., the region was known for the movement of some considerable quantity of rum.

What does the member see in this agreement in terms of benefits for businesses in Nova Scotia and their workers but also in terms of the benefits for people in Panama.

Canada-Panama Free Trade Act
Government Orders

10:15 a.m.

Conservative

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

Mr. Speaker, it is certainly true, particularly in the coastal areas of the riding that I represent, that there was a lot of trade and there still is ongoing trade with the Caribbean and Central America. One of the main products that was shipped down to Central America was fish. However, interestingly enough, a lot of dynamite out of the Dynamite Wharf on Mahone Bay Islands was shipped down. A lot of the schooners coming out of LaHave shipped a lot of fish and dynamite down there and absolutely brought rum back. It was a great commodity with a great marketplace in Atlantic Canada.

Based on that history, we can see the advantages for Panama, for Canada and particularly for the east coast today.

I will go back to my original statement. Panama is an area that is growing and it is looking for partners throughout the world. We will see the twinning and the opening of the second Panama Canal in 2014. The infrastructure development that is going on there today is tremendous. There are opportunities there now for Canadian companies and businesses, including east coast companies. We have the ability to provide logistical support when the traffic moving through the Panama Canal increases by about 30%. This is a part of the world that is growing already by 3% to 4% and we expect will grow by much more than that when the economy starts to improve. It is also a part of the world, as I mentioned before, that is not only in our same time zone and has the ability to dialogue with Canadian companies in English and in French, but it is also a part of the world in which we should be interested. We should want Panama, the rest of Central America and the Caribbean countries that need opportunity. They have a growing population and we want them to do well, and they will do well, especially if we reinforce the trading opportunities that we already have with them.

It is not as if we are not trading with Panama now. We will continue to trade with Panama. To have rules based trading only strengthens those trading opportunities for Panamanians and for Canadians.

Canada-Panama Free Trade Act
Government Orders

10:15 a.m.

Bloc

Mario Laframboise Argenteuil—Papineau—Mirabel, QC

Mr. Speaker, I hope the hon. member is aware that the Bloc Québécois' position has always been clear: Panama is a country on the OECD grey list of tax havens. Before the treaty is ratified, we would like the government to sign a tax information exchange agreement banning income tax exemptions for subsidiaries created by Canadian companies in that country. I want the Parliamentary Secretary to the Minister of International Trade to get the message that the Bloc Québécois will never promote setting up Canadian subsidiaries in tax havens. I hope he will support the Bloc's request.

Canada-Panama Free Trade Act
Government Orders

10:20 a.m.

Conservative

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

Mr. Speaker, the question goes back to my original statement that rules-based trading can only improve the situation that already exists for trade between Canada and Panama. However, we should be clear that the Minister of Finance has already written to his counterpart in Panama, asking that it undertake its obligations. The government of Panama has made a commitment to undertake obligations for tax information sharing with the OECD. That should answer the hon. member's question.

Canada-Panama Free Trade Act
Government Orders

10:20 a.m.

Liberal

Navdeep Bains Mississauga—Brampton South, ON

Mr. Speaker, I am happy to have the opportunity today to speak to Bill C-46, An Act to implement the Free Trade Agreement between Canada and the Republic of Panama, the Agreement on the Environment between Canada and the Republic of Panama and the Agreement on Labour Cooperation between Canada and the Republic of Panama. I will allude to those agreements as well with respect to the environment and labour co-operation. We definitely need to have a holistic approach when we talk about trade.

The Liberal Party supports sending the bill to the trade committee for further study. The Liberal Party, as the party of free trade, has always promoted efforts to expand the access of Canadian companies to foreign markets. We understand the importance of allowing companies to succeed not only domestically, but abroad as well. After all, we are a trading nation and 80% of our economy depends on exports. Therefore, we must always look for new opportunities to break down barriers and bolster trade.

Ideally, we would like to see Canada open up markets on a multilateral basis. It is important that we recognize we can do much better if we have a multilateral approach. However, with the Doha Round negotiations of the World Trade Organization currently stalled, that means Canada has to focus on bilateral agreements, and that is understandable. The agreement with Panama is one of those agreements that should be pursued. It will provide access to a small but very important Panamanian market.

I have a few key statistics to set the context when I talk about market size. First, Panama has a population of 3.5 million, but, more important, it also has a GDP of $26.2 billion and it is growing. There is some economic growth there as well. Last year we exported over $90 million to Panama and imported $40 million, with a total bilateral trade of $132 million. There is definitely some potential there.

However, the current expansion of the Panama Canal is where there are real opportunities for Canadian companies. Construction, environmental engineering and construction firms will have the opportunity to hopefully gain access to that major initiative.

In 2008, I had the distinct pleasure, along with my colleagues from the trade committee, to travel to Panama to see the canal first-hand. I had the opportunity to look at Panama as a possible jurisdiction for free trade and to pursue a free trade agreement with it. I saw the canal, which carries such a large portion of the world's trade, and marvelled at the engineering that allowed for its creation. I also saw the dynamic and modern city of Panama, which is a business hub for that region. The message conveyed to us was that Panama was stable. It is a modern country that has made significant progress in terms of development and democracy over the years.

Panama has also taken tremendous pride in reclaiming the canal from American control back in 1999. The canal's ambitious expansion is part of a sense of ownership and the understanding that the canal is key to the country's future prosperity.

However, there are some concerns I want to raise with respect to this debate. It is good that we are pursuing this free trade agreement, but it has very minimal impact in the context of our overall trade. While our competitors, other countries, other jurisdictions are pursuing aggressively courting other major developing economies like China and India, Canada is lagging far behind. I believe we are going about this in the wrong way in how we pursue our trade policy.

Canada should be focusing its trade agenda on larger growing markets like Brazil, India, China and Russia, where there are more opportunities for Canadian companies. By focusing on large markets, we can set the template that can be easily transferred to small markets, thereby speeding up the overall negotiation process.

To that effect, the Liberal Party recently presented, as part of our platform and as part of our international outlook, a global networks strategy, which really articulated a trade policy agenda going forward. That would work as a means to generate economic opportunities with the countries I alluded to before, the emerging major powers.

This proposed agreement would provide an opportunity to look at areas of trade and investment, financial services, transportation, higher education, research and development, energy, natural resources and a whole range of areas. I wanted to take this opportunity during the debate in the House to mention this because it is so important that we do this.

It is important for us to look at trade as a means to gain access to markets. This is the first time in over 30 years that we have had trade deficits, something which has alarmed many businesses. Small and medium-sized enterprises in my riding have had to close their doors because of lack of opportunities, not only in the domestic market but in the foreign market as well.

Panama is a first good step, but the real opportunities are in countries like China, Indian and Brazil.

Going back to the comment I made earlier, with respect to having a holistic approach when it comes to free trade. I mentioned that the agreements on the environment and labour co-operation were very important. We also need to talk about this when it comes to trade.

As Canadians, we value market access and market fair play. We want to reduce tariffs. We want to promote economic opportunity. However, we have a responsibility that goes beyond that, too. We have a responsibility, as global citizens, to invest and ensure that we hold ourselves and our trading partners to the best possible environmental standards, that we take this opportunity to talk about labour co-operation and labour standards and ensure that countries comply with international standards. We also have a responsibility to address issues of human rights.

The Liberal Party has always talked about this kind of approach. We have not only talked about free trade but fair trade as well. We have also very much promoted the importance of the environment and labour. It is something we have discussed with regard to many trade agreements and it is important we do not miss the opportunity in this debate.

Tremendous progress has been made in Panama. I saw it first hand. However, I believe we can continue to improve the situation there and also create a framework of going forward for other free trade agreements as well.

As I indicated, in terms of investment abroad, it is not only important to simply to have a free trade agreement with Panama. It is also important that we invest in the trade commissions and foreign embassies abroad that provide support to businesses.

There are many examples in my riding of businesses, particularly the small and medium-sized enterprises. Larger corporations tend to have that infrastructure in place. The small and medium-sized enterprises are looking for opportunities. Not only do they need market access, but they need the market intelligence, the data, the relevant information to better understand the market so they can better position themselves.

I would encourage the government, when it does invest or does pursue these free trade agreements, to also look at areas and means as to how we can really bolster our foreign embassies and trades abroad because it is so important.

Above and beyond pursuing a global network strategy in terms of free trade agreements and investing in foreign trade commissions, we also need to start putting together Team Canada missions. The Liberals pursued this very aggressively in the 1990s. It was an opportunity for us to really brand Canada. I realized this as a result of my travels abroad, even when I was in Panama, Colombia and other jurisdictions. It is very difficult to talk about free trade because some of the perceptions and stereotypes that exist do not necessarily reflect the economic reality and potential of Canada.

It is important that we brand Canada. It is important that we work together, all parliamentarians, in travelling abroad with business leaders and leaders from all sectors of the Canadian economy to brand Canada and to show that we have enormous potential. It would give us the leverage needed to ensure we could successfully pursue other bilateral trade agreements. This would be a step in the right direction. However, we need to ensure that we also pursue some of those key markets, as indicated, which are very important to our businesses, as well.

I would like to take this opportunity again to say that the Liberal Party looks forward to this debate and discussion. We would like to take this into committee, study it, bring forward witnesses, talk about issues that have been raised in the House and ensure that we promote trade in a manner that really benefits the economy as a whole. However, I would like to, from a local perspective, from my constituency of Mississauga—Brampton South, take the opportunity to emphasize the importance of focusing our resources and our strategies around promoting small and medium-sized enterprises and giving them the tools they need to succeed not only domestically, but abroad as well.

There is enormous potential with Panama because of the expansion of the canal. I am confident the Canadian companies that have expertise in engineering and infrastructure would ensure we could meet the requirements of Panama. We will be able to pursue that after we push forward this free trade agreement. This is really encouraging because a lot of companies in my riding and across the country would benefit from that. I hope all parliamentarians take it under consideration as part of our economic recovery going forward.

Canada-Panama Free Trade Act
Government Orders

10:30 a.m.

NDP

Peter Julian Burnaby—New Westminster, BC

Mr. Speaker, I listened with great interest to my colleague. We lament the fact that he is no longer the trade critic for the Liberal Party. The one time, since I have been in Parliament, where the Liberal Party did not act as a sock puppet to the Conservative trade deals, regardless of how bad they were, was when he was trade critic. He came back from Colombia and stood with the New Democrats and the Bloc and said no to the Colombia trade deal. That was a proud moment for the Liberal Party. It was the last time that it took any principled position at all on trade and it was under his leadership as trade critic.

As the member well knows, the biggest problem with the Panama trade deal, and the elephant in the room, is the dirty drug money laundering that takes place in Panama. It is tied for worst in the world, according to the IRS, for drug gang, dirty money laundering. It is a tax haven. It is a fiscal paradise.

The Hells Angels are listening to the debate and saying, “Great, the Conservatives are helping us yet again by bringing absolutely no regulation on dirty money laundering in Panama”. We had the parliamentary secretary saying that the government would send a letter and ask the Panamanians to stop the dirty drug money laundering. The member knows that this is a crock. It is ridiculous.

Given that there is nothing that deals with dirty drug money laundering, with the Hells Angels use of Panama as a tax haven, why is the Liberal Party supporting a deal that so clearly goes against the interests of Canadians, against our Canadian police officers who are trying to fight dirty drug money laundering? Why is the Liberal Party capitulating yet again to the Conservatives on a trade issue?

Canada-Panama Free Trade Act
Government Orders

10:30 a.m.

Liberal

Navdeep Bains Mississauga—Brampton South, ON

Mr. Speaker, I take exception to the comment made about the current trade critic. The member for Willowdale has done an exceptional job for the Liberal Party, for our caucus and for her constituents in representing trade issues. She very much promotes free and fair trade. She is very much concerned about human rights and so is the Liberal Party.

When it came to the free trade agreement with Colombia, we worked very hard in committee to raise legitimate issues with respect to free trade. We worked very hard with the then trade critic as well to ensure we had a side agreement to address those issues. This party is not only committed to free and fair trade, but also to human rights. I am confident that our member for Willowdale will address these concerns if the bill is sent to committee.

With respect to the question around money laundering, again this has been raised on numerous occasions. If this is a legitimate concern, then I legitimately believe that this can be addressed during the committee hearings. I am confident that we can find a solution to deal with this issue, if it does exist to the extent that the member describes it.

This is an opportunity for all of us to come together and find a solution. As I said before, it is absolutely critical that we pursue free trade agreements. It is unfortunate that any time we talk about free trade, the NDP finds some excuse to oppose it. It is frustrating because we need to find opportunities for companies, especially in foreign markets, to expand, grow and create the jobs that we need, so we can have a quality of life not only for ourselves but for future generations as well.

Canada-Panama Free Trade Act
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10:30 a.m.

Bloc

Mario Laframboise Argenteuil—Papineau—Mirabel, QC

Mr. Speaker, first, I want my Liberal colleague to be well aware that the Liberal Party's current position is in line with the position it has taken in the past. When Paul Martin was prime minister and Liberal leader, he signed a tax treaty with Barbados that did not include an information exchange agreement. That encouraged Canadian companies to set up subsidiaries in order to evade Canadian income tax. I know that Paul Martin himself benefited from this.

Once again, is the member aware that this is the good old Liberal way: signing agreements with tax havens where friends of the party can set up subsidiaries and avoid declaring and paying tax on income, because they would be exempt from declaring it here in Canada?

Canada-Panama Free Trade Act
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10:35 a.m.

Liberal

Navdeep Bains Mississauga—Brampton South, ON

Mr. Speaker, I remind the member, when he asks his question, that referring to the integrity of the former prime minister is something I do not think is a proper assessment in this debate. When he pursued free trade agreements, he did so keeping in mind Canada's national interests, and that includes Quebeckers as well.

The businesses that had opportunities to succeed in these free trade agreements not only existed in other parts of the country but in Quebec as well. Quebec companies very much rely upon free trade agreements and opportunities abroad with respect to economic opportunities, for creating jobs and ensuring they have an opportunity to succeed and create a footprint that can really make Quebec and Canadians proud of the opportunities we have with free trade agreements.

As I indicated, any questions on money laundering or tax evasion will be addressed in the committee hearings. This is where some of the work will be done and it will allow us to have the opportunity to ensure we deal with it in a manner that is in our national interests.

Canada-Panama Free Trade Act
Government Orders

10:35 a.m.

Bloc

Mario Laframboise Argenteuil—Papineau—Mirabel, QC

Mr. Speaker, I am pleased to speak on behalf of the Bloc Québécois to Bill C-46, An Act to implement the Free Trade Agreement between Canada and the Republic of Panama.

This is important because we are talking about the position of the Conservatives and the Liberals. The people who are watching have seen what their position is. The main reason why the Bloc Québécois is opposed to this agreement and will not support it is that Panama is on the OECD grey list of tax havens.

I will read the four OECD criteria for determining whether a country is a tax haven: nil or nominal taxation; a lack of transparency; laws or administrative practices that prevent the effective exchange of information; and indications that the country is attempting to attract investments that are purely tax-driven and not for economic activity.

One way a country can deal with one of these criteria is to sign a tax information exchange agreement with other countries, and that is what the Bloc Québécois is calling for. The European Union and the United States are working to that end. They have shown that they want to sign a free trade agreement with Panama, but they are dragging their feet because, with the recent financial crisis, the leaders of those countries are very reluctant to develop trade with countries that promote tax evasion. That is a fact.

I understand that the Liberals support this agreement because, when they were in power, they led the way with this sort of agreement. None other than the Liberal leader, who was the prime minister of Canada at the time, promoted a free trade agreement with Barbados. His own companies benefited and got huge tax breaks. The problem is that, when we ratify an agreement with Panama, we will be telling Canadian companies that if they set up a subsidiary that has its own income in Panama, they will not have to declare that income here in Canada.

We do not want that. We do not want the government to encourage Canadian companies to evade taxes and use their income to create subsidiaries in Panama just so they can avoid declaring that income here in Canada. Why would they not do that if there were an agreement that let them do business with Panama? And to top it all off, it would be legal to create subsidiaries whose declared income would not come back to Canada.

What the Bloc Québécois is asking for is simple. We want a tax information exchange agreement, which is what the OECD calls for. Such an agreement must not exempt Canadian subsidiaries in Panama from income tax. This would be equitable and logical.

All the taxpayers here in Canada pay their taxes and work hard to pay those taxes. They are seeing their pension income decrease. It is happening, and the media are telling us that the main pension funds have a solvency ratio of 87%, which means they have a shortfall of 13%.

I think that the people of Quebec and Canada should expect the government not to sign trade or free trade agreements with countries that are on the OECD's list of tax havens. This is not Canada's list; it is the OECD's. In response to that, the Conservatives told us today, through the parliamentary secretary, that the Minister of Finance wrote a letter to the leaders of Panama. He told them that they must do what is necessary to be removed from the OECD's list of tax havens.

A lot of good that does to have the Minister of Finance write a letter. They will take that letter and file it away in the circular file. Thank you very much. Why? Simply because being a tax haven has its advantages. That is the reality. These countries have no intention of co-operating, and that is why Panama is on the OECD's grey list of tax havens. If Panama had wanted to co-operate in the past, if it had wanted to be respectful of other countries, it would not be on the grey list of tax havens.

Why does the government want to sign an agreement at any cost and as quickly as possible, if not to encourage Canadian businesses to set up subsidiaries there? Sure, they want to do business in Panama, but by setting up subsidiaries that will enable them to evade taxes on their revenues.

The Liberal member says that we can discuss this in committee, but a discussion will not work. Either we sign an information exchange agreement that prohibits tax evasion by Canadian companies or we do not sign the free trade agreement with Panama.

The Liberal Party and the Conservative Party want to sign the agreement anyway, without requiring a tax information exchange agreement and without requiring that Canadian companies not establish subsidiaries, whose revenue they would not have to declare in Canada. This inevitably encourages tax evasion. What will happen? The same thing that has happened over the past two months. At France's request, the HSBC Bank had to provide a list of clients with Swiss bank accounts, which included some Canadians. Canada did not care. In the past, the Liberals did not care, just as the Conservatives do not care now. France did care because the French people were tired of paying taxes while the rich evaded taxes.

Today, Canada has had to come around because we have a minority government. The Conservatives were afraid of paying the political price. Canadians on the list given to France are being asked to pay up. We know very well that tax evasion is a Criminal Code offence. However, the Conservative government has not indicated that people who evaded taxes will face criminal sanctions.

Today, the Conservative Party, supported by the Liberals, will sign a free trade agreement, supposedly for the sake of potential trade between Canada and Panama. By the way, Panama is a small country. That is not the issue. Yes, we can do business with Panama, just as we can with other countries. It is worthwhile. However, we cannot do business with a tax haven and legalize it in an agreement, in an international treaty, that would allow our Canadian and Quebec companies to create subsidiaries that would be exempt from paying tax on their Canadian revenue. We would be encouraging them to evade tax.

The Bloc Québécois stands up for all Quebeckers, not for the few rich people who might take the opportunity to establish subsidiaries in Panama and, with the free trade agreement, legalize the situation. That is what the Liberals did with Barbados when then prime minister, Paul Martin, had interests in that country. He signed a free trade agreement with Barbados to legalize his own personal business. The Conservatives are doing the same thing for some of their friends.

I find that sad. Quebeckers and Canadians work too hard in order to pay their taxes to then have a few rich and privileged people do business with a tax haven and establish subsidiaries that they would then be allowed to use to hide revenues that should be declared in Canada and therefore taxed in Canada. It is simple: when a subsidiary is established in a tax haven, which, as the OECD explains, imposes no or only nominal taxes, the company pays no tax on business done with that country. In this case, the country we are talking about is Panama. And the company would be crazy not to do this, because the Conservative Party, with support from the Liberals, would ratify this agreement without requiring a tax information exchange agreement, which the Bloc Québécois and the OECD are calling for, and without requiring that tax-exempt revenues be covered by this agreement. A company that establishes a subsidiary in Panama would then be subject to Canadian laws and tax rates, not Panamanian tax rates. This would be a good way for Canadians and Quebeckers to do business.

This would also be a good way for the public to know that everyone doing business with Panama is paying their fair share of taxes, just like the citizens. Once again, the Conservatives are succumbing to the Liberal phobia of allowing the rich to avoid paying taxes.

Canada-Panama Free Trade Act
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10:45 a.m.

Liberal

Paul Szabo Mississauga South, ON

Mr. Speaker, the economic arguments for free trade agreements are very compelling on a number of points.

There are some side issues, and they are part of this debate. The United States signed an agreement with Panama three years ago, and the Panamanian Congress ratified it 13 days later. But here we are three years later and the U.S. Congress has still not ratified the Panamanian agreement.

Is the member aware of the reasons that the Americans have not proceeded with ratifying that agreement?

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10:45 a.m.

Bloc

Mario Laframboise Argenteuil—Papineau—Mirabel, QC

Mr. Speaker, at a time of financial crisis and stock market crisis, I can understand why the Americans do not want to sign or ratify any agreements with countries that are known tax havens.

I appreciate my colleague's question. Of course he was on the Liberals' side back when he was defending the treaty with Barbados, which is also a tax haven. I am very disappointed that the Liberals are siding with the Conservatives and have not examined their consciences regarding some of the bad decisions they made when they were in power. Once again, the Liberals are not offering any change. It is not surprising that they are having such a hard time these days, and it will only get worse in the weeks and months to come.