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

[Mike Wallace, Conservative, Burlington, ON]

Mr. Speaker, we worked on this issue with Panama in previous Parliaments, as was mentioned by others. Why is it important for Canada to be moving forward with free trade agreements around the world, including this one with Panama? What will that do for the Canadian economy, and why is it important at this time, based on the world economic situation?

[Kellie Leitch, Conservative, Simcoe—Grey, ON]

Mr. Speaker, the member for Burlington has done such great work in the House.

The bilateral agreements between Canada and Panama have totalled, just in 2011 alone, over $235 million. The member asked what the benefits are. My riding of Simcoe—Grey is here in the province of Ontario and the benefits are substantive, whether that be the elimination of tariffs on key exports in this province, focused mainly on construction machinery, electronics, chemicals, or pharmaceuticals like Baxter, in Alliston, or making sure that they have the opportunity to expand their markets, thereby expanding what they are exporting, and create jobs. That is what this is all about. It is about creating jobs in the long run for Canadians so they can have a better quality of life.

[Paul Dewar, NDP, Ottawa Centre, ON]

Mr. Speaker, I just want to drill down a bit more on this agreement. Last night on CBC we saw a documentary on mining in Panama and the effects that it is having on the population and the environment, killing fish and lakes. Could the member tell me exactly where the binding framework is for Panama and Canada when it comes to the environment under this agreement?

We can have a side agreement, but if we do not have a binding framework agreement where citizens can come forward and raise concerns, like we do in NAFTA, it is only worth the paper it is written on, which is not a lot.

Can the member point out what section of this agreement would allow for a binding framework agreement when it comes to the environment?

[Kellie Leitch, Conservative, Simcoe—Grey, ON]

Mr. Speaker, as I mentioned in my speech, there is a separate agreement on the environment that would commit both countries to pursue a high level of environmental protection. The agreement on the environment includes provisions for encouraging the use of best practices in corporate social responsibility, and a commitment to promote public awareness so that members of the public may step forward and express their concerns with respect to environmental laws.

The agreement reaffirms the country's international commitments under the United Nations Convention on Biological Diversity to promote conservation and sustainable use of biological diversity, as well as to respect, preserve and maintain the traditional knowledge, innovations and practices of indigenous peoples.

We are moving forward substantially on this. As I mentioned before, we want to be focused on sustainable development while we are still focused on environmental protection. That is exactly what this free trade agreement is doing.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Mr. Speaker, I am no longer a member of international trade committee, but I enjoyed my time there immensely. Over a year ago, prior to the previous election, we were working on this same agreement then. Checking with one of the people in the lobby, we worked out that there were over 50 hours of debate on this minor treaty alone. To those who are wondering about whether the House sufficiently debates issues, the answer most clearly is yes. I do not blame the people of Panama or the government for being a bit frustrated with Canada that we have yet to implement this treaty.

I am pleased to rise today to talk about Bill C-24 and the Canada-Panama free trade agreement. This agreement would provide benefits to Canadians in numerous sectors, and hopefully I will have time to get through most of them. In particular, I wish to speak about the services sector.

As many hon. members I am sure are aware, the Panamanian economy is built on the service sector. Panama is not known as a manufacturing hub. It is perhaps best known for its canal and for the strategic position it provides to the world in the transportation of goods.

Panama offers opportunities for Canadian service providers in a broad range of commercial services, financial services and temporary entry for business persons. This free trade agreement would expand opportunities in these key areas and others.

In 2009, which according to my notes is the latest possible data, Canadian commercial services exports to Panama amounted to $48 million. During the negotiations with Panama, our government's approach was to develop substantive provisions to govern cross-border trade in services as well as to provide a level of market access similar to that afforded under NAFTA. Canada sought similar treatment as afforded to the U.S. under its free trade agreement with Panama. This is important because we are going to be competing with American businesses as we try to sell to Panama.

When it comes to free trade, a lot of the benefits are derived from buying and importing from countries so that we acquire lower-cost goods, but we are also interested in selling to Panama and obtaining the same treatment so that we are on level ground with the United States, one of our major competitors. This is yet another example of how our government is committed to achieving a level playing field for Canadian businesses around the world.

Free trade is a cornerstone of our economic success as a nation. Our ambitious pro-trade plan is helping to open doors for our businesses around the world, including in Panama.

The free trade agreement contains strong provisions to provide access on a competitive basis. The agreement provides market access beyond Panama's obligations under the WTO and GATT, particularly in areas of Canadian expertise and export interests, which include mining and energy-related services, professional services, which involve engineering and architectural services, environmental services, distribution and information technology.

The services and services-related provisions of the agreement would benefit Canadian exporters, particularly small to medium-sized enterprises, through the implementation of principles and conditions of regulatory stability as well as fair and equitable treatment. Regulatory stability is important not just as has been demonstrated in our current budget, but in our agreements around the world.

Canadian services exporters would also benefit from provisions designed to increase transparency of regulations, including increased transparency on access for temporary entry for a broad range of service providers.

The agreement also provides a framework for the negotiation of mutual recognition agreements respecting professional licensing and qualification requirements and procedures.

Consistent with past practice, Canada has taken reservations in this free trade agreement to maintain full policy flexibility in areas of domestic sensitivity, including social services, health and public education. There is no concern or fear-mongering necessary in those areas.

Another area of service that is of particular interest in dealing with Panama is financial services. In this area the agreement establishes NAFTA equivalent access for all financial services in respect of right of establishment, full national and most favoured nation treatment, certain cross-border commitments and various other carve-outs.

In terms of provincial government measures, the openness of the provincial financial sector framework was bound at existing levels. As members probably know, Canadian firms are among the top financial providers in the world, and we are proud of their success.

This free trade agreement would enable them to succeed in the dynamic and growing Panamanian market. In terms of sector-specific market access commitments, the levels of access Panama offered to Canada achieved parity with what was offered to the U.S. through the trade promotion agreement.

The portfolio management commitment, however, would only take effect at the time the U.S. trade promotion agreement comes into force. Importantly, Canada has achieved the same treatment as the U.S. in respect of ownership of insurance brokerages, pension fund management and securities dealers' requirements.

Canadian financial institutions expressed significant interest in expanding relations with Panama through a free trade agreement. If members have ever been to Latin America, they will have seen that Scotiabank very much plants the Canadian flag all over the continent of South America and Latin America. Scotiabank, for example, currently operates 12 branches in Panama City that offer a wide variety of banking services. These include corporate and commercial lending facilities, project and trade financing, cash management services and personal retail banking services.

These institutions supported a free trade agreement to better position Canadian business vis-à-vis competitors in this market, particularly those that already benefit from preferential trading agreements with Panama, and to institutionalize investments and dispute settlement protection for existing investments.

I will wrap up with just a few brief words about the temporary entry for business purposes, again, something that helps to expand the delivery of services to Panama and increases our service sector in Canada with its export.

The service provisions of this trade agreement address the important question of temporary entry for business people. The temporary entry chapter takes important steps to address barriers that business persons might face at the border, such as limits on the categories or numbers of workers who can enter the country to work or provide services.

Temporary entry provisions are important because they facilitate entry for covered business persons by eliminating the need to obtain a work permit for business visitors and by eliminating the need to obtain a labour market test and/or economic test for other categories. They also would exempt certain occupations from numerical restrictions, such as domestic/foreign proportionality requirements and quotas with respect to the hiring of foreign nationals at a single enterprise.

This free trade agreement would ensure the secure, predictable and equitable treatment of service providers from both Panama and Canada. It would give Canadian companies enhanced access to the Panamanian market, which offers numerous opportunities including the ongoing multi-billion dollar expansion of the Panama Canal. This is a free trade agreement that would benefit service providers and all Canadians.

Let me also add that one of the things we must always recognize with all free trade agreements is that all parties can benefit. Trade is not a zero-sum game; it is something that expands the possibilities for both consumers and exporters on both sides of the equation. This has been recognized by economists for hundreds of years. In fact there are many people who will look at trade as one of the best ways to alleviate poverty in countries that have not achieved the economic success of Canada, including in areas of income inequality, an area about which I am sure opposition members will be most interested in asking questions.

I encourage all hon. members to vote for this agreement, an agreement that would bring Canada and Panama closer together and increase the wealth of all Canadians.

[Paul Dewar, NDP, Ottawa Centre, ON]

Mr. Speaker, I mentioned earlier that there was quite an interesting documentary on CBC last night, The New Conquistadors. It was focused on Panama, specifically mining in Panama. It talked about the toxic tailings ponds that are killing fish in lakes and water and the fact that indigenous people are being pushed off the land. Canadian mining companies are the ones that are involved here. We have indigenous people protesting in front of Canadian embassies. As a result, sadly, of the protest two people have been killed recently.

I say that because one of the issues around this trade deal is: Where is the binding framework agreement when it comes to environmental standards? I asked the member's colleague earlier if he could point out where it is in this agreement. He basically said that it was a side agreement and would promote the ideas of sustainability, et cetera, but there is no binding framework agreement that is actually going to be solid, like we have in NAFTA.

If I am missing something here, maybe the member could enlighten me. If not, why do we not have a solid binding framework agreement that is going to be something we could actually show people, to demonstrate we are being responsible when it comes to the environment?

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Mr. Speaker, I thank the hon. member for his question, but there is a presupposition there that I do not necessarily buy into, which is that the democratic government of the country of Panama cannot protect its own citizens.

I did not see the documentary last night, but I am aware of documentaries that have said similar things about Canadian mining projects in Canada. Possibly sometimes those are true. Does that mean Canada has had poor environmental practices? Does that mean that the Panamanian democratically elected representatives cannot implement their own environmental laws?

We should not stereotype countries that are less economically developed than Canada that they do not have their own democratic institutions to defend and decide their own responses to environmental, labour and other issues. That there are protesters and discussion about it means there is a good democratic and robust discussion in Panama that the Panamanian people will resolve.

It is positive that we have an environmental agreement, but do we absolutely need a binding agreement with them? Not necessarily.

[Sean Casey, Liberal, Charlottetown, PE]

Mr. Speaker, my question relates to concerns expressed in this and previous Parliaments with respect to Panama being a locale for money laundering and a tax haven.

My concern specifically relates to the protracted negotiations that went over some eight years before the United States was finally able to sign a tax information exchange agreement with Panama. Even within that tax information exchange agreement, the level of disclosure was not ideal. It was certainly less than ideal. In other words, the Panamanians were quite reluctant to provide the level of disclosure the Americans wanted. What concerns me is that after all that, Canada does not yet have a tax information exchange agreement with Panama, and here we are passing legislation with respect to free trade.

Does my colleague opposite share my concern with respect to a tax information exchange and entering into a closer business relationship with a country where these concerns with respect to money laundering and a tax haven have been expressed?

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Mr. Speaker, I thank the hon. member for his question and I am glad to note that he did not make the mistake that some other members have made in this House when they referred to old data that Panama was on the OECD's watch list. In fact, Panama has made enough agreements with enough countries that it has been pulled off the black list or grey list, and now that situation has changed.

With respect to dealing with the United States, I would remind the hon. member, and I am not familiar with all the details, that Canada right now is having a little problem with the overreaching elements of the American Internal Revenue Service with its demand for financial institution on Canadians and Canadian institutions that have dealings with Americans or are American born. We all have constituents who were born slightly south of the line who are now being hassled or have the fear of being hassled. Therefore, I would not necessarily share that concern, because the United States can be extraordinarily aggressive in reaching out to the world.

The final point I would make to the hon. member is the fact that Canadian financial institutions, which are deeply tied into Canada on an economic basis, are going to be expanding there, and I mentioned Scotiabank in my speech. I think they would provide some reassurance that the standard business practices in Panama going forward would be increasingly aligned with countries like Canada. Scotiabank has a vested interest there to make sure their reputation is spotless in actions, words and deeds.

[Sean Casey, Liberal, Charlottetown, PE]

Mr. Speaker, I am pleased to rise to speak on Bill C-24. The Liberal Party has long been in support of opening new markets on the basis of fair trade. We will be supporting this particular legislation. We do have some concerns, given the obvious bipartisan support, that this is yet another instance where time allocation has been imposed, but nonetheless, the Liberal Party stands in support of the content of the legislation.

One of the key concerns with respect to our trading relationship with Panama, and this has been evident with respect to the government's free trade agenda, is about the domestic practices within some of the countries where we are seeking to have new trade arrangements. An additional point to be kept in mind, and one the government would do well to carefully consider, was raised by Jim Stanford of the Canadian Auto Workers, who appeared recently at the international trade committee.

Part of his presentation outlined the following, with respect to the lack of apparent benefits derived from free trade agreements. Mr. Stanford, before the committee, reviewed the five longest-standing trade agreements. He said:

...with the United States, Mexico, Israel, Chile and Costa Rica. Canada's exports to them grew more slowly than our exports to non-free-trade partners, while our imports surged much faster than with the rest of the world.

Mr. Stanford went on to say:

If the policy goal (sensibly) is to boot exports and strengthen the trade balance, then signing free-trade deals is exactly the wrong thing to do.

Looking back on some of the previous free trade agreements, with Colombia there were outstanding issues with respect to labour and human rights, and the same concern applied in Jordan. With respect to Panama, one of the outstanding concerns, as I raised in my question just a few moments ago, is the issue of tax havens and issues related to money laundering.

Just to put this in context, the Parliamentary Secretary to the Minister of International Trade , in response to issues on the Canada-Jordan free trade agreement and violations of human and labour rights and Canada's response, told the House

...what...members fail to realize is the entire issue of extraterritoriality. There are certain things we can do when negotiating with another country and certain things we cannot do because they are beyond our sphere of influence.

The question that must be raised, of course, is: What mechanisms within any agreement should be in place with countries where issues of concern are found to exist and persist?

For example, with respect to the Panamanian situation, when federal government officials were testifying before the international trade committee last fall, they could not address adequately the matters of money laundering and the tax haven issues related to Panama.

Again, as I indicated earlier in my question to the hon. member for Saskatoon—Humboldt, in December 2010, Panama signed a tax information exchange agreement with the United States. In testimony before the United States' House ways and means subcommittee back in March of last year, Public Citizen's Global Trade Watch research director raised concerns with respect to the money laundering issue in the wake of the agreement signed between the U.S. and Panama. He said:

Panama promised for eight years to sign a Tax Information Exchange Agreement (TIEA). Yet when it finally signed a TIEA with the Obama administration in November of 2010, the agreement did not require Panama to automatically exchange information with U.S. authorities about tax dodgers, money launderers and drug traffickers.

In the previous Parliament, concerns were raised with respect to Panama as a tax haven in which instances of both tax evasion and money laundering were found. Concerns were raised as to whether a free trade agreement should be proceeded with, without a clear tax information exchange between Canada and Panama in place.

There is as yet no tax treaty or tax information exchange agreement between Panama and Canada.

The history, as we understand it, is this: Panama asked that we enter into a double taxation treaty, which is more comprehensive than a tax information exchange agreement; Canada refused and asked for a more limited, less all-encompassing agreement; Panama, which at the time had only entered into double taxation treaties, insisted on a double taxation treaty; Canada has not yet responded to this second request.

All double taxation treaties include information exchange obligations between signatory countries. That is because of the model convention of the OECD. As of November 2010, Canada was party to double taxation agreements with 87 countries, with eight more signed but not yet in effect. As of November 2010, Canada had signed nine tax information exchange agreements, the less robust agreements, and they were yet to come into effect.

In testimony this past fall before the international trade committee, reference was made to the correspondence between Canada and Panama, in which the latter was asked whether Panama had responded to the concerns expressed by Canada on the tax haven issue. According to Department of Foreign Affairs officials, no such response had been received.

This past December, during debate on Bill C-24, the parliamentary secretary went to considerable lengths to express his confidence in the commitment by Panama to improve its exchange of tax information and went to great lengths to reference the OECD statement acknowledging the progress of Panama in that regard. However, the issue of tax havens and money laundering is and should be of concern to the government.

It is unfortunate that the parliamentary secretary apparently did not read the statement issued last July by the OECD, which states that the OECD's Global Forum:

...must still evaluate whether Panama's domestic laws will allow for effective availability, access to and exchange of information.... The government has introduced domestic changes so that the agreements can be effective. The Global Forum will follow up to make sure they work as intended. It is important that Panama continues to work to fully implement the standards.

Article 6 of the agreement between the United States and Panama on the issue of tax co-operation and information, entitled “Possibility of declining a request”, states that the “The competent authority of the requested Party may decline to assist”.

To conclude, the Liberal Party will be supporting this agreement. We feel, in the circumstances, that the discussions and negotiations between the two countries with respect to the exchange of tax information should be at a more advanced stage before we as parliamentarians consider this legislation and we raise that as a concern, but it will not be a significant enough concern to prevent us from supporting the agreement.

We would encourage the government to proceed as rapidly as possible to ensure that the issues with respect to tax havens and money laundering with our trade partners in Panama are properly and adequately addressed.

[Joy Smith, Conservative, Kildonan—St. Paul, MB]

Mr. Speaker, I heard the member say that he will be supporting this agreement. Obviously there has been great consideration given as to how important this agreement is to Canada. I would like my colleague to explain to the House why he feels it is good to support this agreement. I am really glad to hear that he is going to. Perhaps he could give the rest of us some insight as to why he feels this measure is worthy of being supported.

[Sean Casey, Liberal, Charlottetown, PE]

Mr. Speaker, the Liberal Party is and always has been supportive of free trade and of anything that serves to break down barriers between countries, as long as concerns with respect to environmental matters, taxation and human rights are addressed.

It is important to break down barriers to encourage business between countries. It is a help to our exporters and importers to remove tariff barriers or other potential impediments to trade. It is all about providing greater opportunity to Canadian exporters and importers, as is the nature of any free trade agreement. The key is balance, and that is what I attempted to address in my remarks.

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

Mr. Speaker, in the member's opening comments he mentioned there was time allocation on this bill. Once again we have a bill with some important repercussions, yet debate is going to be finished in a mere few hours on this particular section of the legislation.

Could the member comment specifically on the time allocation? Members opposite have said this bill has been back a number of times. However, clearly there are still some gaps in it, and the member identified some of that. I wonder what he feels about continuing to shut down the process so that parliamentarians do not have the opportunity to fully engage in debate, call appropriate witnesses and so on.

[Sean Casey, Liberal, Charlottetown, PE]

Mr. Speaker, that is an excellent question. It almost seems as though it is a reflex in this Parliament to introduce legislation and then limit debate. It somehow has become automatic, and that is most unfortunate.

In the course of my remarks I indicated my concern over the lack of any solid agreement with respect to the exchange of tax information. That aspect could and should be addressed before this bill goes forward. Tactics such as time allocation prevent that from happening. It is unfortunate, but it seems to be ingrained in the government and in this Parliament.

[Jonathan Tremblay, NDP, Montmorency—Charlevoix—Haute-Côte-Nord, QC]

Mr. Speaker, the hon. member from the Liberal Party talked about the problems that free trade with some countries might pose.

I would like to know if he agrees with us. The Conservatives are giving us the impression that they are putting the blinders on and closing their eyes as soon as we talk about free trade. That way, they cannot see the possibility of tax evasion and violations of human and workers' rights.

Does the hon. member agree with us that we have to make sure not to sign free trade agreements at any cost, and that we have to look at what is happening in foreign countries?