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.

Canada-Panama Free Trade Act

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

Mr. Speaker, I understand the member is not running in the next election, so I want to wish him well. I have had many good times with him in the public accounts meetings when I was a provincial member and he was the long-time chair of the Standing Committee on Public Accounts.

The member explained quite well the problems with tax evasion and money laundering. I disagree with his assessment that we should be signing and implementing a free trade deal when we should be doing what France did a year ago, that is, get tough with Panama. When France started taxing corporations doing business in Panama, the Panamanians simply signed the tax treaties that the French wanted.

We are not going to get anywhere if we simply sign agreements without getting tax treaties signed first. That is the point. The member was on the right track and he had great arguments, but he should vote against this deal until those tax treaties are signed.

[Shawn Murphy, Liberal, Charlottetown, PE]

Mr. Speaker, we probably both have similar views in certain situations, but we have come to a different conclusion as to whether the glass is half full or the glass is half empty. I do not believe we should hold up the trade agreement. I have read everything I could get my hands on. There have been many good and positive steps made on the tax treaty. Canada has given proposals. We received proposals back from Panama and I think it will be concluded.

The point I want to leave the House with is it is not what goes on in Panama, it is what goes on in this country regarding tax havens. If we took a dozen of the people who had large accounts in Switzerland and took the information that is readily available on the Internet, WikiLeaks, or wherever, and charged them instead of giving them amnesty, convicted them and put them in jail for five or six years, the whole issue of tax havens would disappear pretty quickly.

[The Acting Speaker, Barry Devolin]

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 Davenport, Employment Insurance; the hon. member for Winnipeg North, Public Safety; the hon. member for Madawaska—Restigouche, Government Priorities.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Mr. Speaker, we are at report stage of this bill. My colleague has moved a series of amendments at this stage which, although they are only a small part of the overall bill, would have the effect of destroying the bill by deleting some key clauses in the bill.

It is quite appropriate that the House should support those amendments for the deletion of those provisions. This is another in a series, the Colombia free trade deal being the most egregious example, of bilateral trade agreements that we have entered into that are not in the interests of Canada. In many cases they are downright exploitive of the country that we negotiate them with.

If we analyze trading arrangements, the ones that are the fairest, as opposed to the nomenclature of being freest, are clearly the ones that are done at the multilateral level rather than the bilateral level. With a few notable exceptions, Canada is in a position with a country like Panama. We dominate it. We have heard figures that trading is relatively modest between the two countries by international standards, but it is much more to our advantage.

In this kind of relationship the smaller, weaker party is at a distinct disadvantage once the agreement goes into play. That is particularly true when one understands the history of this model of trading agreements. We accord what in effect is state status to very large multinational corporations under the NAFTA agreement. We have seen very clear examples where we have been the negative beneficiary of the clause that gives them that status and the right to sue national governments, in effect being on par with them.

A classic example where we were the negative beneficiary was the one involving a chemical substance that Canada wanted to ban and did so. Part of the refining process for this substance was in Sarnia near my community. We ended up paying something like $13 million or $18 million to a multinational corporation, without even fighting it. The Liberals at that time just caved, which they are really good at.

The one that really bothers me is when Mexico was at the receiving end of this type of a lawsuit. A multinational corporation based in the U.S. was moving toxic materials into a very poor community in Mexico. The national government simply did not have the financial wherewithal to fight the suit and ended up having a judgment awarded against it for many millions of dollars. I think it was $20 million to $30 million U.S. which it had absolutely no ability to pay.

We see those kinds of abusive processes and it is why there are many countries in Central America and South America that will not enter into negotiations with Canada on those kinds of bilateral agreements because of that clause and because in a number of cases we are the dominant partner.

It is not good for our international reputation if we enter into these agreements with these kinds of countries. That is particularly so, as we saw with Colombia and its history of abuse of human rights, but it is also true with Panama.

We have heard repeatedly today, and it is conceded by all sides, it is a tax haven and a centre for money laundering and organized crime. Some 400,000 corporations are registered by the Panamanian government, hundreds of times probably out of proportion to the normal economic activity that many corporations would represent. They are all shell companies and a good number of them are used to launder money through organized crime syndicates. Others are there purely to avoid their tax responsibilities in their domestic countries.

That is the kind of country and government, maybe government more so than country, because I do not want to disparage the people of Panama, with which the Conservative government is entering into the agreement. The end result, when we enter into an agreement with like this with a country with those types of practices, we are condoning those practices.

It is really interesting that the Conservative government is doing this, the so-called tough on crime government. I have oftentimes very great doubts about whether the Conservatives would know anything about fighting crime, how to get at it, but we know, any of us who have studied it to any degree, and they should know, that if we are to get at organized crime, we get at the dollars.

By allowing Panama to continue to be a tax haven that inspires those corporations to register there, it also makes it very easy for it to launder money through there. By doing that, the drug trafficking and human trafficking that goes on within those organized crime syndicates, Panama clearly is assisting them in their operations and we in effect are condoning it when we sign on to this kind of agreement.

It is a very good reason why we should not be signing this. In addition to that, there are others. I want to deal with one in particular around setting standards.

If I have time, I will go to the environment, but I want to deal with labour standards. I must admit I was somewhat taken aback by the last speaker when he said that the Panamanian government was making progress. I am dealing now with labour standards, because this agreement, if it is processed to its final stage and is signed and ratified by both countries, does not have any meaningful provisions in it that would ensure workers in Panama would have even minimal standards of job protection, health and safety standards and environmental standards.

In 2010 there was some perception by the president of Panama that somehow the Panamanians were not friendly enough, and it is really hard to imagine this is the case, to the corporate world. Therefore, they passed a law in the summer of 2010 which eliminated environmental impact studies on projects deemed to be of social interest. That would be infrastructure programs, I assume, in many cases.

Then they went on and made it illegal to have mandatory dues collections for collective bargaining arrangements. People cannot do that in Panama, something on which my community led the way, back after the second world war. The ban formerly came out of Windsor in 1945, so now it is illegal to do that in Panama.

It allowed employers to fire striking workers when they were in the course of a legal strike. It criminalized street blockades, civil protests. It also protected police from prosecution when they abused workers in a strike-breaking situation.

That is the kind of country that we are going to be signing on to, and it is beyond the pale that we would be doing so.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Mr. Speaker, I listened with interest to my hon. colleague's remarks and I heard him talk about what this agreement would mean to Panama.

It is my understanding that as a Canadian parliamentarian my primary duty is to represent Canadians. I appreciate the hon. member's concern for human rights, which we all share, but here is the difficulty I have with his argument and I would like him to address it.

Panama is a democratic country. It is not a dictatorship. The government was democratically elected. If the democratically elected representatives of the people of Panama believe this is a good deal for Panama, why should Canadian parliamentarians be opposed to it on the basis of the argument that it is bad for Panama? Panamanian representatives support it for Panama. Canadian representatives support it because it is good for Canada. Why should we interfere in their democratic process?

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Mr. Speaker, there are two answers to that, one a general one.

It is in the interests of Canada to protect our reputation at the international level, but the government has done a great deal of damage to that. That includes our relationship with countries that are quite prepared to abuse human rights. Every parliamentarian has the responsibility to protect Canada's reputation in that regard. That is the general answer.

With respect to his claims around Panama's democracy, we could have some strong arguments about that if we actually studied the country and in particular when we think of people like Noriega. I do not think that was a democratic government. Things have not changed a lot since then.

My colleague's real question was whether that government was a vibrant representative democracy. Even if we concede that it is, and I am not, it still comes back to our responsibility to uphold human rights, including the right to organize collectively and the right of a worker to have a safe working place and in the environmental field to have a safe environment for the community as well. We have a responsibility to be involved in that when we enter into these kinds of agreements.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, the hon. member knows I have the utmost respect for his thoughtfulness both in this chamber and outside and his legal analysis. He elevates the quality of debate in the House.

The hon. member will also know that his party and our party pushed for a bill on corporate social responsibility and ultimately it lost, which was quite regrettable in my opinion.

The hon. member and I probably also would agree that the side agreements on labour co-operation and the environment, et cetera are not as strong as one would like, but maybe as good as one is going to get.

Is the issue of corporate social responsibility, and that is the ability of an indigenous person to sue a Canadian corporation operating in Panama, advanced by this treaty or is it affected at all?

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Mr. Speaker, there is a practical answer to that question. I do not see it being advanced because of the inability of individuals in Panama to use that.

It comes down though to the basic model. There is the Mercosur trading arrangement in South America in which maybe eight countries take part. I have had various discussions over the years with people from some of those countries who have told me there is a whole different model and the one in the European Union is the one they would prefer to enter into. It would be multilateral and resources would flow from the centre to new countries coming into the agreement. That would be a major plus.

When we were having multilateral discussions with South America, there was some discussion about there being some financial incentives from the wealthy countries to build the infrastructure and move technology into the country so it could advance. However, those discussions were broken off. That is the kind of model that we should be looking at and doing it at a multilateral level.

[Mario Silva, Liberal, Davenport, ON]

Mr. Speaker, I am pleased to speak on this issue once again.

I am a member of the international trade committee. This bill has been before the House. We have had an opportunity to listen to stakeholders. At the end, we concluded that this was a good agreement for Canada and was one that we should pursue. That is why I will be speaking in support of this bill.

Given that Canada is a trading nation, I believe it is in our interest to do so. We have launched a series of trade agreements with a variety of countries that have been very successful for many businesses in Canada.

We recognize that Panama, compared to the giants of Latin America, is a small player, but this is a strategic place and partner that has great potential for the future. There are important opportunities there for growth between the north and south. The Panama Canal is a gateway that will undergo a massive expansion and could be an opportunity for Canadian businesses. We hope, through this initiative, dialogue and agreements, that there will be business opportunities between both countries. There would be different projects going on underground on which hopefully businesses could bid successfully. We have this opportunity.

As I said, the trade is relatively small, at about $100 million, but it has potential to grow. As well, these are significant steps in relation to tying things up, country by country, in the Americas.

My hon. colleague spoke about Mercosur, which is a large bloc in South America that includes Brazil, the dominant player there, Argentina and other regional players such as Uruguay, Paraguay and now Venezuela. It is a market that we have to get into. This is a market that we would eventually have a trade agreement with, similar to the agreement we are in the process of with the European Union. It is a complex process, but one that is necessary to engage in because the European Union is an equally important bloc on which we have to concentrate.

As we all know, trade for Canada is predominantly with the U.S. at over 80%. We have to diversify the treaty relationships we have with other countries around the world. This offers us an opportunity. Strategically it makes sense, given the major projects in the canal as well as the strategic importance of Panama.

Panama has made some strives over the years. It went through a very difficult time during the Noriega regime and afterwards. The 1980s was a difficult period, but it has made a transformative presence on the world stage. It is a stable democracy. It is a major player in the Organization of American States, of which Canada is a player, and this is a very positive thing. It is a country that has been providing stability for the region. Panama is a player that we want to engage bilaterally and through this agreement.

It is important to note that this agreement has very important side agreements on issues of labour and the environment. On the labour issue, my colleague spoke of corporate social responsibility, which I feel strongly about, and that needs to be done. In some ways this elevates the discussion and brings the focus not just on trade agreements, but labour rights and human rights issues, as they are equally important. We did that with the Colombian free trade agreement. There was a very important agreement on a human rights review. That was an historical step in terms of a trade agreement.

Although we are not anywhere near where we want to be in terms of corporate social responsibility, we are beginning to realize that it cannot be ignored and it has to be addressed in our trade agreements, bilateral agreements and discussions. We want to make sure that Canadian businesses are conducting themselves ethically abroad. By and large, I think they are but Canada can play a major role as a leader for the rest of the world in the fields of human rights and corporate social responsibility. This has to be the issue for the future.

Getting back to the agreement, it covers such issues as the right to freedom of association and the right to collective bargaining, among other things. I am very supportive of such an agreement that recognizes that when entering arrangements like free trade agreements, labour rights must be protected and encouraged. This is a positive outcome of this particular agreement.

In terms of potential business for Canadian companies, the opportunities, although presently small, have considerable room for growth. Canadian business provides a wide range of products, including vehicles, pharmaceutical equipment and machinery, among other things, but the opportunity for growth exists. Certainly it exists in the financial sector. We have major players in the Americas, such as Scotiabank, which has been carrying the flag of Canada. It plays a major role in the financial sector throughout Latin America and, of course, it is a major player in Canada as well.

As for the services provided by Canadian companies in the financial, engineering and communications sectors, there can also be an opportunity for growth.

Some concerns have been raised about the free trade agreements. I know there have been issues raised in committee in relation to the banking regulations in place in Panama with regard to money laundering. This is a big issue and the government needs to take it very seriously. It is a challenge that other countries face when they have tax-free havens, including some in Europe. This needs to be addressed.

The thrust of this agreement is one of economic support and solidarity between two countries that are important allies and provides stability in that region.

As I mentioned at the beginning of my remarks, Canada is a trading nation and responsible sound trade agreements are in the interest of Canada and are good for Canada. I think most Canadians would agree that we cannot act in isolation. This is the time for us to engage the world.

We are all aware that the discussions in Doha have not gone very well. Given that those discussions have not gone well, countries like Canada have engaged in bilateral agreements. There are those who would challenge the wisdom of that and whether the agreements should be multilateral or bilateral, but at the end of the day we have to move forward because the discussions have not been very meaningful or conclusive thus far. We cannot stand back while other countries sign agreements.

As I mentioned, Brazil is a huge player in that area. It is a country of 170 million people with a $2.2 trillion budget that keeps on growing. Our engagement in Panama further links us to the markets in South America, such as Brazil and other players.

The GDP of Panama is $44 billion. As I mentioned, the amount of trade we do with it is small, about $100 million, but it is nothing that we can dismiss as there are strategic interests for Canada.

I would be pleased to support this agreement. It is fairly good for Canada and Panama and offers the opportunity for mutual benefits, increased trade and co-operation in years to come. This is the essence of good trading relationships and good trade agreements.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Mr. Speaker, I still find it disappointing to hear a Liberal colleague speak in favour of this bill. He says that the proposed agreement is good for Canada. That is too abstract for me, and I would like him to be more specific.

We need to remember that the OECD considers Panama to be a tax haven. Perhaps it would be good to review the criteria for declaring a country a tax haven: lack of transparency; laws or administrative practices that prevent the effective exchange of information; and indications that the country is attempting to attract investments that are purely tax-driven and not for economic activity.

I am wondering what good there is for Canada in all of that. Perhaps it is good for businesses that will avoid paying taxes, which our constituents will end up paying for them. I would like to hear the member explain his position.

[Mario Silva, Liberal, Davenport, ON]

Mr. Speaker, I thank my hon. colleague for the question. I would especially like to thank him for his concern and his interest in everything that is good for Canada.

At committee, we had the opportunity to hear from several witnesses who spoke about this bill. Representatives from certain businesses clearly indicated that this bill offers many advantages for our country and for businesses that work in Panama. After several meetings during which I had the chance to hear many people's testimony, in the end, while I cannot say there was a complete consensus, I can say that people who have been able to invest in Panama said that the bill would benefit businesses and would benefit Canada.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Mr. Speaker, I listened with great interest to the member's speech and the one presented earlier by his Liberal colleague. I would have to say that I am very puzzled because I specifically remember his saying that side agreements are important. Let us backtrack from this. What is very important for fair and balanced trade is that we enter into trade agreements that provide for a balancing of trade to further economic development and looking after human rights, labour standards, and environmental protection. The scholars would tell us that we do that by making sure there is one trade agreement that contains all those measures and is legally binding.

If there is anything we should have learned from the failings of the NAFTA and its side agreements, is that it was a mistake. As I recall with two previous U.S. presidents and moving on through to President Obama, there were great concerns about the frailties of the NAFTA.

I think the member is confusing apples and oranges. Actions by the government to command another party to agreement are different from corporate social responsibility where obligations are imposed on an independent corporation.

I wonder if he could speak to that.

[Mario Silva, Liberal, Davenport, ON]

Mr. Speaker, I spoke on two issues. One was the issue of this particular agreement and the side agreements which I thought was important. I said in terms of the evolution of the agreement, I think this is a very big step. I mentioned the fact that even on the Colombia free trade agreement, we did deal with the issue of human rights with a review that takes place annually.

It is not the ideal of the corporate social responsibility bill that I had supported that was put forward by my hon. colleague, but it certainly is a step forward that we even have this on the table. That should be seen as an achievement in itself, and not going back to the idea that it cannot happen, because it is happening with these side agreements.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I am pleased to provide some commentary on 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.

This afternoon we are debating the four report stage motions which were moved by a member from the NDP. These four motions are all motions to delete certain clauses in the bill.

The first motion is to eliminate clause 7, which outlines the purpose of the bill. I think the bill probably would still operate even if we did not have the narrative about what the purpose is because it is almost self-evident.

The second motion is to eliminate the clause which designates that the minister is the representative of Canada. That is almost self-evident as well, although it is probably good to have it in there.

The third motion is to eliminate clause 12, which lays out the minister's authorized activities in his role.

The last one is to eliminate the final clause, which is the coming into force clause, i.e., when this bill would become law.

The member for Windsor—Tecumseh had indicated that, in substance, putting all these together probably makes the bill somewhat sloppy or inoperative and basically would kill the bill.

Now we know exactly why we are spending all this time on this. It is probably why the Speaker has given so much latitude to members who are speaking because there is not very much we can say. These are constructive motions basically to scrap the bill. Some people would rather talk about the bill, which is really not what we are debating.

It is interesting that there has been so much irrelevance relative to what we are supposed to do, but probably some of the more interesting commentary that we have had with regard to bilateral free trade agreements in general. There have been a lot of very good issues that have come up. Some relate to double taxation issues, or tax-sharing information, or multilateral versus bilateral agreements, and some of those benefits and whether or not we should be doing trade at all with countries that do not respect human rights, with countries that do not respect the collective bargaining process.

We talked about the fact that in this particular case the trade activity between the two countries is very small. It is $90 million one way and $30 million the other. It is inconsequential. Yet, there have been eloquent speeches about what a great thing this is for agriculture and so forth. That is nonsense, quite frankly. There is not a great deal of trade.

However, what there is, is a future. There is the expansion of the Panama Canal which is going to be finished, I think, in 2012. It is going to open up new opportunities.

The most important aspect that has been raised is that there is a problem in Panama. It has been identified critically by the OECD, and it has to do with tax evasion through tax havens. Tax havens are fine. Tax avoidance is fine. Tax evasion is illegal.

We need good faith with our trading partners. They may not be part of a particular trade instrument that we have, such as a bill like this one, but they should be part of the conversation. I think that members have basically said we need to have this conversation about how we are going to conduct ourselves in terms of having ethical trade with other countries around the world. We need that conversation. I hope that it will start as a consequence of the input of hon. members today and that we understand that even in Canada there are people who do bad things. There are people who are money launderers, who break the laws, all the things we accuse these other countries of. Let us not be holier than thou. We have problems ourselves. We have to clean them up.

Mr. Speaker, I will finish this speech at the next sitting.

[The Acting Speaker, Barry Devolin]

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