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, the fact is that France got results and recently signed a double taxation avoidance agreement with Panama. That is because, this past February, France became proactive and levied a 50% tax on dividends, service fees, royalties and interest paid by French companies to a beneficiary in any of the blacklisted countries. Of course, one of the 18 countries was Panama.

Clearly the proof exists that if proactive action is taken, such as France took and imposed penalties against the 350,000 companies that are operating in Panama, there will be results. Panama came to the table very quickly, and the Prime Minister should now be diverting his plane when he leaves Switzerland after meeting with the Swiss president and heading straight to Panama to make sure we get a similar agreement.

As a matter of fact, Panama has signed an agreement with eight countries just in the last few months. Guess what? Not one of them is Canada. Panama has signed agreements with Italy, Belgium, the Netherlands, Qatar, and Spain, all in the last six months. Yet Canada is a country that is doing a free trade deal with Panama and it is not part of those eight.

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

Mr. Speaker, the member is right. I find it unfortunate that the government is willing to encourage trade at any cost, without any thought to what could happen, the results, the consequences.

This government has always been reluctant when it comes time to force an issue. It is as though they are scared to lose out by pushing human rights issues, fair trade and the creation of benchmarks and standards.

If I were a member of this government, I would be ashamed to not be able to put my foot down more. I would be ashamed to only be able to back the business side of things without being able to focus on getting a fair and equitable bill or agreement.

[Paul Dewar, NDP, Ottawa Centre, ON]

Mr. Speaker, there have been a lot of bilateral trade agreements signed off by Canada recently and I think there is concern by many that as we continue to go down the path of a bilateral approach, it is at the cost of looking at multilateral approaches.

I do not want the member's comments about this specific trade agreement but about this method or approach to trade. Is she concerned at all about this approach to having bilateral agreements? One could argue that it distracts us from what I think most people would agree is the way to go, which is multilateral agreements, so that there can be fair trade rules for everyone, not just compounded bilateral trade agreements, which can make it difficult for everyone.

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

Mr. Speaker, it is quite troubling. Canada has signed more than 20 bilateral agreements. By signing bilateral agreements, the Canadian government is ignoring certain global laws concerning protective measures for workers or unions, human rights, the environment, etc.

It is all very well and good to say that these types of bilateral agreements contain laws to protect the environment and workers, but it is just hearsay. Nothing sticks to realities, to global agreements, and we should be worried. Not only is this wrong, it is not in keeping with Canada and the image it usually projects.

[Paul Dewar, NDP, Ottawa Centre, ON]

Mr. Speaker, I rise today to speak to a bill concerning a bilateral free trade agreement with Panama, Bill C-46.

I rise today to hopefully take a look at Canada's track record regarding trade and particularly the direction that the government has taken when it comes to trade agreements. When it comes to the Panama free trade agreement, it is actually part of the cookie-cutter approach that the government has of looking at free trade as a one-off kind of thing that can be done with different countries, and by the same token, ignoring where I think we should be spending our time and effort, which is looking at the multilateral forums.

Many who are involved in trade agreements and in diplomacy are very concerned about the fact that we were not able to find success in the Doha Round. The government will say that since Doha has collapsed, the World Trade Organization talks on multilateralism have collapsed, in effect what we should be doing is just having bilateral trade agreements.

That sounds reasonable if we consider that there does not seem to be any initiative that is worthwhile to get multilateral trade agreements going on or the Doha Round going again, except for the fact that when we look at what Canada's role in trade has been historically from the beginning of Confederation, we need to ensure that we do have fair trade opportunities, that we are not going to be susceptible to larger economies taking advantage of our goods and services and resources. By the same token, we have to have access to markets.

Essentially, in a sentence or two, that is what the equation is. It is making sure we have access, while protecting our economy.

When it comes to these bilateral trade agreements, the concern here is that when we compound them and stack them up, we have to really look at what is in the interests of Canada. There have been some interesting suppositions put forward on these small bilateral trade agreements. Let us be honest here: most Canadians do not wake up in the morning and say, “By golly, we need to get access to the market in Lichtenstein, or Jordan, or Panama”.

We do want to make sure that we are not selling off our natural resources without value added, that we are not opening our markets up to the vagaries of what we have seen lately, which is very significant multinational corporations coming in and taking over our companies, dispensing with the parts of the company that they do not find profitable, and making away with the profits. That is the major concern of Canadians, not about free trade with Panama or Lichtenstein or Jordan.

Canadians are very concerned about what happens when these bilateral trade agreements compound and what is the benefit for Canada. In the last couple of weeks, there has been an interesting discussion around potash. Potash has been a real cornerstone for the economy in Saskatchewan. As we know, it was something that was a net benefit for everyone in Saskatchewan because it was a crown corporation.

Sadly, we saw it sold off, and we say this respectfully to the party in Saskatchewan or what used to be the Conservative party that exists no more. They sold it off. We now have Mr. Wall in a position where he is having to sound like a New Democrat, saying that because of the concerns of international investors, he is going to actually stand up for Saskatchewan and not let Potash Corporation be further undermined. We welcome that.

Mr. Wall has now listened to what New Democrats have said: “Do not sell it off. Do not let the Prime Minister have his way.” When we are talking about international trade, we are talking about protecting Canadian industry. I know some of the Conservatives are looking as though they are doing a pretzel dance, but that is kind of how they are dealing with the potash file. I guess they represent exactly what is happening with their position on trade, protecting, on the one hand, Canadian industries, and on the other hand, ensuring that we have markets abroad.

Make no mistake, if Potash Corporation is sold off to another country, which is essentially what is happening, the effects will be not just to Saskatchewan. The ripple effect will be felt throughout Canada. That is what we have to consider when we are looking at trade agreements. How is Canada going to benefit? The provisions in this bill, in this offering from government, are in terms of investment protection and free market access in goods and services, including government procurement, but then we get into what we have seen in previous trade agreements: a labour protection agreement and an agreement on the environment.

Unless absolute clarity on what we are agreeing to in terms of labour standards and environmental standards is embedded in trade agreements, they are not worth the paper they are written on. They can be ignored. If there are labour standards, for instance, such the ones in Panama, which are not as strong as those in Canada, essentially we are putting our workers in unfair competition with workers from Panama. Not only that, but in talking to people from Panama, as our party has, their concern is that it is in fact putting a rubber stamp on labour practices in Panama and saying that all is well and good.

I have heard the government say, time and time again, this will lift all boats up and by us signing a free trade agreement with Panama, all of a sudden it is going to have fair labour standards and fair environmental standards. We know we do not even have the capacity to have oversight on the potash deal in this country. Are we really going to have enough people to have oversight on the environmental and labour standards in Panama? I doubt it. In fact, the agreement does not have it embedded. It is a side agreement and it is a sideshow at the end of the day.

When we look at the totality of this bilateral trade agreement, it is like what we have seen in the past. There is no guarantee that we are going to have equity in terms of access to markets and protecting labour and environmental standards for those we trade with. We do not know and have actual numbers to convince any of us that this will be a benefit to Canadians, be it workers or investors. We do not know what the follow-up will be, because when we are talking about trade agreements, each of these agreements needs to be monitored. Once we sign off and say, “Here is access to our markets”, some people will take advantage of that and will have access to cheaper labour, perhaps, and able to have environmental standards that are not as strong as Canada's, but we will have to make sure that there are benefits to Canada. Who is going to monitor that?

Right now, as I said before in terms of looking at the potential sale of PotashCorp, we do not even have enough people monitoring that. For each of these bilateral agreements, we are going to need people to monitor these trade agreements. That is why it is so important to focus on the multilateral approach.

With a multilateral trade system, which used to be the General Agreement on Tariffs and Trade, we would have discussions and debates in Brussels and we would have some of our bureaucrats in Brussels on a regular basis ensuring that the GATT rules were being followed. We will need the same kind of thing for each of these bilateral agreements.

We should be entering into multilateral agreements. It makes sense and it is fairer. This is not the way to go. Clearly this is going to be another example of the government ignoring multilateral, going into bilateral, and at the end of the day, Canadians will not be better off.

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

Mr. Speaker, I want to thank the member for his very good speech outlining some of the problems with this Panama trade agreement. Between the environmental, labour and tax haven issues that are outlined in this agreement, one of the things we know is that, for many of our ridings, we have been left with a bad taste as a result of agreements that have been negotiated by the government.

The softwood lumber deal was not such a great deal for the workers in my riding of Nanaimo—Cowichan. What we have seen as a result of that is sawmills close and some of our pulp mills really struggle with access to fibre. So I have a tough time going back to my riding and talking about another agreement that does not seem to provide the kind of protections that we would expect our legislators to put in place for Canadian workers.

I wonder if the member could comment on the fact that agreements such as the softwood lumber agreement simply have not benefited Canadian workers and in fact we have seen job losses as a result of that. Anytime we want to talk about fair trade, we want fair trade, not free trade. We want to talk about no net job loss for Canadian workers. Could the member comment on that?

[Paul Dewar, NDP, Ottawa Centre, ON]

Mr. Speaker, what my colleague from British Columbia is actually pinpointing is the problem with these agreements. Like the softwood lumber sellout, as some of my colleagues call it, the agreement looks good on paper to those who are negotiating it but when it comes down to individual communities and industries, we have not seen the benefit. We have seen the opposite of that.

Let us remember what happened. We had $1 billion go south to guarantee that we would have fair trade and access to markets. Now we see, in ridings right across the country, the shutdown of an industry. The irony, actually the tragedy, is that we were investing this money so that we could have access and it has had the opposite effect.

What we need to see in these agreements is not just nice side agreements on labour and the environment that, frankly, are not very effective. We need to see, just like we are taking about with potash, where the net benefit is for Canada in these trade agreements, not in theory but in actual real terms.

I am sure that at committee we will be asking to see the statistics on Panama that we will be able to take to the bank and take to our communities to ensure we are not being opened up just for some people to take what they want and leave the rest, because that is what we have seen here. We have seen our country opened up, people taking what they want and leaving most of our workers with the short end of the stick.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I have always found it interesting to hear the debates on the trade deals because it seems the same issues are raised.

However, I picked up on a couple things and I wonder if the member could comment on them.

Three years ago, the United States entered into an agreement with Panama and 13 days thereafter the Panamanian congress approved the deal. However, here we are, three years later, and the U.S. Congress still has not ratified the Panamanian agreement. It does raise some questions about what is in fact the problem. We know that the implications of a trade deal with the United States and Panama will not have too much of an effect simply because 96% of the Panamanian exports are duty free and there is no competition to the major export commodities of the U.S.

There must be something more to this from a U.S. perspective and, I submit, that it would probably be relevant for the discussion and for us to know when there are free trade deals, particularly with the same country, what other countries are doing and why.

[Paul Dewar, NDP, Ottawa Centre, ON]

Mr. Speaker, I would point to the fact that it was the U.S. Congress that stopped the trade deal with Colombia and, as the member would know as well, it was not just with the present government but with the previous government. The reason was clear: the congress was not going to be entering into a free trade agreement with, as he noted, Panama, but also with Colombia because of the concerns about what was happening on the ground in Colombia.

What we need to see, before we enter into trade deals, is that there is fair play in daylight with the countries that we are going to be entering into these deals with, before, not after. This is where the American Congress has taken a strong stand. It is seen, in the case of Colombia, that there was not fair play in daylight on things like labour rights, human rights and the environment. I think that is the same reason why the U.S. stopped its negotiations with Panama.

[Luc Malo, Bloc, Verchères—Les Patriotes, QC]

Mr. Speaker, I heard the NDP member from Ottawa talking about the importance of a multilateral approach in trade agreements to ensure some degree of fairness in the agreements and to ensure that they benefit all parties involved, which is quite a departure from the sort of bilateral agreements this government wants to rush through.

The Bloc Québécois has always been very clear. Protectionism will not help the Quebec economy because it is based on the manufacturing industry. In its budgets, the government has been trying to limit the development and growth of manufacturing businesses by introducing policies that favour other sectors, such as the western oil industry. We object to such ploys because everyone knows that the Quebec economy is based primarily on manufacturing, and therefore on exports. International exports account for one-third of Quebec's GDP. If we include all interprovincial exports, over half of our GDP depends on the growth of our manufacturing industry.

We therefore cannot support any sort of protectionist initiatives. That is why, when we learned that the American administration had decided to include protectionist measures in its stimulus plan, some Bloc Québécois members rushed to Washington, the American capital. They urged the American government and all partners to stay away from protectionist measures because they are harmful not only to our economy, but to theirs as well. A great deal of trade takes place between Quebec and the United States and between Canada and the United States. The fabrication of manufactured goods often begins on one side of the border and is completed on the other side. The value added to goods increases on the other side of the border, and those goods come and go. We have an integrated manufacturing industry. The Bloc Québécois therefore vehemently opposes any sort of protectionist measures.

However, the common good and the ability of governments to redistribute wealth, protect the environment and culture, and provide their citizens with basic public services, such as health care and education, must always be the basis for decisions about trade rules. If the WTO's Doha round is compromised and the free trade area of the Americas is currently stagnating, is it because the negotiations were flawed? Of course. It does not mean that the multilateral system is ineffective. It comes down to some partners around the table having the impression that they will come up short. Some parties want to have more benefits and, consequently, the other parties run the risk of coming up short.

When negotiating, it is important to always bear in mind that agreements must be fair to all partners and that each party must secure the benefits it had hoped for by signing the agreements.

In the case of multilateral agreements, if the government made more of an effort around the table to arrive at just and fair compromises, we would not be in a position today of watching it rush to sign bilateral agreements with just about anyone in order to bypass others who would like to sign agreements. I do not believe we should be doing this. The Bloc Québécois' position is that it is important that efforts be directed to negotiating multilateral agreements.

That is why the Bloc Québécois was the first party in this House to call for an agreement to be signed with the European Union. This agreement is still being questioned today because it is not clear whether the government is serious about defending what is important to us at the table, namely cultural exemption and supply management. Fundamental requirements still need to be central to the debates, discussions and negotiations because there are fundamental aspects at the heart of a society's economy or identity. For example, supply management is fundamental to Quebec agriculture. There is also cultural exemption. I like repeating that in this House. Quebec is a nation where culture, the arts, literature and, essentially, everything that is at the centre of our collective identity as Quebeckers, are important to us. We want to preserve our identity for generations to come because that is what defines us as a nation. So ends that aside.

As my colleague from the New Democratic Party said in his speech, when agreements are negotiated, they have to benefit the country's economy, or the nation's, in the case of the Quebec nation. When the Bloc Québécois assesses potential agreements presented to it, one of the questions it needs answered is whether these agreements can benefit Quebec's economy.

That being said, with Panama there is another problem to add to the debate: the fact that this country is on the grey list of tax havens. None of us likes to hear in the news that companies are not paying their fair share of taxes because they shelter their capital in tax havens in various countries that protect them from having to fulfill their social responsibility. It is clear that ordinary citizens do not enjoy the same privileges that the government unfortunately continues to give rich companies to save them from paying some of the tax on their profits.

As far as Panama is concerned, I have here an article from Le Devoir, from September 29, 2010, entitled “Lutte internationale contre l'évasion fiscale—Les mauvais élèves sont montrés du doigt”. It is about singling out the offenders in the international fight against tax evasion. The subtitle refers to the release of the international forum's first report card.

This text from Agence France-Presse explained that, following a preliminary review by the WTO, Panama would probably be on the WTO list of offenders. I believe this needs to be taken into account.

[Randy Hoback, Conservative, Prince Albert, SK]

Mr. Speaker, the member is consistent with his coalition partners against trade and against companies like Bombardier and other companies in Quebec doing business around the world. Those members do not want to see any type of free trade agreement that gives them an advantage in the marketplace.

In the agriculture sector in Saskatchewan trade is very important. We need trade. The NDP does not represent farmers in Saskatchewan, it never has and it never will.

Why is he against trade? This is so beneficial for the whole Canadian economy, especially Quebec. Why would he not just embrace this, get behind it, push it and see the bill go through?

[Luc Malo, Bloc, Verchères—Les Patriotes, QC]

Mr. Speaker, I thank my colleague for his question.

The member mentioned a coalition. I see more of a coalition between the Liberals and the Conservatives to help major corporations avoid paying their taxes. These taxes would help us better redistribute the wealth and would give our citizens even better lives.

In response to his question, as I said in my speech, the Bloc Québécois is a strong supporter of multilateral agreements. The Bloc Québécois was in favour of signing the North American Free Trade Agreement, and is in favour of a free trade agreement with the European Union. These agreements involve several parties, who will all reap the benefits.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, the U.S. entered into an agreement with Panama three years ago, but it still has not been ratified by the U.S. Congress.

It is curious because the previous questioner asked what the member had against trade when there were all these good things. In regard to the U.S., the FTA would eliminate 88% of tariffs on U.S. exports and it would secure new access and advantages to Panama investment, financial and other services and, most significant, it would open up major new opportunities for U.S. businesses and workers in the current expansion of the Panama Canal.

It would appear that there are substantial reasons why there are very strong benefits for the United States in entering into that agreement. Notwithstanding that Panama ratified the agreement with the U.S. 13 days after it was agreed upon, 3 years later the U.S. Congress has refused to give approval to that Panama agreement.

Is the member aware of any reasons why the U.S. has refused to enter an agreement, which clearly would be to its advantage?

[Luc Malo, Bloc, Verchères—Les Patriotes, QC]

Mr. Speaker, I thank my colleague for his question.

I would not want to hazard a guess as to why the U.S. Congress has not decided to go ahead with this free trade agreement, but it is clear that countries should not be in a hurry to sign free trade agreements. Unfortunately, I get the feeling that the Conservative government is in a hurry. It is rushing to sign bilateral agreements with a number of countries in order to head off other countries that are doing the same thing.

As I said in my speech, instead of focusing its efforts on this sort of thing, the government needs to sit down with other countries and really do what it takes to ensure that major multilateral agreements see the light of day, for the sake of Canadians and Quebeckers.

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

Mr. Speaker, I am very pleased to speak to the bill.

At the outset, I would like to take a moment to recognize the Parliamentary Secretary to the Prime Minister. An hour or so ago he indicated that the Prime Minister had just signed a double taxation avoidance agreement with Switzerland today in Switzerland. He gave information, for which we have been looking for some time now, as to how much money has been recouped by Revenue Canada.

The Parliamentary Secretary to the Prime Minister said that last year $138 million had been collected on behalf of Canadian taxpayers under the amnesty program. He said that even more than $138 million had been collected to date this year, but he did not give us an indication of how much. I know the parliamentary secretary to the finance minister is here and perhaps he could make a note of this and get back to us with the information as to how much has been collected so far this year. I think that is a good sign.

For many years now, the banking systems of Switzerland, Liechtenstein and other countries becoming tax havens for arms dealers and drug dealers. As well, regular everyday Canadian taxpayers and corporations have been taking advantage of these tax shelters primarily because they can get away with it.

After several hundred years of Switzerland keeping its bank secrecy laws and veils in place, after 9/11 we started to see some breakthroughs. President Obama took on the Swiss banking establishment over the last couple of years, demanding information. Under the guise of finding out information about terrorist financing, he was able to break open the veil of secrecy. However, up until 9/11, up until the worldwide concern about terrorism, there did not seem to be too much concern about drug dealers, arms dealings or about other people hiding their money from tax authorities. Things have developed and progressed for the better.

Here is another bit of information that the public knows about now. A bank employee in a Liechtenstein bank two or three years ago sold bank diskettes containing thousands of names of taxpayers to the German government. In a more recent case, a Swiss bank employee did the same thing. He took the records into France and turned them over to the French government. Now the Canadian government has been faced with this information being made public and Canadian taxpayers are demanding to know what the Canadian government is doing about it.

The Canadian government is essentially offering an amnesty to taxpayers in Canada who have not paid their taxes. The government wants them to walk into Revenue Canada, declare that they have been bad and it will let them off the hook with no penalties, no jail terms, nothing more than just “pay your taxes”. That has been its approach. Now the Prime Minister has gone off to Switzerland and has an agreement with the Swiss government.

I ask the parliamentary secretary to the finance minister to take note of what France did, and it was quite substantial. Only this February, France compiled a list. There is the OECD grey list, but there is also France's black list. It put 18 countries on this list and one was Panama.

France acted proactively, and Canada should do what France did. France levied a 50% tax on dividend, service fees, royalties and interest paid by French entities to any beneficiaries in any of these blacklisted countries, including Panama, a 50% upfront tax levy. Gains from real estate and securities transactions were also subject to the same levy. In addition, France's 95% tax exemption on dividends issued by subsidiaries to their French-based parent company will be removed if the subsidiary resides in any of the blacklisted jurisdictions. France brought these rules in immediately, in February.

What happened? The results have been phenomenal. France now has a double taxation avoidance agreement signed with Panama. When Panama realized the game was up, that it would have to comply, it signed agreements not only with France, but with Mexico, Barbados, Belgium, the Netherlands, Qatar and Spain. That is since February. It now has these agreements that it refused to sign for many years.

Guess what? Canada is not one of those countries. Canada is a country that is looking at implementing a free trade agreement.

This is perfect timing for Parliament and the government to become proactive and to do what France did. It should compile a blacklist, follow the OECD's list if it wishes, and levy the 50% tax on dividends, on interest, on royalties, on service fees, all the measures that France took, then watch Panama come immediately to the table. Within weeks of the government doing this, I can guarantee the Panamanian government will be knocking on the government's door, asking to sign the double taxation avoidance agreement. That definitely would be putting the cart behind the horse because the government is not doing things in a way that would get results.

The member for Mississauga South has been desperately seeking answers from successive speakers all morning, and not getting them, about why the Americans are not ratifying the agreement. He wants to know the reasons why 43 or 45 congressmen have demanded that President Obama not ratify it. He points out that Panama signed and ratified the agreement within 13 days, yet after 3 years the United States has not ratified, nor is it likely to be any time soon.

The reality is 45 American legislators have resisted signing. Part of the reason is the Americans are aware that 350,000 corporations have offices in Panama to shelter income. In order words, they are taking advantage of the tax haven status. One of the corporations is none other than AIG. AIG received gazillions of dollars in bailouts just two years ago and it gave a huge amount of bonuses to its executives six months later. Now AIG is suing the U.S. government for $306 million in back taxes it claims it is owed because of the use of one of its Panamanian corporate entities. It wants to involve itself in tax havens like Panama—