House of Commons Hansard #125 of the 40th Parliament, 3rd Session. (The original version is on Parliament's site.) The word of the day was trade.

Topics

Canada-Panama Free Trade Act
Government Orders

February 7th, 2011 / 12:25 p.m.

Liberal

Larry Bagnell Yukon, YT

Mr. Speaker, I wonder if the member could elaborate on the dismal performance of the Conservatives on freeing up the borders to the United States and other countries for trade.

Canada-Panama Free Trade Act
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12:25 p.m.

Conservative

The Acting Speaker Barry Devolin

A quick answer from the hon. member for Halifax West regarding the bill.

Canada-Panama Free Trade Act
Government Orders

12:25 p.m.

Liberal

Geoff Regan Halifax West, NS

Mr. Speaker, my hon. colleague from Kings—Hants, the former trade critic, is suggesting I take my time, but I do not think I will be allowed to do that. I am sure he would love for me to go on at great length about this. I trust he would enjoy it.

The way the government has treated border issues and trade issues with a variety of countries, particularly with the U.S., is a concern. Until last August I was the Liberal critic for natural resources. When I look at the government's attitude toward the softwood lumber agreement I find it has been quite weak.

Canada-Panama Free Trade Act
Government Orders

12:25 p.m.

Liberal

Yasmin Ratansi Don Valley East, ON

Mr. Speaker, I rise today in support of 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.

As has been mentioned, Canada is a trading nation. In the global economy, it is important to get preferential agreements with countries, which is beneficial to both partners. We have seen the impact of relying too heavily on one trading partner. We have seen the government's lack of action on increasing U.S. protectionism and its failure to seize trade opportunities in China, South Korea and other countries.

The Conservative government's mismanagement of Canada's trade relations has led to the first trade deficit we have seen in over 30 years. The trade deficit record last July was $2.7 billion. Therefore, it is important that as a country we need to increase our efforts and our engagement in order to improve the economic situation, increase international trade, and help the Canadian economy.

Canada has always supported free trade. Our origins are that of a trading nation, having started with fur, wood, and other natural resources. The portion of our economic activity attributed to trade is greater than that of most other nations. Indeed, approximately 80% of our economy and millions of Canadian jobs depend upon trade and our ability to access foreign markets. We are, after all, a very small country. Our population is 32 million which, one day the U.S. ambassador told me, could fit into the State of California. Taking that perspective, we need to ensure that we make agreements that are based in the interests of Canada.

If a free trade agreement is negotiated properly, Canadian exporters benefit from the reduction and elimination of tariffs on their goods destined for other countries. Canadian manufacturers benefit from the reduction and elimination of tariffs at the Canadian border on the various materials that go into their products. Canadian consumers benefit from lower prices of imported goods when tariffs on these goods are reduced or eliminated.

I think it is important to note that people do look at the best return on their investment, and everyone is an economical shopper. In this global age, where we are exposed to just about any goods and services, it is important that when we make deals we are able to ensure a better deal for Canada.

We have heard the debate on protectionism and what steps could best promote Canadian business success and generate Canadian jobs. However, most Canadian businesses that serve domestic markets do benefit from free trade because they are forced to innovate and compete with others from abroad, provided that those abroad comply with international rules on trade, tariffs and non-tariff barriers. In the long run, Canadian businesses are more than capable of being strong, innovative, and competitive without hiding behind protectionist walls.

We know that when we are promoting trade in our green technology, as we have seen in examples such RIM et cetera, we need to be strategic and smart because we live in a global village. In that village, everyone knows what the prices are. We could go on eBay and get things from Australia that could be cheaper than what we could get in Canada. This makes businesses innovate, so they can compete in the global market.

The Liberal Party has always supported economic growth through proper free trade agreements. It also supports any initiatives that will improve access to foreign markets for Canadian businesses. It is important to note that we cannot rely heavily on one trading partner because, as was said, when the elephant rolls over, it is the poor mouse sitting next to it that might get hurt. It is important for us to be careful when we are negotiating but ensuring ensure there is freer trade with far more nations, rather than relying heavily on one partner.

Although Panama has a small economy and Canada's existing trade with that country is relatively limited, there are opportunities for Canadian businesses.

The expansion of the Panama Canal is currently underway and it is slated to be completed by 2014 at a projected cost of $5.3 billion. That is an interesting sum of money. The expansion is expected to generate opportunities for Canadian companies in such areas as infrastructure and construction, as well as environmental, heavy engineering and consulting services. In the area of capital projects, opportunities will be generated in human capital development and construction materials.

Like the free trade agreements between Canada and Chile and Costa Rica, the North American free trade agreement, and the free trade agreement between Jordan, the Canada-Panama free trade agreement includes side agreements on labour co-operation and the environment. These are important aspects of the agreement.

The Canada-Panama labour co-operation agreement recognizes the obligations of both countries under the International Labour Organization's Declaration on Fundamental Principles and Rights at Work. Both countries are required to ensure that laws, regulations and national practises protect the following rights: the right to freedom of association, the right to collective bargaining, the abolition of child labour, the elimination of forced labour, and the elimination of discrimination.

The Canada-Panama labour co-operation agreement and the agreement on the environment both include complaints and dispute resolution processes that enable members of the public to request an investigation into the perceived failures of Canada or Panama to comply with these agreements.

The free trade agreement with Panama is another opportunity to increase access to more markets for Canadian farmers and businesses. As was pointed out, our farmers need access to more markets. We are a small country and our farmers need to be competitive and innovative. This agreement will give them access.

Panama is a relatively small economy. In 2009 we exported $90 million in goods to that country, which is not as large as some trading partners. It is, however, a stable country which has made significant progress in recent years in terms of development and democracy. Canada is well placed to continue to encourage that.

In spite of the global economic downturn, Panama's GDP grew to 10.7% in 2008, one of the highest in the Americas, and is forecast at 5.6% for 2010. In 2009, bilateral trade between the two countries totalled $132.1 million. Canadian exports made up $91.4 million and $40.7 million in imports.

In the merchandise area, exports to Panama include: machinery, vehicles, electronic equipment, pharmaceutical equipment, pulses and frozen potato products. In the area of service, Canadian exports include: engineering, information and communications technology.

Under the agreement Canada will eliminate over 99% of its tariffs on imports from Panama.

It is important to note that there is no debate here over the issue of human rights. As members of Parliament we may be concerned about it, but we defer on what approaches to take, whether it is through trade, opening up doors, or through the wagging of fingers. Wagging fingers is not a good idea. When I was in India, we discussed what Canada could export, and the first thing I was told was pluralism.

As the government is focusing on creating free trade agreements with other countries, it also needs to look at creating free trade agreements within provinces.

Canada-Panama Free Trade Act
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12:35 p.m.

Liberal

Judy Sgro York West, ON

Mr. Speaker, the human rights issue continues to concern me with respect to free trade agreements. When we are providing opportunities for free trade, we have to monitor human rights and labour rights.

These agreements may provide opportunities from a trade perspective, but how can they avoid exploiting some of the employees who would have additional work opportunities?

Canada-Panama Free Trade Act
Government Orders

12:35 p.m.

Liberal

Yasmin Ratansi Don Valley East, ON

Mr. Speaker, I know the hon. member is very interested in labour law, and there is a side agreement on Labour co-operation that recognizes the obligations of both countries under the ILO.

On the other front, from a human rights perspective, I made a statement very quickly on whether we would like to engage with other countries. Through trade, we engage people, and through this engagement, people see how different people operate. If we were to shut the country, close the doors, close our borders, people would not understand how others operate. I gave a prime example of when I went to India, I was in the state of Gujarat, and I asked what would be the best Canadian expert and they said it was pluralism. We did not have to teach it to them. They understood how we, as Canadians, worked and lived in harmony, and respected our diversity.

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12:35 p.m.

NDP

Dennis Bevington Western Arctic, NT

Mr. Speaker, I rise to speak to Bill C-46 at report stage.

My opinion on the bill has not changed over the course of time of it being in committee. In fact, many of the things presented in committee spoke very strongly against the nature of the bill and against the bilateral free trade agreement with a country like Panama.

Panama along with Colombia are two countries that the Conservative government has decided, in its wisdom, to pursue free trade agreements with and have brought them forward in this Parliament. Neither of these countries is appropriate for free trade deals with Canada.

Clearly Colombia had so many human rights violations that the nature of our protection for those human rights issues, which we hold so strongly in Canada, were simply not there.

In the case of Panama, quite clearly there are human rights issues, but more overwhelmingly are the issues surrounding the nature of the Panamanian business community. That has been brought forward, in great detail, to Parliament through our work, through the work of some of the other parties and through the witnesses at committee and clearly this is not a nation that holds the same level of integrity and honesty within its corporate structures as we do in Canada.

To enter into this free trade agreement, pushing investment with Panama is like injecting more poison into our system. Our system may falter because of the opportunities that exist in this.

Free trade agreements need careful scrutiny, and we have been calling for that. Careful benefit scrutiny, net benefit analysis should take place on any free trade deal with any country in the world. I know we are negotiating a number of those, so there should be work put into that.

Take for instance the much wanted European free trade agreement. Many holes are showing up in that deal already. For instance, today there is a report coming out that indicates Canadian drug costs, drug costs that are directly related to government costs, are going to go up substantially if we go ahead with the European free trade deal as outlined, with the provisions in which the Europeans are most interested.

The opportunity to use generic drugs will be made more difficult. That difficulty is estimated to cost us in the order of $1.5 billion to $2 billion a year. Where does that come from? From the pockets of Canadian taxpayers. What benefits do we get from that? By going along with the Europeans on that, the net total investment in new research and development would be in the order of $400 million.

With the effect of marginal tax rate for corporations in this country of 18%, how much improvement to the economy has to go ahead to make up the difference of $2 billion to the taxpayers? There are no answers for that. No analysis has been done. That directly affects our federal government and all the provinces as well.

There was a curious reception that I went to the other night with the Japanese automotive association. There were opportunities for speeches. The Minister of International Trade made a fine speech about his total belief in free trade, the need to sign these agreements and to work on these things. That was fine. I accept that as his position.

However, the president of the Japanese automotive association said that the European free trade deal was not the panacea for the association, that it would lose on the deal if we signed with Europe.

Let us look at the Japanese automotive industry, one of the clear winners for Canada in the last decade with the setting up of new plants. Of the total number of vehicles produced, most are exported to the United States. Not only are the Japanese in Canada, probably because of our good conditions and public health care, but their product is part of our export development in manufacturing, which everyone in the chamber must understand is very weak on every other front.

The people who are doing a successful job for us in manufacturing automobiles and exporting to the United States are saying that we should look at the provisions of the European free trade deal. Quite clearly, we have to look at trade deals very carefully in this new world. This is not the old world of the 1980s and 1990s when the free trade mantra was something that no one could resist, that no political party was able to completely ignore, that no political party of the right was able to say anything other than it agreed.

Let me get back to the free trade deal with Panama. It is not really a free trade deal. This is about investment. This is about Canadian companies investing their profits in Panama, perhaps on the new expansion of the Panama Canal or a number of other areas. That is what is going to happen. Investors will be taking the money they make in Canada and investing it in another country.

What about agriculture? Riots are going on around the world right now over the price of agricultural products. Canada could do much better. A previous member spoke of pulses, the consortium of producers of lentils, peas and beans. I had an opportunity to speak with those people and they are not concerned about free trade. They are concerned about our railways that do not give them a proper deal on service. They have much more difficulty getting their products to the Canadian ports for export to the world market for produce that is ever-expanding and where the prices of products are going up.

When we talk about agriculture, we are talking about something that is going to be in great demand. When we think about agriculture in terms of free trade, what we should be thinking about is how to protect and enhance our agricultural capacity in our country. This is the way to deal with that.

What is Canada's trade? So much of it is energy and raw resources, the things the world needs, not what it wants. The world wants produced products, but it needs raw products and Canada is in a good position to provide those raw products. We do not want to sell them too cheap or give them away. We want to ensure that our children and grandchildren are well protected in our resources going forward. When we sign free trade deals with countries and say that we must give our resources in a fashion that we do not dictate anymore, we are giving up something, but what are we getting in return?

Let us talk about border security. A big issue right now is that the thickened border has slowed down free trade to the United States. That is nonsense. Trade since 9/11 to the United States has gone up consistently until 2008 when there was a recession and the value of the Canadian dollar accelerated. Those two factors hit our trade very hard with the United States. It went down from about $350 billion to about $100 billion, but it had nothing to do with free trade. It had to do with currency and our ability to deal with our own issues.

As for the currency, we do not have the opportunity to do like the Liberals did in 1993 and lower the interest rate because we are already at rock bottom. We are in a bind. What can we do, quantitative easing? What do we do to improve our currency position vis-à-vis the United States? That is the problem we have with trade with the United States.

Canada-Panama Free Trade Act
Government Orders

12:45 p.m.

Liberal

Larry Bagnell Yukon, YT

Mr. Speaker, the member mentioned a couple of countries with which it would not be acceptable to have free trade agreements. With which countries would he be willing to sign free trade agreements?

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12:45 p.m.

NDP

Dennis Bevington Western Arctic, NT

Mr. Speaker, my colleague from the Yukon and I share many things.

I agree with him that there should be some countries we enter into fair trade agreements with that are based on careful analysis and that provide us the answers we want.

In some ways probably multilateral trade with Latin America would be better. It has trading group there called Mercosur. There are certain provisions within that trading group that it wants to maintain. Canada has to understand that fair trade means we deal with what the countries that have banded together want.

With some of those countries, though, we have a problem because we have very large subsidies and tariffs against things such as sugared-based ethanol from Brazil. That is a problem. How would we get around that and keep the subsidies in place for our farmers? Those are things that bar us from fair trade agreements with large expanding trading partners.

Canada-Panama Free Trade Act
Government Orders

12:45 p.m.

NDP

Jean Crowder Nanaimo—Cowichan, BC

Mr. Speaker, I thank the member for Western Arctic for clearly outlining why we should be opposed to this agreement. I have a question for him with regard to tax havens.

Back in November, Mr. Todd Tucker appeared before the committee that was examining the bill. He indicated that we were being told not to worry, that we were protected from the fact that Panama could continue to be a bad actor with the tax havens. He said that in the agreement there were clauses that would actually prevent Canada from taking any action, specifically article 9.10, which states:

Each Party shall permit transfers related to a covered investment to be made freely and without delay, into and out of its territory.

Then it goes on to talk about chapters 9 and 12 of the free trade agreement that have non-discrimination clauses.

Could the member for Western Arctic comment on the fact that Panama is noted for its tax havens and that we will not be protected under the agreement from the continuing abuse of the tax haven status in Panama?

Canada-Panama Free Trade Act
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12:50 p.m.

NDP

Dennis Bevington Western Arctic, NT

Mr. Speaker, that question troubles and perplexes all of us. When we go into a free trade agreement with the kind of provisions we have proposed with Panama, we open a Pandora's box. There are 400,000 corporations in Panama. They are not there for the weather. They are there because the tax haven status is such that they can be there. Interestingly enough, many of them are also criminal organizations. These are things that will filter through to the Canadian side with this kind of agreement.

Panama refused to sign a tax information exchange agreement. Therefore, the country recognizes what it is doing with its laws for the corporations it shelters. It is not interested in changing, so why would we go ahead with this agreement?

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12:50 p.m.

Liberal

Kevin Lamoureux Winnipeg North, MB

Mr. Speaker, many of the New Democrats give the impression that it is strictly the tax haven issue that prevents them from voting for the bill. I guess a hypothetical question for the member, and I would really appreciate a good answer, is this. If the issue were not a tax haven, would they then be more inclined to support the bill, the concept of freer trade?

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12:50 p.m.

NDP

Dennis Bevington Western Arctic, NT

Mr. Speaker, it is hypothetical and we do not deal with hypothetical issues here. We are dealing with a trade agreement between Panama and Canada. Once this passes the House, then that is the law of the land. Therefore, we cannot be hypothetical about it. We have to be practical and realistic about it.

Canada-Panama Free Trade Act
Government Orders

12:50 p.m.

Liberal

Judy Sgro York West, ON

Mr. Speaker, I am pleased to add my voice to the debate concerning Bill C-46.

As has already been said by many of my colleagues in the House, if passed by Parliament, Bill C-46 would implement a free trade agreement, an agreement on labour co-operation and an environmental accord between Canada and the Republic of Panama.

I share many of the positive comments that have already been made during the debate. Canada is after all a trading nation that has, for the past 30 years, maintained a trade surplus with our global neighbours and our competitors, or at least that was the case until now.

Canada is still a nation on which 80% of our economy is trade-dependent, but despite the lofty trade talk, the Conservative government has presided over a tremendous decline in our national trade advantage. Now, for the first time in more than a generation Canada is in a trade deficit situation.

That is right, the nation that was created and has since maintained itself by trading with our neighbours is importing more than we are selling globally. This new dependency must concern all of us. It is disappointing to me, but for Canadian farmers, manufacturers, and other exporters of Canadian goods and expertise, this is simply a disaster.

As members can imagine, I am pleased to see that the government is starting to focus its attention on trade matters, even if I would rather have seen that focus be on larger, more robust and growing markets, markets that could provide a greater growth potential for Canadian goods and labour expansion.

I want to be clear, I am not suggesting that Panama is not worth the effort; just the opposite. Canada and Panama had more than $132 million worth of bilateral trade in 2009 alone. Then, despite the recession in 2010, Panama's GDP grew by just over 5%. Put another way, while Panama's market potential for trade is relatively small, it is moving in the right direction.

In contrast to the Conservative approach to trade, when the Liberals devised the team Canada approach to opening new trading opportunities, we set our focus on much larger markets, such as the U.S., China, the U.K., the Netherlands and Italy. I suppose the difference is that the Liberals were confident that Canada could and should compete at the highest levels on the global stage, while Conservatives continue to concern themselves with smaller, short-terms goals.

That was then and this is now, so I need to be thankful for smaller steps. With this in mind, I want to congratulate the Minister of International Trade for his efforts to make this agreement possible.

What does this agreement actually do for Canada and for the people of Panama? Right now, Panama levies tariffs on Canadian agricultural products in the range of 13% to 260%. That means that Canadian agricultural products such as pulses, frozen potatoes, processed foods and beef are taxed in a way that makes them uncompetitive when directly compared with some of our Panamanian goods. We clearly know that our agricultural community continues to be under fire and under huge stress, and we need to do everything we can to decrease those problems.

As an example, a bushel of soybeans that would sell for $13.98 in Canada would face a tax in Panama of 47%, or $6.57. With that extra taxation, that bushel would cost $20.55 to a further processor in Panama. That is unfair for our marketplace and unfair for our agricultural industry. This means Panamanians would be more apt to buy Panamanian produced goods when given that choice rather than pay the premium for a top notch Canadian product, understood by all of us.

The agreement would put an end to that artificially prompted competitive disadvantage for our farmers and it would allow Canadian farmers to start to compete on a level playing field, something they have consistently proven their ability to do effectively in many other jurisdictions.

On non-agricultural goods, Panama currently maintains an average-applied tariff of between 6.2% and 81%.

The passage of Bill C-46 means that Canadian fish, construction materials, paper products, and vehicle and auto parts will no longer face this kind of harmful taxation. Again, this kind of tariff reduction means that Canadian industry will have the option of opening and exploring Panama's market potential from a position of strength rather than one of initial economic disadvantage.

In return, Canada will eliminate almost all tariffs on currently imported Panamanian goods. This deal will allow the market to sort out which industry is the most competitive and which products are of the greatest quality and desire to consumers. As I look back on history, I have every confidence that when competing on a level playing field, Canadian farmers, anglers, manufacturers, and paper workers will create success and generate tremendous wealth for their respective industries.

I should also mention that this Canada–Panama free trade deal would seek to address non-tariff trade barriers to further help ensure non-discriminatory treatment of imported goods. While each of these things represent positive advantages, I would be remiss if I focused only on trade and not on the labour portions of the agreement which continue to be of enormous concern to me and others. This is especially important given the refurbishing and expansion of the Panama Canal, which is expected to be completed by 2014.

As with some of the other trade deals that Canada has signed, this agreement includes a side agreement on labour co-operation and the environment. The Canada–Panama agreement on labour co-operation recognizes the obligation of both countries under the International Labour Organization's Declaration on Fundamental Principles and Rights at Work, which requires that each country ensure that their domestic laws, regulations, and practices protect fundamental labour principles and rights at work.

Specifically, this includes: the right to freedom of association, the right to collective bargaining, the abolition of child labour, the elimination of forced labour, and the elimination of discrimination. These are extremely important issues when we are talking about free trade. As a former minister of citizenship and immigration, I think these are important elements of any free trade deal.

While free trade agreements are most certainly economic devices, the Liberals have long viewed trade and engagement as important instruments of social advancement and human rights promotion. When a nation exists in isolation, there is little regard for these fundamental freedoms and rights. However, once a country becomes part of the greater community of nations, there is an imposition of a greater social responsibility.

Sometimes I wonder which comes first. Clearly, this is the avenue we are pursuing, but monitoring these issues must be of high importance to Canada.

Canada has been a trading nation since it was opened by the coureurs de bois in the 17th century. Our native people traded for all items they could not produce themselves. Generations of Canadians have exported our products and ideas to the entire world. Canadian expertise has been responsible for countless global advances, but it has also helped this nation in ways those first coureurs de bois could never have imagined.

Today, Canada is the 11th largest trader on the planet, ranking well ahead of countries such as Spain, Russia, Mexico, India, and Australia. Our international commerce amounts to more than $600 billion annually, and more than 80% of our economy is directly dependent upon trade and commerce with others. Indeed, to say that Canada is a trading nation would be a tremendous understatement, and it is for this reason that I am pleased to support Bill C-46.

Canada-Panama Free Trade Act
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1 p.m.

NDP

Chris Charlton Hamilton Mountain, ON

Mr. Speaker, it seems to me that the position of the Liberal Party on this trade agreement is that as long as we sign the trade agreement, everything else will magically improve. We will just keep our fingers crossed, and do it on a wing and a prayer. I wonder if the member could comment.

This free trade agreement between Canada and Panama was signed in May 2010, but here is what happened in the summer of 2010. The president announced unilateral changes to labour law. The law ended environmental impact studies on projects deemed to be of social interest. It banned mandatory dues collections from workers. It allowed employers to fire striking workers and replace them with strike-breakers. It criminalized street blockades and protected police from prosecution.

The severity of this attack on labour rights was met with strikes and demonstrations. The police were exceedingly harsh in their response and this was just this past summer. At least six people were killed, protesters were seriously injured, and many were blinded by tear gas and police violence. Three hundred trade union leaders were detained. That was the summer and it was in May 2010 that this agreement was signed.

Does the member really believe that engaging in these kinds of trade agreements will help either labour standards, environmental standards, or human rights generally?