Bill C-24 (Historical)

Canada-Peru Free Trade Agreement Implementation Act

An Act to implement the Free Trade Agreement between Canada and the Republic of Peru, the Agreement on the Environment between Canada and the Republic of Peru and the Agreement on Labour Cooperation between Canada and the Republic of Peru

This enactment implements the Free Trade Agreement and the related agreements on the environment and labour cooperation entered into between Canada and the Republic of Peru and signed at Lima on May 29, 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 related agreements themselves, without the consent of the Attorney General of Canada.
Part 1 of the enactment approves the Free Trade Agreement and the related 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 orders 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 related agreement on labour cooperation.

Canada-Peru Free Trade Agreement Implementation Act

[Scott Brison, Liberal, Kings—Hants, NS]

Madam Speaker, at committee stage we have a responsibility as parliamentarians to study this FTA and to ensure that the benefits are there for Canada and that it makes economic sense for Canada. We will do that which is required as responsible members of Parliament at committee to ensure that we have done our homework, that we have pursued this very seriously and have done due diligence on the FTA.

I agree with my colleague in terms of the importance of not delaying passage of the bill, but at the same time of ensuring that we study this FTA carefully and we listen to stakeholders. There are a number of stakeholders who have perspectives on this that we have not yet heard from.

Having the legislation at committee stage will give all parties an opportunity to study it effectively.

[Frank Valeriote, Liberal, Guelph, ON]

Madam Speaker, I have been participating on the auto committee for some time. One of the issues that continually arises is the effect of free trade on our auto industry.

Common reference is the free trade agreement with South Korea and the concern that a number of cars from South Korea are being allowed into Canada but a far fewer number of cars from Canada go to South Korea. I take to mind here the issue of free trade but also fair trade and fair trade in relation to the issue of protectionism.

While I understood the previous question was about the speed with which this trade agreement could go through, I am also concerned about substance being more important than speed.

I wonder if my friend, the member for Kings—Hants, would comment on the need for fair trade and not just free trade balanced with the issue of protectionism.

[Scott Brison, Liberal, Kings—Hants, NS]

Madam Speaker, the hon. member for Guelph is part of the class of 2008, a very impressive class of new Liberal members of Parliament who are contributing significantly to this Parliament. They are making a real difference. He has been a tremendous leader on the auto sector.

The Korea agreement is of great concern. Free trade with Korea can only proceed if we see the non-tariff trade barriers taken down by the Korean government. When we are looking at these trade agreements we have to study not just tariff barriers but non-tariff trade barriers. There are numerous non-tariff trade barriers that prevent cars from outside Korea from being sold there and that prevent cars manufactured in Canada from being sold in Korea.

We need to ensure that the non-tariff trade barriers are brought down so that there is truly a level playing field. It is tremendously important that we look at tariff and non-tariff trade barriers. In Korea it is my understanding that the non-tariff trade barriers are significant and very punitive against any imports of automobiles from anywhere else.

[Serge Cardin, Bloc, Sherbrooke, QC]

Madam Speaker, Bill C-24 is the act to implement the Free Trade Agreement between Canada and the Republic of Peru, the Agreement on the Environment between Canada and the Republic of Peru and the Agreement on Labour Cooperation between Canada and the Republic of Peru. As I said earlier in a question to the Conservative member, the relative importance of trade with Peru is rather low and negligible. It would not necessarily be my choice for the cornerstone of my speech to you this afternoon. I will address other aspects of equal—if not, in the end, greater—importance than just the absolute figures of the transactions between Canada and Peru.

As I said earlier, given the figures considered, our trade deficit with Peru is fairly substantial. Involved are exports of some $300 million and imports of $2.4 billion. Proportionally, the deficit is quite substantial.

There are a number of issues with the free trade agreement with Peru, and I would like to raise a few. First, the agreement on investment protection in this agreement with Peru is almost a copy of chapter 11 of NAFTA. We know how that works and that it leads the multinationals increasingly to initiate proceedings against governments. Chapter 11 also contains the dispute resolution mechanism, which poses problems and has significant weaknesses.

The Bloc Québécois supports investment protection, as long as it is done well. Furthermore, there is the government's almost unhealthy predilection for signing bilateral agreements by the handful and as quickly as possible, ignoring of course the multilateral aspect. In recent times, the WTO is somewhat out of the picture, the Doha round is rather ineffectual and there is little progress. We all know that international trade—globalization—must be governed by rules that are the same for everyone and equal for all.

If I have time, I would also like to talk about mining companies. There are a lot of them in Peru, nearly 80. It is common knowledge that a vast number of them have their head offices in Canada, but in the end, they are foreign. Knowing that, in Canada, regulations governing mining companies abroad are very weak, they take advantage of the situation.

Earlier, a member spoke of fair trade and the various components of it, which include the environment, workers' rights and human rights. They are of prime importance in business and increasingly so. They have also been ignored by the multinationals, which have tried to globalize pretty well everywhere on the planet. We know the aim is to make money. Often, it is to the detriment of the people in the country where they have chosen to set up, because they could take advantage of various weaknesses. These are the things that must be considered increasingly to be regrettable, passé. We must look to the future and to development on a much fairer level.

As I was saying earlier, the relative importance of trade with Peru is rather small. With 0.079% of Canadian exports, Peru ranks 48^th, and 19 ^th when it comes to Canadian imports. This puts Peru in 25^th place among Canada's trading partners, but it is important to stress its minor role when it comes to our exports.

In this regard, Peru accounts for less than 1% of Canadian international trade, 0.31% to be more exact. Both Canada and Quebec have a negative trade balance with Peru. However, it should be noted that Canada imports primarily raw materials from Peru, including copper, while exporting mostly wheat and manufactured products.

As I mentioned earlier, the balance of trade for all exports is $382 million, while total imports amount to $2.458 billion, for a deficit of $2 billion. This shows the ratio of exports and imports, and the numbers speak for themselves.

In Quebec, exports amount to $50 million, while imports total $223 million, for a deficit of $173 million.

As regards agriculture, this is a typical agreement. Fortunately, supply management is not affected. Indeed, over-quota tariffs on regulated products and supplies such as dairy products, poultry, eggs and refined sugar, are exempt from tariff reductions.

The environment and labour laws are also affected by the agreement. The Canada-Peru free trade agreement is accompanied by two side agreements on labour law and on the environment. When it comes to human rights and labour law, Peru is not a problem country like Columbia. However, the standard of living is low, and we can legitimately question the ability of the Peruvian state to implement both environmental and labour law standards on its territory.

The main danger is with Canadian mining companies operating in that country. Indeed, Peru's mining potential is significant and over 80 Canadian mining companies are present in that country. Canada is the number one investor in Peru's mining sector. Given the poor track record of Canadian mining companies and a total lack of will on the part of the Canadian government to regulate their operations, protecting the additional investments of these companies through a new chapter 11 is highly questionable.

The Bloc Québécois is opposed to the Conservative government's strategy, which consists in making piecemeal agreements. Instead, we support a multilateral approach. The current economic crisis clearly shows that a market economy can work properly only if it is regulated and stabilized through an institutional, political and ethical framework. Rather than signing piecemeal agreements, Canada should work within the WTO to ensure that the rules governing international trade are the same for everyone.

The Bloc Québécois believes that trade can contribute to the prosperity of nations and, in that sense, that it can be a major social and economic development tool. However, this can only be the case if trade agreements include measures that will ensure sustainable development and that will promote the development of the populations involved.

The Canada-Peru free trade agreement includes a clause to protect investments that is patterned on NAFTA's chapter 11 and that will allow businesses to sue governments. To include a chapter protecting investments could impede Peru's social and economic development. That country is a minor trading partner for Quebec.

As I said, Quebec’s exports to Peru represent 0.14% of total exports from Quebec, and Quebec has a $174 million negative trade balance.

Canada’s main business activity in Peru is in the mining sector, and Peru’s track record on worker protection in that sector is hardly a glowing one.

In the absence of any real policy to hold Canadian mining companies accountable, ratifying this agreement will allow those companies to expand their activities without being subject to any rules or consequences when they pollute or when they flout human rights. The Bloc Québécois is therefore opposed to this bill.

Chapter 11 of NAFTA, relating to investments, allows investors from member states in the North American Free Trade Zone to claim compensation from governments of another party to NAFTA when they believe they have incurred a loss as a result of the adoption of regulatory measures that modify existing business operating conditions. The regulatory or legislative changes must, however, be such that they can be considered to be direct or indirect expropriation or a measure tantamount to an expropriation.

NAFTA is the only major free trade agreement to which Canada is a party that contains such broad provisions regarding the treatment to be granted to investors from other parties. Because the free trade agreement with Peru contains a similar clause, the Bloc Québécois believes that it is not in Quebec’s interests to adhere to the agreement and is opposed to ratifying it.

In fact, the free circulation of goods can hardly not go hand in hand with the free circulation of capital. Where specific provisions are not incorporated into free trade agreements, bilateral agreements generally provide for the protection of investments coming from the other party, and all such agreements contain substantially similar provisions, that is, a neutral arbitration procedure in the event of disputes between the foreign investor and the host state of the investment. There are currently over 1,800 bilateral agreements of this type in the world.

The provisions of chapter 11 of NAFTA governing investments have been called into question. They are the source of numerous proceedings that have been brought against various governments in Mexico, the United States and Canada. They sometimes result in several million dollars in compensation being awarded. In a nutshell, chapter 11 defines a complete scheme to govern investments. In addition, the definition of investments is very broad. Some of the provisions of that chapter, including the concept of expropriation, have generated numerous proceedings. In addition, the current trend is toward extending that concept to encompass lost profits.

There are lots of examples of lawsuits I could mention under chapter 11. They often revolve around the concept of expropriation and lost profits. The expropriation of real estate directly affects a company’s assets and operations, but something else is at stake when multinationals sue for lost profits.

So a host of lawsuits are underway. For example, there is a suit over regulations that were adopted on PCBs. The Canadian government is being sued by S.D. Myers as a result of the issuing of an interim order on the exportation of wastes containing PCBs, which was in force between November 20, 1995 and February 4, 1997. The American company alleges that this order prevented it from doing business in Canada and it wants $20 million US in compensation. According to the decision that was handed down, Canada’s temporary ban on the export of wastes containing PCBs violated two provisions of NAFTA.

Canada is still appealing this decision, of course, but we are talking here about defending the public interest and protecting the public. This decision means that foreign multinationals have legal authority over matters like this that are essential to the public and to national sovereignty.

There is another lawsuit that will show how bad the chapter 11 provisions on investment can be. Another suit stemmed from the prohibition of a toxic waste burial site. On February 19, the British Columbia Court of Appeal heard the appeal of a NAFTA panel decision awarding the American company Metalclad Corporation $16.7 million US in damages. The panel reached its decision last August after a Mexican municipality refused Metalclad a permit to operate a toxic waste burial site. Surprisingly enough, Canada will intervene in this case on Mexico’s behalf to argue that all interpretations of NAFTA must take a government’s ability to protect the public interest into account.

What I find surprising is that the government is practically copying chapter 11 in this free trade agreement. It is all the more likely and obvious, therefore, that governments will be sued by multinational companies. For example, if there is ever a major development in environmental policy in Peru, multinational mining companies from Canada that might not be used to any regulations could sue the Peruvian government in the same way.

There is also dispute settlement, as I was saying earlier. Many questions have arisen regarding the dispute resolution mechanism in this chapter. The mechanism provides that a company considering that a government has violated the investment provisions can take direct action against the government before an arbitration tribunal. The tribunals hearing the disputes are set up to hear a specific dispute. The deliberations of the arbitrators and their decisions are secret, unless both parties to the dispute decide otherwise.

While the free trade agreement with Peru has a number of improvements in terms of transparency, the Bloc Québécois feels that the resolution of disputes should be done multilaterally and in a centralized manner, rather than on a piecemeal basis between the various countries signing bilateral agreements.

In fact, the NAFTA provisions on investment are similar to those in the proposed free trade agreement with Peru. They give very broad powers to businesses and give us concern as to the ultimate sovereignty of governments and their ability to take measures to protect the health of people and the quality of the environment.

I might not have the time to conclude everything I had to say today, but I will now move to multilateralism.

The course of globalization, a phenomenon bearing both great hopes and great injustice, must be redirected. The disparity between rich and poor, the failure to respect rights and freedoms and the lack of regulations on the environment and labour give rise to despair more than anything else. Openness to trade and the establishment of international regulations to counter protectionism and protect investment are good things, which the Bloc supports. That does not mean that trade rules should have precedence over the common good and the ability of governments to redistribute wealth, to protect the environment and their culture and to offer their citizens basic public services such as health care and education.

Quebec is a trading nation. Our businesses, especially the high tech firms, could not survive in the domestic market. For the Bloc Québécois, for Quebec, international business is of almost capital importance, and we also support free trade agreements, but within a specific context. In this case, fundamental aspects of the free trade agreement with Peru prevent us from supporting it.

[The Acting Speaker, Denise Savoie]

Before we move on to questions and comments, it is my duty pursuant to Standing Order 38 to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Dartmouth—Cole Harbour, employment insurance; the hon. member for Sault Ste. Marie, the steel industry.

[Lee Richardson, Conservative, Calgary Centre, AB]

Madam Speaker, I welcome the comments of my hon. colleague who is a colleague on the international trade committee and has some expertise in these matters.

I would like the member's thoughts on the adjacent and attendant agreements, along with the free trade agreement. I think that, like me, he would have received a letter from the ambassador of Peru complimenting our governments on this. He said:

The agreement will also have a positive impact in other areas beyond the economic dimension. It will help us fight against poverty by creating new employments and fostering the development of local communities. By the same token, it will contribute to affirm the rules on corporate social responsibility and the protection of the environment, which are issues that very much concern Canada's public opinion.

I would like the hon. member to comment on that because these are two areas on which he has often expressed his own views.

[Serge Cardin, Bloc, Sherbrooke, QC]

Madam Speaker, I could have gone into much greater detail about this in my speech, but as I said, in a perfect world, trade would benefit both parties, not bring less well-off countries down even farther.

However, trade is not a cure-all. When companies invest abroad, I do not think that their first priority is improving the standard of living of the people in the countries where they set up shop. Their priority is making money.

I am not suggesting that all multinationals are brutes, but I am sure that the first priority is making a profit. Things do not balance out automatically or magically. There must be a will to improve things. Setting up shop in places where wages are low is not enough.

Still, efforts have to be made, and this has to be set out much more clearly in free trade agreements. There are no regulations governing mining companies working abroad. I said during my speech that this is important. Many foreign mining companies have their headquarters in Canada in order to exploit other countries, knowing full well that they will be free to do more or less as they please, because those countries do not have very stringent environmental rules and the companies cannot be reprimanded by the Canadian government.

I think that regulations are needed. Mining companies are a good example. There need to be strict regulations and a code of ethics to prevent mining companies from damaging and destroying the environment in other countries and contributing to population displacement. I am not saying that would happen in Peru, but we have seen it happen in other countries. This sort of thing must not happen again.

[Jim Maloway, NDP, Elmwood—Transcona, MB]

Madam Speaker, I agree with some of the previous member's concerns regarding free trade with Peru but does he not think that some of his concerns could be addressed by virtue of the cancellation clauses within the agreement? We are all aware that the NAFTA can be abrogated, I believe, with a 90-day notice from either side. Therefore, if he is concerned that things will not work out in a couple of years the way we think they should, why should we not just abrogate the agreement at that time?

[Serge Cardin, Bloc, Sherbrooke, QC]

Madam Speaker, any way to improve a free trade agreement is a good way. We would have to see at that point. We are already debating this agreement here in the House, and we will debate it in committee if the opposition supports it. The Liberal Party seemed to support the agreement. Because of important aspects of the agreement, the opposition ought to be against it, which would put an end to it, because Bill C-24 would not be passed and the agreement could not be implemented.

However, it is crucial that the Conservative government's foreign and international trade policy be more open to multilateralism and that we work to create a level playing field for everyone. There are many players, but the rules are not the same for everyone. In my opinion, we need to move more and more in this direction in the future, to make globalization more equitable and give it a human face.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Madam Speaker, I would like to ask my colleague to explain in more detail the Investment Protection Agreement in the free trade agreement with Peru. He talked about lawsuits. Under what aegis can corporations sue in relation to this agreement?

[Serge Cardin, Bloc, Sherbrooke, QC]

Madam Speaker, I would like to thank my colleague for her question.

It is relatively simple. I also talked about the term expropriation, which now refers to nearly all situations and to all intents and purposes means loss of profits. If a particular government makes regulations, for public health and environmental protection or various social purposes in its country, that prevent a multinational from making the profits it was hoping for, the corporation can sue that government for the losses it incurs.

In ordinary internal trade, that cannot be done. These are things that are not done. Why should foreign multinationals be able to do what our own corporations cannot do? Sometimes corporations are expropriated in Quebec and Canada. Of course there are evaluations done to determine how much it is worth, but that is not based on the possibility of future profits, which are often arbitrarily inflated. It is based on their true value.

Recently, in the case of 2,4-D pesticides, Dow Chemical sued the government of Quebec for losses. The curious thing is, that company sells the pesticide to farmers. It has a specific market. In the interests of public health, Quebec says that this pesticide should not be used for cosmetic purposes, that is, to beautify lawns and eliminate dandelions. As an aside, when it comes to beautiful yellow dandelions on a lovely green lawn, I have always found that to be a pretty sight, but some people do not like it. The company claims that this will cause it to lose profits. Certainly it is going to lose profits. However, what has become of the sovereignty of a country, and of Quebec, to be able to legislate in the interests of public health and based on principles of environmental precaution? At that point, those positions are not acceptable.

For that reason, the Foreign Protection Investment Agreement in connection with the free trade agreement with Peru is a copy of Chapter 11 of NAFTA and it cannot be accepted in any way.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Madam Speaker, generally speaking, we oppose NAFTA style agreements that put big business interests before workers and the environment and that have increased inequality and decreased the quality of life for the majority of working people.

In the case of Canada-Peru, our concern is that a much larger and more developed economy will take advantage of a developing one and that large corporate interests will end up shaping the so-called free trade architecture to serve their needs and not the public interests of the two trading nations.

The most egregious aspects of the free trade agreement are similar to those found in the Canada-Colombia agreement that will be coming forward shortly.

I will begin first with labour rights. The Canada-Peru free trade agreement does not include tough labour standards. The labour provisions are in a side agreement outside of the main text and without any vigorous enforcement mechanism. Trade unions in Peru have expressed concern as Peruvian labour law is deficient in several areas.

The hon. member for Kings—Hants earlier was talking about enhancing labour rights and that free trade agreements can do that. I would like to use as a reference some comments made by the Council on Hemispheric Affairs with regard to the U.S.-Peru free trade agreement. It stated:

Despite the FTA's condition that labor standards in Peru must not be lowered, a number of President García’s recent decrees have put the country’s Public Service workers in jeopardy. [Last year, in 2008], the Inter-sectional confederation of State Workers...organized a strike in protest of legislative decrees 1025, 1026, and 1057, which, according to the union, compromise the labor rights of public employees. The new laws are designed to “modernize” the public sector through “punitive evaluations” of current employees’ work performance, as well as through a reorganization of positions and salaries. The power to implement these changes is granted to the National Civil Service Authority, omitting any possibility of collective bargaining. This leaves labor organizations with little leverage to protect the jobs of their members.

While these concerns raised by organized labor in Peru are significant, much larger problems plague a majority of the country’s population. Because unionized sectors in fact make up only a small portion of the nation’s labor force, few have the ability to collectively protest when labor laws are changed. Worse still, even the limited labor standards presently on the books are largely unable to extend their reach to a majority of working Peruvians. According to a 2007 Human Rights Report, only 9 per cent of Peru's labor force is represented by unions, and more than 70 per cent of it works in the informal sector. Thus, regulations affecting minimum wage and working conditions do not protect most Peruvians, making concern over labor laws almost a moot point.

While the national minimum wage was raised to $176 per month in October of 2007, many workers in the informal sector earn merely between $20 and $30 per month, according to the U.S. Bureau of Democracy, Human Rights, and Labor. The Bureau also reported that the Peruvian government “often lacked the resources, capacity, or authority to enforce compliance with labor laws.” Hence, most Peruvian workers are not protected against the potentially damaging effects of the FTA, which could leave them even more vulnerable to the self-serving demands of foreign multinationals.

I will now talk briefly about the environment. By addressing the environment in the side agreement there is no effective enforcement mechanism to force Canada or Peru to respect environmental rights. The Canada-Peru agreement on the environment commits both countries to pursing environmental cooperation and to work to improve their environmental laws and policies but it can only ask both parties to enforce their domestic laws. If they do not, there is no consequence.

Let me speak briefly about investors. Copied from NAFTA's chapter 11 investor rights, the Canada-Peru free trade agreement provides powerful rights to private companies to sue governments over their public policy, enforceable through investor-state arbitration panels. We have seen through our NAFTA experience how this type of corporate rights regime undermines the legitimate role of government in protecting and improving the lives of its citizens and the environment.

The Canada-Peru agreement is a somewhat improved copy of the outdated George Bush style approach to trade, but it still puts big business before people. There is no effective enforcement of human rights and it pays lip service to environmental protection, without any real measures or dispute resolution mechanisms.

These types of NAFTA copycat agreements are meant for trade between highly industrialized and developed countries, but Peru is a developing nation. This trade deal will not help Peru grow sustainably and increase the standards of living for its citizens. Instead, it will open the country up to exploitation by multinational corporations. Canadian corporations are very active and large investors in the natural resources sector in Peru. This kind of neo-liberal trade regime is strongly opposed by civil society groups, trade unions, environmental groups and citizens from both Canada and Peru.

As the hon. member from the Bloc pointed out, Peru is not a major trading partner with Canada. Two-way merchandise trade between the two countries reached only $2.8 billion in 2008. Over $2 billion of that money was Canadian imports, of which over 50% was from Canadian gold companies operating in Peru, taking advantage in 2008 of rising gold prices.

The trade deal was negotiated in record time, which should be a cause of concern for everyone in the House, and was negotiated without any consultation with trade unions, environmental groups, civil society and citizens.

By far, the trade deal does not provide investors and labour with a level playing field. While under chapter 11 investors have the right to seek binding arbitration that they can pursue independently, a trade union in Peru does not get to pursue a case to arbitration. It can file a complaint that would lead to an investigation and report, but it is up to the government to seek remedies and damages. Our experience with the NAFTA template shows that government is unwilling to do this. Empirical evidence strongly suggests that the minister of the day will not pursue the matter.

Market access is a concern. Let me reference this by talking about, in some cases, the technical aspects of the Canada-Peru free trade agreement in relation to the U.S.-Peru free trade agreement.

Before I talk about market access, I will provide a little primer.

It eliminates the vast majority of tariffs immediately upon entry into force. For Canada, most tariffs that will not be eliminated immediately will be phased out over a three-year period, which includes things like certain types of gloves, boots, textiles and imitation leather; and over a seven-year period for boats and other floating structures.

For Peru, most tariffs that are not eliminated immediately will be gradually phased out over a 5- to 17-year period. This includes foods such as rice, and certain cuts of meat.

Canada did not make any commitments to reduce over-quota tariffs on supply-managed goods, and that is a concern. We have in Canada a supply management system, province to province and territory, that protects farmers, producers and consumers. Canada did not make any commitments to reduce over-quota tariffs on supply-managed goods such as dairy, poultry, meat and eggs. Eggs are a product that we always think of in Ontario. It did, however, commit to gradually eliminating the within-quota tariff on these products. Canada will also allow partial access to the domestic sugar market, and Peru is placing the same restriction on imports of Canadian sugar.

Canada pursued market access under the same terms as those granted to the U.S. Canada received the same tariff concessions as the U.S. for wheat, barley and pulse foods. Canada did not, however, receive the same concessions for pork and beef.

Regarding investment protection provisions, the agreement with Peru was negotiated using the 2003 template based on chapter 11 of NAFTA. In spite of the so-called improvement to chapter 11 from lessons learned, chapter 11 is built on the principle of a corporate charter of rights that overrides the democratic will of a nation and puts labour at a disadvantage.

Under the terms of the agreement, Canada and Peru commit that their labour laws respect the 1998 Declaration on Fundamental Principles and Rights at Work. It also includes a dispute settlement process and a financial penalty should a country fail to respect ILO principles or fail to enforce domestic labour laws. The penalty for non-compliance is determined by a review panel that has the power to require the offending country to pay up to $15 million annually into a co-operation fund. Our labour allies have made the case that, although it is a step in the right direction, those side agreements are just side agreements, with no effective and vigorous enforcement mechanisms, where the last word belongs to a bureaucrat.

In the U.S.-Peru deal, the labour and environmental sections are not side agreements but chapters in the main text, chapters 17 and 18 respectively. In the U.S. agreement, the first articles of chapter 17 explicitly restate the standards and declaration. The Canadian agreement mentions the side agreements in the preamble and then makes reference to them throughout the rest of the agreement.

NAFTA just focused on the enforcement of labour standards while each partner retained full regulatory control to establish or modify its labour and employment standards. The Canada-Peru agreement is more substantive and seeks to prohibit violating core labour standards when they have an impact on trade and investment. There is, however, no empirical evidence that this kind of enforcement mechanism actually works at all.

Let me speak briefly on the environment.

The application of domestic law trumps all other considerations. The agreement on the environment does not contain a dispute settlement mechanism or specific penalties set out for non-compliance. Basically the side agreement says that the parties agree to abide by the commitment they have agreed to.

Unlike the Canada-Peru free trade agreement, the U.S. incorporates the environment and the labour side agreements right into the accord. The U.S. accord provides for a consultation process, after which the parties have access to a dispute settlement mechanism.

In fact, even though the environmental provisions appear stronger in the Peru-U.S. free trade agreement, the Council on Hemispheric Affairs has reported that the Peru-U.S. free trade agreement has provided the president with an excuse to lower environmental and labour protection standards by anticipation, through a flurry of decrees aimed at facilitating foreign ownership and the acquisition of land. About 40% of these presidential decrees were deemed unconstitutional by the Peruvian congress constitutional commission.

We in the NDP have great difficulty with this agreement, and not just the chapter 11 portions of it that are much like the chapter 11 portions in our NAFTA agreement with the United States that are causing so much trouble these days. There are a whole host of problems.

I would like to end there and I look forward to any questions that hon. members might have.

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

Madam Speaker, I listened to my colleague’s speech with interest.

I myself have just returned from a mission of the Inter-Parliamentary Forum of the Americas to Peru, where I was in contact with parliamentarians, the government and the public. I observed that there was somewhat the same kind of distance as we have here in Canada and Quebec, between parliamentarians and the government, that is, when it comes to preparing agreements such as the one some would like to adopt today—there is perhaps not enough consultation of parliamentarians. We end up with an agreement negotiated between the two governments that contains elements that may be difficult to accept. For example, in this agreement we have the equivalent of Chapter 11 of NAFTA, which in my opinion gives corporations improper powers.

Does my colleague not believe that if we had developed a practice of prior consultation, we might have achieved a more balanced agreement with Peru, that would have precluded this kind of agreement? Essentially, it is not free trade that is bad, it is the way it is applied. Agreements are made that do not properly reflect the objectives of free trade, including bringing greater prosperity to both countries.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Madam Speaker, I do agree that one of the problems with this free trade agreement is the fact that not enough consultation has taken place and not with the proper parties.

Peru has made some strides in the last number of years, just as Colombia has made some great strides in the last four or five years.

Really the question before the House in terms of consulting is, will this free trade agreement or other free trade agreements in the Americas make those countries a better place? Will they improve and promote human rights? Will they alleviate the poverty situation for the poorest of the poor and create a level playing field between the countries involved in the free trade agreement? I am not convinced that is going to happen with this free trade agreement.

[Colin Carrie, Conservative, Parliamentary Secretary to the Minister of Health]

Mr. Speaker, I listened intently to the member's speech. He seems to be missing some of the historic points about free trade agreements. Free trade agreements tend to raise the GDP of both countries involved, increase trade of both countries, and raise the economic status of individual workers in both countries.

Canada has a duty to help increase the rights of citizens around the world and lead by example. One of the best ways is through economic engagement. Canada needs new trading partners, not fewer.

The member seems to infer that Canadian companies would take advantage of foreign workers. I find that quite insulting, because Canadian companies are some of the most ethical companies around the world and they have a history of leading by example. They raise human rights and wages for the general population around the world through economic engagement.

This is a great opportunity for Canadians and Canadian companies. My NDP colleague does not seem to understand that the future is in greater access to foreign markets, not less.

I wonder if he could answer the question, what does the NDP have against quality Canadian companies and Canadian entrepreneurs who want to help improve the lives of workers around the world through economic engagement? We have a great history of that. Why does he think this would be different at this stage?