House of Commons Hansard #65 of the 41st Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was panama.

Topics

Canada-Panama Economic Growth and Prosperity Act
Government Orders

December 12th, 2011 / noon

Conservative

Canada-Panama Economic Growth and Prosperity Act
Government Orders

Noon

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 rise in the House today to speak to the Canada-Panama economic growth and prosperity act. I was worried that I would not get here on time; my plane was delayed.

This is an important piece of legislation, as we can tell from the opposition benches. There is a lot of interest in it and we certainly encourage and look forward to the support of the opposition on this important bill.

Our government is committed to protecting and strengthening the financial security of hard-working Canadians. Our focus continues to be the economy, creating jobs and economic growth to benefit Canadian workers and their families. That is why we are continuing to deliver our job-creating pro-trade plan. The Canada-Panama economic growth and prosperity act is a key part of this plan.

We Conservatives understand, as do hard-working Canadians, that trade is a kitchen table issue. By that I mean that Canadians intuitively understand that trade is the key to their financial success. One in five Canadian jobs and over 60% of our annual GDP is generated by trade. Trade is a matter of fundamental importance to workers, as it helps put food on the table and helps families make ends meet.

In the past few months we have seen a vivid reminder to all of us that the world economy remains in the grip of a global economic crisis. The fragility of global markets has emphasized the importance and urgency of continuing to diversify our trade relationships and expanding our exports with emerging market economies like Panama.

These are challenging economic times. Problems in the global economic situation continue to persist. That is why our government is taking action today to create jobs and help our businesses and their workers succeed in the years ahead. That includes our ambitious pro-trade plan to help businesses expand their presence around the world.

In these tough economic times, Canadians expect their government to do everything it can to enhance the ability of Canadian firms to participate in global markets and to create an advantage for Canadian businesses. That is why our government took action on our budget 2010 commitment to make Canada a tariff-free zone for industrial manufacturers.

Eliminating tariffs on goods used in manufacturing helps Canadian companies lower their production costs and increase their competitiveness. This contributes to a stronger economy, creates jobs and growth here at home, and reinforces our G20 leadership in the fight against protectionism.

It is actions such as this that demonstrate our government's clear understanding that there is a link between open markets and free trade and jobs and the quality of life here in Canada. We know that when Canadian companies succeed, Canadian workers succeed.

Free trade agreements help small and large businesses. In fact, small businesses in particular are responsible for 43% of all Canadian exports. This free trade agreement would help small business exporters do what they do best: create jobs and wealth for this country.

With this legislation we are one step closer to giving Canadian businesses the access they need in Panama. By improving access to foreign markets for Canadian businesses, we are supporting the Canadian recovery and creating new jobs for Canadian workers.

In the midst of the global downturn, this government has demonstrated its commitment to seek out more trade and investment opportunity for our businesses.

Through the Canada-Panama economic growth and prosperity act, Canada is also sending a strong message to the world. Canada will not resort to protectionist measures and will continue to fight for an open rules-based system.

As a trading nation, Canadian workers, companies, producers and investors need access to the international marketplace to stay competitive. Canada is an export-driven economy, and pursuing bilateral and regional trade agreements is essential to bringing continued job prosperity and economic growth to Canadians. That is why our government has established an ambitious pro-trade plan.

A free trade agreement with Panama is also a part of our government's efforts to strengthen Canada's engagement in the Americas. Panama occupies a unique and influential position in the global trading system, thanks to the Panama Canal. This vital gateway is currently being twinned. Our government recognizes that Canadian firms are well placed to help. It should be noted that when the twinning of the Panama Canal is finished, it will carry approximately 5% of the entire trade on the planet. That is an opportunity Canada cannot turn its back on.

The Canada-Panama economic growth and prosperity act would generate increased export and investment opportunities for Canadians by creating a preferential and more predictable trade and investment environment.

For example, for exporters of Canadian goods, Panamanian tariffs on over 90% of Canadian goods exported to that country would be eliminated upon entry into force of the free trade agreement. Most remaining tariffs would be eliminated over a period of between five to fifteen years.

For Canadian service providers, the free trade agreement would help expand market access opportunities in areas such as information and communications technology, energy and financial services.

This agreement would benefit workers in every region of this country.

For example, Quebec would benefit from the elimination of Panamanian tariffs on key exports, such as machinery, vehicles, pork products, pharmaceuticals and aerospace products.

Investment and services provisions would benefit the engineering, construction and transportation sectors.

Ontario would benefit from the elimination of Panamanian tariffs on key exports, such as pharmaceuticals, machinery, information and communications technology products, and electrical and electronic equipment.

Financial services provisions would benefit Canadian banks and financial service providers operating in Panama.

Western provinces would benefit from the elimination of Panamanian tariffs on key export interests, such as fats and oils, processed food, pork, information and communications technology products, pulses and cereals.

The Atlantic provinces would benefit from the elimination of Panamanian tariffs on key export interests such as frozen potato products, trees and plants, fish and seafood, and forestry products.

For Canadians looking to invest in Panama, the free trade agreement includes a chapter of comprehensive rules governing investment. The rules provide greater protections and predictability for Canadian investors and their investments in Panama.

The free trade agreement also provides Canadian exporters of goods and services greater market access to Panama's government procurement opportunities, including those related to the Panama Canal expansion and other infrastructure projects. It is clear that this agreement would benefit Canadian workers and their families.

I am also pleased to report that in July 2011 the OECD formally placed Panama on its list of jurisdictions that have substantially implemented the international standard for exchange of tax information, commonly known as the white list. This is an extremely important achievement. It demonstrates Panama's commitment to combat international tax evasion. I trust it will appease concerns regarding taxation.

Panama is committed to the implementation of this free trade agreement and has already completed its domestic ratification process.

Canada is not the only country with whom Panama has negotiated a free trade agreement. Panama is deepening its regional economic partnerships and is expanding its global reach through the negotiation of trade agreements with countries such as the United States and the European Union.

As members of Parliament may be aware, the United States Congress approved the United States-Panama trade promotion agreement on October 12, 2011. This agreement, which could enter into force as early as 2012, would provide American firms with preferential access to the Panamanian market. Many Canadian goods and services compete directly with those of the United States in Panama. Canadian products would be at a significant competitive disadvantage if they continued to face duties while products from the United States enjoyed duty free access.

We cannot stand by and let Canadian companies compete on an uneven playing field. We must act quickly to ensure our businesses and workers can compete and remain competitive in the Panamanian market and reap the substantial benefits of this trade agreement.

I think all Canadians should be proud of this agreement. This treaty is a high-quality comprehensive agreement that would be beneficial for Canadian workers and their families. As I mentioned before, a free trade agreement with Panama would give Canadian exporters, investors and service providers preferential access to a dynamic up and coming economy. Two-way merchandise trade between Canada and Panama reached $213.7 million in 2010. As these figures demonstrate, Canadian exporters have been very active in the Panamanian market but there remains significant untapped potential.

Once the new agreement is in place, Canadian businesses will benefit from lower tariffs. This agreement would eliminate tariffs on 99.9% of recent non-agricultural imports from Canada with the remaining tariffs to be phased out over five to fifteen years. Tariffs would also be lifted immediately on 94% of Canada's agricultural exports to Panama. Panama currently maintains tariffs averaging 13.4% on agricultural products, with tariffs reaching peaks as high as 260%. This significant reduction in trade barriers would directly benefit a number of sectors that already have established business ties in Panama, including agriculture and agrifood products, pharmaceuticals, pulp and paper, vehicles, machinery and information and communications technology products among others. By eliminating tariffs on these goods and many others, Canadian exporters and producers would become more competitive against competitors from other countries such as the United States, the European Union, Chile and Singapore which already have or are seeking preferential access to the Panamanian market.

This agreement would also help Canadian businesses take advantage of the new investment opportunities in the Panamanian market. Panama is an established and growing destination for Canadian direct investment abroad, particularly in areas such as construction, mining, and banking and financial services. The stock of Canadian investment in Panama is expected to grow in the years ahead. It reached $121 million in 2010, in part due to the many infrastructure projects planned by the Panamanian government and the private sector. Once this agreement is implemented, Canadian investors will enjoy greater stability, transparency and protection for their investments.

The agreement would also ensure the free transfer of capital related to investment protection against expropriation without adequate and prompt compensation and non-discriminatory treatment of Canadian investments. Under this free trade agreement, all forms of investment would be protected, including enterprises, debt, concessions and similar contracts. These reciprocal commitments would serve to promote bilateral investment flow which is crucial to linking Canada to global value chains.

Among the most important benefits of this agreement would be the increased ability of Canadian companies to participate in large-scale infrastructure projects funded by the Panamanian government. Indeed, with the Panamanian government investing heavily in its country's growth and strategic importance, government procurement opportunities were a key driver for the negotiation of a free trade agreement with Panama.

As a case in point, Panama is currently undergoing a $5.3 billion expansion of the Panama Canal. This expansion, which began in 2007, is scheduled to be completed by 2014 which will mark the 100th anniversary of the canal. It should be obvious that activities related to the ongoing expansion of the Panama Canal provide many opportunities for Canadian companies. Canadian companies in the areas of environmental technology, capital projects, human capital development, construction materials and marine technology stand to benefit greatly from this ambitious project.

However, this is not the only opportunity for Canadian businesses. Just last year, the Government of Panama laid out a five-year strategic plan in which it plans to spend $13.6 billion on the country's infrastructure. Under this plan, $9.6 billion would be allocated to infrastructure investments and other economic programs designed to stimulate further growth.

Some examples of projects the government is looking to undertake include airport construction, expansions and upgrades, a new convention centre, a new water treatment plant, power generation projects, agriculture irrigation systems, and a $1.5 billion metro system. These are areas where Canadian businesses possess the necessary experience and expertise to successfully bid on these projects. With the passage of this agreement, Canadian workers and businesses will be able to capitalize on these opportunities.

I am pleased to say that the Canada-Panama free trade agreement includes strong government procurement provisions that guarantee Canadian suppliers will have non-discriminatory access to a broad range of procurement opportunities, including those under the Panama Canal authority. This means that Canadian workers and companies, wanting to bid on a government procurement contract for goods and or services, will receive the same treatment as Panamanian firms. It is thus important that Parliament acts fast and enables Canadians to take advantage of these opportunities right away.

Canadian services providers and their workers also stand to benefit considerably from the Canada-Panama free trade agreement. On services, this agreement will provide a transparent, predictable and rules-based trading system to Canadian services providers, while ensuring they are treated equitably with Panamanian companies.

Canada negotiated enhanced market access opportunities that would go well beyond Panama's World Trade Organization General Agreement on Trade and Services commitments in services sectors of key interest to Canada. This means that Canadian providers in such areas as professional services, engineering, mining, construction and environmental services will have preferential access to Panama's market.

This agreement would provide a great opportunity to take our current bilateral trade and services to a new level in the years ahead. As we can see, the Canada-Panama free trade agreement is a comprehensive agreement covering everything from market access for goods to cross-border trade and services to investment and government procurement. It would provide rules to assist Canadian businesses doing business in Panama and would deepen our commercial engagement with a strategic partner.

Canadians understand that international trade is the lifeblood of our economy. Canadians value the real and tangible benefits that trade brings to our country. That is why they have entrusted this government with a mandate to focus on economic growth by forging new trade opportunities around the world.

It should not come as a surprise therefore that Canadian businesses have been strongly advocating in favour of this agreement. Let us listen to what Jason Myers, from the Canadian Manufacturers and Exporters, said about this agreement's potential to improve market access. He said it:

—will improve access to two growth markets for Canadian goods, services and investment at a time when Canadian manufacturers and exporters are focusing on finding new customers and business opportunities around the world.

Closer economic integration with Panama promises to deliver further gains for Canadian exporters, investors, consumers and the economy as a whole.

At a time when Canadian businesses are faced with the challenges of the global economic slow down, the quick implementation of the Canada-Panama free trade agreement is of tremendous importance to our economy.

I reach out to opposition colleagues in the House and I would ask them to support this agreement. This is an important agreement, not just for the Government of Canada, but for the country as a whole. Certainly, our government is focused on broadening and deepening our trading relationship, as it protects and creates jobs and economic growth for Canadian workers and their families.

I have some advice for my opposition colleagues. There are a number of special interest groups that continue to push their job-killing anti-trade agenda and they will continually invent any reason to oppose trade. I ask the NDP members, in particular, to stand strong against those groups, to be reasonable in their position on this important agreement for Canadian workers and to help us support the quick implementation and passage of the bill through the House.

This is important legislation. It means jobs in every part of the country from coast to coast to coast and where there are jobs, there are opportunities.

It has been pleasure to speak to the bill. As members know, this is the same bill we introduced in the last Parliament. During the 40th Parliament, the legislation was debated for 15 days and almost 30 hours. I think the debate is over. It is time to get this through the House.

Canada-Panama Economic Growth and Prosperity Act
Government Orders

12:20 p.m.

NDP

Mathieu Ravignat Pontiac, QC

Mr. Speaker, it is interesting that the member finished his comments on the supposed position of the opposition.

We have to be careful with the speed at which these trade deals go forward and also the blind faith that the Conservative government has that any trade deal has to be a good trade deal. With Panama, there are some significant issues.

My hon. colleague mentioned how investment would be protected in this trade deal, but that may be a problem. We know that Panama has various tax havens, particularly for drug money. One of the most important parts of its investment economy is laundering drug money.

What does my hon. colleague have to say about protecting Canadians from drug cartels?

Canada-Panama Economic Growth and Prosperity Act
Government Orders

12:20 p.m.

Conservative

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

Mr. Speaker, earlier I asked the NDP members to support the quick implementation of the bill. I will ask them again and stress the importance of it.

We have to look at Panama's record. Panama was on the grey list for many years for money laundering, but it is no longer on it. It is now on the white list. The OECD group decides that, not an individual country. Panama has come light years from where it was only a very short time ago.

As for the NDP position on supporting free trade agreements, I would ask those members to look at their own record. It is a dismal zero. NDP members have never supported a free trade agreement.

I will quote the member for Hamilton Mountain, who, at second reading of the Panama free trade agreement, stated the NDP's position quite clearly. She said, “this is not a trade agreement that I can support”. However, she should have added that there was no trade agreement she could support. That is the NDP position.

Canada-Panama Economic Growth and Prosperity Act
Government Orders

12:20 p.m.

Liberal

Wayne Easter Malpeque, PE

Mr. Speaker, the parliamentary secretary is correct. The bill was debated for a considerable length of time during the last session and there were quite a number of questions raised. My NDP colleague, who just spoke, raised a couple of those serious concerns that were raised in the last Parliament and I would hope the parliamentary secretary could give us some answers in that area.

There is no question that we will be supporting the bill going to committee, but there is a serious issue around tax havens and money laundering, especially of drug money. The U.S. Congress has spelled out some serious concerns about the money laundering and on Panama not being committed to the kind of commitments that should be made in terms of ridding the country of the money laundering possibility.

Does the parliamentary secretary have any answers on those two critical areas before this goes to committee?

Canada-Panama Economic Growth and Prosperity Act
Government Orders

12:20 p.m.

Conservative

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

Mr. Speaker, first, I welcome the comments from the hon. member for Malpeque that the Liberals will support the bill going to committee. It is beneficial to the Canadian economy that we get this agreement through the House and to committee as quickly as possible.

To answer his second point, as I answered the hon. member from the NDP, the OECD has taken Panama off the grey list and put it on the white list. This signifies that Panama's money laundering difficulty, one it had for many years, is being worked on. There are terrific improvements being made by the Panamanian government when it comes to money laundering.

The other thing that should be noted from the hon. member's statement is that the U.S. has signed a free trade agreement with Panama. The European Union is in the process of doing so. Obviously they have satisfied any concerns they had as to money laundering. I see no reason why we should not be satisfied with the advancement that Panama has made in that area.

Canada-Panama Economic Growth and Prosperity Act
Government Orders

12:25 p.m.

Conservative

Ed Holder London West, ON

Mr. Speaker, I have been privileged to be part of the international trade committee since being elected by the great constituents of London West. In that time we have had an aggressive approach toward free trade agreements throughout the world. Panama is particularly important in a lot of ways.

The issue that comes up in every free trade deal is agriculture. Colleagues from all sides of the House have just come back from Europe where we talked to the Europeans with respect to that.

Knowing the importance of agriculture as it relates to this free trade deal and what it would mean from a tariff standpoint, could the parliamentary secretary please explain to the House why the issue of tariff-free products, particularly as it relates to agriculture, means so much to Canada and to the agricultural community in our country?

Canada-Panama Economic Growth and Prosperity Act
Government Orders

12:25 p.m.

Conservative

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

I can break it down quite simply, Mr. Speaker. There would be an immediate gain. There are average tariffs on agricultural products of 13.5%, which goes much higher on certain individual items. A number of agricultural products will now come in tariff free, or basically tariff free, including everything from oilseeds and pulses to frozen potato products, which come from the riding of the hon. member for Malpeque, to fish, beef and pork. All of these products will have improved access to the Panamanian market.

The other thing that should not be missed is the fact that the Americans have signed a free trade agreement. They are our competition in North America and throughout much of the world when it comes to agriculture. For us to have an opportunity to have preferential access to agricultural products is an opportunity that our country cannot afford to miss.

Canada-Panama Economic Growth and Prosperity Act
Government Orders

12:25 p.m.

NDP

Robert Chisholm Dartmouth—Cole Harbour, NS

Mr. Speaker, I want to seek some further clarification on the issue of Panama being a tax haven.

The parliamentary secretary indicated that Panama had been taken off the grey list, but as recently as November 5, French President Sarkozy added Panama to a list of countries that he said remained tax havens and would be shunned by the international community.

Would the parliamentary secretary not agree that this casts some doubt on the government's contention that Panama has come a long way and that everything substantial has been done to deal with the issue of Panama being a serious tax haven and a problem in relation to trade?

Canada-Panama Economic Growth and Prosperity Act
Government Orders

12:25 p.m.

Conservative

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

Mr. Speaker, the hon. member for Dartmouth—Cole Harbour only has to go back and check the records. It was in July 2011 that the OECD formally placed Panama on its list of jurisdictions that had substantially implemented the international standards for exchange of tax information, commonly known as the white list. This important achievement demonstrates Panama's commitment to combatting international tax evasion and I trust it should appease most of the concerns of the opposition.

The question is not whether Panama is on the grey list or on the white list. Panama has moved forward. We can either accommodate that and congratulate and reward Panama on that, or we can punish Panama and put it back on the grey list.

With the twinning of the Panama Canal, in 2014 Panama will be about to carry 5% of the entire trade on the planet earth. Canada is in a terrific position and an advantageous position to participate in that. We would be foolhardy not to congratulate Panama on the steps forward it has made and not continue to broaden our trade with it and bring it further into the community of nations in the OECD.

Canada-Panama Economic Growth and Prosperity Act
Government Orders

12:30 p.m.

NDP

Brian Masse Windsor West, ON

Mr. Speaker, it is a pleasure to rise today to debate Bill C-24. I will build off of the last question to start with and then return to some comments later.

It is important to note that New Democrats are in favour of trade. There is no doubt about it. None of us are against the movement of goods and services, but what we prefer is some balance in our trade agreements. The constant theme of trade is that when we give something, we get something back. Under this administration and previous ones, Canada has slipped significantly. It has signed a series of bilateral agreements since NAFTA that have actually put us into a significant trade deficit, even with the United States. My community lost the Auto Pact in NAFTA, and subsequently and eventually our auto manufacturing has gone from number two in the world to number eight.

When we look at Bill C-24 and the repercussions it could create, there are significant aspects with the loss of trade. It does not automatically guarantee that we are going to be the winner in a trade deal. Often Canada's bilateral agreements have been with smaller nation states that have advantages through lax environmental, labour and regulatory systems that allow their products to come into our markets while it is difficult for our products to subsequently get into theirs.

There are also issues related to non-tariff barriers, which I will touch on briefly. One country that has not come forward is Korea. There are tariff barriers there, but there are also non-tariff barriers in the auto manufacturing sector. As a result, hundreds of thousands of vehicles flood into Canada every year, but we sell virtually no vehicles in Korea. That also happens even when we do not have trade agreements or there is no balance.

Another good example is Japan. I was told recently that the only Canadian vehicles sold in Japan were the ones sold to the Canadian embassy. It is a problem when hundreds of thousands of vehicles are pushed into our market and we do not have any reciprocity whatsoever.

The issue of Panama is interesting. It has been put on the white list. There is a blacklist, a grey list and a white list, and I will get into that a little later if I have time. The OECD categorized these lists, but there still is not an automatic assumption of all the characteristics of what a tax haven is. Second to that, there is still a process in place.

The NDP's former international trade critic, the member for Burnaby—New Westminster, was very serious in trying to create an agreement that could be worked out with the government to deal with serious tax haven issues with Panama, as well as labour issues and a number of different things. Unfortunately, the government has not agreed to include that as part of its process. It has not been willing to compromise to a certain degree to ensure that tax havens are going to be taken care of.

It is interesting because Panama has quite a significant history of money laundering and tax havens. It also has a history of flagging ships of convenience and basically throwing the seafarers out the window, so to speak, making them vulnerable for treatment that is not part of the conduct of an international agreement. Panama has used that as a way to supplement income and attract corporations for its net benefit at the expense of others.

Although Panama has been moved to this list, it does not mean that all the measures are being taken into account. It does not account for some of the internal taxation issues, or even the current issues that are taking place. Just because it is moved off a list does not necessarily merit having no checks and balances. New Democrats were proposing some checks and balances to the system. There is a big difference between that and just having a blind faith bilateral agreement and seeing what happens later. It just has not been working for Canada in this case, and has not been working in general.

New Democrats want more specifics built into the agreement with Panama, and we are willing to do that. This bill will go to committee, which needs to hear from some witnesses. I have some testimony that I will table here today, but there needs to be testimony from individuals to look at whether there is actual movement.

I know that the parliamentary secretary made a very important point about the Panama Canal opening up in 2014. It is very important. The Panama Canal is historic. My former legislative assistant, Mohummed Peer, actually did a documentary through PBS on the original Panama Canal. It is quite a significant achievement and a marvel in many respects.

The new Panama Canal will actually have 5% of the world trade going through it. I think that is part of the reason that there is a lot of pressure to move Panama onto the white list. I think that is one of the reasons there has been a lot of effort to move it along that way.

However, that does not mean that it has actually moved that way. We need to have some testimony or some checks and balances to ensure that it does.

The government claims it is tough on crime, but often it has been very lax when it comes to organized crime or tackling some of the difficult challenges with our trade partners that relate to crime and also relate to how things are affected on our streets. I would look at my riding of Windsor West, for example, where 40% of Canada's daily trade goes to the United States, basically, along two miles of the Detroit River. It crosses on four crossings: the hazardous materials truck ferry, the Ambassador Bridge, the CP Rail tunnel, and the Windsor-Detroit tunnel. We have two kilometres there.

Despite having 40% of that trade, recently the government has cut back on the customs facilities and branch there. Now decisions about stopping trucks and smugglers dealing in guns, drugs, and human trafficking are now made 400 kilometres away, in Niagara Falls. Despite having reports saying that there should have been a consolidation in Windsor, the government decided to move the headquarters and so forth to Niagara Falls. My point is that cuts have been made, ideological cuts, and that has actually opened up our exposure to these elements.

With regard to Bill C-24, my worry is that we do not have any of the important backstops that are necessary to look at the tax havens. I want to touch on the issue of the OECD here, because it is important that people understand that there is a blacklist that includes countries that do not live up to any expectations or standards. There are really no countries left on the blacklist that I am aware of. The grey list includes a number of countries that a do not follow some tax standards. Then there is the white list, to which Panama has been added. It has been moved to it recently, so that is a benefit.

However, at the same time, we still do not have the necessary backstops that the member for Burnaby—New Westminster proposed. One of his amendments, which was defeated by both the Liberals and the Conservatives, was a taxation agreement that would track legal income while the tax information exchange agreement would track all income, including that made through illegal means. Considering Panama's history and reputation on such matters, it would be clear that such an agreement is necessary before signing a trade deal.

The member for Burnaby—New Westminster was attempting to ensure that there would be more information and a deeper tax scrutiny on Panama.That would be important because of the hundreds of thousands of corporations that are actually in Panama.

Some testimony from Todd Tucker of the Public Citizen's Global Trade Watch was very important at committee. I want to read a little of what he had to say. He said:

I have two central points. First, Panama is one of the world's worst tax havens. It is home to an estimated 400,000 corporations, including offshore corporations and multinational subsidiaries. This is almost four times the number of corporations registered in Canada. So Panama is not just any developing country.

Later he said:

Let me elaborate on the first point. What makes Panama a particularly attractive location for tax dodgers and offshore corporations? Well, for decades, the Panamanian government has pursued an international tax haven strategy. It offers foreign banks and firms a special offshore licence to conduct business there. Not only are these businesses not taxed, but they're subject to little to no reporting requirements or regulations.

That is important, because when we want to get into a fair trade deal, we need to have access to the types of conditions and strategies that we are going to compete against. These tax havens give advantages on the trade arrangement that do not favour Canadian exporters, and that is why we have seen the trade surplus diminish under the current government and a trade deficit emerge on a continual basis. Our manufacturers, our labourers, abide by international and Canadian standards that make it uncompetitive for them when corporations are able to use those subsidies, being tax havens, to basically lower their costs in the way that they are able to compete, so the realtionship becomes naturally unfair and unfitting.

I understand the pressure on the government with regard to increasing its access to markets. We have seen a couple of other interesting issues emerge recently that are motivating the government, not only with Panama but also Jordan, to move toward some type of bilateral agreement. We recently saw our international trade committee go to Europe for the European trade agreement, CETA. That agreement is very important in many respects. It has a lot of conditions that are going to be very critical for our supply management and a series of different things.

The interesting thing that took place while our trade group was in Europe was that the Conservatives signed a perimeter agreement with the United States for more harmonization on regulations and on different services and products, including food and automotive products, which might actually limit our exporting capability into Europe, because the content requirements are going to further rise between Canada and U.S. regulations and they will then also be negated for Europe.

I can understand the overall strategy of the government in trying to find alternatives out there, but again, it cannot be done in the absence of labour laws and other types of laws that are important.

On Panama, we will offer some recommendations and amendments to try to move forward. However, we are disappointed with the government's lack of ability to compromise and add those elements.

I want to touch a bit on labour rights. Panama has a history of issues with labour rights, and we do not have the type of scrutiny necessary to evaluate this. The member for Burnaby--New Westminster was asking for a commission to be set up to look at labour rights and provide some type of mentorship, in a sense, so that there would be oversight of this trade agreement and labour rights.

In some of the countries we are trading with, labour rights are lower. These issues emerge even in the context of larger trading partners. For example, there are child labour issues with India. These can present serious problems for us to compete against.

Panama, as we know, has ships under flags of convenience. That is important because it allows Panama to lower its labour standards, putting a whole bunch of people at risk, while limiting our capability to compete.

We saw the very high-profile case of Paul Martin's Canada Steamship Lines using flags of convenience. There was quite a controversy in this country. It was really shocking that a prime minister's company would take advantage of this loophole for labour rights to be able to advance his own pocketbook from Canada Steamship Lines. Flags of convenience are another situation that is not addressed in this agreement.

Therefore, we are going to oppose the bill at this particular time. We feel that there should have been some greater compromise with this.

Also, the member for Burnaby--Westminister proposed a yearly review of this deal to examine whether or not Panama has actually advanced on some of the tax haven issues. We would be open to those things as long as there was going to be some greater scrutiny and follow-up. That is the problem with just accepting the bill the way it is right now.

As I conclude, I want to say for the record that New Democrats are supportive of a trade agreement. There is no doubt about that. However, we want to see progressive trade as the difference, and there has to be some balance with regard to our operations and our trade agreements. Right now we are continuing to gut the Canadian economy with some of our trade agreements. How they are working out has led to Canada having the lowest number of manufacturing jobs since we have been tracking them in the 1970s. This is a real problem, because we are losing the value-added work that is necessary for this country to compete in the global economy. What we are witnessing is that when we open up trade, sectors of the economy have actually lost some of their strength.

We can look at the tool and die and mould-making industry, for example. There has always been the argument that we have to go to high-end, value-added manufacturing to be okay, and that will be a way that we can actually evolve our economy. However, tool and die and mould-making in Canada are the best in the world, but we are struggling to maintain it because of tariff and non-tariff barriers and some of the things brought down in trade agreements that have opened us up to competition against lower standards for labour, lower environment rights and less scrutiny. These are real problems.

We have not addressed some of the serious issues. When we actually have some power and some capability, as in the case of Panama, we should have some conditions built into the agreement that would require analyzing and reviewing it to ensure that those things are measured and taken seriously. We would then be able to put pressure on Panama to comply.

The hon. parliamentary secretary said that if we did not do this, we would be punishing Panama and it would go back to being a greater tax haven. First of all, we still do not know the evidence. President Sarkozy was very clear in his remarks. In fact, he was asked to apologize for his remarks and refused. He is very serious about the effects of the tax haven situation in Panama. I do not know why we would not measure and analyze this. Why would we not build into our base model for trade with Panama the ability to influence, in order to end that type of practice? If we did that, we would have a greater effect on the drug trade, organized crime and corporate responsibility. A series of measures would allow Canadians to compete, while also helping to deal with these issues around the globe. We have an opportunity to do this.

We should not just let the OECD determine our relationship with another country. That is not right. We should be putting our own standards of greater scrutiny in place, because we know there are a lot of politics relating to the OECD. However, if we are serious, we have an opportunity for Canada to have a stronger relationship with Panama. We can actually then have some scrutiny over the conduct in Panama. Leaving it to the OECD is not enough. Its members have disagreements on what a tax haven is. At the same time, OECD members like President Sarkozy note that the tax haven situation has not gone away. I think the evidence is strong enough that it merits our making some amendments. We will look at that in committee.

We are disappointed that the government came back with the same bill. It has been around a number of times, the first being August 11, 2009. The bill has been punted back and forth and subjected to electoral changes, yet has not changed at all. That is a real problem for us. We would have thought that at some point the government would introduce some of the measures it heard concerns about, so that it could move the bill through the House more quickly. There is no doubt that if there was that intent, we could move this legislation through the system a lot more quickly.

The member for Burnaby—New Westminster was very clear about our concerns with respect to the bill. We would take this approach: we would go back to committee and examine it and hopefully have an opportunity to convince the government to make these changes. If the government were willing to make these changes, then we would work with it to move the legislation through as long as it would ensure that the tax haven, human rights and labour issues would be addressed and that there would be an ability for us to follow through. If we just act in blind faith, we know the results. We know the government's record.

Canada has diminished its capability to trade, especially from the value-added aspect. We are about more than just oil, gas and natural resources in this country. This country was built on value-added work, especially after the Second World War, when there was a real intent to make sure there would be opportunities. Just opening up a market and reducing tariffs and trade does not guarantee that we actually improve our quality of life.

There is no doubt that we want greater access to these markets in Panama, Jordan and the EU. Some policies will be changed; people who have already invested in businesses and parts of the economy will be affected. We need to identify those areas and ensure that Canadians can compete in a fair way. There may be damage to certain sectors of the economy. I know that the government is looking at putting supply management on the chopping block in a number of different agreements. If we implement those types of measures, there has to be a business case and a plan. Therefore, we should be proposing a series of amendments at committee to ensure that these issues can be taken care of.

I appreciate the opportunity to debate this. I think it is important for Canadians to understand where our economy is going. Our trade deficit has gone so dramatically high that it is a serious threat to our national economy and to our quality of life. It really shows the mismanagement of the government by just blindly thinking it can sign small bilateral agreements to solve the Canadian economy. We have to have a value-added economy. This agreement is a small part, but it actually has a big part to play in the tax haven issues.

The reality that we all understand is that Panama, as the canal opens up, will have a lot of power. The question is what will we do right now to ensure there is some fairness and reciprocity regarding the abuse of tax havens?

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12:50 p.m.

South Shore—St. Margaret's
Nova Scotia

Conservative

Gerald Keddy Parliamentary Secretary to the Minister of International Trade

Mr. Speaker, those were interesting closing comments on reciprocity, from the member opposite. Trade agreements truly are about reciprocity. They are about rules-based trading between equal partners. If I can summarize, the hon. member does not support free trade agreements with Panama, Colombia, Peru, Honduras or Jordan, because we should not be trading with those countries. However, if we look at more developed nations, the members opposite do not support free trade agreements with Iceland, Norway, Switzerland, Liechtenstein or the 28 members of the European Union. I do not know who they support as free trade partners.

I have a problem with what the hon. member said about companies trading with the European Union. Although he got off topic about Canadian content, it is very clear. I spoke to manufacturers, agricultural producers and people in the fishery about the EU agreement; not one of them was worried about Canadian content. It is good enough for the OECD countries, but it is not good enough for the NDP—

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12:50 p.m.

Conservative

The Acting Speaker Barry Devolin

Order, please. The hon. member for Windsor West.

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12:50 p.m.

NDP

Brian Masse Windsor West, ON

Mr. Speaker, the reason I delved into the European trade agreement is that, at the time, our committee in Brussels and Paris was actively pursuing policies here in Canada and North America that would erode our capability to take advantage of that agreement if it went ahead. That is the reality. Some of the standards that we would adopt under the Canada–U.S. perimeter security agreement would eliminate products and services that we can now bring into Europe because of content provisions and laws in that agreement. This is the challenge we are faced with, as these two things are happening at once.

I want to return to the OECD question from the parliamentary secretary. I do not think it is right for us, when we know the significant tax haven, drug running and money laundering situation in the history of Panama, to turn a blind eye and say that the OECD has let us out of this one. We know the political pressure because the OECD countries want to ship through Panama. Panama has a big stick, as the canal is opening up. At the same time, the OECD standards should not be a whitewash for us. We should use this as an opportunity to at least do some follow-up on the money laundering situation, crime and organized efforts that have been identified in Panama.

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12:50 p.m.

Liberal

Kevin Lamoureux Winnipeg North, MB

Mr. Speaker, countries like India are quickly becoming strong world economic powerhouses. There are other countries where we have adopted aggressive immigration policies, where we have seen growth of countries and communities, like the Filipino community. Could the member indicate what is the NDP's policy on developing freer trade with countries like India and the Philippines?