Bill C-46 (Historical)

Canada-Panama Free Trade Act

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

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 Panama and done at Ottawa on May 13 and 14, 2010.
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 agreements 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.
Part 3 of the enactment contains coordinating amendments and the coming into force provision.

Second Reading

[Dennis Bevington, NDP, Western Arctic, NT]

Mr. Speaker, I would say that this agreement would play in the direction Panama has already established for its economy, which is that of a state that promotes quasi-legal and illegal activities under the guise of its tax laws and shelters and the way it treats many of the issues in front of it.

What Canada is doing with this agreement, really, is playing into an illegal operation in Panama. That is unfortunate.

If the hon. member thinks that the role of the Canadian government is to continue to foster the development of these illegal and improper activities in world markets, he should be fine with this agreement.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Mr. Speaker, as members will recall from my participation in the debate yesterday, one of the big concerns I have about this free trade agreement is that labour rights, in fact, are part of a side agreement only.

Earlier today I heard members of the government side say that this is all right; a side agreement is still part of this free trade deal, so all is well.

In fact, all is not well. First of all, the side agreement is completely inadequate, because it simply asks governments to acknowledge the labour laws in their own countries. Under those labour laws, we know that just this last summer there was more anti-labour repression in Panama during which workers were killed, 100 were injured, and 300 more were arrested. Clearly, Panama's labour laws are not up to either Canadian standards or international standards.

The big problem with side agreements has been demonstrated in a different kind of labour context. In my own hometown of Hamilton, Local 1005 of the Steelworkers had a side agreement with a company, which they thought the company would honour, in much the same way the government has faith that its side agreements will be honoured. In that side agreement, cost of living increases were guaranteed to pensioners, steelworkers, who had worked hard all of their lives, had bargained pensions, and were counting on those cost of living increases to make ends meet.

However, the company decided unilaterally that since it was only a side agreement, it would ignore those obligations. Pensioners now are not getting the cost of living increases.

I want to ask the hon. member for Western Arctic whether he agrees with the government that side agreements are good enough to protect workers' interests or whether those side agreements are not worth the paper they are written on.

[Dennis Bevington, NDP, Western Arctic, NT]

Mr. Speaker, coming from a region of the country that relies on the federal government to set the deals for resource extraction in my region, I know perfectly well how difficult it is to achieve results, whether they come from side deals or are straightforward.

In many cases, it is simply that money talks. The deal works out in this fashion: people who do not have the advantage lose out. To me it is clear that what one has to look at is the good intent of the government one is dealing with, whether one is talking about one deal or another.

It really comes down to the track record of the government one is dealing with. What is the best indicator of future performance? It is past performance.

What we see in Panama is a past performance that is pretty straightforward. What will future performance be? It will be somewhat similar.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Mr. Speaker, I rise as well to speak in favour of the hoist motion, specifically because of the extremely inadequate side agreement on the environment.

We went through this whole dialogue on the free trade agreement with Colombia and yet again we are having the same inadequate documents tabled before this House. Since the serious issues raised about both the side agreements on labour and environment that were held in this House, there has been not one second of public dialogue or debate on what direction we want to go in our trade agreements with other countries.

Quite some time back, when Canada entered into the NAFTA, the three countries decided that they would not, at that time, incorporate labour and environmental considerations into the text of the binding trade agreement. Since that time, a number of governments, including the U.S. in the last U.S. election, and some Canadians have raised the bar and said that maybe it is time to revisit that, that if countries are going to claim that environment is as significant as development, maybe they better step up to the plate and actually put them on par in the balance.

I have taken the time to look at the side environmental agreement and I have to say that it is beyond shameful.

This place actually brought forward a trade agreement with the United States and Mexico but it has a lot of problems. The environmental provisions should have been incorporated into the NAFTA or at least within the side agreement, which is called the North American Agreement on Environmental Cooperation. This was an effort to create a genuine independent body with a budget and with some senior leadership that y would further the dialogue with the trade partners to try to incorporate environment into trade.

We have seen in the trade agreements that the government has brought forward that it absolutely does not believe the words when it stands in the House and says, “We must balance environment and development”. Nothing is clearer to this House than this free trade agreement that the government has tabled before this House. It has told us clearly how significant it thinks environmental factors are in trade and development.

As I have mentioned, there is significant downgrading from the North American Agreement on Environmental Cooperation, simply in the structure. Under the North American agreement, there is a council of the environment ministers of the three countries. In the Panama agreement, it is a committee of representatives. Who are they? Are they lower echelon bureaucrats? We do not know yet. We can guess who they will be because we have seen what has happened in Colombia. There is no full-time commission, no budget and no independent secretariat. Who is going to lead this so-called dialogue with the public? If the public requests that there be a dialogue on some of the environmental implications of this trade agreement, who will lead this topic?

We know that in our country it is a time of restraint. Are we to believe that Panama has surplus dollars, that its government can come up with the millions of dollars necessary to further these open dialogues on the environmental implications of trade and development?

There is no joint public advisory council. In the North American side agreement, it created a public advisory council and appointed people from industry, public interest groups and trade unions to the council of ministers. So much for participation and so much for the Conservative Party grassroots governance. There is no joint public advisory committee and no national advisory committee to our government on our relations with Panama under this agreement. Unlike the deal with the United States and Mexico, there is no duty to hold public meetings with the committee. Everything is behind closed doors.

The main argument for bringing forward the side agreement on environment in the NAFTA was that we needed to ensure that none of the partners in these trade agreements watered down their environmental laws to have an economic advantage. That is the whole purpose of incorporating environment and trade.

In this agreement, the word “enforcement” does not even exist. The government has taken out entire parts of the side agreement. Missing from this agreement is the obligation on the parties to ensure effective enforcement of their environmental laws. It is not in this side agreement.

In the North American Agreement on Environmental Cooperation, there is an entire framework of how we deliver effective environmental enforcement. That framework has been endorsed by the World Bank , the United States Environmental Protection Agency, the Circumpolar Institute on Environmental Law and the International Network on Environmental Compliance and Enforcement which our government belongs to.

In the Panama agreement, it has been replaced with two pathetic provisions. The government has pulled out of this framework at least 15 factors that are necessary for a country to have effective environmental enforcement and, instead, we have that the parties will encourage voluntary best practices of corporate social responsibility. It would be up to the corporations to decide if we are going to care about environment in Canada and Panama from now on.

Second, we have that the countries will promote voluntary-based measures. That is absolutely reprehensible. There are no investigative powers. One of the most important aspects of the North American agreement is the power of the secretariat to look into allegations of failed enforcement. There is no investigative power and no right of the citizens of either country to raise concerns and ask for an investigation.

There is also no article, which is in the North American side agreement, where the countries hold each of the signatories accountable for an ongoing pattern of failure to enforce environmental law. That is absolutely critical to the credibility of any fair trade agreement.

Perhaps it is understandable that the government would be fearful of committing to a process where it could be held accountable for effective environmental enforcement when, almost daily, it is being taken to court for the failure to enforce its laws. Just a few weeks ago, we had two first nations and two national organizations, for the fifth time, suing the Minister of the Environment for failure to comply with his own legislation on endangered species. I cannot even begin to count the number of cases brought by citizens against the federal government for failure to comply with the federal Environmental Assessment Act.

It is the same with public participation. All the strong measures in the North American side agreement are missing. We have the nice preamble but nothing is binding. The government has essentially eviscerated any kind of commitment to environmental protection in trade through this agreement. What is worse is that it has not taken a progressive forward-looking measure but has taken these measures and incorporated them into the body of the trade agreement.

I need say no more. The government has clearly stated its position. It does not believe that environment is part of trade and development.

[The Acting Speaker, Denise Savoie]

It being 5:30, the House will now proceed to consideration of private members' business as listed on today's order paper.

The House resumed from September 30 consideration of the motion that Bill C-46, An Act to implement the Free Trade Agreement between Canada and the Republic of Panama, the Agreement on the Environment between Canada and the Republic of Panama and the Agreement on Labour Cooperation between Canada and the Republic of Panama, be read the second time and referred to a committee.

Canada-Panama Free Trade Act

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Mr. Speaker, I am pleased to be speaking on behalf of the Bloc Québécois about Bill C-46, particularly about the amendment proposed by an NDP member.

To begin with, I would like to say that the Bloc Québécois will support this amendment because it means that debate about the bill will be delayed, potentially killing it. We are against this bill, and we said that during the first debate.

It is important to reiterate that the Bloc Québécois opposes this bill mainly because Panama is a tax haven, a country that promotes tax evasion. It is unbelievable that the Conservative government, supported by the Liberals, wants to conclude an agreement and adopt a bill to implement that agreement with a country that promotes tax evasion, when we have seen over the past two or three weeks that rather significant capital belonging to Canadians had been transferred to the HSBC Bank in Switzerland. In essence, this constitutes a form of tax evasion. The government tells us that it has started recovering some of the money, but it is a double standard. On one hand, it says it wants to recoup this money but it is not going to great lengths to do so, and on the other hand, it wants to conclude a trade agreement with Panama, a country that openly promotes tax evasion and is on the OECD grey list of tax havens.

France, among other countries, has taken very serious measures to fight tax evasion. French parliamentarians believe that this type of tax evasion absolutely must stop. They have taken measures to impose more taxes on companies that want to set up in known tax havens. France has established a black list, which was published in February 2010. It includes a number of Latin American and Asian countries, Anguilla in the Caribbean, Belize in Central America, Brunei in Asia, Costa Rica in Central America, Dominica and Grenada in the Caribbean, Guatemala in Central America, the Cook Islands and the Marshall Islands in Oceania, Liberia in Africa, Montserrat in the Caribbean, Nauru and Niue in Oceania, Panama in Central America, the Philippines in Asia, Saint Lucia and Saint Vincent and the Grenadines in the Caribbean. Panama is clearly on the black list of countries that promote tax evasion.

In Canada, we have a government that wants to promote trade with a country that has been blacklisted by other countries for promoting tax evasion.

We are short on money, and the government says we have a massive deficit. And yet it wants to negotiate and sign agreements with countries that promote tax evasion. These agreements will favour businesses and individuals that invest in these countries in order to pay less in taxes. That makes no sense, and is a complete contradiction.

The Bloc Québécois is not against free trade agreements. On the contrary. We have often said this. The Bloc Québécois was the first party to introduce the idea of an agreement with the European Union. We were in favour of a free trade agreement with the European Union, and these negotiations are now under way. We are absolutely not against trade agreements. Take NAFTA, for example, which Quebec fully supported.

What we are saying is that we must take advantage of the globalization of markets to try to level the playing field with trade regulations, to ensure they are fair for workers in other countries and workers here, for the different companies and for the environment. We must ensure that free trade agreements are not signed at the expense of the people of another country, of their environment or ours. We must look at the measures beforehand, instead of rushing to sign agreements, which only leads to serious repercussions in terms of the environment and labour rights. It is quite possible that these agreements would be better negotiated from a multilateral perspective.

What we are saying is that yes, we must be open to trade, but not just any old way. We believe that in order for trade to be mutually beneficial, it must first be fair. A trading system that results in exploitation in poor countries and dumping in rich countries is not viable. There is a downside, as I just mentioned. The Bloc Québécois will never tolerate a system of free trade that would result in a race to the bottom. We worry that an agreement like the free trade agreement with Panama will result in a race to the bottom.

The absence of environmental or labour standards in trade agreements puts a great deal of pressure on our industries, especially our traditional industries. It is very difficult for them to compete with products made with no regard for basic social rights. The Bloc Québécois believes that child labour, forced labour and the denial of workers' fundamental rights are a form of unfair competition, just like, or even more than, export subsidies and dumping. Prohibition of these practices is widely accepted at the international level, as reflected by the large number of countries that have signed the International Labour Organization's eight fundamental conventions. We must have a way to protect ourselves against such practices. We need an overall vision, a policy geared more to multilateral than bilateral agreements.

Trade agreements and trade laws do not protect our businesses and our workers from this social dumping. If a country wants to benefit from free trade, in return it has to accept a certain number of basic rules, with regard to social rights in particular. Environmental organizations and human rights groups have been concerned about this issue for a long time. More recently, though, it has become a major economic issue. Quebec has proportionally more industries threatened by competition from Asia than the rest of Canada. Quebec is at the forefront of this debate.

In closing, the Bloc Québécois is urging the federal government to revise its positions in trade negotiations in order to ensure that trade agreements include clauses ensuring compliance with international labour standards as well as respect for human rights and the environment. In their current form, side agreements on minimum labour standards and environmental protection lack a binding mechanism that would make them truly effective. The Bloc Québécois believes that if Canada wants to have credibility on this front, it should immediately sign on to the International Labour Organization's fundamental conventions against various forms of discrimination, forced labour and child labour, as well as those in support of the right to organize and collective bargaining.

Once again, we will support the amendment put forward by the NDP so that, ideally, this bill will eventually be withdrawn.

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

Madam Speaker, at the beginning I want to make a Hansard correction on behalf of the member regarding Bill C-46 because in his black list of countries with tax haven status he had mentioned the Dominican Republic, but he had meant to say Dominica, so I want to correct that on his behalf.

I think it is very interesting on the difference in approach on the issue of tax havens between France and Germany vis-à-vis the Canadian Prime Minister.

In France, the French government drew up its list of tax haven countries and it was very proactive. It applied taxes against these companies that do business in Panama. It taxed their dividends, service fees, royalties and interest paid.

What does the Canadian government do? Exactly the opposite. It waits until an employee of a Swiss bank turns over bank records to the French government and now we have the Prime Minister going cap in hand to Switzerland to talk to the Swiss finance minister about getting more information from Switzerland.

Revenue Canada has been given the list of these Canadians who have been investing in the tax havens, and guess what Revenue Canada does? It gives them an amnesty. There is a totally different approach. We have a very soft approach whereas the Germans and the French have a very tough approach.

I would like to ask the member--

[The Acting Speaker, Denise Savoie]

The hon. member for Saint-Maurice--Champlain.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Madam Speaker, I thank my hon. colleague for asking the question. And he is quite right to suggest the Hansard correction regarding what I said earlier. I said the Dominican Republic was on the black list, but I meant to say Dominica. I will make sure that is corrected, right after my speech.

My colleague is quite right. It is very strange that this government is promoting tax evasion by trying to pass this bill to enter into a free trade agreement with a country that is on France's black list and on the OECD's grey list of tax havens.

It is a complete contradiction for the government to say it will address a few of those issues with Switzerland. Why this double standard? We simply do not understand. That is why we completely oppose a free trade agreement with Panama. I mentioned several countries that are on black lists or grey lists, so what country will be next, after Panama?

Does the government have a policy on free trade, or is its policy to encourage as many free trade agreements as possible with tax havens? We cannot help but wonder.

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

Madam Speaker, my follow-up question for the member is this. After France put Panama on the black list, guess what happened? Panama signed a tax avoidance treaty. After Panama signed with France, it now has eight signed agreements.

Where is Canada in all of this? Canada is pushing ahead with a free trade agreement and it is not even one of the eight countries that Panama signed a tax avoidance agreement with.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Madam Speaker, once again, the member is quite right. France is very advanced in that regard and we have to wonder why Canada, which also wants to enter into free trade agreements, is not equally forward thinking. It must be consistent and not invest in tax havens, on the one hand, and not invest in other countries that do the same thing, on the other hand, or enter into free trade agreements with them. It makes no sense.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Madam Speaker, on behalf of the Bloc Québécois, I am pleased to be speaking about Bill C-46, An Act to implement the Free Trade Agreement between Canada and the Republic of Panama, the Agreement on the Environment between Canada and the Republic of Panama and the Agreement on Labour Cooperation between Canada and the Republic of Panama. I am also pleased to be speaking after my colleague from Saint-Maurice—Champlain, who does such excellent work on the Standing Committee on International Trade.

First of all, it is never easy to keep track of the Conservatives because they go off in all directions, which is why they got such a bad grade at the UN. That is part of the problem. They are not focused enough, they cast too wide a net and they are not building a solid base. The result is inevitable. And we can see it in the agreements that this government is signing.

To begin with, I would like to say that the Bloc Québécois does not support Bill C-46 concerning the implementation of a free trade agreement between Canada and the Republic of Panama.

Yes, Panama is one of the most developed economies in Central America, but the Bloc Québécois cannot ratify a free trade agreement with this country as long as it is on the OECD's grey list of tax havens. This is very important.

We know that the citizens who are listening to us work very hard and pay their taxes. Some of them are retired and continue to pay taxes. We often forget that. The economic situation is not easy, which means that we cannot revitalize our economy. This is the whirlwind that the Conservative Party got sucked into because it decided to forgo a traditional economy. This is a choice that the Conservatives made, notably by not supporting investments and the forestry industry.

In recent budgets, the Conservatives invested more than $10 billion in the automotive sector, but barely $200 million in the forestry industry, which is nevertheless Canada's primary industry. Without forestry, the development and industrialization of the past 50 years would not have taken place. Unfortunately, the decision to not support one segment of our traditional economy forces us to attempt to open markets in other economies. That is what the Conservative Party is trying to do by signing agreements with other countries. In this case, it is Panama. However, this country is on the OECD grey list of tax havens.

The Conservatives' message is that we can do business with tax havens and that we will avoid paying taxes in Canada, all the while hoping that our companies will create jobs here. However, we are increasingly seeing the good jobs leaving Canada, right under the Conservative Party's nose.

We must examine what the Conservatives have been doggedly working on: destroying the traditional economy, including the forestry sector. They have attacked it repeatedly. I am saying this because the forestry crisis started well before the banking crisis of the past two years. The forestry crisis started five years ago and businesses had sounded the alarm well before that.

The Conservatives decided to take other action rather than helping the forestry industry. This inevitably led to lower family income. There are fewer high-quality jobs and this affects our retirees and seniors, who must make an additional effort and continue to pay taxes year after year. There is no possibility of indexing the assistance that could benefit or be available to them, or the very basis for retirement income. The increase in old age security is negligible and does not even pay for a coffee.

The Conservatives decided not to invest to protect our traditional jobs in forestry and other industries, and they are shifting the tax burden to seniors and retirees. This is a choice the Conservatives are making, and the Bloc Québécois is not fooled.

The Conservatives are trying to get good press, with the Liberals' help. We must not forget that the Liberals supported the last two budgets. They let them pass by sitting down and not voting. That is how the Liberals do things. They have no backbone. We know them, and we have known for a long time that that is how they are. They have given moral support to the Conservatives as they shift from a traditional resource-based economy to a capital development economy. They have chosen to have huge mining companies that are going to invest in foreign countries and hire foreign workers.

That is not what the Bloc Québécois would have chosen to do, and it is not what the Bloc Québécois has always stood up for. We want to keep our jobs and our money in Quebec and the rest of Canada. If we can help Canadians by standing up for Quebeckers, then so much the better. That is what we do every day in the House. We have to prevent the Conservatives from continuing to damage the traditional economy, and one way to do that is to stand up against this free trade agreement with Panama, a country that is on the OECD grey list of tax havens, as I have said many times.

Today, here in the House of Commons, we were treated to quite a sight during question period: the Bloc Québécois members were asking the minister in charge about the cases of tax evasion involving the HSBC bank that were discovered by the French. Capital was being held in Switzerland and other countries by people from different countries who were evading tax. The government likes to brag about recovering money, but it is dead-set against prison terms for individuals who defraud the people of this country in this way.

That is unacceptable. Our constituents work too hard, or have worked too hard, if they are retired. Yet today we learned in the news that the French discovered that Canadians were evading taxes. We learned this through the news. It took a report from the CBC for this government to wake up. In fact, it had not decided to investigate Canadians who were evading taxes by putting their money in Swiss accounts. The Conservative government realized that it had no political choice, since it is a minority government, and could be defeated any day. As soon as there is a crisis on the horizon, the Conservatives try to put out the fire. That is what they did by trying to recover the money, but they forgot that tax evasion by a citizen is a violation of the Criminal Code.

Someone who is accused of stealing a litre of milk from the corner store must pay for the milk and face criminal charges. So I do not see how someone who diverted hundreds of thousands of dollars from Canadian tax authorities could simply walk away by writing a cheque and facing no criminal consequences.

That is how the Conservatives work. They are trying to destroy the traditional economy, as they did with the forestry sector, and open up new markets with tax havens like Panama. We have never supported that; we will not support it today; and we never will. We will always be against the way the Conservatives, supported by the Liberals, choose to govern by taking away from the poor to give to the rich.

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

Madam Speaker, I want to thank the member for his comments today.

The fact of the matter is that France did show some leadership with regard to chasing people who are investing in tax havens. First, it compiled a list of the tax havens. I think it was 17 or 18 countries, and then it proactively levied a tax of 50% on dividends, interests, royalties and service fees paid to anyone based in France to a beneficiary based in countries on its black list, which included Panama. That is what France did.

Guess what? In short order, what did Panama do? It lined up and signed a double taxation avoidance treaty with France. As of now it has eight signed treaties. That is an example of a country that was proactive and got results on tax havens.

What does Canada do? It waits until it gets some tax information from a former employee of the HSBC and it offers them amnesty if anybody wants to come forward and confess their sins. Then we have the Prime Minister going cap in hand to Switzerland to beg the prime minister of Switzerland to help out.

That is a totally different approach than what the French and the Germans have done. Those two countries know what to do in this situation because they are getting results.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Madam Speaker, my colleague is quite right, especially since Canada is headed for a record deficit of more than $54 billion. The men and women who are watching us, the workers and the retirees, have no hope that there will be a change in their personal situation in terms of the income the government provides, whether it is old age security or employment insurance, to those who need it.

It is even more frustrating when a political party, the Conservative government supported by the Liberals, decides that it will not ask the rich to pay their fair share, while those who suffer the most have no hope of seeing their income rise. They could at least have decided to take from the rich, who have been spared through tax avoidance measures, and improve support for seniors, the unemployed and those without work. That will never happen with this Conservative government supported by the Liberals. Never.

We have to fight hard against free trade agreements such as the one the Conservative government is about to sign with Panama, a country on the OECD grey list of tax havens.

My NDP colleague is right. I hope he will vote with us against this bill.