Bill C-24 (Historical)

Canada–Panama Economic Growth and Prosperity 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 Economic Growth and Prosperity Act

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, the member says four. He might be the only New Democrat MP who says that they have voted for four. I cannot recall. Could the member indicate clearly which four free trade agreements? He said he voted for four of them. Could he tell us which four free trade agreements he voted for that came through the House of Commons? I do not believe he is right.

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

Mr. Speaker, I cited four trade agreements that we supported. There was the auto pact. I talked about the EU binding agreement on human rights.

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

The NDP never supported us.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

That's not true.

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

Mr. Speaker, I would hope the member would show the politeness of actually listening.

There was the Mercosur binding social agreements. I also talked about Australia's move away from investor-state provisions.

Do we vote for bad Conservative trade agreements? No, only Liberals do, because they do not read the agreements. They do not understand the impact of the Conservatives' bad Fred Flintstone agreements that we say no to. The reality is when we look at the actual trade statistics, we have been proven right and they have been proven wrong.

[Olivia Chow, NDP, Trinity—Spadina, ON]

Mr. Speaker, I wonder why today we are debating a free trade agreement between Panama and Canada. I wish I were standing here debating Bill S-4, the safer railways act, for example. That is a high priority for me.

The bill we are discussing would allow the Conservatives to be soft on crime and on criminals. How would the bill allow the Conservatives to do that? It would allow criminals to hide money obtained through illegal means in the tax haven of Panama. In fact, the Conservatives do not really want to track this money from illegal activities. They have no problem doing a trade deal with Panama even though Panama refused to sign the tax information exchange agreement which would disallow criminals from hiding their money in that country.

Right now there is absolutely no transparency. In a small country like Panama, there are 400,000 corporations, many of which are there just to hide their illegal funds. One might ask what kind of illegal activities those corporations in Panama are involved in. The country is used to launder drug money. It is used to divert aid. It is used to bribe the government. It is used to fund paramilitary groups. It is used to defraud shareholders. It is used to embezzle public funds. It is used for human trafficking. It is used to trade in illegal arms. Those criminal activities are intolerable and the people involved in them should be punished.

However, this trade deal would allow criminals not only to avoid taxes, but to also launder money and hide their funds. In fact, Panama is known as a major financial conduit for Mexican and Colombian traffickers' money laundering activities according to the U.S. Department of Justice and other entities. Let me read a memo from the U.S. Embassy in Panama that was revealed by WikiLeaks:

Along with its sophisticated banking services, Panama remains an environment conducive to laundering the proceeds from criminal activity and creates a vulnerability to terrorist financing.

These are the words of the U.S. Embassy, not of the NDP. The memo indicates:

The money laundering process of: placement (putting money into a legitimate financial institution), layering (distancing the money from its origin) and integration (causing the money to re-enter the economy in legitimate-looking form) is perfectly replicated in Panama.

My gosh. Placement, layering and integration; this is how criminals hide their money in Panama. Not just in that memo from 2006, but in 2009 a U.S. Embassy cable on Panama reported Panama's failure to report Colombian kingpin David Murcia Guzman's laundering of drug money. It is incredible. These criminals are using the drug money they have made from selling drugs and wrecking people's lives. They are able to take the money made from doing drug deals and hide it in Panama.

The Conservatives have said that is okay. They are going to turn a blind eye to it and will not even ask about who is behind the corporations. They do not want to know what kind of people are hiding money. They do not want to know about the illegal activities. They do not think it is up to them. They will see no evil and speak no evil, because it is another country. They are going to wash their hands of it and allow the criminals to continue their activities. That is inexcusable.

How would the trade deal make it even worse? The Canada-Panama trade deal would worsen the tax haven problems. As the OECD has noted, having a trade agreement without first tackling Panama's financial secrecy practices would encourage this secrecy and allow even more offshore tax dodging.

There is reason to believe that the trade deal would not only increase tax haven abuses, but it would also make fighting them that much harder. How would that happen? For example, even if we could persuade the government to put in place legislation giving Panama a deadline to clean up its act or face sanctions, and we tell the Canadian banks that they are restricted from transferring money to their affiliates, article 9.10 of this trade deal says that each party shall permit transfers relating to a covered investment to be made freely and without delay into and out of its territory.

What does that mean? It means speeding up the transfer of illegal funds. It means giving criminals more freedom to cheat. It means making sure that they can hide their funds without any barriers. Moreover, chapter 9 and chapter 12 of the FTA have non-discriminatory clauses that protect Panama's registered investors. That means protecting criminals from Canadians or anyone going after them.

Article 12.06 states that Canada will always allow Canadians to purchase financial services from banks operating in Panama.

This is the kind of deal that we are debating.

What is a tax haven? It means people do not have to pay any tax or very little tax on relevant income. They do not have to provide information about their income. There is a lack of transparency. There is no substantial activity by the taxpayers in that jurisdiction. That is the OECD's definition of a tax haven. Panama fits the criteria of this definition to a t. That is what it is known for.

Why are we doing a trade deal with that country? I looked at how much trade Panama is doing with Canada. I noticed that it is less than 1%. It is not a major trading partner for Canada.

Two-way merchandising trade between the two countries reached only $149 million in 2008 and is less than 1%. Therefore, why this rush for trade with Panama? I would understand if we wanted to discuss trade with China. There is a big market there. It is not as if Panama is a big country. It is well known as a tax haven.

This trade deal is being negotiated in record time without any consultations. Perhaps one of the reasons is that the government does not want people to rise up and say that to shelter criminals and be soft on crime is not the way to go. Perhaps that is why we are debating this bill.

Panama is well known for allowing people who are close to bankruptcy to take their cash and assets to an anonymous offshore company so that they do not have to pay their creditors. They rack up a big bill and owe a lot of people a lot of money, so they take their assets and hide it in a corporation in Panama. No wonder they have tens of thousands of these corporations functioning very well.

Panama is also known for allowing people to transfer profit to these offshore centres. In fact, in 2008, Goldman Sachs paid a federal tax rate of 1%. This was before it collapsed. It would have paid 35% in the U.S., but it only ended up paying 1% because it was able to move a lot of its money to Panama.

Global Financial Integrity estimates that there is $1.2 trillion in tax havens in secret jurisdictions around the world. One-third of that money, 33%, is money that comes from the proceeds of crime. As well, 3% of that money comes from corruption. That is $335 billion of criminal funds hiding in tax havens around the world. Because of these tax havens, one might ask how much tax is not being paid to governments such as the Canadian government. In total, governments around the world are losing $165 billion worth of taxes, which could go to AIDS, helping people in poverty, providing drugs for kids in Africa, providing education for women, creating jobs or building infrastructure around the world, but is not because of many tax havens, such as the ones in Panama.

Panama is also famous for the registration of ships. It is number one for flags of convenience. They could be Canadian ships. Some of us may recall that we have a famous person who has these ships that do not fly Canadian flags. Rather, they fly flags of convenience.

Do members know how many ships are registered in Panama? Eight thousand ships are registered there so they do not have to pay much tax. I would rather see some of these ships, those that are owned by Canadians and registered in Canada, pay Canadian taxes so we could take some of that money and provide health care for seniors, for example. There are lots of ways one could use the funds from tax avoiders.

Some of the 8,000 ships that are registered there, just registered but not really there, just fly the flag of convenience. Some of these ships do have crew members from Panama. What kind of people are they? Forty per cent of them are migrant Chinese workers who earn less than $3,000 per year. As a result of registration in Panama, illegal fishing vessels can avoid fisheries regulations and controls. Some of these fishing vessels can fish illegally using methods that are prohibited by international laws. Since they hide in Panama and fly flags of convenience, they do not have to be regulated. I focus mostly on these illegal activities.

French president Nicolas Sarkozy, in a speech made at the end of the G20 conference in Switzerland in November of last year, named Panama as one of the countries with serious problems. He said that countries that remain tax havens would be shunned by the international community.

Shunned by the international community, except Canada perhaps, because the Canadian Conservative government wants to be good friends with Panama. It does not want to curb these illegal activities. It does not want to understand or learn about the illegal arms groups that use Panama for drug trafficking. The government does not want to learn about the funds generated from illegal activities that are being laundered through banks, real estate developments and various corporations.

Panama is a country of extremes. It is a country of about 3.4 million people and yet 40% of the people living in Panama are poor and 27% of those folks, close to three out of ten, are extremely poor. The rate of extreme poverty is particularly acute in the indigenous population. Even though the country has endured extensive structural adjustments, liberalization and privatization in recent years, this has not translated into economic benefits for the population. I have no doubt that when this trade deal passes through the House of Commons it will not help four out of ten people in Panama and lift them out of poverty. It will help criminals, drug dealers, arms traders, people involved in extreme illegal activities and fraudsters.

[Chris Alexander, Conservative, Parliamentary Secretary to the Minister of National Defence]

Mr. Speaker, we on this side have unfortunately become all too familiar with positions taken by the NDP in comprehensive opposition to trade agreements, whether they be existing ones, future ones, those under negotiation or those under discussion today.

In my experience in the House, this is the first time that I have heard a member comprehensively denigrate an entire country. As a former member of Canada's foreign service, I find it curious, and to some extent embarrassing, that any member of the House would give such a negative characterization of a nation of over three million people in our hemisphere that is our partner in so many fields.

Would the hon. member opposite please correct the record and acknowledge that there are business people in Panama who run legitimate businesses, who want to trade in good faith, who respect the laws of their country and this country, and have a contribution to make by creating wealth to alleviate poverty in Panama and prosperity in this country?

[Olivia Chow, NDP, Trinity—Spadina, ON]

Mr. Speaker, perhaps my friend across the aisle did not want me to quote the U.S. embassy's cables on Panama. Of course, there are very good business people in Panama. There are good people conducting trade activities and doing business. We want to support them. Yet we cannot turn a blind eye to the people who are not friends of Panama but are just using it to hide their money obtained by illegal means.

If the Conservative government is serious about cracking down on crime and being hard on criminals, then at a bare minimum it should demand a tax information exchange agreement. Why would the Conservatives not want to do that? At least all income could be tracked going into Panama, including that obtained by illegal means. Why would the government not want to do that? What does it have to hide?

[The Acting Speaker, Bruce Stanton]

The hon. member for Trinity—Spadina will have seven and a half minutes remaining for questions and comments when the House next returns to debate on this question.

The House resumed from February 29, consideration of the motion that Bill C-24, 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 read the second time and referred to a committee, and of the motion that this question be now put.

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Speaker, I am pleased to again enter into the discussion on Bill C-24.

Bill C-24 would implement the free trade agreement and the related agreements on the environment and labour co-operation entered into between Canada and the Republic of Panama, done in Ottawa on May 13 and 14, 2010.

We have said previously that the Liberal Party is supportive of this legislation and we remain so. However, we maintain the concerns we raised previously with respect to the fact that as the government is pursuing new agreements, it has been neglecting our relationship with our largest trading partner, the United States.

Pursuing new trade agreements is certainly worthy of support. However, we have to keep these agreements in context. I have raised questions in this House several times, that while the minister is travelling all over the world talking about trade here and trade there, the government is ignoring our most important trading partner.

The government is also ignoring another trading partner, and that is Korea. Hog producers and beef producers have been in my office over the last few weeks. They are very concerned about the South Korean market. We have an established market of over $1 billion of trade on beef and pork. It is a growing market. However, now that the United States has moved ahead and signed a trade agreement with South Korea, the tariffs will be coming down for the Americans. We are their most important competitor, and we will be left uncompetitive in that marketplace. We will in fact lose that market rapidly over time.

What seems to be the problem with the government in so many areas is that rather than being about results, it is very much about spin. It wants to be able to say that it has signed nine trade agreements, or has had 15 or 20 or 40 discussions, when in reality it is the results that matter. Again I emphasize that we are very concerned about the fact that the government is ignoring some of our largest trading partners while it talks and signs agreements with others around the world. The new agreement does not add up to the losses we are facing as a result of the government not emphasizing the agreements we already have in place.

While the Conservatives have proclaimed the promotion of trade, it has been under their watch that the mismanagement of the file in terms of trading relationships has resulted in trade deficits for the first time in over 30 years. Let me emphasize that. We hear the minister talk about all the great things the government is doing. Last year for the first time in 30 years, Canada had its first merchandise trade deficit. That tells me the results are far different from the spin we are getting from the Minister of International Trade.

With respect to the United States, we have seen the government surprised by increased United States protectionist actions. It was surprised by the initial buy American provisions in the 2008 United States stimulus package. It was again surprised in 2011 when the new buy American provisions were returned by the Obama administration. Those buy American provisions in fact will affect Canadian jobs and will hurt both the U.S. and Canadian economies.

The Conservative administration was also surprised by the announcement by the United States Federal Maritime Commission at the instigation of United States senators of an investigation into U.S.-bound container traffic being diverted to Canadian ports and whether to impose fees or tariffs as a result of this diverted trade. This would be another potential fee placed on Canada.

The government was also surprised when the United States government, in signing the U.S.-Colombia free trade agreement, withdrew the exemption Canada had of $5.50 per individual in terms of sea and air entry into the United States.

I was in Washington, D.C. over the last few days where I met with senators and congressmen about a number of issues between our two countries. They too seemed to be caught by surprise in terms of that clause in the U.S.-Colombia trade agreement that took away Canada's exemption. After my visit to the United States, I am now more concerned by the fact that we had a lot of allies in the U.S. Senate and House of Representatives but the government failed on its watch to pay attention to that serious issue which puts another fee on Canada.

The importance of the U.S.-Canada relationship is in the value of trade, and that exceeds about $1.4 billion to $1.6 billion a day. The government is very much ignoring our most important trading partner.

I want to emphasize again in the House that while the government is pursuing Panama, Jordan, and others, it is ignoring our most important trading markets. I have to outline this point with the minister.

Will the minister get on the ball and get on a trading relationship with South Korea? We need a free trade agreement signed with South Korea, or we are going to be displaced as a result of being uncompetitive with the United States which has signed a trade agreement. I cannot emphasize that enough. That is worth $1 billion in trade.

In spite of the global economic downturn, Panama's GDP grew to 10.7% in 2008, one of the highest in the Americas. In 2010, Panama's GDP growth stood at 7.5%. Panama is Canada's largest export market in Central America.

Panama is an important market especially for folks in my province of Prince Edward Island. We export fish, shellfish, french fried potatoes and other agricultural products. It is very important to producers in Prince Edward Island. We need this agreement.

The bilateral trading relationship has grown 61% since 2009, reaching $213 million in bilateral trade in 2010.

As I said, the primary Canadian merchandise exports to Panama include machinery, vehicle electronic equipment, pharmaceutical equipment, pulses, frozen potato products and other agricultural products, and shellfish. Canadian service exports include financial services, engineering, information and communications technology. These are also important. We import precious stones from Panama and a number of fruits and nuts, fish and seafood products. The relationship is important.

I do have to point out what remains a concern to us within the Liberal Party. The tax haven issue with Panama has not been addressed. The President of France talked about that at the G20. The tax haven issues that a number of countries have around the world have to be addressed. In particular, the Canadian government has to work harder with Panama to address that issue.

The bottom line is that we support this trade agreement. We especially want to see the labour, environment and tax issues addressed in it though.

[Dennis Bevington, NDP, Western Arctic, NT]

Mr. Speaker, I am pleased to have an opportunity to question my colleague who has brought up a number of issues in regard to Bill C-24. I know that those issues are important to all of us in the House. Over the past years that we have been working on this bill, we have proposed many amendments on the subjects the member has concerns about, yet I do not see that the Liberal Party has come through with support for those amendments. Can the member explain his and his party's actions in that regard?

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Speaker, I am not entirely sure what specific amendments the member is talking about, but I can certainly say I know that his party is concerned with labour and environment issues. We do see these as a side agreement in the agreement. It is a step forward that labour and environment are attached as part of the agreement.

I will admit that one of the concerns I have with both labour and environment in many of the trade agreements that have been signed is that there is not the ability to enforce those rules as strongly as we would like. However, whether it is with respect to some countries where human rights are a concern, the Liberal Party's point of view is that having an economic relationship and trading relationship with that country in fact does provide an even greater ability to argue on human rights and other issues because it is then a part of the package.

[Paul Calandra, Conservative, Parliamentary Secretary to the Minister of Canadian Heritage]

Mr. Speaker, the member mentioned in his speech how important this deal was to his region of the country because there are a lot of exports from Prince Edward Island. I am wondering if he could explain why in 13 years of a Liberal majority government he was not able to deliver any type of deal like this for his province. I am wondering if he could also explain to me if the type of relationship building that he talks about with our friends to the south is the example we saw of the previous government where it was stomping on dolls of the American presidents and saying, “We hate those”, and I will not use the word in the House. Is that an example of the type of relationship building he is mentioning?

Again, perhaps the member could tell me about the Liberal Party's desire to build relationships with our American friends and why in 13 years the Liberal majority government and the member were unable to deliver a deal that is so important, as he said, to the people of his province.

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Speaker, I would suggest to the member that maybe he could get his head out of the sand. Maybe he could stop the divisiveness and look at the realities.

The fact of the matter is that when we were in government we balanced the books in this economy and gave the country the foundation which we find ourselves in today. It was the Liberal government. I was a backbencher and part of a committee that made the recommendations to ensure that the banking system remained sound in this country, which now his leader, the Prime Minister of the country goes around the world and brags about, but at that time the current Prime Minister was opposed to that particular merger.

I will tell the member that in terms of the U.S. relationship, the first government in 30 years to have a merchandise trade deficit on exports in this country is in fact the current government. Yes, we were there to establish a relationship with the United States, and we did. We continually built on that relationship.

I am proud of my time as a Liberal. I just cannot understand why the government and its members, whether they are talking from speaking notes from the PMO or what I do not know, constantly use divisiveness and fear tactics. That is what the member does in the House of Commons, and it is completely unacceptable.