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 proceeded to the 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.

Speaker's Ruling

[The Acting Speaker, Denise Savoie]

There are four motions in amendment standing on the notice paper for the report stage of Bill C-46. Motions Nos. 1 to 4 will be grouped for debate and voted upon according to the voting pattern available at the table.

I will now put Motions Nos. 1 to 4 to the House.

Motions in Amendment

[Peter Julian, NDP, Burnaby—New Westminster, BC]

moved: Motion No. 1

That Bill C-46 be amended by deleting Clause 7.

Motion No. 2

That Bill C-46 be amended by deleting Clause 10.

Motion No. 3

That Bill C-46 be amended by deleting Clause 12.

Motion No. 4

That Bill C-46 be amended by deleting Clause 63.

He said: Madam Speaker, I am pleased to rise on the NDP amendments to take out certain key portions of Bill C-46, which is the implementation legislation on the free trade agreement with Panama.

The reason why the NDP is opposing this agreement, as many of the witnesses who came before the standing committee can attest, is because this is just another symbol of what has been a pretty dysfunctional trade strategy from the government.

Over the last 20 years, the middle class has been gutted. We have seen reduced incomes for most Canadian families and increasing inequality. Inequality in Canada is at the same level as it was in the 1920s. A lot of this is due to a series of bad right-wing economic policies that have been put forward, first, by the Liberal government and continued by the Conservative government. One of the components within that is how the Conservative government approaches trade strategy.

We will hear Conservatives in the House talk about how this is a fantastic opportunity and that Canadians will prosper. Canadians have heard that line in agreement after agreement. The government said the same thing about the softwood lumber sellout. It said the same thing about the ship building sellout. It said the same thing about the buy America sellout.

However, we have seen the contrary. We have seen middle class incomes eroding, poor Canadians getting less and struggling harder to make ends meet. In part, it is because the government signs these agreements without due thought to the consequences.

This may be surprising, but the Conservative government does not even do impact studies before it signs these agreements. It just goes ahead from the back of a napkin, hoping and praying that everything will turn out right.

It is fascinating to actually look, in real terms, at the export figures. Every time we have signed a bilateral trade agreement, our exports to those markets have actually gone down and not up.

We will hear some bafflegab from Conservatives later today and they will use a very clever trick. Instead of using real dollars, they will use current dollars. As we know, if we use current dollars, we can throw out anything and show that people are earning more money because the inflation rate and devaluation that takes place is not taken into consideration in that purchasing power. It is the same thing with exports. In real terms, in constant dollars comparing apples to apples in the markets that the Conservative government has signed these bilateral trade agreements, our exports have gone down. That is a statement of fact.

The Conservatives will try a lot of bafflegab, but a real reason why their trade strategy is so dysfunctional is because they have not done their homework and checked the figures. In fact, the NDP did the research through the Library of Parliament because, after asking DFAIT month after month, the Department of Foreign Affairs and International Trade was unable to give the actual real-term constant dollar value of our exports to those markets.

I will cut to the chase. We have a dysfunctional Conservative government with a dysfunctional trade strategy. The government is making most Canadians poorer because it is not giving due thought to the impacts of what these trade agreements are and has a rabidly right-wing approach on trade agreements generally.

We have signed a trade agreement with Panama, but what is the problem with Panama? In a study from the Internal Revenue Service of the United States, tax havens and criminality are mentioned as well as what happens in Panama because of its encouragement to launder dirty money. The study says that 75% of all sophisticated drug trafficking operations use offshore secrecy havens like Panama.

I will cite from Tax Havens: How Globalization Really Works by Ronen Palan. He states, “It is evident to all who have studied the offshore banking business that its growth has been fuelled by the phenomenal increase in cash from the U.S. drug trade”.

The IRS states that of the investigations it has conducted, 45% involved illegal transactions derived from legal income and about 55% of cases actually dealt with illegal income from drug trafficking. The IRS cites the offshore money laundering havens where this takes place, which is very interesting. Leading them all is Panama and the Cayman Islands. The sites named by the IRS account for 85% of all cases involving transactions of illegal income.

It is not simply a process of signing a trade agreement with just any country. We are talking about the leading money laundering dirty drug money tax haven in all of the world tied with the Cayman Islands. The the government has a trade agreement with it.

I will not have time today to go into the labour violations, environmental standards or treatment of aboriginal people in Panama. However, I know my NDP colleagues will be mentioning this over the next few hours and days of debate. Instead I will focus on the issue of the money laundering of dirty drug money.

The Conservatives know full well the fundamental issue that has come up and stopped Congress in the United States from moving forward with a trade agreement with Panama. It apparently has higher standards than the Conservative government. One would think the Conservative government would then say that it would negotiate hard on behalf of Canadians, that it would put a stop to the money laundering of dirty drug money and that it would demand a tax information exchange agreement with the Panamanian government. It did not do that.

It sent a letter last year and the Panamanian government did not deign to respond for a long time. However, because the Conservatives are soft on the crime of money laundering dirty drug money decided they wanted to move ahead with the trade agreement, despite the fact it had absolutely no commitment from the Panamanian government to clean up the mess.

What response did they get? We will hear Conservatives say that they got a commitment from the Panamanian government to clean up all the money laundering of dirty drug money that takes place in Panama. That is what they will tell parliamentarians and the public, but they do not have a tax information exchange agreement. Even something minor like a double taxation agreement only deals with legal funds. It does not deal with the money laundering of dirty drug money that takes place in Panama as I speak.

The Conservatives did not get any of those assurances. However, there is a clause in the bill. What does the clause in the trade agreement actually say? It says that nothing should impede the transfer of funds in or out of the country. I guess what the Conservatives are saying is that not only is having a tax haven okay, which they are fine with as they are soft on the money laundering of dirty drug money, but it also says that they cannot stop the flow. If the Hells Angels decides it wants to money launder in Panama, I guess that means the trade agreement says that is okay, too.

These are the fundamental points about which people who voted for the Conservatives in the past should be concerned. We are not talking about economic development or progress. This dysfunctional trade policy has actually put the lie to those pretensions.

We would not be seeing most family incomes and exports to those bilateral markets go down in real terms, despite the bafflegab where the Conservatives try to magically produce, on the basis of current dollars, some kind of magical formula that does not take into consideration the fact that exports have gone down because the export strategy, pretty pathetically, is dysfunctional and failed. It is not just that. The agreement itself allows that protection and comfort for the money laundering of dirty drug money.

This is fundamentally hypocritical. It is appalling to me that a Conservative government that is so soft on white collar crime and so soft on the laundering of dirty drug money, if it is trying to push an election at the same time, would actually bring this bill forward. Over the next days of course we are going to be raising these issues, and of course Conservative voters would be the most concerned about this hypocrisy from the Conservative government.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Madam Speaker, I listened very carefully to the speech made by my NDP colleague. I think that he highlighted the problem with this free trade agreement. He talked about money laundering, whether it is being done by drug dealers or people who launder illegally obtained money. The public often wonders why our laws are not harsh enough for cases like that. But here we are talking about an agreement with a country that is a tax haven and that encourages such practices. These examples show the public how it is possible for regular people and criminals to do this right in front of the police, because it is allowed. These people can do this in countries like that.

I would like my colleague to expand on that.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Madam Speaker, I would like to thank the member for Saint-Maurice—Champlain for his question.

He understood correctly. The witnesses we heard in committee were very clear about this. There is absolutely nothing to prevent the money laundering that is still happening in Panama. Moreover, if past practices are any indication, Panama is one of the worst offenders in the world in this regard.

I was surprised. I thought that the Department of International Trade would hold a press conference with Mom Boucher to promote this bill. However, as understand it, Mom Boucher is not available at the moment. I find this type of situation absurd: if you are a drug dealer, criminal or money launderer, then you have a friend in the Conservatives. They are proposing an agreement that will serve only to increase money laundering and illegal drug operations.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

Madam Speaker, since my colleague from Burnaby—Douglas raised the issue of his party having done an impact study, and also because he and I both served on the transport committee, I wonder whether he would be prepared to share with us what impact the development of the Panama Canal would have on the transportation routes resident in our Pacific gateway strategy, most specifically with the ports in the Lower Mainland, and with some of the commerce that flows from that.

I wonder if he would share with us whether his impact study would give us an indication that the free trade agreement would compensate for the loss of the transportation services that would accrue to the Pacific gateway ports.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Madam Speaker, I did not say that the NDP had done an impact study. I would like to state for the record and for the member for Eglinton—Lawrence that what I was saying was that it was surprising to me that the Conservative government, regardless of the agreement it tossed on the floor of the House of Commons, never does its due diligence. The Conservative government never does its homework. It never does the homework that is required to actually present the case to Canadians.

Now the Conservatives will do a lot of cheerleading. We will hear it this afternoon. We know exactly what they are going to say, that It is all about economic prosperity. However, hard-working Canadians who are working harder and harder for less and less are seeing jobs going overseas. They are seeing the kinds of deals that actually encourage the laundering of dirty drug money. I think those Canadians are very skeptical now about the kind of vacuous cheerleading we hear from the Conservatives on this.

The Liberals are not obliged to support the Conservatives on this, and we hope the Liberals will be on board with voting against this bad deal.

[Gerald Keddy, Conservative, Parliamentary Secretary to the Minister of International Trade]

Madam Speaker, it is a privilege to rise to speak to this bill. I did not expect to be speaking to additional NDP amendments to the bill, but I can honestly say I am not terribly surprised.

Without question these amendments are dilatory, obstructionist and unnecessary. They are a thinly veiled attempt to kill the bill, nothing more, nothing less. Worse yet, in my opinion, they disrespect the committee process because all committee members had ample opportunity to put forward all of their amendments at committee stage. We had lengthy debate and heard numerous witnesses, yet here we are debating four amendments that have nothing to do with the substance of the bill. They are only here to kill the bill.

I am happy to speak to Bill C-46, the Canada-Panama free trade agreement, and am privileged to do so.

We need to recognize a few facts, because the previous speech was pretty short on facts.

Panama is a strategic hub for the Americas. It is an important nexus of commercial activity throughout the region. It is already an important market for Canadian businesses. In 2009, two-way merchandise trade between our countries totalled $132.1 million. Panama is a market with great potential, and this free trade agreement would help Canadian businesses take advantage of the opportunities that it offers. I have a personal example.

There is an engineering firm in my riding that specializes in the oil and gas sector. At the present time it is looking at some contracts in Panama. In order to fulfill those contracts, because of the duty, the company is better off to use its subsidiary business in Mexico and ship straight from Mexico to Panama. If this deal goes through, those jobs will stay in Canada.

This agreement would also establish a level playing field so that our companies could maintain or improve their competitiveness in a market where strong competitors, such as the United States and the European Union, have or are seeking preferential access.

A Canada-Panama free trade agreement would result in tangible benefits for Canadians. For example, it would be of key importance to Canadian merchandise exporters.

In 2009, two-way trade between Canada and Panama in non-agricultural merchandise amounted to $104.2 million with Canada's non-agricultural exports to Panama totalling $68 million. The hon. member wants to ignore the numbers as if they did not exist, but we have substantive trade between Canada and Panama now. It begs the question: why would we not include clearer rules to establish beneficial rules-based trading with a country that we are already trading with, that helps Canadian businesses and helps Canadian jobs?

Key Canadian non-agricultural exports to that market have included pharmaceuticals, machinery, vehicles and electrical and electronic equipment. Once implemented, our agreement with Panama would immediately eliminate tariffs on 99.9% of recent non-agricultural imports from Canada. The agreement would eliminate tariffs ranging from 5% to 11% on Canadian pharmaceutical exports to Panama, which amounted to $10.8 million last year.

Canadian machinery and automotive exports to Panama are currently subjected to tariffs as high as 15% to 20% respectively. Under the free trade agreement these barriers would be eliminated.

In these challenging economic times, when our manufacturing sector benefits, the country benefits.

In the forestry sector the Canada-Panama free trade agreement would eliminate tariffs as high as 15% on a range of wood and paper products, creating new opportunities for Canadians in the export of lumber, plywood, books, packaging materials and other products.

Here at home the forestry industry accounts for approximately 12% of Canada's manufacturing GDP and directly employs 230,000 Canadians. As the Forest Products Association of Canada has said, it is the economic lifeblood of over 200 communities in our country. Our government is working to ensure that industries like this one that contribute so much to our economy have access to growing markets like Panama and have the ability to make the most of the opportunities there.

In terms of our agricultural trade, Canadian producers exported $23.6 million of agriculture and agrifood products into Panama in 2009, and there is room to improve.

Panama currently applies tariffs on many agricultural products, some as high as 20%. Once implemented, the free trade agreement would immediately eliminate tariffs on goods accounting for 94% of Canada's agricultural exports to Panama. This would benefit Canadian farmers countrywide, including exporters of frozen french fries, pulses, malt, oilseeds, beef and pork products, maple syrup and Christmas trees.

Canada Pork International has gone on record that Panama is one of the Canadian pork producers' top 15 markets. Approximately $5 million worth of pork products are exported there each year. They support the Canada-Panama free trade agreement and have emphasized the importance of moving ahead with this agreement to take advantage of entering a market ahead of our largest competitors.

The benefits of having access to the Panamanian market do not end with our agricultural and non-agricultural goods, producers and exporters. A free trade agreement with Panama would also improve access for Canadian service providers looking to enter this dynamic and growing market. Panama is a services-oriented economy and some in Canada's service sector have already established operations there.

In 2008, our commercial services exports to Panama totalled $12 million. This includes those providing financial services, engineering and professional services, information and communication technology services, and others.

The Canada-Panama free trade agreement would help Canadian service providers expand their operations, pursue new opportunities, and keep pace with their competitors.

In its services negotiations, Canada obtained access beyond Panama's World Trade Organization commitments, particularly in areas of export interest to Canada, including mining services, energy services and environmental services. This means preferential access for Canadian service providers in sectors where Canada has expertise to share.

The Canada-Panama free trade agreement would also establish new rules to govern trade in services, ensuring the secure, predictable and equitable treatment of service providers from both countries.

This is to ensure that a company such as SNC Lavalin, which is leading a consortium to build a $4 billion copper mine in Panama, owned by Inmet, a Canadian mining company, will directly benefit from this agreement.

We are making our way through some difficult economic times. Many hard-working Canadians are looking for us to show leadership on the economy, promote sustainable economic improvements, and create opportunities for job growth. Our government has made a commitment to do just that, to help Canadians capitalize on their expertise and expand into new and exciting markets.

Canada's producers, exporters and service providers are constantly faced with fierce competition, and we must do what we can to ensure they compete on even ground with their competitors.

We must continue to reduce barriers to trade and negotiate competitive terms of access in global markets. We must show the world that Canada's businesses are second to none.

A free trade agreement with Panama would help to do this.

For all of these reasons, I call on all hon. members in this House, including the members of the NDP, to support Bill C-46.

In the time remaining, I would like to summarize some of the highlights of this bill. There are a couple that we cannot ignore.

We cannot ignore the increased traffic that will go through Panama after it is finished twinning the Panama Canal. We can look at that as an obstruction, a challenge, or we can look at that as an opportunity. Quite frankly, I look at it as an opportunity. There is no reason that increased flow of traffic cannot feed our container ports on the west coast and east coast of Canada.

We simply do not have to wait for the European Union or the United States to sign free trade agreements before we come in a day late and a dollar short. We are leading the way, we are promoting Canadian businesses, and we intend to continue.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Madam Speaker, I do have a question with regard to taxes. A number of concerns have been raised by a number of colleagues about the tax haven issue, the worry that Panama provides some opportunity for tax havens.

Now, I will be the first to say that these tend to be taken advantage of by the people who do not actually follow the rules, and there is no indication that increased trade would actually allow any increased activity in this regard. However, there has been some effort of the part of the Canadian and Panamanian governments to enter into some form of a tax agreement, whether it be a double tax treaty to avoid double taxation or a tax information exchange agreement.

I wonder if my hon. colleague could speak a bit to where those negotiations stand.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Madam Speaker, it is an important question. It is also one that certainly merits some discussion.

I appreciate the hon. member's comments that we do not expect that everyone doing business with Panama is looking to launder money. That is something that we need to address. Certainly, by far, 99.99% of all Canadian businesses doing business in Panama are there for legitimate and correct reasons.

On the issue of co-operation with the finance department and Panama, our Minister of International Trade has been in contact with his appropriate counterparts in Panama. We expect Panama to live up to all of its obligations under the OECD.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Madam Speaker, in trade deals, the government has a propensity to make side agreements. In particular, I am talking about, in this case, as in others, the side agreements on labour and environmental issues. Of course, the biggest problem with that is enforcement, as there is no enforcement mechanism.

I have a question for the parliamentary secretary. I am wondering if he agrees with me that if these agreements were not side agreements but actually in the body of the trade agreement, and therefore enforceable so that disagreements could be worked out between the two countries to ensure that labour and environmental rights were protected, whether this would go a long way in this place toward getting more agreement on this sort of deal.

I wonder if he would like to make a comment on that.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Madam Speaker, I thank the hon. member for his question. It is a reasonable and responsible question.

The issue here is quite simple. We are actually dealing with a trade agreement. We are not dealing with an agreement that is specifically on labour or on the environment; we are dealing with an agreement on trade. The trade agreement has an appendix with an agreement on labour and an agreement on the environment along with it, because of the importance we place upon proper labour laws, rules and regulations and proper environmental laws, rules and regulations. Therefore, we penned an appendix to the trade agreement.

However, it is a trade agreement. It is not a separate agreement on labour or a separate agreement on the environment. We appreciate the importance of both issues and have included them within the bill.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Madam Speaker, the bill should be called “Drug traffickers: You can keep the proceeds of crime act”, because that is exactly what the current government is presenting. “Send the proceeds of crime to Panama” is what the government is saying.

I would like to ask the parliamentary secretary, because he has just not dealt with any of the witnesses who spoke to this issue, why is he saying the IRS is wrong in investigating so many cases of dirty drug money laundering in Panama?

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Madam Speaker, what this bill should be called is “Opportunity”. There is opportunity here for Canadian businesses. There is opportunity for Canadian services. There is opportunity for the non-agricultural sector. There is opportunity for the agricultural sector.

I would ask one more time for the NDP to withdraw its position, to back up and actually support this piece of legislation.