Madam Speaker, I am pleased to speak today to the Canada-Panama free trade agreement.
I have to say at the outset, though, that I find it mind-boggling that we are yet again debating a bilateral trade agreement, as if such agreements will somehow magically give us a coherent and smart industrial and economic strategy.
On the contrary, there has been no economic strategy, no real focused trade strategy, and the result has been that most Canadians are worse off now than they were before.
The government simply cannot keep doing these ribbon cuttings for free trade agreements and then expect that its job is done.
This is no small issue. When we look at the last 20 years, since the implementation of the Canada-U.S. Free Trade Agreement, the real income of most Canadian families has gone down, not up. The real incomes of the two-thirds of Canadian families that comprise the middle class and those of the poorest Canadians have gone down right across the country.
The only people who have actually profited and seen an increase in their real income over the past 20 years, when the first of these agreements was implemented, have been the wealthiest of Canadians. The wealthiest 10% have seen their incomes skyrocket. One-fifth of Canadians, the wealthiest 20%, now take home most of the real income in this country.
In fact, as I pointed out in this House on Monday when I spoke about the Canada-Jordan free trade agreement, I remember the arguments being used when the first free trade agreement was being signed between Canada and the U.S. At that time, the management of Stelco, which is now U.S. Steel, a steel manufacturer in my hometown of Hamilton, sent a letter to all the steelworkers in the plant telling them that in the upcoming federal election they should vote for the parties that support free trade because without such a trade deal their jobs would be at stake.
Well, that trade agreement has been in place for decades now and I would defy the government to find a single steelworker who would say that it has been good for his or her job. On the contrary, decent family sustaining jobs are disappearing and they are being replaced by precarious and part-time work.
To imply, therefore, that the free trade agreements that have been brought in by the Liberals and Conservatives have led to instant prosperity is simply false.
Statistics Canada data puts the lie to those pretensions that this is somehow a coherent and smart industrial and economic strategy. Maybe the reason the government is so intent on doing away with the mandatory long form census is that it knows that solid statistical evidence will contradict its mantra of being a good economic manager.
We need to ask about the actual record of the government since it came to power. We saw the softwood lumber sellout, which killed jobs right across this country. We have seen the shipbuilding sellout, where the tiny European country of Liechtenstein actually outmanoeuvred the Conservative government. Of course, there was also the Canada-Colombia free trade deal. All of them point to the fact that the Conservative government's record is abysmal when it comes to protecting Canadian interests.
Meanwhile, our competitors are investing in export promotion support. The United States, Australia and the European Union are spending hundreds of millions of dollars every year in providing support for their export industries and promoting their exports.
In Canada, we spent paltry cents on the dollar compared to other countries like Australia. Australia's total budget for export promotion support is half a billion dollars. Our total budget is a few million. This is what is wrong with the government's approach: it simply does not provide the kinds of supports that other major industrialized countries, our competitors, do.
What we in the NDP have been saying ever since the Conservative government came to power is that it needs to change its approach. The government simply cannot go to these free trade agreement ribbon cuttings and expect that its job is done.
Even if these trade agreements were based on fair trade as opposed to the old NAFTA template, do the trade agreements themselves make a difference? Obviously not, because with a number of these bilateral agreements, our exports in places have actually gone down in those markets after the trade deals were signed. In every case, imports from the countries that we have signed with have gone up. In other words, other countries have managed to profit from the agreements signed with Canada but Canada's exports have actually gone down.
How can we sign an agreement and not have a follow-up strategy to bolster our exports?
The problem with the government's approach is not only that it has no industrial strategy but it also does not have an export oriented focus and it is not willing to invest Canadian government funds in the way that other countries do to bolster their industries.
Instead, our government is allowing the wholesale sell-off of Canada's strategic industries: Stelco, Inco, Alcan, Nortel, Falconbridge, and the list goes on. Canada has already ceded control over aluminum, steel and nickel, and now potash is inching its way toward a foreign sale. It is way past time for the Prime Minister to stop rubber-stamping foreign takeovers and start protecting family supporting jobs and our communities.
I am proud that my NDP colleagues and I have been advocating a buy Canadian strategy. We are the only party in the House to do so. While the Liberals and Conservatives make facile attempts to ridicule us for it, countries like France, the United States and Germany are focused on making precisely such investments in key industries. They are essential for ensuring a strong foundation. Without such a foundation, Canada will continue to lose from the trade deals it signs.
Let us look specifically at the Canada-Panama free trade agreement.
As the NDP labour critic, I will begin by focusing on the labour co-operation agreement, which grandly declares that both countries have committed to ensuring that their laws respect the International Labour Organization's 1998 Declaration on Fundamental Principles and Rights at Work.
The declaration aims to ensure that social progress goes hand-in-hand with economic development and covers the right to freedom of association, the right to collective bargaining, the abolition of child labour, the elimination of forced or compulsory labour and the elimination of discrimination in respect of employment and occupation. That sounds great, except the labour co-operation agreement contains no provisions that would force the signatories to implement the UNs labour standards.
Moreover, the agreement does not prevent Panama from weakening or reducing the protections afforded in domestic labour laws in any future effort it may make to encourage trade or investment. The Canada-Panama FTA contains only one enforceable labour provision: a requirement for the government to adhere to its own labour laws. Unfortunately, there is a significant canard involved in this language.
Panama's labour track record is not good. While unions and collective bargaining are permitted in export processing zones, the International Labour Organization's committee of experts questioned the government as to whether these workers actually have the right to strike.
In August 2007, two construction union members were assassinated while demonstrating for worker's rights. This summer there was a new wave of anti-union repression in Panama, resulting in several workers killed, over 100 injured and over 300 arrested.
Panama's law regulating the EPZs does not include arbitration or specify procedures to resolve labour disputes. Moreover, the U.S. state department noted that child labour continues to be a problem, with violations occurring most frequently in rural areas at harvest time and in the informal sector where many children work as street vendors, shoe shiners, cleaning windows, washing cars, bagging groceries in supermarkets and picking up trash. Clearly, even if Panama plays lip service to upholding ILO and UN labour conventions, it does not walk the talk. This FTA's so-called “dispute settlement system” does little to change that reality. It serves as little more than window dressing.
The maximum government fine for labour violations is capped at $15 million and, to add insult to injury, these funds, in the unlikely circumstance that they will ever be collected, are paid to a joint commission to improve labour rights enforcement, which, in turn, could easily be funnelled back into the Panamanian government's coffers.
Given that the Panamanian labour code does not even apply in export processing zones and that approximately two-thirds of Panamanian workers operate in the informal economy, the remedial power of any labour provisions that might be included in the agreement would be severely limited. In fact, this FTA would ultimately exonerate the signatories from meeting an acceptable human rights standard. To put it in a nut shell, this free trade agreement is bad news for labour.
However, it gets even worse.The agreement is bad news not just for labour, but for every Canadian because Panama is an offshore tax haven for companies that want to evade their Canadian tax obligations. A free trade agreement between Canada and Panama would be a bonanza for big business while leaving individual Canadian taxpayers with an ever-increasing burden for picking up the costs of federal government programs.
Let us take a closer look.
For decades, Panama has adjusted its laws in order to ensure that its business climate is one of the most unregulated in the world. Such lax regulation offers tremendous opportunities for foreign companies interested in dodging fair taxes, exploiting malleable labour regulations and taking advantage of less than transparent reporting requirements.
Panama's level of foreign direct investment has skyrocketed since legislation was passed in 1992, which established export processing zones in a number of locations across the country. Companies from all over the world are welcome to establish factories in these zones from light manufacturing, assembly, high technology and specialized and general services. Companies operating there are exempt from all taxation on imports and exports, sales tax and taxes on capital and assets.
In addition, EPZs are free from all restrictive national labour and immigration standards. Instead, they operate under provisions that are more favourable to foreign companies than the current Panamanian code.
In April 2009, the U.S.-based Public Citizen released a report highlighting Panama's banking secrecy rules and lax financial regulations. Ever since then, there has been much discussion in the media about Panama's status as a top tax haven. All foreign corporations conducting business in Panama are exempt from national taxes, making the country a 100% tax haven, according to the report. It comes as no surprise that over 350,000 foreign registered companies nominally operate from Panama.
In addition to tax exemptions, Panamanian law also makes it easy for multinational corporations to cook the books. According to the Public Citizen report, Panama has one of the world's most restrictive information exchange regimes, which allows the country to withhold information, even within the framework of a criminal investigation. Moreover, extremely strict slander laws can be used to arrest journalists for reporting facts and figures if they do not reflect well on business interests.
This lack of transparency, coupled with a lenient regulatory system governing the country's banking and financial sectors, enables corporations to conceal their financial losses and to engage in off-balance-sheet activities.
Evidence also links Panama's Colon Free Zone, or CFZ, with trafficking of narcotics and other illicit substances, in addition to offshore activities carried on by foreign corporations. Panama's CFZ, which is the second largest free trade zone in the world, provides a centrally located transit area for drugs and related money laundering activities moving up through Mexico to its northern border, according to the International Monetary Fund.
The illicit matters have grown even more controversial since the G20, at its recent conference, decided to crack down on tax havens and to step up financial regulation as key steps toward global financial recovery. In response, the Canada Revenue Agency is working on a new set of rules for voluntary disclosure here in Canada of offshore earnings.
I have criticized these rules elsewhere before. Not only will these rules allow individuals and corporations to admit that they have earned income in offshore bank accounts without facing prosecution for tax evasion, but under the new rules, auditors will only go back 10 years, and account holders will no longer have to explain where the original capital on accounts more than 10 years old came from. That, of course, means that money laundering is now legal in Canada as long as one is patient.
A free trade agreement with Panama would actually make it even more difficult to crack down on tax evasion and money laundering in Panama. The proposed FTA contains provisions that forbid cross-border regulations on financial transactions between Canada and Panama. It would also provide subsidiaries operating in Panama enhanced investor rights that would enable them to challenge any attempt by the Canadian government to monitor or limit financial transactions. In short, if one has tax evasion or money laundering needs, try Panama.
It is time to rethink our approach to global competitiveness. The measure should not be the profitability of Canadian multinational corporations abroad but rather the ability of Canadian-based producers to compete and thrive on Canadian soil in a dynamic global economy. What Canada needs and Canadians deserve is an overall national economic strategy that delivers on the promise of good jobs at home and shared prosperity abroad. The patchwork of trade agreements the Conservatives have brought to this House to date delivers neither.
It is time to stop the ad hoc ribbon cutting across the globe and start afresh in the recognition that our trade policy requires deep reform. In fact, Canadians understand that need better than the Conservative government, and they are getting active on the issue. There is a growing fair trade movement in Canada that is being embraced by individual citizens, schools, academics, unions, activists, religious organizations, and more, all unified by their desire to make the world a better place.
Fair trade is really about making changes to conventional trade, which, as I pointed out, often fails to deliver on promises of sustainable livelihoods and opportunities for people in the poorest countries in the world. Poverty and hardship limit people's choices, while market forces tend to further marginalize and exclude them. This makes them vulnerable to exploitation, whether as farmers and artisans or as hired workers within larger businesses. That two billion of our fellow citizens survive on less than two dollars per day, despite working extremely hard, makes it painfully clear that there is indeed a problem.
Fair trade seeks to change the terms of trade for the products we buy to ensure that the farmers and artisans behind those products get a better deal. Most often this is understood to mean ensuring better prices for producers, but it often includes longer-term and more meaningful trading relationships.
Clearly, Canadians are taking this concept to heart. I want to applaud everyone involved in having their communities certified as Fair Trade Towns. The first city to be awarded Fair Trade Town status in Canada was Wolfville, Nova Scotia, on April 17, 2007.
Since then, additional cities, such as La Pêche, Quebec; Port Colborne, Ontario; Nakusp, B.C.; Golden, B.C.; Gimli, Manitoba; Olds, Alberta; Revelstoke, B.C.; Neuville, Quebec; Mercier-Hochelaga-Maisonneuve, Quebec; Vancouver, B.C.; Barrie, Ontario; Sainte-Anne-de-Bellevue, Quebec; and Canmore, Alberta have all joined, allowing fair trade towns to stretch from coast to coast.
I am proud that my own home town of Hamilton is a fair trade town in progress. We are well on the way to meeting all six goals for achieving fair trade town certification. All of the credit goes to Environment Hamilton and its supporters, who have been tireless in promoting sustainability in our community.
Members of the House may be interested to know that the six criteria for certification are as follows. First is the support of city council. Council has to pass a resolution in support of fair trade and the local campaign including (a) a commitment to purchase only fair trade certified tea, coffee, and sugar and other fair trade certified products, where possible, for all meetings and in offices and cafeterias and (b) a commitment to assign fair trade town responsibilities to a member of staff or committee to ensure continued commitment to its fair trade status.
Achieving this goal has been interrupted by the current municipal campaign in Hamilton, but I am cautiously optimistic that getting the city to commit will not be the most daunting challenge. Of course, the outcome of the election may change that landscape.
Second, communities have to demonstrate that fair trade certified products are available in stores and restaurants. Hamilton is already there.
Third, there must be support from community groups. Again, the support and commitment is already there in Hamilton, and we are now getting people organized around the goal of formal certification of the city.
Four, there needs to be demonstrated public support from both the media and the general public. Those pieces will certainly fall into place in Hamilton as we take the final steps toward certification of the city.
The fifth criterion is that a steering committee be convened that includes wide representation from the community and that commits to achieving two additional targets per year: submitting an annual progress assessment to TransFair Canada, and organizing events for National Fair Trade Week in May of each year. Environment Hamilton has already recruited representatives from local co-ops, faith groups, and retail outlets to join EH on the steering committee, so that is another criterion that has been met.
Lastly, there has to be a commitment to promote ethical and sustainable consumption. This will dovetail nicely with work already being done around the “eat local” campaign and the labour movement's “sweatshop-free” campaign. Again, we are almost there.
I am confident that Hamilton will get its certification as a fair trade town in very short order. When we succeed, we will be the largest municipality in Ontario to have achieved that designation.
Let us put that into the context of the oft-cited phrase of environmentalists, “Think globally, act locally”. Clearly, Hamilton is already acting locally, but the phrase urges people to consider the health of the entire planet when acting in their own communities and cities.
Long before federal agencies began enforcing environmental laws, individuals were coming together to protect habitats and the species that live within them. Now, with respect to trade, grassroots activists are once again way ahead of the federal government. It is time to catch up. It is not overly complicated, and if we make the effort, it will be very easy to engage in fair trade.
There are only three pillars to fair trade: respect for the environment in all dealings, respect for the economy—agreements must be economically viable—and respect for the human rights of the societies involved in trade agreements.
If the Conservative government included these simple but profound guidelines and principles in its international trade policies, Canada's image on the global stage would be transformed, and all Canadians would know that their federal government is finally embracing a trade policy that delivers on the promise of good jobs at home and shared prosperity abroad.
Instead, what I see in the Canada-Panama free trade agreement is a continuation of the patchwork approach of signing bilateral agreements that neither meet the goals of fair trade nor lead toward a comprehensive national economic strategy. In the absence of meeting those criteria, this is not a trade agreement that I can support.
Therefore, I move the following motion:
That all the words following “That” be deleted and replaced with the following: Bill C-46, An act to implement the Free Trade Agreement between Canada and the Republic of Panama, the Agreement on the Environment between Canada and the Republic of Panama, and the Agreement on Labour Cooperation between Canada and the Republic of Panama, be not now read a second time, but that it be read a second time six months hence.
