Bill C-41 (Historical)

Canada-Korea Economic Growth and Prosperity Act

An Act to implement the Free Trade Agreement between Canada and the Republic of Korea

This enactment implements the Free Trade Agreement between Canada and the Republic of Korea that was done at Ottawa on September 22, 2014.
The general provisions of the enactment set out rules of interpretation and specify that no recourse may be taken on the basis of sections 9 to 15 or any order made under those sections, or on the basis of the provisions of the Free Trade Agreement, without the consent of the Attorney General of Canada.
Part 1 approves the Free Trade Agreement and provides for the payment by Canada of its share of the expenditures associated with the operation of the institutional aspects of the Agreement and the power of the Governor in Council to make orders for carrying out the provisions of the enactment. Part 1 also provides protection for certain geographical indications.
Part 2 amends existing laws in order to bring them into conformity with Canada’s obligations under the Free Trade Agreement between Canada and the Republic of Korea.
Part 3 contains coordinating amendments and the coming into force provision.

Canada-Korea Economic Growth and Prosperity Act

[Some hon. members]

Agreed.

No.

[The Deputy Speaker, NDP, Joe Comartin]

There is no unanimous consent.

Questions and comments, the hon. member for Saanich—Gulf Islands.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, I would like to ask my hon. friend from Winnipeg North about an aspect that is often confused with trade agreements but has nothing to do with liberalizing trade and has everything to do with putting foreign corporations in a superior position to domestic government, and those are what are referred to generally as investor state agreements. As the member may know, the Green Party opposes investor state agreements because, by their very definition, they are anti-democratic.

I know there are some concerns within the Liberal Party, but it seems members are generally in favour of investor state agreements, and I wanted to ask my friend from Winnipeg North if there are any limitations on Liberal Party support for investor state agreements such as the Canada-Korea agreement we have before us now?

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I am not too sure of the terminology of investor state agreements that the member is referring to. I will take her at face value. Obviously in any sort of an agreement there are always certain aspects that raise concerns. What we are talking about is the overall principle of having free trade agreements, and the benefits to Canadians as a whole have been, generally speaking, very positive.

There are always going to be concerns. When I think of the Korea agreement, for example, one of the biggest concerns that I and members of my caucus have is in regard to the automobile industry. We are very sensitive to that industry and the needs of that industry. This is an industry where, again, through time, we have seen very progressive, liberally minded prime ministers talk about ways in which we can expand that industry and complement it.

Whenever there is a trade agreement, one of the more responsible things to do is to look at where and how that agreement would impact real jobs here. For example, in the Korea agreement, part of the concern I have, and I know many of my colleagues share it, is the automobile industry. When we talked about the European Union agreement, I raised the issue of the impact on cheese sales. There are always going to be different aspects of an agreement, but in general I believe that free trade agreements are a positive thing and we have to recognize that in principle.

As for the point of order from my New Democratic Party colleague, this is the first time in all the months or years of my challenging the NDP that they have actually suggested a date. I look forward to doing the follow-up and I will look into that date. I would be shocked to find that all the members of the New Democratic caucus actually voted in favour of that agreement. However, I will wait and do a little research on that date. I was encouraged. This is the first time in which an NDP member has actually stood and declared a date, but I would still be surprised if every member of the New Democratic caucus actually voted in favour of a free trade agreement.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Mr. Speaker, it is always a privilege and honour to rise in the House. This morning I rise to speak on this historic free trade agreement between Canada and Korea.

I am delighted to be sharing my time with my hon. colleague, the Parliamentary Secretary to the Minister of National Revenue and for the Atlantic Canada Opportunities Agency, and member for South Shore—St. Margaret's, with whom I have had the opportunity to be on the trade committee for the last eight and a half years. He used to be the parliamentary secretary to the trade committee as well, and so we have a good working relationship. He also has a thorough understanding of the importance of this agreement for not only his constituents but all Canadians.

I want to touch on some of the aspects of this free trade agreement and how it would strengthen our trade and investment ties across the Pacific.

This agreement would increase the prosperity of both countries and result in job creation and enhanced opportunities for Canadian and Korean businesses, particularly small and medium-sized enterprises, as well as investors, workers, and consumers.

I do not think members will find any government or any prime minister in Canadian history who better understands the importance of trade to our economy. Trade represents one in five jobs and accounts for approximately 60% of our country's annual income. We also understand that Canada's prosperity requires expansion beyond our borders into new markets for economic opportunities that serve to grow Canada's exports and investments.

As I said, no government in Canada's history has been more committed to the creation of new jobs and prosperity for Canadian businesses, workers, and their families. Deepening Canada's trading relationships in dynamic and high-growth markets around the world is key to these efforts.

I would also like to thank the opposition parties for their understanding and support of why it is important to ratify this agreement quickly and have it implemented by January 1, 2015.

I worked together with my honourable colleague across the aisle, the member for Vancouver Kingsway and the NDP official trade critic, who stated last week in this House that:

This agreement offers the opportunity for Canadian producers and exporters to increase trade with a modern democratic country with a high-income complementary economy.

He went on to say that:

It will level the playing field for Canadian exporters, who can compete with the best in the world....

Finally, he said:

There is no doubt that Korea is both a significant and a strategic economic partner for Canada.

I could not agree more, and in that regard I would like to highlight the key elements of our trade strategy for Asia and South Korea.

The economic potential of Asia is immense, with a constantly evolving political transformation and a monumental demographic shift. Asia is important to Canada because it offers new opportunities to expand Canada's economic prosperity.

The importance of this agreement is that it would be the gateway to the Asia-Pacific, which has a population of 50 million-plus. This agreement would open the doors. That is why our government has taken such a rigorous and strategic approach to trade with Asia.

My hon. colleague, the Minister of International Trade, has travelled numerous times to various parts of Asia, including the conclusion of this agreement with South Korea and the pursuit of agreements with India and Japan. He will be leading a delegation to India next month. These agreements would lead to increased trade and investment, enhancing Canadian prosperity for generations to come.

Investment is a key driving force for economic growth and competitiveness in Canada. Canadian companies that invest overseas can expand their client base significantly and bring capital back into Canada, which can create jobs. Foreign companies that invest in Canada create jobs as well, boost our economy, and contribute to economic growth that benefits all Canadians.

While Canada and South Korea enjoy a strong investment relationship, ample scope remains for further growth in both directions.

South Korea's direct investments into Canada have risen from $397 million in 2005 up to $4.9 billion by the end of 2013. South Korea is the twelfth-largest investor country in Canada and the fourth from Asia.

South Korea is one of the world's great science and technology powerhouses. I am very interested in innovation and technology, and I had a chance to visit Taiwan a couple of times, as well as Korea, earlier this year.

South Korea has one of the highest expenditures on research and development, R & D, as a share of GDP among OECD countries, spending 4% of GDP. While most private sector R & D takes place domestically, South Korean companies have begun investing in research centres overseas, including Samsung in my home province of British Columbia. Others are becoming more active in utilizing overseas R & D staff and resources.

With this agreement's investment-related provisions and Canada's world-leading, cost-effective R & D environment, Canada would become an even more attractive destination for South Korean R & D investment.

Other examples of South Korean companies' continued interest in Canada are not hard to find. KOGAS, South Korea's national gas company, has already invested heavily in a Canadian LNG project.

My colleague across the way will be interested in knowing that Green Cross, a South Korean biopharmaceutical company, will be opening a new company, a manufacturing facility in Montreal, as it breaks into the North American market. For these companies and many more, Canada is the destination of choice.

Something that is near and dear to the constituents in my riding of Kelowna—Lake Country and to wine lovers across Canada is also something that is very appealing to the palate of the people of South Korea, and that is our great Canadian icewine.

As I alluded to, I had the opportunity and the honour of travelling with the Prime Minister and the Minister of International Trade on March 11 to Seoul, Korea, for the signing of the free trade agreement with President Park. It was an historic moment and an incredible experience. At Blue House, President Park's house, we were able to enjoy a toast of Canadian icewine, which was the icing on the cake.

A champion of the Canadian wine institute is the president, hard-working Dan Paszkowski, who indicated:

The Canadian wine industry is pleased to support the Government of Canada in its work to finalize negotiations for the Canada-Korea Free Trade Agreement. South Korea is an important market for Canadian wine producers, as evidenced by the significant growth in the value of Canadian icewine exports, which increased nearly 25 percent between 2012 and 2013. With a successful FTA, the Canadian wine industry anticipates even stronger export growth in the coming years.

I recently spoke with Dan, who said that about 95% of the market right now is the export of icewine to South Korea, but there is a huge potential for other products once the South Korean community starts to taste our product. Something of interest is that the highest price point for red wine is South Korea. These are great things to raise our glasses and cheer about in the future with this agreement.

In other investments abroad, Canadian direct investment in South Korea has fluctuated over the years. We have seen an upward trend in recent years. Specifically, at the end of 2013, Canadian investment stock in South Korea was at $534 million, up from $390 million in 2012.

Canadian companies continue to show increased interest in investing in South Korea. Major Canadian companies such as Magna International, Bombardier—whose facility in South Korea and we had an opportunity to tour with the Prime Minister—and Pharmascience have already invested in South Korea, and more investments and partnerships are on the horizon. Just this past May, the clothing brand Joe Fresh announced it would open its first store outside of North America in Seoul, with plans to open nine more retail outlets in the South Korean capital by the end of the year.

This agreement will level the playing field for Canadian companies in the South Korean market, which we all agree is important. Canadian businesses can compete with the world when they are on a level playing field.

The agreement sets out transparent and predictable rules, something also very important for businesses. They want stability, predictability, and transparency.

The agreement will ensure that Canadian businesses in South Korea will be treated no less favourably than South Korean businesses. It will protect Canadian businesses from discriminatory treatment and provides access to an independent international investor state dispute settlement mechanism. The same rules will apply to South Koreans investing in Canada, further increasing the attractiveness of Canada as an investment destination. I do not think anybody would disagree with each country being treated the same way, respectfully and with the same rules. These rules have been a standard feature of Canada's comprehensive free trade agreements since NAFTA and have been shown time and time again to be in our national interest.

For Canadian companies that invest abroad, there is no substitute for being on site where their clients are. Canadian companies that invest in South Korea will now find it easier to have their professionals on site in South Korea. The agreement will provide new preferential access for professionals from both Canada and South Korea and will facilitate greater transparency and predictability for the movement of businesspersons between the two countries.

Our Conservative government is committed to protecting and strengthening the long-term financial security of hard-working Canadians. Thanks to these actions under our government's free trade leadership, Canadian workers, businesses, and exporters now have preferred access and a real competitive edge in more markets around the world than at any other time in our history.

The global market is shifting. More companies are looking to Asia for growth. The South Korean market provides a landmark opportunity for growth in neighbouring markets in Asia, Japan, and China. This agreement will provide fair access to the whole South Korean market and ensure continued growth for Canada.

Trade has long been a powerful engine for Canada's economy, and it is even more so in what remain challenging times for the global economy. By continuing to actively pursue broader market access and new investment opportunities, we are providing Canadian businesses and exporters with access on preferred terms to the largest, most dynamic, and fastest-growing regions around the world.

I would ask for a quick ratification of this agreement by all parties.

[Marjolaine Boutin-Sweet, NDP, Hochelaga, QC]

Mr. Speaker, Canada has an agreement with Korea, a country that respects human rights. For example, the agreement will help improve working conditions in a number of sectors, including the aerospace industry.

In Canada, manufacturers are closing their doors. Companies are trying to extract minerals from the earth, but sooner or later, there will be none left.

In addition to the agreement that will improve things for the aerospace industry, does the government plan to do anything to ensure that the industries of the future—which create good unionized jobs—can grow and diversify our economy so that it does not depend solely on natural resources?

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Mr. Speaker, aerospace is something that is near and dear to my riding of Kelowna—Lake Country. Kelowna Flightcraft is the largest private employer in my riding. Aerospace and aviation, with their innovation and technology, are sectors that are very important to Canadian communities across the country.

Canadian companies are leading the way. Jim Quick, the president and CEO of the Aerospace Industries Association of Canada, said:

Our industry depends on exports and access to international markets to remain competitive and continue creating jobs and revenues here at home. This agreement is imperative to restoring a level playing field for Canadian firms in the South Korean market, which is especially important given the considerable growth the aerospace industry will see in the Asia-Pacific region in coming years. We congratulate the Government of Canada on this achievement, and thank its representatives for their ongoing commitment to boosting Canadian competitiveness in international markets.

As we can see, the aerospace industry is very supportive of this agreement. It would benefit all of us across Canada.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Mr. Speaker, I would like to thank my colleague from British Columbia for his great speech outlining many of the benefits of the Canada-Korea free trade agreement.

All of us in the House know that during the 12 months following the Korea-U.S. agreement, our exports to Korea dropped dramatically. One of the sectors that was impacted most severely was the agricultural sector. In fact, in Ontario, there are current tariffs on pulses of 607% and of 30% on pork.

In my riding one of the producers, which is co-operatively owned and produces processed pork, knows that its exports stand to rise dramatically with the signing of the Canada-Korea free trade agreement. I am sure that if my colleague had had more time, he would have outlined many of the other agricultural areas in British Columbia that would benefit as well from the signing of this agreement. Could he take a few minutes to outline some of those benefits?

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Mr. Speaker, I would like to thank my hon. colleague for the question and for his hard work for his constituents in his riding of Kitchener—Conestoga, another innovation centre in our country.

This agreement is very important for agriculture in British Columbia specifically. My riding has vineyards, orchards, and a variety of different crops. There would be a reduction of up to 45% in tariffs for blueberries and cherries, for example. I know that the vice-president of the BC Cherry Growers' Association was very excited about this development. The Minister of International Trade is also the member for Abbotsford, which is the blueberry capital of Canada. He is also very excited.

In agriculture and agri-foods, there is a 10% tariff to be removed on frozen rays, skate, whitefish, sole, flounder, salmon, frozen crab, and seafood. We are looking at other agricultural products throughout Alberta, such as wheat. The pork and beef industries are going to be big winners. Of course, the Canada-U.S. agreement took a lot of that market away, so we are going to get our market share back to our customers through this bilateral agreement with South Korea.

Agriculture is a big component, as is seafood from both the Pacific and the Atlantic.

Another winner will be the forest sector. I have Tolko mills in my riding, so it is a win-win all around the country.

[Gerald Keddy, Conservative, Parliamentary Secretary to the Minister of National Revenue and for the Atlantic Canada Opportunities Agency]

Mr. Speaker, it is as real pleasure to rise in the House today to speak to the Canada-Korea free trade agreement.

Before beginning my comments, I would like to thank my colleague from Kelowna—Lake Country not just for his support for this particular agreement but also for his work on trade and on behalf of Canadian exporters during his tenure on the trade committee.

This free trade agreement is an ambitious state-of-the-art agreement covering virtually all sectors and aspects of Canadian-Korean trade, including trade in goods and services, investments, government procurement, intellectual property, labour, and environmental co-operation.

This free trade agreement, Canada's first with an Asian country, is yet more proof that our government is focused on creating jobs and opportunities for Canadians in every region of the country.

I would particularly like to focus on benefits of the Canada-Korea free trade agreement to Canada's fish and seafood industry. Surrounded by the Arctic, Atlantic, and Pacific Oceans and home to the Great Lakes, Canada has one of the most valuable fishing industries in the world.

In 2012 alone, the fish and seafood industry contributed more than $2.2 billion to Canada's GDP and provided some 41,000 jobs for hard-working Canadians. It is also the economic mainstay of approximately 1,500 communities in rural and coastal Canada.

Canada exports most of its fish and seafood. It is the world's seventh-largest exporter of fish and seafood products, exporting an estimated 73% by value of our fish and seafood production.

Asia is an important market for Canadian fish and seafood products, and with this dynamic market, it is rapidly growing in importance in global trade.

Canada has a proven ability to export to Asian markets, including South Korea. Between 2011 and 2013, Canada exported an average of $49 million in fish and seafood products to South Korea. However, there is still much room to grow in this vibrant Asian market, and Canada must act now.

I must say that during this debate I was able to listen to the words of the MP for Winnipeg North, although he mainly concentrated on volume and was a little light on facts. I have heard in this House that all of the parties intend to support this trade agreement and I thank the opposition parties for that.

However, let us be clear on the Liberal record on trade: in the 13 years they were in government, they signed three agreements. We have been in government for eight years and we have signed 43 agreements. There is no comparison.

Times were good when the Liberals were in government. The dollar was low and exports were high. It was not anything they did that caused that; rather, it was the free trade agreement signed by Brian Mulroney's government that caused that increase in dollars in the country. However, the danger of doing nothing in the good times was that when the recession hit in 2008-2009, we were left in a virtual trade deficit. We had to work extremely hard to find markets for our exports, and Canada is an exporting nation.

We took the risk of falling behind. We have not fallen behind. We have actually caught up; now we are moving forward again, and times are getting better.

Canadians well remember that the last time the Liberals tried to talk seriously about trade, they campaigned to rip up the North American Free Trade Agreement. I was happy to see that once they got into government, they forgot their campaign promise, and Canada was actually able to move ahead on that.

Once fully implemented, the Canada-Korea free trade agreement would eliminate South Korea's tariffs on all fish and seafood products. South Korea's tariffs in this sector, which include fresh, frozen, and processed fish and seafood, run as high as 47%. With the elimination of tariffs, Canadian products would become more competitive, allowing Canadian firms to increase exports in this dynamic market. As we know, exporters from the U.S. and the EU are already benefiting from preferential access to the South Korean market.

Some of the products that would benefit from immediate tariff elimination include frozen lobster and Pacific and Atlantic salmon, whether fresh, chilled, frozen, or smoked. They currently have duties of up to 20%.

In all, 70% of fish and seafood tariff lines will be duty free within five years of the agreement's entering into force. All remaining duties in this very sensitive Korean sector will be entirely eliminated within 12 years.

The outcome for Canada's top fish and seafood export interests is on par with or better than those agreements obtained by the U.S. and EU. Compared to the U.S., for example, Canada obtained stronger results for fish and seafood for roughly half of Canada's key exports, including lobster, hagfish, and halibut. By year five, Canada will have duty-free access for more fish and seafood products than either the EU or the U.S. will have at their five-year mark under their respective FTAs with Korea.

The benefits do not end there. In addition to tariff elimination, this agreement contains robust provisions that will ensure that Canadian fish and seafood exports are not undermined by unjustified trade barriers. The chapter on sanitary and phytosanitary measures negotiated with Korea is a good example. In this chapter, Canada and Korea have agreed to build on their shared commitments under the WTO Agreement on the Application of Sanitary and Phytosanitary Measures. The chapter fully recognizes the rights of the WTO members to take the sanitary and phytosanitary measures necessary for the protection of human, animal, or plant health, as long as they are based on science and are not used as disguised measures to unnecessarily restrict trade. Far too often we see phytosanitary measures becoming non-tariff trade barriers. The agreement we have signed with Korea should prevent that from happening. It also establishes a committee of experts who can collaborate and consult on phytosanitary issues to enhance bilateral co-operation. The committee will provide a forum in which issues can be discussed and resolved before they become major problems.

At this time, I would like to take a moment to elaborate on the benefits pertaining to lobster. Lobster is an iconic Canadian crustacean, Canada's top and most valuable export in the fish and seafood sector. It is certainly an important product in my part of the world, in southwestern Nova Scotia. The south shore, along with West Nova, are the main lobster exporters in Canada. In 2013, Atlantic Canada's exports of lobster were worth $888 million and accounted for 95% of all Canadian lobster exports. Canada's exports of lobster to South Korea were worth an average of $18.2 million annually between 2011 and 2013. Again, we accounted for nearly 37% of Canada's total seafood exports to South Korea.

Current duties of up to 20% on lobster products faced by Canadian exporters will be totally eliminated. This summer we got a taste of what increased lobster trade with South Korea will look like. Korean Air Cargo launched weekly service to South Korea from Halifax to transport an expected minimum of 40,000 kilograms of live lobster. This happened only a few months after the announcement of the conclusion of negotiations on this agreement. This is the type of opportunity that can be generated across this country from coast to coast to coast.

Given the many benefits of the agreement, the stakeholders from the fish and seafood industry have shown great support for the Canada–Korea free trade agreement.

I will quote the Lobster Council of Canada, which supports the agreement:

...it will greatly enhance our industry's competitiveness in South Korea. Tariff elimination and improved market access for lobster exports helps to ensure long-term prosperity of our industry and the thousands of people it employs in [Nova Scotia].

It is not just about Nova Scotia. We have a huge inland fishery in Canada, worth nearly half a billion dollars, in the Great Lakes, Lake Winnipeg, Great Slave Lake, and Great Bear Lake. We have a major fishery in the Arctic Ocean for arctic turbot. We have a fantastic fishery in British Columbia. We are surrounded. We have a very viable wild fishery in this country and an aquaculture industry that will now have a marketplace for its products. For B.C. halibut and arctic turbot, we are looking at a reduction in tariffs of 10%. That is a huge difference for these fishermen and plant owners.

This is a great agreement. This is a smart agreement for Canada, and it is a great agreement for fish and seafood.

[Pierre Dionne Labelle, NDP, Rivière-du-Nord, QC]

Mr. Speaker, we are talking about the Canada-Korea agreement. The NDP leader has considerable experience from decades as a provincial minister and in government and the public service. We can trust him to develop trade and economic policies for Canada. The Conservative government is tired and corrupt. The NDP is ready to work at finding real solutions to the real problems facing Canadian families.

Does my esteemed colleague agree that this introduction shows that the NDP is a good party?

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

Mr. Speaker, it may have been the translation I was getting a little wrong. I will not repeat in English everything the hon. member said in French.

Here is the reality. The reality is that this is a good agreement for Canada. If the NDP continues to support this agreement, it is the right thing for that party to do. Unfortunately, its record on trade is not great. It has not supported free trade agreements in the past. However, if it changes its tack and supports this one, I will be thankful for that, absolutely. It is the proper thing to do.

More importantly, this agreement is exactly like all other agreements we have ever signed. It would improve the quality of life for Canadians, create jobs and opportunities, and immediately put more money in the pockets of hard-working Canadians. It also has investor state provisions the NDP is supporting that would allow companies to be on a level playing field with their competitors in Korea.

[Lois Brown, Conservative, Parliamentary Secretary to the Minister of International Development]

Mr. Speaker, I thank my colleague for his discussion about the fish industry in his own province of Nova Scotia.

We know that by removing tariffs and barriers, goods become available to consumers at a lower cost and people's purchasing power increases, as they have access to more imported goods. I wonder if the member could speak a bit about how the increased purchasing power of the people in Nova Scotia is going to translate into a higher standard of living for the people of Nova Scotia.

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

Mr. Speaker, it is extremely clear. Canada is a trading nation. Roughly 50% to 60% of business in Canada is export related. What the hon. member is asking about is trickle-down economics. Every time a wild blueberry producer in Nova Scotia is able to eliminate a 25% or 10% tariff, that is more dollars. That is real money.

Let us understand how insidious a tariff is. A tariff is on top of all the other costs. Producers have already covered their cost of production, have already paid wages, have already paid a lot of taxes on that and certainly all the remittances. Then, on top of that, there is a 10% tax called a tariff. That would be a 100% profit that would go back to a business and go into trickle-down economics in the form of wages and more goods, if producers were buying that product from another distributor. That money would go back into the economy and end up at the local service station, grocery store, and furniture store. It would be very good for the Canadian economy.

[Arnold Chan, Liberal, Scarborough—Agincourt, ON]

Mr. Speaker, I thank the parliamentary secretary for his contribution to the debate with respect to what this agreement would mean to the fishing industry.

My question to him is actually in respect of investment in South Korea, in particular as it deals with the highly integrated chaebol system in South Korea. I would like to get the parliamentary secretary's comments with respect to whether there would, in fact, be an appropriate balance between Canadian companies being able to invest in such a highly integrated industrial economy like South Korea's compared to South Korean firms that would be able to invest here in Canada.