Mr. Speaker, it is my pleasure today to address the House during this debate on Bill C-2. For those who have not necessarily had the pleasure of learning about this bill in detail, I just want to say that it calls for the implementation of the Free Trade Agreement between Canada and the States of the European Free Trade Association. The association, EFTA, is made up of four European countries—Switzerland, Norway, Iceland and Liechtenstein—with a little over 12 million inhabitants, all told.
I should point out that the European Free Trade Association once included nine countries, but has lost members over the years. To compensate for those losses, the four members of the European Free Trade Association have undertaken to sign a series of free trade agreements, including this one with Canada. Earlier, the minister mentioned that he has been trying to speed up negotiations on all kinds of bilateral free trade agreements. Typically, multilateral agreements of the type with which we are all familiar are preferred. The WTO oversees all trade agreements.
Now, some 200 countries around the world are trying to negotiate bilateral free trade agreements at a more frenzied pace than ever. It also looks like the government is in a hurry to finalize the free trade agreement with Colombia. As we all know, committee debates have focused on human, workers', union and environmental rights. That is why the opposition will not accept this agreement. We also know that the new President of the United States does not support the free trade agreement with Colombia. I am not sure how the minister and the new government want to approach this debate. Many free trade agreements are currently being negotiated, but we still have to be careful about what we agree to in the end.
This is not an agreement that was hastily put together. On the contrary; negotiations began in May 1998, over 10 years ago. We know that in the fall of 2000, governments agreed on a first draft. Because it opened up the ship markets too quickly, it threatened our shipyards. Only the economic sector feels directly threatened by this agreement. As a result of new negotiations, implementation will be staggered over several years, up to 15 depending on the type of vessel. Although it is not thrilled, the association representing shipbuilders is resigned to accepting the agreement but is asking for an aggressive shipyard modernization program before the elimination of tariffs.
I asked the minister that question earlier, but he did not answer. I wanted to know what exactly he intends to do to make up for all the years and money invested in the shipbuilding industry in Norway, which was heavily subsidized in order to develop its competitiveness and expertise. The minister simply stated that he would ensure that it would not reoccur and that there would be no more subsidies. That is not what I wanted to know. I wanted to know what Canada will do to ensure that the shipbuilding industry can also benefit from certain programs that will result, by the time tariffs are removed, in a competitive situation. We were not given an answer.
The free trade agreement between Canada and EFTA is a traditional free trade agreement. Once implemented, it will liberalize trade of all non-agricultural goods.
It concerns only non-agricultural goods, not services, agriculture or investment. Of course, it provides for a dispute resolution mechanism that the parties, and only the parties, can use.
Another provision of this agreement has to do with anticipated economic impacts. In committee, opposition members have often asked the government to conduct an economic impact study in order to make projections and determine what will happen and what the impact will be on various sectors, such as agriculture, manufacturing and other specific areas. It has never carried out a single study, even though it has had 10 years to do so. Even the website for some countries in the European Free Trade Association is not up to date, because information is missing. How could the government have produced an economic impact study on this agreement? It must be condemned. It is always the same thing: the government never provides us with an economic impact study. We had to make do with drawing conclusions from a few general observations.
Needless to say, the goal of the Bloc Québécois is to work for the interests of Quebec, and we are going to keep on doing that as long as we are here. Logically, Quebec stands to benefit the most from this agreement. Canada's main exports to these three countries all come from Quebec. It follows that lifting the trade barrier should also benefit Quebec.
In addition, in high-tech sectors, Quebec's economy is strong in areas where these countries are also active, which should promote investment in Quebec. Take the example of Switzerland, which has a very vigorous pharmaceutical industry producing brand-name drugs. Prescription drugs account for 40% of Canadian exports to Switzerland and 50% of imports. To break into the American market, Swiss pharmaceutical companies might think about manufacturing drugs here, and the mecca of brand-name drugs, with its pool of skilled researchers and advantageous tax rules, is Quebec. A free trade agreement to facilitate trade between a corporation and its subsidiaries would likely bring new investments in the pharmaceutical industry in Quebec.
Nickel accounts for over 80% of our exports to Norway. The biggest mine in Canada and third largest in the world is in Quebec's Ungava region. It is owned by the Swiss company Xstrata. Our leading export to Iceland is aluminum. There again, production is concentrated in Quebec. Basically, subject to the implementation of an aggressive policy to support and modernize shipyards, Quebec should benefit from this agreement.
When we presented our supplementary opinion to the report from the Standing Committee on International Trade, there were two issues that directly affected us: protection of supply management and shipbuilding. Now I would like to talk about protecting supply management.
Obviously, Bill C-2 also touches on agriculture. It allows for the implementation of bilateral agricultural agreements, which would be added to the free trade agreement with the EFTA. These agreements are not far-reaching and will not have a significant impact on Quebec agriculture. Of the three agricultural agreements, the agreement with Switzerland in particular caught our attention because it abolished the 7% tariff on dairy products imported from Switzerland. Currently, 5% of the Canadian dairy product market is open to foreign competition. The 7% tariff was levied only on the imports that were part of this unprotected segment of the market to which our producers do not really have access.
Since the elimination of the within-quota tariff provided for in the agricultural agreement with Switzerland will affect only the market segment that is already covered by imports, the impact on our dairy producers will be negligible. However, this will make it all the more important to vigorously defend supply management at the WTO. A quota increase coupled with the elimination of the within-quota tariff would expose our dairy farmers to increased competition from countries that, unlike Canada, subsidize their dairy production.
The House of Commons unanimously adopted the Bloc Québécois motion calling on the government to reject any reduction in the over-quota tariff and any quota increase. Given the elimination of the 7% tariff in the current agreement, it is imperative that the government maintain a firm position at the WTO: supply management is absolutely not negotiable. In fact, in our opinion, a weakening of supply management would justify the renegotiation of the agricultural agreement with Switzerland.
I should also point out that modified milk proteins—which Switzerland produces—are transformed to such an extent that the courts have ruled that they are not agricultural products. That means that they are not covered by agricultural agreements. That being said, one of the appendixes in the bill to implement the agreement has been completely excluded. Milk proteins are excluded from the agreement, and the tariff quotas and over-quota tariffs remain unchanged. In other words, products that are under supply management are still protected. In fact, it is mainly the west that will benefit from the agricultural agreements because they provide for freer trade in certain grains, but the impact will not be significant because these countries are not heavily populated. The message is clear: supply management must be vigorously defended at the WTO.
The second aspect that directly affects us is shipyards. We have some concerns about the future of our shipyards. At present, imported vessels are subject to a 25% tariff. Under the agreement, these tariffs will start gradually decreasing in three years and will be completely eliminated in 15 years. However, our shipyards are far less modern and in much worse condition than Norwegian shipyards. Norway has made massive investments in modernizing its shipyards, whereas the federal government has completed abandoned ours. If our borders were opened wide tomorrow morning, our shipyards would likely disappear. But for economic, strategic and environmental reasons, we cannot let our shipyards disappear.
Imagine the risks to Quebec if no shipyard could repair vessels that ran aground or broke down in the St. Lawrence, the world's foremost waterway. For years, the Bloc Québécois has been calling for a real marine policy, and for years the government has been dragging its feet. Now that the agreement has been signed, time is of the essence. A policy to support our shipyards is urgently needed.
Moreover, this is the only recommendation in the report of the Standing Committee on International Trade on the free trade agreement between Canada and the European Free Trade Association. The committee agreed to insert the recommendation proposed by the Bloc Québécois international trade critic—incidentally, that was me, at the time—and of course the deputy critic, who is sitting behind me.
It reads as follows, “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”. That is the only recommendation made in the report, and the government must fully implement it.
The Conservative policy of leaving companies to fend for themselves could be disastrous for shipyards. We expect the government to give up its bad policy, and we call on it to table, as quickly as possible, a real policy to support and develop the shipbuilding industry.
When they appeared before the committee, shipyard representatives stated that two measures should be given priority: allowing accumulated depreciation to be transferred to buyers of Canadian ships and putting in place a structured financing mechanism. These simple measures—at the very least—could be adopted immediately. However, there are other measures that should be added.
In conclusion, I would like to say that it is, indeed, a free trade agreement. Bilateral free trade agreements are proliferating. We continue to be convinced that multilateral agreements should be signed as often as possible.
The agreement we are discussing involves four small countries. It is a very positive agreement but we must realize that it is also very limited. Together, these four countries represent approximately 12 million people and about 1% of Canada's exports. The real opportunity lies with the European Union. With a population of 495 million people, generating 31% of global GDP, the European Union is the global economic powerhouse. Canada is far too dependent on the United States, which has accounts for more than 85% of our exports.
The American economic slowdown, coupled with the surge in value of Canada's petrodollar against the U.S. dollar, reminds us that this dependence undermines our economy. Quebec has lost more than 150,000 manufacturing jobs in the past five years, including more than 80,000 since the Conservatives came to power, with their laissez-faire doctrine. To diversify as we must do, we should not look to China or India, countries from which we import, respectively, eight and six times more than we export to them. The European Union is an essential trading partner if we want to diversify our markets and reduce our dependence on the United States.
What is more, the fact that Canada has not signed a free trade agreement with the European Union considerably diminishes how competitive our companies are on the European market. With the recent rise in value of the petrodollar, European companies have tended to skip over Canada and open subsidiaries directly in the United States. Canada's share of direct European investments in North America went from 3% in 1992 to 1% in 2004. Add to that the fact that the European Union and Mexico have had a free trade agreement since 2000. Consequently, 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. Bombardier is a case in point.
Overall, this free trade agreement with the European Free Trade Association is good for Quebec. But as I have said and will keep on saying, it is better to promote multilateral agreements, where the rules apply to everyone. Important considerations such as human rights, union rights and environmental rights are sometimes left out of bilateral agreements. It is not true in this case, but it has happened in other agreements. I am more and more convinced that multilateral agreements should include social and environmental clauses. That is the direction we need to take.
