Bill C-55 (Historical)

Canada-EFTA Free Trade Agreement Implementation Act

An Act to implement the Free Trade Agreement between Canada and the States of the European Free Trade Association (Iceland, Liechtenstein, Norway, Switzerland), the Agreement on Agriculture between Canada and the Republic of Iceland, the Agreement on Agriculture between Canada and the Kingdom of Norway and the Agreement on Agriculture between Canada and the Swiss Confederation

This enactment implements the Free Trade Agreement and the bilateral agreements between Canada and the Republic of Iceland, the Principality of Liechtenstein, the Kingdom of Norway and the Swiss Confederation signed at Davos on January 26, 2008.
The general provisions of the enactment specify that no recourse may be taken on the basis of the provisions of Part 1 of the enactment or any order made under that Part, or the provisions of the Free Trade Agreement or the bilateral agreements themselves, without the consent of the Attorney General for Canada.
Part 1 of the enactment approves the Free Trade Agreement and the bilateral agreements and provides for the payment by Canada of its share of the expenditures associated with the operation of the institutional aspects of the Free Trade Agreement and the power of the Governor in Council to make regulations for carrying out the provisions of the enactment.
Part 2 of the enactment amends existing laws in order to bring them into conformity with Canada’s obligations under the Free Trade Agreement and the bilateral agreements.
Part 3 of the enactment provides for its coming into force.

Canada-EFTA Free Trade Agreement Implementation Act

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Mr. Speaker, when we pursue free trade agreements, it is a two way negotiation process, a give and take. The fact that there are long tariff reductions, a made in Canada procurement policy, that supply management is protected and that for the first three years there is no tariff reduction, all these very much play into our national interests, and they were addressed in the free trade agreement.

I share the member's concern with respect to shipbuilding. The government has done very little to develop a comprehensive plan to deal with our domestic shipbuilding industry and to create a long term strategic initiative and partnership with the shipbuilding industry so it will be able to compete. Norway is a very good example because it did subsidize. There is no doubt that it no longer provides subsidies now but it did subsidized before, which allowed its shipbuilding industry to be in a competitive position.

The onus and responsibility now lies with the current government to put together a plan for not only structured financing but a more comprehensive plan that can position our industry, once the tariffs are reduced, especially when the tariff reduction starts in 2012, to be on an equal and competitive footing. Even though the subsidies no longer exist today in Norway, there is no doubt that the subsidies in the past have put it in a more favourable position. Therefore, I do very much recognize the member's concerns.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I rise today to speak about the proposed free trade agreement with Switzerland, Norway, Liechtenstein and Iceland, the members of the European Free Trade Association. I am speaking on behalf of all the Bloc members and would like to acknowledge in particular the contributions of the members for Sherbrooke and Berthier—Maskinongé to the Standing Committee on International Trade, which has studied the proposed agreement and the free trade agreement.

The Bloc believes that this is a good free trade agreement that deserves to be supported. Moreover, we believe that Quebec will benefit a great deal from this agreement.

For example, the pharmaceutical industry in Quebec, like the industry in Switzerland, is very healthy. We can therefore expedite trade and perhaps pave the way for more and more transactions. To penetrate the American market, Swiss pharmaceutical companies might be tempted to produce drugs here, which presents an attractive opportunity for us.

We would remind this House that Quebec is the home of the brand name drug industry in Canada because of its pool of skilled researchers and its tax breaks. For Quebec this agreement will pave the way for new business opportunities.

The agreement facilitates trade between a company and its subsidiaries and is likely to mean new investments in the pharmaceutical industry in Quebec. That is good news.

Let us turn our attention now to Norway. Nickel accounts for over 80% of our exports to that country. The largest mine in Canada and the third largest in the world is owned by the Swiss company Xstrata and is located in Ungava. This agreement may also have benefits on that front.

Let us continue our tour of the countries with a stop in Iceland. Aluminum is our main export to Iceland. Aluminum production is also concentrated in Quebec.

Overall, this is an attractive agreement. I would also say it does not have the same drawbacks as previous agreements.

For example, NAFTA and the agreements with Costa Rica and Chile all contain what could be called bad clauses on investments that give companies the right to sue a government that adopts measures that would reduce their profits. This sort of provision is not found in the agreement with the EFTA. Consequently, the free trade agreement with Europe, at least this part of Europe, is worthwhile. There will be no sword of Damocles hanging over our heads, because this agreement does not contain any such clauses.

Furthermore, the agreement only covers goods and not services. It will not create competition with public services, whether they are offered by the state or not, since they will not be covered. Similarly, banks providing financial services will not be in competition with Switzerland, which is known to have a very solid and very discreet banking system, and Liechtenstein, which is a true haven for the financial world when it comes to taxation and anonymity. We are already having enough problems with Barbados without adding any more. It would be best if the agreement did not allow this type of exchange.

For government procurement it is the same thing. The government is still free to favour domestic procurement, subject to the WTO agreement on government contracts. It would be somewhat ridiculous for the government to negotiate room to manoeuvre and then decide not to use it. It is imperative that the federal government, which is the largest purchaser of goods and services in Canada, favour suppliers here and consider the potential spinoffs from its purchases.

We have another absolutely ridiculous example. Canadian athletes will be dressed in material that is made in China. There should have been a different solution. We could call this an obvious and quite unacceptable lack of pride. This is outside the limits of the agreement before us, but I wanted to mention it anyway. When we look at an agreement like this, we have to look at what it will allow us to do. This agreement does not allow for such an absurd possibility.

The whole issue of agriculture is a concern that a number of MPs have mentioned in this House. Supply management is not affected by this agreement. The Bloc Québécois motion passed here in 2005 has become the cornerstone of the Canadian government's position on protecting supply management. We are very proud of that and we hope things will continue this way.

We are just as proud of the fact that the supply management model is being developed throughout the southern countries. It may be part of the solution to the food crisis. The more countries that use this type of system, the less agriculture will be subjected to traditional trade patterns. Thus, it will be possible to provide better protection that will allow both communities and producers to be well served in terms of agricultural production.

This agreement ensures that supply management will not be affected. That is another reason that the Bloc Québécois likes this agreement.

This agreement will make it possible to implement bilateral agricultural agreements as add-ons to the free trade agreement. We will see how this will come together. Bilateral agreements will not necessarily have a huge impact on Quebec agriculture, because milk proteins are excluded from the agreement and the tariff quotas and over-quota tariffs remain unchanged. In short, supply managed products will be protected.

However, there is one sector where this agreement would be good, although the federal government will really have to go out of its way to make a sustained effort. I am talking about the issue of support for shipyards. A number of members in this House have brought this up this morning. As a member of the maritime caucus, I know that there have been questions. They have been handled in an acceptable fashion in the agreement, but that does not mean that the Canadian government will not have to have a more aggressive and constructive policy on shipyards. In fact, we have some concerns.

For example, imported vessels are currently subject to a 25% tariff. Under the agreement, these tariffs will gradually decrease over three years, and will be completely eliminated in 15 years. In the future, in 15 or 20 years, we do not want to see a whole industrial sector disappear, as was the case with the textile sector. We know that the government needs to take action now to ensure that once this all disappears, our industries in this sector will be competitive.

Our shipyards are currently less modern than Norwegian shipyards, for example. They are in worse condition. So some things will need to be renewed, since Norway has invested heavily in modernizing its shipyards, while ours have been completely abandoned by the government.

[The Deputy Speaker, NDP, Bill Blaikie]

Order, please. It is now time for statements by members. The hon. member will have 13 minutes left for his speech.

The member for Saskatoon—Rosetown—Biggar.

The House resumed consideration of the motion that Bill C-55, An Act to implement the Free Trade Agreement between Canada and the States of the European Free Trade Association (Iceland, Liechtenstein, Norway, Switzerland), the Agreement on Agriculture between Canada and the Republic of Iceland, the Agreement on Agriculture between Canada and the Kingdom of Norway and the Agreement on Agriculture between Canada and the Swiss Confederation, be read the second time and referred to a committee.

[The Acting Speaker, Conservative, Royal Galipeau]

When we were discussing Bill C-55, the hon. member for Montmagny—L'Islet—Kamouraska—Rivière-du-Loup had 13 minutes to finish his speech. He now has the floor.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I want to reiterate that the debate concerns the proposed free trade agreement between Canada and the European Free Trade Association, which is made up of Switzerland, Norway, Liechtenstein and Iceland. The Bloc Québécois is in favour of this bill and the agreement.

In the first part of my speech, I talked about how the agreement could mean attractive opportunities for the pharmaceutical industry in Quebec. The same is true of the nickel sector, especially for one mine in Ungava, in Quebec. The agreement could also benefit aluminum exports to Iceland. Consequently, Quebec is very interested in seeing this agreement implemented.

Moreover, we have ascertained that the agreement will have no impact on agricultural supply management. The existing systems in Quebec and Canada can be maintained.

However, at the end of my speech, just before question period, I made the point that the federal government will have to take far more aggressive steps to support the shipbuilding industry once this free trade agreement takes effect. The agreement provides that tariffs will decrease over 15 years.

I believe that the shipbuilding industry in Norway, in particular, is much better equipped today than Canada's. Canada has abandoned the shipyards. The industry was not really given the tools to grow.

In that context, I would like to point out that one recommendation in the report presented by the Standing Committee on International Trade was adopted by that committee. It had been proposed by the hon. members for Sherbrooke and Berthier—Maskinongé from the Bloc Québécois, our two spokespeople in this matter. They did their work in a very conscientious manner and got support from the committee on the following motion:

The Canadian government must without delay implement an aggressive Maritime policy to support the industry, while ensuring that any such strategy is in conformity with Canada’s commitments at the WTO.

The purpose of the motion is to raise a red flag. Indeed, the free trade agreement is desirable. However, in practice, for the marine industry the government truly has to make a significant shift and implement a support strategy for the shipbuilding industry.

This currently does not exist and our shipyards have often been left to fend for themselves over the past few years. We are seeing the results of that. It is possible to have a healthy and competitive shipbuilding industry, but we have to have a policy to that effect. That is no reason not to support the free trade agreement with European countries.

We are sending a message to all of Europe. The agreement I am currently referring to is the agreement between Canada and the European Free Trade Association, which includes Switzerland, Norway, Liechtenstein and Iceland. It is important to note that these are countries Quebec does a lot of trade with. However, this now suggests that the real target should be signing a free trade agreement with the European Union that will help achieve results for all our exchanges with Europe.

For example, the four countries involved in the current agreement represent 12 million people and roughly 1% of Canadian exports. With the European Union, it would be 495 million inhabitants who generate 31% of global GDP. In fact, the European Union is currently the strongest economic power in the world.

Every day we are painfully becoming more aware that our economy is far too dependent on that of the United States. When there is a downturn in consumerism such as we are seeing now in the United States, when we see that the Americans are committing a lot of money to the war in Iraq, when we see the commercial paper crisis, when we see the economic slowdown in the United States, when we see the obvious aggression of emerging countries such as India and China, we can see that it is getting more and more difficult to keep our place in the American market.

This agreement gives us an opportunity to move forward and guarantee that we have access to Europe.

The current free trade agreement indicates that we are moving in the right direction. We should have a similar agreement for the entire European Union, but we do not. We believe that the federal government should speed up its attempts to access Europe so that we can arrive at an even more significant agreement that will give the best possible results.

This is the reality. We have lost 150,000 manufacturing jobs in five years, more than 80,00 of which were lost since the Conservatives came to power. They follow the laissez-faire doctrine, meaning that the market regulates everything, but that does not mean that we should not be open to new markets, as we would be with the free trade agreement we are talking about today, and of course a more widespread agreement with the whole of Europe. The European Union is absolutely essential to diversifying our markets and reducing our dependency on the United States. The fact that Canada has not yet signed a free trade agreement with the European Union considerably diminishes the competitiveness of our businesses on the European market.

At this point in my speech, I would like to say that the Canadian government must realize that it is essential to move forward on environmental issues. Other countries must see that we are respecting Kyoto, and that we will be firmly committed to Kyoto plus, which will be developed at the Copenhagen conference next year. As it stands, we could end up paying export taxes because the international community does not recognize that we have made an adequate effort on environmental issues. The government will have to be tougher and much more active in this respect, and it will have to recognize that sustainable development is not only good for the environment, but it is also good for the economy. Canada is not currently a leader, as it could have been if it had truly decided to accept Kyoto, to implement it and to create resources more quickly, such as a carbon exchange, so that we could reap all the necessary benefits.

Let us go back to the possibility of a free trade agreement with Europe. With the rise of the petrodollar, European companies have tended to open subsidiaries in the United States and leave out Canada. That is another reason why it would be a good idea to sign a free trade agreement with all of Europe.

Canada's share of direct European investments in North America dropped from 3% in 1992 to 1% in 2004. The alarm bells are ringing. We need to change our attitude, we need to change the way we do things, and we need to come to an agreement with all of Europe, like the one we are debating today, as quickly as possible. It would be to Quebec's and Canada's advantage to sign and implement an agreement as soon as possible.

I should also point out that the European Union and Mexico have had a free trade agreement in place since 2000. As such, if a Canadian company is doing business in Mexico, it is in that company's best interest to relocate more of its production to Mexico because it can access both the European and U.S. markets, which it cannot do if it keeps its production in Quebec. It is important to both companies and workers for the federal government to change its attitude and speed things up in terms of opening up markets. Being open to globalization when the conditions are right means that our companies have to be in a competitive position. We have to give them the fiscal tools they need, and we have to give them the tools they need to access the market.

The example I just gave is the best one. A Quebec company does not have the same access to the European market as a Mexican company, and companies in Mexico have access to both North American and European markets. This is an aberration that should be rectified as soon as possible.

Quebec would be the first to benefit from a free trade agreement with Europe. The Bloc Québécois has been promoting this for some time now. We proposed it as part of our election platform and our political agenda. We believe that if we persevere in this file as we have in others, we will eventually get a free trade agreement with Europe.

For example, 70% of the people who work for French companies in Canada are from Quebec, as are 37% of those who work for U.K. companies here and 35% of those who work for German companies here. In contrast, just 20% of people working for U.S. companies in Canada are Quebeckers. The Government of Quebec has been working with companies since the Quiet Revolution, and that is a major advantage when it comes time to seek out European investment. We have everything we need to become the bridgehead for European investment in America.

Thus, we see what the prevailing spirit was when the free trade agreement was signed with the United States, the agreement that later became NAFTA. Thanks to that spirit, Quebeckers rallied behind their leaders who wanted to implement free trade. Quebec has benefited from this free trade. Unfortunately, market conditions have changed considerably. Since the markets have opened up to China and other countries around the world, we are now facing a new reality. This reality calls for new tools for international trade. Free trade agreements are the best example.

Today, the Bloc Québécois is very pleased to support Bill C-55, which would implement the Free Trade Agreement between Canada and the EFTA, that is, the European Free Trade Association, consisting of Iceland, Liechtenstein, Norway and Switzerland.

We believe this is a step towards adopting such an agreement with Europe as a whole. Quebec is open to this position and hopes to see it come to fruition. Quebec as a whole shares this desire to move forward on such agreements. We hope the federal government will pick up the pace and conclude an agreement with the European Union. That would be the best way to diversify our economy, which really needs a boost, due to the slowdown in the American economy and the emergence of new competition from China.

I am pleased to confirm once again that the Bloc Québécois supports this free trade agreement and hopes to see it implemented as soon as possible. It will be beneficial for businesses and workers in Quebec.

[The Acting Speaker, Conservative, Royal Galipeau]

Before I go to questions and comments, I would like to thank the hon. member for Vancouver Quadra for maintaining order and decorum in the House over the last several minutes. Questions and comments.

Resuming debate, the hon. member for Halifax.

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, I am pleased this afternoon to have an opportunity to speak to Bill C-55.

I was in the House earlier today when the minister of trade made his very enthusiastic uncritical comments in support of the bill that is before us. I listened very carefully to what the minister of trade had to say about what the impact of Bill C-55 if implemented in its current form would be on the shipbuilding industry of this country.

I expected that he would speak in an informed way about what are some very serious concerns which are widely shared not just by a small corner of this House, not just by 30 New Democrat members of Parliament, but by a great many people across this country, particularly on both coasts, in terms of the very worrisome impact this free trade deal will have on the shipbuilding industry. Far from hearing him give appropriate attention to the very legitimate concerns that are widely shared and widely expressed, he more or less dismissed those concerns. I do not want to misrepresent him in any way, but I think he referred to them as certain sensitivities. He said there were certain sensitivities that had arisen in regard to shipbuilding.

I do not know the minister of trade personally, but I have to say that is one of the world's greatest understatements. Perhaps he is prone to understatement, I do not know, but it certainly does not do justice and it does not deal fairly with what are very deeply rooted concerns. From my point of view and that of the New Democratic caucus, these are well-founded concerns about what the impact of this deal, if it goes ahead unamended, will be on thousands of jobs in this country.

Having said that, there is a very unhappy history, one that is very much shared by and is the joint responsibility of a succession of Conservative, Liberal and Conservative governments. There has been a complete failure by any of those governments over the decades to put in place the kind of comprehensive, coherent, national shipbuilding policy that would have served this country so much better than the kind of fits and starts, piecemeal approach to shipbuilding. It has often been an approach that has been based more on short term electoral considerations than on the very fundamental issues that underlie the need for a comprehensive national shipbuilding policy.

My own experience and exposure to the inadequate responses of the succession of governments began when I was leader of the New Democratic Party in Nova Scotia. There were very real, well-founded concerns about the impact of that lack of a national shipbuilding policy in my own riding in Halifax. At that time I was proud to represent the riding of Halifax Fairview, and before that, Halifax Chebucto. Both of those provincial ridings were very much impacted by the policy, or more accurately, the absence of a national shipbuilding policy. That had an impact on the Halifax shipyards. We have systematically allowed that to happen in this country. Other countries, and one most notable in the context of this debate is Norway, have understood that there cannot be a sound, competitive shipbuilding industry if there is not a net comprehensive national policy.

I recall attending federal NDP conventions in the early 1990s. I think 1991 was one of the occasions when I was part of crafting and piloting through a very comprehensive policy that was adopted by the New Democratic Party. We called for that national shipbuilding policy. Before I ever came to Ottawa and continuing since I entered this chamber in 1997, the New Democratic Party has been very consistent and very persistent in continuing to press for that national shipbuilding policy.

We still do not have it. When the Minister of International Trade refers to “certain sensitivities”, his words, with respect to the disastrous impact that this trade deal, unamended, could have on our shipbuilding industry, he is being extremely insensitive to both that pathetic history of governments of his party's stripe and of the Liberals in not securing a sound base for a robust shipbuilding industry that can continue to compete in today's world.

There is absolutely nothing wrong with our current shipbuilders and our current shipyard workers in terms of their ability to compete, but we have had such a fits and starts approach to this industry that what has effectively happened is that Norway foremost, but other countries as well, has invested in a smart, orderly and far-sighted way in its shipbuilding industry. It has in the process established itself as a competitor that will be a huge winner from the trade deal that is before us. I say good for it.

Some people ask, what is wrong with New Democrats? After all Norway has had a proud tradition of being a social democratic country committed to high wages, committed to practically the whole range of policy objectives that the current government and the Liberal government before it completely pushed aside as not the domain of government intervention. In fact in Norway the government has intervened in a very smart way to build up its shipbuilding capacity, to train, to invest in the hardware, software and infrastructure needed, in the tax policies and so on.

It is not some kind of unexpected development that Canada finds itself at such a disadvantage in relation to competing with a country like Norway. What is unexpected, but I suppose we should come to expect it, what is absolutely unacceptable and impossible to understand for a lot of people whose jobs are at stake is what on earth Canada has been doing in the meantime that has allowed us to be so vulnerable.

It is not just New Democrats who are speaking out on this, although before I go to some of the other voices and some of the other interests very much concerned about the devastation in the shipbuilding industry that can result from this trade deal, I want to take this opportunity to pay tribute to my colleague from Sackville—Eastern Shore, who is not able to be here today. I have to say that if he had been in the House to hear the minister talk about certain sensitivities, I think he probably would have had a heart attack. In fact, he had an accident and because of his injury was in hospital yesterday being operated on, and therefore, he was not able to be here today. He has never failed to take a stand on behalf of the shipbuilders and the shipyard workers in this country from the day he entered public life.

It is not just the Nova Scotian members of Parliament in the New Democratic caucus who have been very vocal, knowledgeable and persistent in putting forward their concerns. There are several members from British Columbia. For example, there is the member for Nanaimo—Cowichan. The Nanaimo shipyards are very important to the local economy and obviously for local jobs. There is the member for Victoria. In Victoria the Esquimalt dry dock is very important. The Lower Mainland and the Vancouver members all have expressed their concerns articulately. However, it is not just New Democrats who have spoken out.

I would like to read briefly from some of the testimony before the parliamentary committee when Karl Risser, president of Local 1, which was originally the Marine Workers' Federation but is now affiliated with the Canadian Auto Workers Shipbuilding, appeared before the committee. He did so not just on behalf of the proud members who have a long history with the Marine Workers' Federation and today are affiliated with CAW, but also on behalf of the Shipbuilding, Waterways and Marine Workers Council that has done a lot of collaboration and coordination around its concerns about this impending devastation to the shipbuilding industry. He stated in committee:

I am here on behalf of the workers in the marine sector...to express our opposition to this agreement. Canadian shipbuilders find themselves competing for work in domestic and international markets on far from a level ground. Other governments, Norway for one, have supported the shipbuilding industries for years and have built them into powers, while Canada has not. We have had little protection, and what little protection we have left is a 25% tariff on imported vessels into Canada, which is being washed away by government daily through agreements such as this and the exemptions being negotiated with companies.

I will not go on at length, but he makes the important point that ministers of defence over the years have acknowledged how important shipbuilding is to our defence. I know there are some members who will rush forward in this context and ask what my concern is now because we have some important new shipbuilding activity happening with respect to the submarine refits and to the frigates. That is absolutely true and it is very welcome, and I acknowledge that, but with respect to defence and shipbuilding, there has never been a comprehensive approach taken to this and, therefore, we have not had orderly procurement nor long term planning and investments. We have had major investments into important contracts from time to time but then just a drought for very long periods.

Someone who is not familiar with the shipbuilding industry may say that it is not the government's problem. Do we want the government investing and awarding contracts to shipyards to build naval vessels that we do not need? No, but that is not the point. The reason we need a comprehensive national shipbuilding policy is because of the very heavy investment of public dollars into contracts that are awarded for naval vessels and, most recently, major contracts with respect to frigates and subs. Without a comprehensive national shipbuilding policy, all that investment would fall idle if we did not have a commitment to Canadian shipbuilding of non-defence vessels.

It is not surprising that a lot of concern has been expressed. Unwisely, the government felt that, because of opposition from the existing shipyards and in the absence of a national shipbuilding policy, which, understandably, marine and shipyard workers across the country will be very opposed to, it could award the major contracts for both the frigate and the submarine refits and that would shut them up. It felt that would keep them busy in the short term and that they would not dare speak out because they would be so grateful.

However, what they understand, what they committed to and what they lobbied a long time for was not just the immediate investment in contracts that would benefit them individually as workers or their families, but they had pleaded the case and put forward comprehensive proposals for what a national shipbuilding policy should look like and they still do not have it.

Therefore, there are major concerns about what will happen to our shipyards and to the jobs of our shipyard workers over time.

The point was made that Norway should be the kind of country with which we would welcome entering into trade deals, and that is true, but that does not mean we can turn our backs on the legitimate problems that have arisen, not because of what it is looking for but because of what we have failed to do in terms or appropriate investments.

As I indicated, many other people have expressed concerns about the impact of this. Some may suggest that it only affects the shipyard workers. However, in his testimony before the committee, the president of the Shipyard General Workers' Federation in British Columbia stated:

The Canadian shipbuilding industry is already operating at about one-third of its capacity. Canadian demand for ships over the next 15 years is estimated to be worth $9 billion in Canadian jobs. Under the FTAs with Norway, Iceland, and now planned with Korea and then Japan, these Canadian shipbuilding jobs are in serious jeopardy. In these terms, this government's plan is sheer folly and an outrage.

Is it only the workers who have spoken out? No it is not.

In his testimony before committee, Andrew McArthur, speaking on behalf of the Shipbuilding Association of Canada but long-associated with Irving Shipbuilding Inc. and now in retirement, said:

So our position from day one has been that shipbuilding should be carved out from the trade agreement. We butted our heads against a brick wall for quite a number of years on that and we were told there is no carve-out. If the Americans, under the Jones Act, can carve out shipbuilding from NAFTA and other free trade agreements, as I believe the Americans are doing today with Korea, or have done, why can Canada not do the same? ...We have to do something to ensure shipbuilding continues. The easiest thing is to carve it out from EFTA. And if you do one thing, convince your colleagues in government to extend the ship financing facility, make it available to Canadian owners in combination with the accelerated capital cost allowance, and you will have as vibrant an industry as exists

However, what has not happened is the kind of response to the expert advice given by those involved in the shipbuilding industry and by the concerns put forward by the shipyard workers themselves.

I want to come back to where the Liberals stand on this. I could not help but think how consistent they have been, and they are consistent if nothing else, on the budget, on the extension of the Afghan counter-insurgency mission and with regard to climate change. They have railed against them, have talked about the problems with them and then have voted for them or did not vote at all.

Today we heard the trade critic for the Liberals say that they really had concerns about shipbuilding. He knows the problems and spoke a bit about them but then said that they would monitor the effect of this on the shipbuilding industry.

In conclusion, I want to indicate that the New Democratic Party cannot support this bill without a carve out for the shipbuilding industry and without any indication that some of the agricultural implications have been adequately addressed.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Mr. Speaker, I listened to the hon. member as she spoke about her objection to this great free trade agreement that we are debating now and which looks as though it will come to fruition.

I listened with interest to her criticism of the shipbuilding aspect of it but I also listened when the minister spoke about the agreement and the protection put in it to protect, for many years, our shipbuilding industry.

However, I find it rather curious that here we are creating hundreds of thousands of jobs and perhaps millions of man-hours for people who work in an industry that we all know was at risk, and, in one particular case, the Davie Yards, which was in financial distress and has been for some time, how this bodes well for the health of that particular industry.

I do not know how the member can construe the tremendous investment by the Minister of National Defence and the procurement by the Canadian government with regard to defence contracts, in particular, the refurbishing of our fleet, to be a negative. My goodness, I do not know how this could be a negative. It actually bodes well for employment and the long term viability of our shipbuilding industry.

Why does the hon. member and her party, time and time again, vote against the very thing that creates employment and brings back vitality to that industry?

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, I do not want to be argumentative. I do not know whether the member was in the chamber when I spoke but if he was, he either did not listen to what I said, which is his prerogative, or he did listen and knows that he has completely misrepresented what I said.

I said, in no uncertain terms, that it does bode well in the short term for jobs in shipbuilding. I made that very clear. I complimented the government on that and acknowledged that was so.

What I went on to say, however, which he chose to either disregard or misrepresent, which is not quite within the rules, is not what he said. He said that I had suggested that this was a negative thing and that I did not acknowledge that the implications for shipbuilding in the short term were positive. I do acknowledge that, but the present government, like the Liberals before it, has only a short term view of these things.

If he wants to know why we cannot support this bill unamended, it is because a carve out of the shipbuilding industry would have done nothing to damage the prospects for the jobs that are now going to be generated by the new refurbishing of our fleets. Therefore, a very simple carve out would have made a great deal of difference. We will continue to fight for that. We believe that was what was needed and without it we will not be able to vote for it.

[Gerald Keddy, Conservative, Parliamentary Secretary to the Minister of the Atlantic Canada Opportunities Agency and to the Minister of International Trade]

Mr. Speaker, I was listening to the discussion of the hon. member for Halifax on what was said, or what was not said, or what might have been said, and quite frankly I am a bit confused.

However, what I am not confused about is the fact that this is a good treaty. It is a good FTA for Canada. It is a good FTA for the European nations. It opens up prospects for a wider market for goods. Anytime we can sell our goods in Canada, because we are an exporting nation, that means jobs and opportunities for Canadians, for workers, whether they are unionized or non-unionized. It is a good thing for Canada.

For the shipbuilding industry in particular, there are 15 years of protection in this treaty. That is the most protection of any FTA we have signed. For three of those years, the protection is at its current level. That is the most effort any government has ever made to protect any particular industry under a free trade agreement.

I would go a step further than that. The Norwegians have just purchased the Davie yard in Quebec. It looks now as if that yard will be profitable, with a lot of jobs and a lot of opportunity for the workforce in Quebec. I am not sure, without a foreign buyer, if this would have happened. I am not sure if that yard would have remained viable.

It is worth discussing. Would the NDP rather see our shipbuilding industry die a slow and painful death and see us lose those high paying, well qualified jobs in this country? That is the direction in which the shipbuilding industry was headed.

This government has done more than any previous government to support shipbuilding, first of all under this agreement, and second, with our frigate program. The Minister of National Defence and the Minister of Public Works recently announced $549 million for the Halifax shipyards and $351 million for the Victoria shipyards, respectively, for a refit of Canada's frigate fleet. This is part of $3.2 billion that is going to be spent on refurbishing our fleet in Canada.

At the end of the day, this is a good agreement for shipbuilding. That is the area she wants to talk about. In that area alone, this is a good agreement.

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, we will just respectfully have to agree to disagree. A great many people in this country, from Newfoundland through to British Columbia, who have decades of experience and an in-depth knowledge of the shipbuilding industry, happen not to agree with the government on this and we happen to agree with them.

One of the reasons, if he wants to know why there is such concern, is that when there were a lot of concerns about the Jones act in the U.S. being exempted from NAFTA and a lot of people in the shipbuilding industry were saying that it was really going to be a blow to the industry, the Conservatives said, “No, this is a great deal”. The Liberals said they were opposed to it, but then they signed it anyway when they got into government. The Conservatives said it was a great deal and there was no problem, but of course we know that is not true.

Let me again quote Andrew McArthur, one of the foremost authorities. I do not have time to quote him at length, but he made it absolutely clear that NAFTA had been a disaster when he said:

Looking at NAFTA, we feel we were sold down the river. We cannot build for American shipowners, but American shipbuilders can build for Canadian shipowners....

They are suspicious. In the short term, they understand, as I have acknowledged, that the refurbishing of the fleet is a very positive thing for the existing shipbuilding industry, but it does not provide what they said was essential: if not a carve-out, then a clear, comprehensive, national shipbuilding policy. We still do not have it. On that basis, they and we cannot support this flawed agreement.

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Mr. Speaker, I rise today to speak on Bill C-55, which would implement the free trade agreement that Canada has negotiated with the European Free Trade Association, which is composed of Norway, Switzerland, Iceland and Liechtenstein.

It marks the successful end of nine years of negotiations. This process began under the leadership of the former Liberal government and represents a significant achievement for Canada as a trading nation. It secures free trade with our fifth largest merchandise export destination.

Canada has always been a trading nation. From the early days of fur and fish to the present, when a remarkable 90% of our gross national product is attributable to exports and imports, Canadians have relied on international trade to bolster our economy.

Trade is the way of the future. The ratio of world exports to GDP has more than doubled since 1950.

This agreement is a proud achievement for our trading nation.

That being said, I share the legitimate concerns of our country's shipbuilding industry, and I have been careful to examine the provisions affecting that industry before offering my support.

The EFTA agreement strikes a balanced approach by providing new and important market access for Canada's exporters, while also ensuring that an important domestic industry is protected against unfair competition from Norway. Norway subsidized its shipbuilders and built up a tremendous shipbuilding infrastructure, growing the industry into a world leader. However, Norway eliminated its subsidies in 2005 and has no plans to reintroduce them in the future.

Nonetheless, the effect of this buildup still gives the Norwegian industry an advantage. As responsible legislators, we must be careful to ensure that this advantage does not allow it to compete unfairly against our own shipbuilders.

The EFTA agreement provides several protections against this historical advantage. First, it phases out tariffs on ship imports over 15 years, the second longest phase-out ever negotiated in a free trade agreement. This is also the longest tariff phase-out that Canada has ever negotiated. Our negotiators are to be commended for this achievement.

Furthermore, if imports from EFTA countries cause harm to our Canadian shipbuilders during that time, we can revert our tariffs to the pre-free trade tariff rate for up to three years.

This two-pronged approach provides important protection and a long transition period for our shipbuilders. This is the fairest, most balanced deal that can be achieved in the real world.

The only exception to these rules is for the largest type of ships, the post-panamax cargo ships, which is not a size of vessel that our shipyards can produce.

These provisions are critical. A carve-out option for these ships, as suggested by my hon. colleagues in the NDP, was a huge stumbling block to making this important agreement a reality.

All of this is not to say that shipbuilders will not see some benefits as well. Earlier, the NDP member for Halifax in fact said that the shipbuilding industry in British Columbia and Atlantic Canada will see some benefits from this agreement.

The buy Canada procurement policy for ships will not be threatened by this agreement, and shipbuilding is also being supported through a $50 million renewal of Industry Canada's structured financing facility.

The objective of the program is to stimulate demand for Canadian-built vessels and increase innovation in our shipyards. It has been able to attract foreign buyers to Canadian shipyards, and the $50 million reinvestment is an important part of continuing this trend.

We should also note that the EFTA agreement presents no threat to our agricultural supply management system. This system is specifically exempted in this agreement.

In my remaining time, I want to talk about the benefits of the trade agreement with EFTA.

The European Free Trade Association is a significant bloc of countries when it comes to their combined economic strength. They are our fifth largest export destination in the world and our twelfth largest destination for foreign direct investment.

Canadian exporters and producers will benefit considerably through the reduction and elimination of tariffs under this agreement. Benefits include the elimination of duties on all non-agricultural goods, the elimination or reduction of tariffs on selected agricultural products, and a level playing field with the European Union exporters in EFTA markets.

There are many farm owners and workers in my community who will be pleased to know that this agreement also eliminates the EFTA countries' agricultural export subsidies for products covered by the agreement. A significant number of agrifood products will receive tariff treatment no less favourable than the tariff treatment accorded to the European Union for the same goods. This is an important competitive gain for our farmers.

The agreement itself is a first generation agreement: it focuses on tariff elimination and trade in goods. Unlike NAFTA, the agreement does not include provisions on investment, services or intellectual property.

The focus on goods is justified. The activities of goods producers account for roughly one-third of total value-added of all industries in the Canadian economy. Between 1997 and 2004, the GDP growth for goods producers averaged 3% per year.

These exclusions have made it an easier deal to secure. However, these provisions should remain long term goals for Canada.

We need to secure provisions on services in the future. Services are the fastest growing part of the economy. Services are things that we cannot drop on our foot. Service producers account for two-thirds of industry-based GDP.

We also need to negotiate agreements on investment. Canadians need to be able to invest abroad with the full confidence that they will be treated equally to domestic producers. If they are not, they need the ability to seek legal solutions.

Finally, we will also need to secure an agreement on intellectual property. An intellectual property policy provides the foundation for investment and growth opportunities in the knowledge-based economy. When we look at our future generation, if we have to compete with giant markets like China and India, we will have to be a self-sustained knowledge-based economy here in Canada.

The free trade agreement with EFTA does not cover safeguards, anti-dumping and countervailing duties, which will continue to be addressed at the World Trade Organization. However, there are provisions that will allow these issues to be revisited after three years, leading to more negotiations and potential gains later on.

The EFTA agreement also has a strategic importance that cannot be discounted. It shows the European Union that we are a serious and important partner, which will help our hope to eventually secure free trade with the European Union.

Yet, the EFTA countries are important in their own right. There has been significant growth in our exports to them, with the past few years showing an amazing 27.6% annual increase in merchandise exports. They are an important market for Canadian natural resources, industrial products and forestry products.

The EFTA countries are also our seventh largest source of imports, including medical products, chemicals and machinery. My colleagues may not be surprised to know that Switzerland is also a key supplier of clocks and chocolate to Canada.

There is also strong foreign direct investment between both sides of this new agreement. Canadian direct investment abroad within these four countries totalled $8.4 billion in 2006. Similarly, Canada is an attractive place for foreign direct investment from EFTA. In 2006, the EFTA bloc invested a total of $15.6 billion in Canada, which was up an unbelievable $9.7 billion from 2004.

This agreement is also welcomed from the point of view of the relationship with Europe more widely. We have found common ground with four European countries. My daughter is currently studying medicine at a school in Europe.

As I go on with this case, I can see that we have a market that we should also be looking forward to because of the strength that the European Union brings to this agreement. We can have a marketplace to go to. This should also help us to find common ground with a much larger and more diverse European Union in the future. The EFTA agreement is an important stepping stone on the path to a Canada-European Union free trade agreement.

Other immediate advantages also include opportunities for trade diversification and enhanced industrial cooperation. We will also have a leg up on the U.S., which has yet to sign such an agreement with EFTA. It also keeps Canada ahead of China, which is already negotiating its own free trade agreement, and India, which is expected to begin negotiations this year.

The Liberal Party supports the broad, multilateral process of trade liberalization under the World Trade Organization. Securing equal access to all countries is ideal. It is especially important for countries where it would be difficult for Canada to get a deal with on the same terms, or even at all, due to our relative size.

Multilateral, non-discriminatory trade liberalization is the ideal. However, given what we are currently experiencing, the multilateral process is often cumbersome and slow. Regional trade agreements, like the one concluded between Canada and the EFTA, can be good and useful supplements to the multilateral process.

Finally, the agreement also has symbolic importance: it increases investor confidence, even without provisions on investment in the deal.

Culturally, Canada shares close ties with the EFTA countries. The largest Icelandic population outside Iceland is in Canada, estimated at more than 100,000 people. Large numbers of Canadians hail from the other member countries of the EFTA. Our countries share the values of democracy, freedom, human rights, freedom of expression and free market economies. We have so much in common with these countries.

Canada is a trading nation and the Liberal Party is the party of free trade. The EFTA agreement is an important agreement and it represents a launching pad to larger trade possibilities down the road. This is a trading relationship that every member in this House should rise to support. I thank the House for giving me the opportunity to share my views. I welcome questions from hon. members.

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

Mr. Speaker, I am pleased to rise in the House today to speak to Bill C-55, the Canada-EFTA free trade agreement.

As other members in the House have pointed out, this agreement has been in discussions for a long time. In fact, the European Free Trade Association and Canada first started their negotiations under the Liberals in 1997 but, ironically, it stalled in the year 2000 over shipbuilding issues. Here we are once again, in 2008, talking about concerns over the shipbuilding issues.

There are a number of good reasons why New Democrats have raised concerns about this agreement. Part of it is about the track record of the current Conservative government. All we have to do is look to the softwood sellout and look at the impact of what is happening in ridings from coast to coast to coast around the softwood agreement and some of the subsequent impacts on forestry policy. What we do not have, of course, is any kind of national strategy around forestry.

In addition, in the House today the government was talking about 22,000 jobs being created but what it failed to say is that the jobless rate rose in April to 6.1% and, in fact, manufacturing continued to decline in April with losses in Ontario and British Columbia. The number of factory workers has decreased by 112,000 since April 2007, according to Statistics Canada.

I want to return to forestry for one second because it directly relates to what we are seeing in the shipbuilding sector. With the government's policies around softwood and raw log exports, because of course it has a federal role, what we have seen particularly in British Columbia and my riding of Nanaimo—Cowichan is one sawmill after another close. This has had an impact on the pulp and paper industry because it does not have access to fibre supply.

An article by the Canadian Centre for Policy Alternatives in June 2007 stated:

Numerous opportunities to generate jobs from forest resources are routinely squandered. Absent much-needed provincial forest policy reforms, the situation is poised to get worse.

This short paper addresses two of the more troubling trends plaguing the coastal industry – rising log exports and mounting wood waste...The cost of not turning those logs into lumber and other wood products here in BC was the loss of an estimated 5,872 jobs in 2005 and 5,756 jobs in 2006.

I know we are talking about a free trade agreement and shipbuilding, so I want to turn my attention to shipbuilding. But I think the record in the forestry sector is an important one to note in the House because it directly relates to trade agreements.

The government is saying, “Trust us. We have built in a 15 year window to protect the shipbuilding industry. Just trust us that somehow or other our workers and communities will survive throughout this”. Because the softwood agreement is so fresh in people's memories, it is very difficult to believe that the government will put the measures in place that will actually protect the shipbuilding industry.

In the early 1980s, the shipbuilding industry was a robust industry in Canada and there were a number of shipyards from coast to coast that were very successful, but in the mid-1980s, 1986 or thereabouts, we started to see a rationalization in the shipbuilding industry.

I want to acknowledge the member for Sackville—Eastern Shore. We all know that any time a question comes up in the House with regard to industrial strategy in this country, the member for Sackville—Eastern Shore will remind members that we must put shipbuilding into that context. Although he has been tireless with his advocacy for this, the government and the former Liberal government simply failed to do that.

I also want to mention the member for Halifax who acknowledged the fact that some work has been done to shore up, so to speak, the shipbuilding industry over the last while. However, we do not have a long term sustainable plan. The government itself has acknowledged the critical role that shipbuilding plays in terms of our sovereignty. Yet, it simply has not put the effort into developing that plan.

When the NDP expressed its concerns about the lack of carve-out provisions in this particular agreement, this position was not developed in isolation. This position was developed in conjunction with the industry and the trade unions.

The board of directors from the Shipbuilding Association of Canada and the Canadian Auto Workers Union came before the committee and talked about some elements that they saw as being essential to be included.

We are not just opposing the agreement. We are proposing solutions in conjunction with people who are on the ground in this industry. They have asked for a carve out, saying that shipbuilding must be excluded from the agreement. They said that the federal government should immediately help put together a structured financing facility and an accelerated capital cost allowance for the industry.

Earlier when we heard the minister speak, I put a question to him about the Jones act and the minister said that it was domestic policy. Let me talk about the Jones act for one second.

The U.S. has always refused to repeal the Jones act. It is legislation that has been in place since 1920. It was legislation that was deliberately developed to protect U.S. capacity to produce commercial ships. The Jones act requires that commerce between U.S. ports on the inland and intercoastal waterways be reserved for vessels that are U.S. built, U.S. owned, registered under U.S. law and U.S. manned. In addition to that, and the minister said that this was domestic policy, the U.S. has also refused to include shipbuilding under NAFTA and has implemented in recent years a heavily subsidized naval reconstruction program.

If the United States, and many members of the House will tout it as the bastion of free enterprise, could see fit to work to protect its shipbuilding industry, surely Canada could do the same thing. This is even more critical in light of the sovereignty issue, but also we have the longest coastline in the world. We should have a vibrant and healthy shipbuilding industry, and it should be everything from small pleasure craft right the way up to the large vessels.

I talked earlier about some of the closures. I come from British Columbia and although this was a provincial government decision, we all know that many times provincial government decisions are influenced by policy at the federal government level.

I want to read from a press release of December 13, 2007, from the B.C. Federation of Labour. It said:

While B.C. Ferries holds a $60,000 party in Germany for 3,000 people on Friday, there will be no celebrating the launch of the first three German-built Super-C Class ferries that have cost the province 3,500 direct and indirect jobs and the loss of $542 million in investment.

That release was put out by the B.C. Shipyard General Workers' Federation.

About the B.C. Ferries' tendering, the Canadian Centre for Policy Alternatives said:

Buying Canadian is no longer procurement policy—at least in British Columbia....If BC shipyards do not receive a significant portion of BC Ferries vessel refits and replacement work over the next five years it is doubtful that a single major shipyard will survive—a substantial de-industralization of the BC economy.

Why would the provincial government choose to forfeit a significant tool of industrial development and throw out its ability to use a major crown corporation to support local well-paying jobs?

Further on down in the article it talks about this being:

—simplistic bottom line economics—search the world for ferry bargains. This approach fails to recognize the spin-off benefits to the BC economy of local procurement. Assuming $175 million is spent in BC on ferry refits and a small new vessel over the next five years, these benefits include 1,500 person years of employment, a $78 million increase in household income, a $101 million increase in provincial GDP, and a $32 million return to government revenues.

Those were 2002 numbers so we can only imagine that those numbers would have substantially increased over the last few years.

What we see in British Columbia is a growing income gap. We have a province that is reeling not only from forestry, but from the lack of attention and investment in the shipbuilding sector. In July 2007 the B.C. shipyard workers put out another release. It said:

BC Shipyard Workers Federation says federal Conservative government betraying shipbuilding industry—free trade deal between Canada and European Free Trade Association expected today could throw away thousands of jobs and hundreds of million of investment in BC and Canada.

George MacPherson, president of the shipyard workers, said:

—a federal announcement today to add $50 million over three years to a Canadian shipbuilding financing program is money previously removed from the same program and won't do much to protect the industry.

Therefore, we have this shell game again, where money is taken away, then it is given back and another press release comes out from the government to talk about how wonderful it is.

MacPherson said:

British Columbia has already lost nearly $1 billion worth of shipbuilding work because BC Ferries is constructing several new ferries in Germany...

A national strategic policy development is required, which supports the shipbuilding industry. When the government talks about a 15 year window to do that, it needs to move on it now. In fact, the U.K. has a shipbuilding strategy. I want to read a couple of points from it because these are things that Canada could building on. Its Defence Industrial Strategy: Defence White Paper, of December 2005, stated:

—it is a high priority for the UK to retain the suite of capabilities required to design complex ships and submarines, from concept to point of build; and the complementary skills to manage the build, integration, assurance, test, acceptance, support and upgrade of maritime platforms through-life;...We also need to retain the ability to maintain and support the Navy....To sustain this requires a minimum ability to build as well as integrate complex ships in the UK, not least to develop the workforce, and to adjust first-of-class designs as they develop.

Surely Canada could learn from other nations that have really made efforts to protect their shipbuilding industry.

Again, earlier today people talked about the fact that Norway did not currently subsidize its industry. It does not subsidize its industry because the government of Norway, over a number of years, put subsidies in place, developed a long term industrial strategy and looked at training and support of the workforce.

We would expect to see that kind of initiative from the government. Because people keep talking about how long a time span 15 years is, what should be done is the carve out should happen so those plans can be put in place and our shipbuilding industry can build on its already considerable strength, because we are world class shipbuilders. However, we need to ensure we invigorate and support that industry.

I would argue it is even more important we carve it out and ensure that we put those supports in place.

The member for Halifax mentioned this, but I want to re-emphasize it. The president of the Shipyard General Workers' Federation of British Columbia said:

The Canadian shipbuilding industry is already operating at about one-third of its capacity. Canadian demand for ships over the next 15 years is estimated to be worth $9 billion in Canadian jobs. Under the FTAs with Norway, Iceland, and now planned with Korea and then Japan, these Canadian shipbuilding jobs are in serious jeopardy. In these terms, this government's plan is sheer folly and an outrage.

Again, that is the labour side of it.

Let us talk about the president of the Shipyard Association of Canada, who retired from Irving Shipbuilding Inc. He said:

So our position from day one has been that shipbuilding should be carved out from the trade agreement. We butted our heads against a brick wall for quite a number of years on that and we were told there is no carve-out. If the Americans, under the Jones Act, can carve out shipbuilding from NAFTA and other free trade agreements, as I believe the Americans are doing today with Korea, or have done, why can Canada not do the same?

We have to do something to ensure shipbuilding continues. The easiest thing is to carve it out from EFTA. And if you do one thing, convince your colleagues in government to extend the ship financing facility, make it available to Canadian owners in combination with the accelerated capital cost allowance, and you will have as vibrant an industry as exists.

It is very important that we continue to push for an amendment of this agreement which carves out shipbuilding to ensure our industry stays viable.

[The Acting Speaker, Conservative, Royal Galipeau]

It being 1:30 p.m., the House will now proceed to the consideration of private members' business as listed on today's order paper.

When we return to the study of Bill C-55, there will be six minutes left for the hon. member for Nanaimo—Cowichan as the time allotted for questions and comments.