This bill is from the 40th Parliament, 3rd session, which ended in March 2011.
Peter Van Loan Conservative
Third reading (House), as of Feb. 7, 2011
(This bill did not become law.)
This is from the published bill.
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.
All sorts of information on this bill is available at LEGISinfo, an excellent resource from the Library of Parliament. You can also read the full text of the bill.
Bill numbers are reused for different bills each new session. Perhaps you were looking for one of these other C-46s:
Thierry St-Cyr Bloc Jeanne-Le Ber, QC
I thank the member for Hochelaga for that very important clarification.
This agreement allowed access to the markets and resources of various countries, which constituted a major step in terms of both human and economic progress.
In the past, many countries waged wars because they wanted to access a resource found in a neighbouring country or because one country was looking for new markets to sell goods. Every empire was built on this desire to have as many places as possible to sell their goods and to accumulate wealth. By opening up trade and accessing our neighbours' resources, without having to invade them or declare war, we probably avoided wars and improved international relations. Over time, these agreements became increasingly important economically.
For an exporting country like Quebec, which essentially produces manufactured goods for export, free trade is attractive because it facilitates access to markets and helps make us more competitive. These agreements enable us to sell our companies' goods, our own creations, to foreign countries, to create jobs in Quebec and to bring in good revenue.
What is more, consumers gain access to these products. In the case of Quebec, imported products often, but not always, have less value added and cost less than usual.
Every country has its strengths and weaknesses. In theory, the underlying principle of free trade is to draw on the strengths of each country to benefit all the partners.
If everything is done properly and Quebec definitely benefits, then the Bloc Québécois will support an agreement. However, let us not get carried away by ideology and say we are for or against free trade no matter what they are trying to sell us. The situation needs to be analyzed and assessed. Obviously, that did not happen in the case of the Panama agreement. In fact, officials from the Department of Foreign Affairs and International Trade and from the Department of Industry admitted when they appeared before committee that they did not conduct any studies to determine whether these agreements would be beneficial to our economy. The government is blindly entering this agreement with the attitude that, because we are all in favour of free trade, we will always support agreements of this kind. The Bloc is not prepared to go down that road.
They want so badly to sign a host of bilateral free trade agreements at any cost that they are prepared to consider any and all markets. The government is considering concluding an agreement with China, when we have a $26 billion trade deficit with that country. The Chinese sell us goods worth $26 billion more than what we sell to them. Before considering freer trade with countries like China, we should start by looking at how we could restore trade balance with them.
The Bloc Québécois proposes taking a multilateral approach, in other words, negotiating trade agreements at the international level, or at least with larger blocks of countries. That would help establish a better balance between the economic advantages that each country hopes to draw from the agreement and all the social, human and environmental considerations, which often are not included in these very specific bilateral agreements.
With regard to Panama in particular, we are concerned about the issue of workers' rights. The government of Panama has moved even farther to the right and has passed legislation that many consider to be extremely anti-union, since it will make it illegal for workers to demonstrate, protest or lobby to improve their salary conditions.
Another concern we have about this free trade agreement is the issue of tax havens. Panama is on France's blacklist and the OECD's grey list of tax havens. At least in theory, we do not want companies to be able to do business in Panama, not because of economic opportunities but because of laughably low taxes and the banking system's lack of transparency. We are worried that companies will take advantage of this to avoid paying taxes that they should legitimately be paying to Canada. In addition, if we sign a free trade agreement, we will make it even easier for people who want to use these tax havens. That is a big concern for us.
The Bloc Québécois has long been fighting to put an end to tax havens like Bermuda, Barbados, Panama and many others.
I kept a close eye on the whole saga of Barbados and the shipping company former Liberal Prime Minister Paul Martin operated there. He even voted for retroactive legislation that allowed him to repatriate profits to Canada tax-free. This was money he had laundered through Barbados. We criticized it then and we have ever since. And apparently it still does not bother the Liberal Party very much to sign a free trade agreement with a tax haven.
There is another reason to fight against tax havens. Yes, we need to recover the billions of dollars theoretically owed to our governments, but we also need to keep criminals from hiding their money in these tax havens. Even if they are caught, once they get out of prison, they can recover the money because we have no way of intervening and checking what money is flowing in and out of these countries.
For all these reasons, the Bloc Québécois cannot support the bill that is before us today. We invite the Liberals, in particular, to rethink the advisability of supporting the government and instead vote against this bill in order to send the government back to the drawing board and have it negotiate multilateral agreements that are good for Quebec, Canada and all working people.
Jim Maloway NDP Elmwood—Transcona, MB
Mr. Speaker, the member is absolutely right. According to American statistics, Panama has 350,000 foreign companies registered. They are registered in large part because of the tax haven status. That is one of the reasons why a good number of American Congress members refuse to ratify a similar agreement with the United States and Panama.
Until the American government gets tough with Panama and forces it to start co-operating and shuts down the money laundering facilities and the tax haven activities of Panama, this is going to continue.
We are rewarding bad behaviour by simply promoting and passing this legislation. The Americans are holding it up. They are refusing to act.
Last year France was tough and put heavy taxes on companies doing business with Panama. Panama came to the table immediately and signed a double taxation agreement with France as a result of that pressure. It is about time the Canadian government gets tough and quits rolling over to countries like Panama.
Thierry St-Cyr Bloc Jeanne-Le Ber, QC
Mr. Speaker, indeed, the Canadian government's attitude is especially appalling considering that many other countries are concerned and are trying to take action to put some pressure on Panama. Yet this government not only still wants to sign the agreement, but wants to move even faster. It appears to be proud of the fact that it is moving faster than the Americans and other countries, saying that we are going to sign and ratify this deal with Panama before anyone else. However, all of the signs and signals from other countries should instead be emphasizing the need for caution. The government should instead be thinking that, if all the other countries that are negotiating with Panama are concerned about the human rights situation, and more importantly, about tax havens, perhaps we should also join in and demand greater transparency from a tax haven like Panama.
Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC
Mr. Speaker, I would like to congratulate my hon. colleague on his excellent speech, which was an excellent summary of the Bloc Québécois's position regarding this free trade agreement with Panama, which, as he was saying, is a tax haven.
In response to questions at the Standing Committee on International Trade, government officials clearly stated that companies that do business in Panama will be able to bring profits back to Canada tax-free. We could not even get an answer from the Canada Revenue Agency regarding the amount or the value of the tax evasion this will bring about. I find that absolutely appalling.
I would like to ask my hon. colleague if he thinks it is right that such an agreement, even with the supposed fiscal arrangements, should exist and that the middle class will ultimately pay for the tax leakage that Canada will suffer.
Thierry St-Cyr Bloc Jeanne-Le Ber, QC
Mr. Speaker, this clearly shows what happens when parliamentarians or parties adopt an ideological approach, as we have seen on both sides of the House. There are those who always support free trade and are willing to sign anything, and there are those who basically are always opposed.
With free trade or any other issue, the Bloc Québécois does not take this ideological approach. We are rigorous. We look at what is before us. Clearly, this agreement is not in Quebec's interests. I doubt that it is even in the interests of the workers in Panama. Therefore, we will not be supporting it.
I believe this is the right approach. The people watching at home today elected us to make these decisions and to take the time to study the issues. If we do not, we are not doing our job and carrying out the mandate entrusted to us by the people. The Bloc Québécois intends to continue carrying out a thorough study of every bill brought forward and will not just blindly follow and trust ideology.
Jean Crowder NDP Nanaimo—Cowichan, BC
Mr. Speaker, New Democrats are opposing the Canada-Panama free trade agreement, Bill C-46.
I am going to address a couple of issues. I want to talk about the labour aspect of this legislation and, if I get to it, fair trade and the tax haven.
Earlier, we heard one of the Liberal members talk about the fact that the Conservative government would have consulted and yet, I find that a surprising statement given the fact when Dr. Teresa Healy, the senior researcher for the Canadian Labour Congress, came before the committee, she clearly outlined some concerns around the labour aspects of the bill.
I will not read her testimony into the record, but she did say the Canada-Panama agreement does not include specific protection for the right to organize and right to strike. On labour issues, fines are small, there are no countervailing duties. There is no provision for abrogation or any other such remedy. Yet, again, labour provisions remain in a side agreement rather than in the body of the text.
She indicated a bit of the socio-economic status in Panama. She said 40% of the population is poor, 27% is extremely poor, and the rate of extreme poverty is particularly acute in indigenous populations.
She also pointed out the track record of the Panamanian government.
The president announced unilateral changes to labour law in the summer of 2010. The law ended environmental impact studies on projects deemed to be of social interest. It banned mandatory dues collections from workers. It allowed employers to fire striking workers and replace them with strikebreakers. It criminalized street blockades and protected police from prosecution.
This is hardly a country's labour record that we would want Canada to enter into an agreement with.
The member for Burnaby—New Westminster has been taking the lead on this particular piece of legislation for New Democrats and has proposed amendments to attempt to change some of the more egregious aspects of this agreement.
One of the amendments he put forward was that the trade union workers in Panama be offered the right to collective bargaining as well as requiring the Minister of International Trade, as a principal representative of Canada on the joint Panama-Canada commission, consult on a regular basis with representatives of Canadian labour and trade unions. Sadly, that amendment was defeated at the committee.
I want to put this into context. In an article from October 2010 called “Back to the 'Good' Old Days”, although it is talking about Asia, there makes some good points. It states:
“Child labour rampant in Asia, serfdom on the rise here”.
I am going to quote extensively from the article because it is important when we see the erosion of labour rights in other countries it cannot help but raise concerns at home.
The article starts with a quote from John D. Rockefeller, from 1894. It states:
The disparity in income between the rich and the poor is merely the survival of the fittest. It is merely the working out of a law of nature and a law of God.
Many of us do not believe that. We believe there are roles for government in terms of redistribution of income.
Quoting again from the article, it states:
During the first 70 years that followed this pronouncement by one of the 19th-century's leading robber barons, the worst excesses of unfettered free enterprise were curbed by government regulations, minimum wage increases, and the growth of the labour movement. Strong unions and relatively progressive governments combined to have wealth distributed less inequitably. Social safety nets were woven to help those in need.
Corporate owners, executives, and major shareholders resisted all these moderate reforms. Their operations had to be forcibly humanized. They always resented having even a small part of their profits diverted into wages and taxes, but until the mid-1970s and '80s they couldn't prevent it. Now they can.
Thanks to the international trade agreements and the global mobility of capital, they can overcome all political and labour constraints. They are free once more, as they were in the 1800s, to maximize profits and exploit workers, to control or coerce national governments, to re-establish the survival of the fittest as the social norm.
This global resurgence of corporate power threatens to wipe out a century of social progress. We are in danger of reverting to the kind of mass poverty and deprivation that marked the Victorian era. Indeed, this kind of corporate-imposed barbarism and inequality is already rampant in many developing countries.
From the statistics that that Dr. Healy quoted, when we have 27% of a country extremely poor and 40% of the population poor, we have to wonder why we would be entering into that kind of trade agreement.
The article went on to talk about how, unfortunately, most Canadians do not seem to know how badly their forebears were mistreated in the workplace of the 1800s. These are labour conditions in Canada, but Canadians often do not realize that in Canada we had some of the worst labour laws going. It talks about a number of things. It says:
Conditions in the mines were especially bad, with most of the miners dying from accidents or “black-lung” disease before they reached the age of 35.
Hundreds of thousands of children, some as young as six, were forced to work 12 hours a day, often being whipped or beaten. A Canadian Royal Commission on Child Labour in the late 1800s reported that “the employment of children is extensive and on the increase. Boys under 12 work all night in glass-works in Montreal. In the coal mines of Nova Scotia, it is common for 10-year-old boys to work a 60-hour week down in the pits”.
This Royal Commission found that not only were children fined for tardiness and breakages, but also that in many factories they were beaten with birch rods. Many thousands of them lost fingers, hands, even entire limbs, when caught in unguarded gears or pulleys. Many hundreds were killed. Their average life expectancy was 33.
As late as 1910 in Canada, more than 300,000 children under 12 were still being subjected to these brutal working conditions. It wasn't until the 1920s, in fact, that child labour in this country was completely stamped out.
In the 1920s in Canada we agreed that child labour was not a norm, finally, that we would agree to. Yet we are saying it is okay to sign trade agreements with other countries where child labour is in fact part of what happens in those countries.
The article went on:
In the United States, another robber baron, Frederick Townsend Martin, was even more candid. In an interview he gave to a visiting British journalist, he boasted: “We are the rich. We own this country. And we intend to keep it by throwing all the tremendous weight of our support, our influence, our money, our purchased politicians, our public-speaking demagogues, into the fight against any legislation, any political party or platform or campaign that threatens our vested interests.”
It is nice to hear that someone was on the record in an honest way about what that particular corporate agenda was.
A modern descendant of John D. Rockefeller, his great-grandson banker David Rockefeller, put it plainly in a speech he gave back in the 1990s: “We who run the transnational corporations are now in the driver's seat of the global economic engine. We are setting government policies instead of watching from the sidelines”.
The article also states:
Already, in most of the developing nations, they have brought back child labour. Conditions in most factories operated by or for the transnational corporations in Asia and parts of Latin America are not much better today than they were in North America and Europe in the 1800s. Thousands of boys and girls are being compelled to work 12 hours a day in dirty, unsafe workshops for 40 or 50 cents an hour.
The article gives a number of examples in some Latin American countries.
When we talk about entering free trade agreements I hear Liberal and Conservative members ask when would the New Democrats ever support a free trade agreement. We would support a free trade agreement when it is a fair trade agreement, when it looks at the working conditions, when it looks at who is being exploited in those countries, when it looks at the corporate agenda in terms of driving the wages down in those unsafe working conditions.
A very good reason for us to question whether or not we should be entering a free trade agreement is when we have a side agreement, as in this particular case, about labour. It is not even integrated into the agreement.
I now have only a brief moment to talk about fair trade.
My colleague from Hamilton East—Stoney Creek earlier talked about multilateral trade. Many of us believe that multilateral trade is a very important way to look at it. Also, when we talk about trade, it should include fair trade.
When we talk about fair trade it is about the fact that workers in the countries of origin have fair access to the profits of their labour. There are a number of principles around fair trade.
To wrap up, I would encourage all members in this House to vote down this agreement. There are better ways that Canada can gauge and demonstrate leadership with countries around trade.
Jim Maloway NDP Elmwood—Transcona, MB
Mr. Speaker, the member certainly summed up the situation rather well.
The fact of the matter is that last year Canada's merchandise exports to Panama totalled only $91 million. We can see there is trade going on between the countries right now. We do not need a free trade agreement to trade with countries, including Panama. In fact, it is happening.
It is interesting that 54 United States congresspersons have demanded that President Obama hold back on this agreement until Panama does something about its status as a tax haven, a major conduit for Mexican and Colombian drug traffickers and the money laundering activities that are going on there. There are 350,000 foreign corporations that are doing business in that country.
The question is, why are we pursuing this issue when the Americans are holding off?
Jean Crowder NDP Nanaimo—Cowichan, BC
Mr. Speaker, the member for Elmwood—Transcona raises a very good point. I did not touch on the tax haven aspect, which is one of the more outrageous aspects of this agreement. In fact, there was testimony before the committee by someone whose name I have forgotten, but he came before the committee and said this agreement is actually worse than what is already in place and what it will potentially do because of particular articles in the agreement which would not allow Canada to defend some of its interests. He stated:
But article 9.10 of the Canada-Panama trade act says that “[e]ach Party shall permit transfers relating to a covered investment to be made freely and without delay, into and out of its territory”. Moreover, both chapters 9 and 12 of the FTA have nondiscrimination clauses that protect Panama-registered investors. Article 12.06 states that Canada will always allow Canadians to purchase financial services from banks operating in Panama.
It is a money laundering operation. It is well-known that some of the drug cartels are dealing with Panama and yet we are going to sign an agreement that allows this money laundering operation. I am sure Canadians will not appreciate that.
Jim Maloway NDP Elmwood—Transcona, MB
Mr. Speaker, the fact of the matter is that France knew how to deal with Panama. Only 12 months ago Panama managed to get itself off of France's blacklist when France simply started levying a 50% tax on dividends, interest, royalties and service fees based in France paid to a beneficiary in any of several countries, including Panama. Guess what? Panama signed agreements with France.
I talked about the 54 United States congresspersons who are refusing to let President Obama sign the agreement. The powerful American government is still not able to get the kinds of results out of Panama that France did because France took direct action. By putting pressure on corporations, the corporations went to the French government and demanded that something be done to straighten out Panama's practices. Guess what? Something happened within three months.
Jean Crowder NDP Nanaimo—Cowichan, BC
Mr. Speaker, the man I was quoting was Mr. Todd Tucker, a research director with Public Citizen's Global Trade Watch.
The member for Elmwood—Transcona again raises a number of good points. I want to read into the record how bad it actually is in Panama. Mr. Tucker stated:
Not only are these businesses not taxed, but they're subject to little to no reporting requirements or regulations.
According to the OECD, the Panamanian government has little to no legal authority to ascertain key information about these offshore corporations, such as their ownership. Panama's financial secrecy practices also make it a major site for money laundering from places throughout the world.
He went on to say in his testimony before the committee:
The Canada-Panama trade deal would worsen the tax haven problem. As the OECD has noted, having a trade agreement without first tackling Panama's financial secrecy practices could incentivize even more offshore tax dodging. But there's a reason to believe that the trade deal will not only increase tax haven abuses but will also make fighting them that much harder.
From around the world we are hearing about how bad this is and yet Canada is signing on to the deal. It makes no sense.
Daniel Paillé Bloc Hochelaga, QC
Mr. Speaker, I am pleased to once again speak about Bill C-46 because a government cannot possibly be unaware that it is impossible to serve such different interests at the same time; it does not make sense.
It is true that Panama has a developed economy. In fact, it has the most highly developed economy in Central America. One of the reasons why Panama's economy is so highly developed and open to the world is that, at a some point, a canal was built that serves as a route between the Americas. As a result, Panama is already accustomed to trade, travel and transit, and has been for a long time.
As a matter of fact, it is this familiarity with transit and trade, as well as the fact that many people pass back and forth through Panama but do not live there, that have made it into a tax haven. Such has been the case for a long time. We are becoming more and more aware of it; however, the members on the other side of the House do not seem to be responding to this situation.
It is said that Panama has moved from the blacklist to the grey list. Panama has signed agreements. In fact, it has signed several and has said that it would like to sign a tax treaty. We are saying that, if an international trade agreement is to be signed, a tax treaty, at minimum, should also be signed. This should not all be incorporated into the same agreement. There should be two separate agreements. But, there is always the power to negotiate.
If Panama receives $91 million worth of Canadian products per year and sells $41 million worth of its products to Canada per year, we find ourselves in a situation that, although may be marginal from an economic perspective, is still significant. The Government of Canada therefore has the power to negotiate. It can say to the Panamanian government that it agrees and that it is prepared to facilitate trade; however, from a tax perspective, there are a certain number of irritants. I will come back to this.
We should also remind Panama that it wants to sign a trade agreement with us, that there is a tax agreement to sign, but that the International Labour Organization finds that Panama's treatment of its labour force is inappropriate. In other words, the Panamanian government is recognized by the International Labour Organization as a government that breaches even minimal labour standards. Here again, we have leverage and can say that before we sign a trade agreement, Panama will have to make significant progress in terms of its tax policy and its labour relations. And why not add the environment to boot? It seems, according to our information, that Panama is not necessarily the best country in the world when it comes to respecting environmental rights.
Even though we are in favour of opening up markets, let us not forget that Canada is part of NAFTA because of Quebec's massive support for the Progressive Conservative government that concluded this international trade agreement with the Americas. We agree with having open markets, but their strategy is all wrong. They should be taking advantage of this opportunity.
What is a tax haven? I said a couple of minutes ago that I would come back to taxation.
There are some terms that are used that people do not understand. A tax haven is four things.
First, a tax haven is a place that has no or nominal taxation. To have a tax rate of 15%, 18% or a little more than 20% on business profits, as we have in Canada, or 11% on SMEs, is perfectly fine. However, 0.5% or nothing at all is considered a nominal tax rate. There is a gap between the tax rates.
Second, a tax haven lacks transparency. When it comes to ethics, transparency and disclosure, if Canada wants to sign a tax agreement with Panama, then there at least needs to be transparency in the information we receive.
Third, there are laws or administrative practices that prevent the exchange of information. Getting any information, let alone transparent information, is quite something. Sometimes the government considers itself to be a tax haven when we ask it for some information, as we did in the Standing Committee on Finance to no avail. Our colleague from the Liberal Party was talking about this earlier. However, sometimes we receive piles of documents that are absolutely not transparent.
Fourth, there are indications that the country attracts investors solely for tax reasons and not for their economic activities. Earlier, our NDP colleagues told us just how many businesses just have a post office box in Panama.
The characteristics of a tax haven are a post office box, difficulty obtaining information, unclear information and non-existent taxation. Those are four relatively simple elements that define a tax haven.
We should be taking this opportunity to state that we want a tax treaty. But if we had a tax treaty with a country that has zero taxes, people would wonder what business we had forcing Panama into levying more than a 1% tax on business income. On the other hand, it would make no sense for Canada, by signing a tax treaty with Panama, to exempt Canadian companies doing business in Panama from paying taxes because they pay them in Panama. That is why we need to discuss tax treaties between Canada and Panama. That is why we are delving into this issue and saying that these agreements need to be reviewed.
What are the elements of Quebec sovereignty and independence? The first is the ability to have our own taxation. During question period, we prove that Quebec is not independent when the federal government gets involved in Quebec taxation. The second is the ability to make all of our own laws. During question period, we also prove that Quebec is being invaded by federal laws. The third element of sovereignty is the ability to sign our own treaties. If Quebec were sovereign, it would not sign this kind of agreement with Panama unless there were worthwhile taxation, labour rights and environmental agreements.
Jim Maloway NDP Elmwood—Transcona, MB
Mr. Speaker, I wonder whether the member would like to comment on the curious position of the Liberal Party on this free trade debate.
We saw what those members did on Colombia when they changed leaders and changed critics. They changed their position. Now they seem to agree with the Panama agreement even though they have been told by the Americans that the American Congress refuses to pass a similar type of agreement with Panama because it is a country that launders drug money and, as the member pointed out, is a tax haven.
In his opinion, why would the Liberal caucus support this agreement when its friends, American Democrats, are opposed to a similar agreement?
Daniel Paillé Bloc Hochelaga, QC
Mr. Speaker, the NDP member has given me the opportunity to speak again about the inconsistencies of our Liberal Party colleagues. These members try to say that they can no longer stand the Conservative government, just like Quebeckers and Canadians. We think that Quebeckers can no longer put up with the Liberal Party's flip-flopping. Last year, they said that they were against the budget and that they would do everything they could to oppose it, but then suddenly, they changed their minds.
I have much more respect for the member for Pontiac, for example. He sat in the Quebec National Assembly as a minister in the government that brought in tax harmonization—that is a little friendly reminder—but at least he stands tall. As the NDP member said, we do not know where the Liberals stand. Unfortunately, they will pay the price come election time, because people will wonder which side they are on. When they keep jumping from right to left, no one knows where they are anymore.
Yves Lessard Bloc Chambly—Borduas, QC
Mr. Speaker, first of all, I would like to congratulate the member for Hochelaga for so eloquently expressing our party's opinion.
He did not have time to address one issue, which is the Conservative government's apparent desire to associate with countries whose actions do not respect the values that have been adopted here, or at least in Quebec. I am thinking, for example, about the concerns we have regarding respect for workers' rights.
Last May, the Republic of Panama passed Law 30, which had a provision that would incriminate workers who dared to defend their rights. This was very similar to the position the Conservatives took regarding equality in the workplace for women when they prohibited unions from going to court to defend them, unless the unions want to risk being fined.
I would like to hear what my colleague has to say about whether the Canadian government has lost its way by wanting to associate with governments that would do such things.