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.

The House resumed from February 3 consideration of 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, as reported (without amendment) from the committee, and of the motions in Group No. 1.

Canada-Panama Free Trade Act

[The Speaker, Peter Milliken]

When this matter was last before the House, the hon. member for Mississauga South had the floor and there are five minutes remaining in the time allotted for his remarks. I therefore call upon the hon. member for Mississauga South.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I am pleased to complete my comments on Bill C-46, the free trade bill between Canada and Panama.

Just generally, I have had some concerns about bilateral trade deals that we have entered into. I have spoken in the past on the Colombia free trade deal. Issues at the time had to do with human rights abuses, displacing people in the cause of improving corporate opportunities, corruption of government and the judiciary, a whole host of issues that had very little to do with the benefits of bilateral trade.

In the case of Panama in Bill C-46, we do not have the same kinds of elements but we do have one that is extremely important to demonstrate that we cannot just look at trade and the benefits of trade in isolation. Our trade exchange with Panama now is very insignificant in the scheme of things, but the expansion of the Panama Canal brings some hope and promise for increased traffic through the canal and opportunities for businesses, particularly for Canada in the construction, engineering and consulting firms. Agriculture may also have some benefits.

The other area is taxation. The finance committee is now looking at tax havens and their use as instruments for tax evasion. This is a very serious problem. It is in the hundreds of billions of dollars. With regard to Panama, the committee heard by teleconference from a witness from the OECD, Mr. Owens, who confirmed to the committee that Panama was rated as in the grey scale. That is pretty well the worst concern one could have in terms of harbouring tax evaders and the secrecy that allows them to do it.

On Thursday, Mr. Donald Johnston, who was a former minister of finance for Canada in the early 1980s and a former secretary-general of the OECD, re-affirmed and confirmed Mr. Owens comments that Panama was one of the biggest problem areas in terms of promoting or at least facilitating evasion of taxes.

The current bill does not specifically incorporate any provisions to address the tax evasion problem, which is a very expensive problem for Canada. However, there are double taxation agreements in place with other countries to ensure that a Canadian, for instance, will not be taxed in one jurisdiction and also in Canada.

The other and probably equally important issue is the tax information sharing agreements. These agreements are the instruments that would allow us to obtain more information about those who have set up situations that would probably allow them to evade taxes in Canada. That is not part of this agreement. The point of my speech so far has been that, as we enter into trade agreements, we should exhaust every opportunity to establish a good faith relationship with that country so we can deal with some of our mutual problems.

I am concerned that government members have not been speaking to this bill, which is at report stage, because if a member of the government stands to speak to it they will be subject to questions by all other hon. members. They do not want that. They do not want to be held accountable and that concerns me and it should concern all Canadians.

Trade is an important issue but democracy is a more important issue.

[Paul Dewar, NDP, Ottawa Centre, ON]

Mr. Speaker, I will be speaking later to the bill and will be echoing some of the concerns that the member has mentioned, particularly around the OECD and the concerns that have been raised. As he mentioned, there was testimony at committee about concerns that the OECD raised and ones that we share.

When we look at a sequential approach, one would think that issue would be paramount to deal with that issue around concerns of banking, tax havens and disclosure.

In light of the concerns that the member has quite rightly put forward and which we brought forward in committee and spoke to in the House, can the member see fit to actually support this bill or is he stating unequivocally today that he will be voting against this bill when it comes to a vote?

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, as I indicated in my comments yesterday and this morning, the issues with regard to tax havens, tax avoidance, information sharing agreements, et cetera, are not part of this bill and have not been part of any bilateral trade bill that Canada has entered into. On occasion there have been side agreements or other matters.

My point is that the government needs to recognize that these are important opportunities as we enter into trade relationships with other countries and that we must also address other mutual points of interest, such as tax evasion.

In answer to the member's question, trade is important for us to consider. I would have liked to have heard more from the government as to its justification and its affirmations about the benefits that will come out of this one. However, the government has not spoken. I do know, however, that the trade deal as it stands now is in itself and in isolation some benefit for Canada, particularly to the agricultural sector and possibly the engineering, construction and consulting areas.

I will be supporting the trade bill but I want to ensure that all hon. members realize that there are these other issues that should be on the table at the same time as we negotiate these deals and that we should consider more multilateral deals rather than dealing with the bilaterals because it is so important in many of these same regions of Panama.

I will be supporting the bill but I do share the member's concerns.

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

Mr. Speaker, I did not hear all of the hon. member's presentation but I heard enough to understand that he wants to support this bill; his main argument is that it would be good for Canada. I want to ask him what he means by that since we know that Panama is a tax haven and that companies establish themselves there specifically to avoid the taxes that ordinary citizens like you and me have to pay.

I am therefore wondering how he can say that it is a good idea to encourage business investments in a tax haven that is on the OECD's grey list.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, it gives me an opportunity to explain to members that tax havens are not illegal. Tax haven means that there is a tax regime or a jurisdiction where the tax rates are lower in that jurisdiction than they are in Canada. A company would establish operations in that other country and be able to do some of its business out of there and pay a lower rate of tax than in Canada.

The problem is not the tax haven. The problem is not reporting that income in Canada. We should understand that tax havens are not illegal and they are not bad. They help a lot of good companies to be better and bigger than they otherwise could be in a higher tax jurisdiction.

Tax avoidance is also not illegal. Tax avoidance is in fact necessary because people are entitled to pay the least amount of tax that they legally owe but not more. Tax evasion, however, is illegal, and that is when people do not pay any tax, do not report any income and decide to take care of themselves first. That is what we are going after. The OECD is concerned that there are far too many opportunities for companies to establish themselves in tax haven jurisdictions and to evade taxes. That is the problem and that is why it should be on the agenda of the government but it has not been and it has not explained why.

[Paul Dewar, NDP, Ottawa Centre, ON]

Mr. Speaker, today I join with others in debating Bill C-46 regarding free trade with Panama. Negotiations were concluded back in August 2009 and, according to the government, there was a comprehensive free trade agreement with Panama. The agreement also includes side agreements. We saw this pattern with regard to Colombia on labour and environment. After the negotiations were completed in August 2009, there were formal signings in May 2010.

When Bill C-46 passed second reading in October 2010, it was then referred to the committee which went through a clause by clause review of it. It is important that we and all Canadians know that the NDP brought forward amendments that would deal with some of the concerns raised by a member of the Liberal Party just a minute ago, including those around tax information, exchange agreements, double taxation, et cetera. Sadly, however, they were defeated. I will, however, put on the record that they were not just defeated by the Conservatives. They had help from the Liberal Party in defeating some of those amendments, which would have passed if there had been support from the Liberal Party.

When we look at the concerns raised by the Liberals, it is important to note that when they had the opportunity in committee to deal with those concerns, they sided with the government on this. It calls into question what the Liberal Party is doing. However, I will leave it to the Liberals to explain their dynamics on this. On the one hand, they are saying that they have concerns about tax havens. I was shocked to hear one of the members of the Liberal Party say that tax avoidance and tax havens were okay because that is a way of doing business but that we want to ensure it is reported. I will leave that for them to discuss among themselves.

However, it is very difficult to understand the Liberals' position when it comes to this bill. On the one hand they say that this is terrible and that we should not be dealing with this kind of trade agreement because of all the concerns around tax havens and double taxation. The list is long and it sounds very similar to our concerns. On the other hand, the Liberals are saying that they will vote with the government on this.

It is perplexing. I know what the Conservatives' strategy is. They have decided that multilateralism is not the way to go and so they are rushing around trying to sign up anyone to a bilateral agreement, which is precarious at best. I think it shows a lack of vision in terms of where we should be going with international trade. For the record, we have stated time and again in this House that we should be going toward a multilateral approach.

My father worked for many years as a public servant dealing with the GATT. It was important at that time for Canada to deal at a multilateral level, My father would negotiate with other countries on behalf of this country on the General Agreement on Tariffs and Trade. We know what happened to that. We know what happened with the Doha round. However, the government now says that maybe it should one day get back to that but, in the meantime, it goes down this bilateral route which undermines the whole approach of multilateralism.

Let us put aside for a second the concerns we have with this deal. Does anyone really think that signing a free trade agreement with Panama will lead to the economic prosperity of Canada? Let us get real here. We need only look at how much investment there is between the two countries. What it does is it undermines that whole intention that many of us have of going down the multilateral route. It is an opportunity that costs and it also decries this notion that we should be trying to work with other like-minded countries, particularly those in the G8 that are looking toward a fairer trade regime, and saying that we all have concerns around the way trade is done and we need to work together to ensure particularly the bigger economies in the world will follow some sort of fair regime.

However, the government is not doing that. It is going off on our own, cap in hand, to anyone who will sign one of these agreements and clearly doing it for political reasons.

As I said, no one really believes that signing a trade agreement with Panama will lead to a green and pleasant land in Canada. In fact, the government will try to spin people by saying how great it is because it is signing all these trade agreements, as if that will make a difference in lives of people. It will not. What it will do, and we have seen this in the debate and the details as we have gone over them, is make it more precarious for Canadians and also for those who are concerned about issues around international banking.

In terms of disclosure of tax revenues and investments and tax havens, the government is sending a message to the international community that it is willing to sign a deal with Panama, without having had the concerns that other governments, like France, have had about disclosure. The sequence is entirely wrong. If we thought this was the way to go, we should have dealt with the concerns of the OECD with tax havens, taxation and disclosure. However, that did not happen.

What is the message? The message is basically Canada really does not care about that. The government is so concerned about looking like it has made progress on trade, which has question marks abound, that it will look the other way when it comes to the concerns with tax havens and disclosure.

I met with ambassadors from throughout Latin America. They are very concerned about the issue of narco-trafficking. One thing said was that we had to follow the money. We have to ensure we know where the money goes.

What is the message from this country? When it comes to the issue of narco-trafficking, we will look the other way if we can put something in the window for people to see we have made progress on “free trade”. It is not principled. It is not effective. I think most Canadians, if they knew what we are signing, would oppose it. That is why it is important to take the time to debate it in the House.

I join with the members from the Liberal Party, notwithstanding their challenge in having a position and then voting the other way, that the Conservative Party is silent on this. It will not talk about it. It has a “move on, there's nothing to see here” attitude. I am not sure if the Conservatives have actually read the agreement. A great poll would be to ask those members if they had read the agreement and know what is in it. It is important to highlight that.

If we are going to be signing on to these agreements, why the hurry? Why are we not hearing from all members of Parliament on this, beyond talking points from parliamentary secretaries?

If we look at the profound effect that some of these trade agreements have had, not just on Canada, but on those we trade with, it also raises an issue. I fundamentally believe, if we are to enter into trade agreements with other countries, it should be of mutual benefit. I do not see that in this case.

We should be looking at strategic kinds of agreements within sectors. We should be ensuring they are sustainable. We should be ensuring there is mutual benefit.

When it comes to the Panama-Canada free trade agreement, we do not see that. What we see is us undermining our credibility when it comes to dealing with financial disclosure, tax havens and real fairness. For that reason, we will be opposing it. I only wish the Liberal Party would find it in itself to do the same, but we will wait for it to decide on that.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I appreciate the member's comments. He always adds to the debate, unlike the Conservatives, but that is another day.

The member mentioned that at committee the Liberals voted against NDP's proposed amendments for the tax sharing agreements and possibly the double taxation.

I rushed out to try to get the minutes of the meetings to see what the amendments were. For the record, I am advised that the amendments were unsatisfactory in their form to establish the requirements necessary. If we look at the act, even with regard to the side agreements on labour and on environment, they are quite comprehensive in terms of their content.

The only reason someone would vote against something the NDP wanted is if the solution was inoperative. I offer that for the hon. member in that there is still this concern. None of those agreements have ever appeared in any of the free trade agreements, so we do not even have a model on how they would be incorporated into a bill.

However, I can assure the member that we do support the establishment of double taxation agreements as well as tax information sharing agreements to deal with tax evasion.

[Paul Dewar, NDP, Ottawa Centre, ON]

Mr. Speaker, I appreciate the point of view of the member. I know that when the amendments were brought to the committee, two parties voted against them. I will leave it to him to look over the minutes and talk to his colleagues about how that went down.

I am curious of the Liberal member's position of accepting tax havens and tax avoidance as long as it is declared. However, if the Liberal Party is so concerned about this issue of double taxation of tax havens, we need to understand the sequence.

When the OECD reports that it has concerns regarding a jurisdiction and we do not have this kind of agreement in place, it is odd for members to say that they will support the government's trade agreement, but they would also like to see an agreement on double taxation disclosure and tax havens be realized. The sequence is entirely wrong. A principled stand would be to say that because they are so concerned about this and until such time as it is dealt with, they will not support the government on it. Does the Liberal Party believe the government will actually get that job done? It will be moving on to the next trade agreement with whomever and forgetting about that.

The problem for the Liberal Party is that it has a position, but it has not followed up with a principled position on the vote. We can have a position, we can have many positions, but if we do not vote to back up that position then, it is just words, and that is unfortunate.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Mr. Speaker, I listened to the member's comments regarding his opposition to the bill. I recognize he represents an urban riding. I have the privilege of representing a riding that is largely urban but has a large farm community as well.

Is the hon. member aware that this free trade agreement will immediately eliminate tariffs on 94% of agricultural exports from Canada and will provide exporters of beef, pork, frozen potato, malt, oilseeds, maple syrup and other products free access to the markets?

I know he may not have a direct concern for farmers, but surely he could find enough support in his party for the farm community, the producers of the great products for which Canada is known, and give them access to these markets. Our farmers desperately need this access.

[Paul Dewar, NDP, Ottawa Centre, ON]

Mr. Speaker, I actually have a farm in my riding and we can go out and visit it.

It is important for the member to know that we understand the issues of farmers. Fundamentally, farmers have always wanted fair trade. However, when they see trade agreements such as this, which have other overlays to it, they would know these compromises fair trade. If we want to support our farmers, we need to get involved with these kinds of agreements to allow fair trade back and forth.

When a jurisdiction is on the OECD radar for issues related to its financial institutions and where the money goes, it can affect every sector. I think the member knows that. I do not think he is pitting of farmers against the rest, but I think farmers care about fair trade as much as any of us.

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

Mr. Speaker, we are here this morning to debate 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.

The Bloc Québécois is not in favour of this bill for a number of reasons. First, this is a bilateral agreement, which the Bloc Québécois believes is ineffective. We believe that a multilateral agreement would be more effective in developing much fairer trade that respects the interests of all of the nations.

The Conservative government has decided to drop the multilateral approach to trade and is entering into many negotiations to sign bilateral agreements. There have not been any studies done by officials at the Department of Foreign Affairs and International Trade or at Industry Canada to help us determine whether these bilateral agreements would be beneficial to our economy. Regardless of whether these agreements are good or not, they seem advantageous, so the Conservatives and the Liberals are jumping at them. They are jumping into other bilateral negotiations before conducting any studies.

If we do not know that we will come out a winner by signing a bilateral agreement, we should not move forward. For example, the Conservative government plans on signing a bilateral agreement with China. In 2005, Canada imported $32 billion worth of Chinese products, which generated a trade deficit in Canada of $26 billion, or $1,000 per capita. When trade with a country generates five times more imports than exports, the main priority should be to balance the terms of trade and not to make them even more liberal.

The Bloc Québécois will not support these bilateral agreements until we receive a guarantee or can be convinced that they will benefit the Quebec economy.

We are told that Panama is the most industrialized country in Central America and it has the highest economic indicators in the region. According to the Department of Foreign Affairs and International Trade, Canadian exports to Panama consist mainly of finished products, such as machine tools, automobiles, electronic and electrical equipment, pharmaceutical equipment, pulses and frozen potato products. Canada also exports financial, engineering and professional services, as well as information technology and communications services.

Canadian direct investments in Panama are made mainly in the banking, financial, construction and mining sectors. Every time the Conservative government comes forward with a bilateral free trade agreement, it always includes mining.

Our primary imports from Panama are metals—mostly gold—precious stones, fruit, exotic nuts, fish and seafood.

The free trade agreement between Canada and Panama will have an impact on our country. According to the Department of Foreign Affairs and International Trade, this deal includes eliminating Panamanian tariffs on many Canadian products.

This means that our businesses will be able to invest in Panama without any tariff restrictions. Thus, Panama will eliminate all tariffs on non-agricultural products.

The Canadian exports that should benefit the most from these concessions are fish and seafood products, construction materials and equipments, frozen potato products, pulses, beef and beef products, most pork products, malt, forest products, and flight simulation and training equipment. So far, so good.

Canada, for its part, will eliminate 99% of its tariffs on products from Panama, except certain sugar products and products under supply management, of course.

The federal government wants to ratify this agreement very quickly because, so it says, it wants to get ahead of the United States and the European Union, which have both signed similar agreements but have a much longer ratification process.

The problem for us is that Panama is a tax haven. I would remind the House about a certain prime minister a few years ago who had interests in Canada Steamship Lines and who managed to get some deals ratified with known tax havens, including a deal with Barbados, which he just slipped through right under our noses. Panama is also part of this group of countries that are known tax havens. It is even on the OECD's grey list.

The OECD uses four criteria to determine whether a country should be placed on its grey list of tax havens: no or only nominal taxation; lack of transparency; laws or administrative practices that prevent the exchange of information; and indications that the country is attempting to attract investments that are tax-driven and do not involve economic activity.

One of the things that stands out for me is the fact that there is no or only nominal taxation. I have nothing against our corporations doing business. However, I do have a problem with the fact that, because of a lack of transparency, corporations cannot say how much money they make there and do not repatriate the money. As for laws and administrative practices that prevent the exchange of information, it seems to me that I have seen this before. I am currently a member of the Standing Committee on Government Operations and Estimates. We are coming to realize that the government is using the excuse that it must protect confidential information to withhold information about money, for example about the freeze on budget envelopes, or about what it is doing with the money. It is very annoying. It means that Canadians cannot find out what is being done with their taxes, and government officials cannot determine how much profit has been made in other countries. This issue of laws or administrative practices that prevent the effective exchange of information is tiresome.

Then there are the indications that the country attracts investments that are solely tax-driven and to not involve economic activity. We must remember that, in some countries, certain Canadian corporations have a dismal record when it comes to mining, among other activities. How will we ask questions to obtain information about what is happening? This is a problem for the Bloc Québécois.

Furthermore, the right-wing government has passed a repressive bill that, in theory, could criminalize workers. It has agreed to review the law but we are not sure that it will do so.

In short, the Bloc Québécois does not support this bill.

We do not know enough about it, and there are not enough guarantees and safeguards. It is a bilateral agreement that completely ignores human considerations and does not demonstrate the openness that should be the hallmark of such agreements.

[Nicole Demers, Bloc, Laval, QC]

Mr. Speaker, I was listening closely to my colleague and I was wondering if she could elaborate on the impact this might have on Quebec and its industries, for whom trade and exports are of capital importance.

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

According to the Institut de la statistique du Québec, 30% of exports to Panama come from Quebec. As far as imports are concerned, Quebec's share is under $2 million.

We are all for trading with Panama and exporting to that country. Nonetheless, we do not want to be involved with these rogue states that use freer trade and making money as an excuse for violating environmental laws and workers' rights established by the International Labour Organization. These things are extremely important to Quebeckers. Even though Quebec does business with Panama, if such agreements are concluded, Quebeckers will not forget how important these two concepts are for Panamanians.