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

[Marc-André Morin, NDP, Laurentides—Labelle, QC]

Mr. Speaker, that is an excellent question.

I do not believe that these agreements are an obligation. It is a bad habit that some governments have developed. If we sign agreements with countries that do not have robust legal systems, where corruption is a problem and where the impartiality of the courts is in question, it is wise to include these kinds of provisions in agreements.

However, when we are doing business with reputable countries with legal systems similar to ours and where corruption is not a problem, there is no need to worry. It is not like in the case of Mexico in the 1980s, when NAFTA was being signed. There was good reason to question Mexico's legal system at the time. In fact, that might still be a concern today. However, when we are doing business with large, modern, democratic countries like South Korea, there is no need to worry about that.

[Isabelle Morin, NDP, Notre-Dame-de-Grâce—Lachine, QC]

Mr. Speaker, I am proud to reiterate the NDP's support for the bill that is presented before the House today. We add our voices to those of a broad coalition of Canadian stakeholders, such as the agriculture and agri-food industry associations; the UFCW, which is Canada's largest private sector union; manufacturing industry associations; and Bombardier, just to name a few.

As we have declared before the House, the NDP keeps in mind three fundamental criteria to ensure that the interests of Canadians are protected when it comes to a trade agreement.

The first has to do with the proposed partner's attitude toward Canadian values. We will make sure that countries respect democracy and human rights and that they have high policies toward labour and environmental standards. In the case of South Korea, we are very satisfied by the work this country has achieved since it broke free from dictatorship a quarter of a century ago. It has transitioned into an energetic, multi-party democracy with an active trade union movement. The wages are beyond decent, and freedom of expression is encouraged. South Korea is a developed country and is ranked 15th on the human development index, which is the highest rank in east Asia. We also have to point out the success of South Korea in becoming a world leader in renewable energy and green technology.

Our second criterion is with respect to the economic benefits Canada can receive from the agreement. Is the proposed partner's economy of significant or strategic value to Canada? Again we are satisfied, considering that South Korea is Canada's seventh most important trading partner. In 2013, Canadian exports to South Korea totalled $7.3 billion. Also, this first agreement with an Asian country would allow Canada to enter the Pacific region and diversify its export markets. Canadian exporters lost 30% of their market share in South Korea after the European Union and the U.S.A. concluded similar trade agreements. This agreement would allow Canada to restore its competitiveness in global markets and compensate for the losses.

Bob Linton, from the United Food and Commercial Workers Union, stated:

This deal will not only help to protect the jobs of our members in these provinces but has the potential to increase employment with good union paying jobs that benefit the communities.

The third criterion is with respect to the terms of the agreement. The NDP wants to make sure that such terms are satisfactory for the Canadian economy. In this present case, we are satisfied by the benefits provided in many sectors.

One example is the agricultural sector. The agreement would enhance trade in the agriculture and agri-food sector, which represents 8% of the country's economy and sustains one out of eight jobs. South Korea imports a colossal amount of these products and is therefore a complementary economical partner for Canada.

We can also point out the benefits provided by this agreement in the aerospace sector. I am really pleased with this agreement, considering the proximity of South Korea to other major economies, such as Japan and China. In the next 20 years, half of the world's air traffic will be driven by Asia. The demand for aircraft in Asia will account for 37% of worldwide sales and be valued at $1.9 trillion.

The NDP recognizes the virtue of free trade and is aware that deepening our trade linkages with the Asia-Pacific region is essential to maintaining Canadian prosperity in the 21st century. However, this is not exactly the agreement that we would have negotiated. Let us face it: some aspects of it need to be criticized.

Let us start with concerns regarding the automobile sector, which needs to be protected. The NDP is calling on the government to take action to support the Canadian automobile industry, which provides 100,000 good jobs. Even if we go outside the frame of this agreement, the Canadian automobile sector has to face ferocious world competition. In 2013, Canada could not attract any of the $1.7 billion in auto assembly investments that were made around the world. These are shocking facts. That is why the NDP is urging the government to provide financial help to this very important sector of our industry.

An NDP government would create policies that would fortify the sector, and we have many ideas on how to do so. We would encourage Korean automakers to set up production facilities in Canada. We would also assist our industry in penetrating Korean and other Asian markets, and we would definitely keep an eye on non-tariff barriers and hurry to resolve disputes in an efficient and adequate manner.

At committee stage, the NDP definitely took the lead by inviting several witnesses from different sectors, including those against the agreement. We were also the only party to propose amendments to protect Canada's automobile sector, which goes back to what I was mentioning a moment ago. One amendment proposed a snap-back in the event of a surge in Korean vehicle imports in the Canadian market. We also suggested implementing yearly trade missions to Korea to observe and control the removal of harmful non-tariff barriers on Canadian exports. However, the government refused both these amendments that would have protected our industry.

Obviously the Liberal Party is no help in addressing that issue, since it does not have a plan or even the beginning of a proposition to protect our industry. There is no surprise there, since the Liberals are willing to support an agreement without even knowing its details, as they did when the Liberal critic approved a trade agreement with the European Union without seeing it.

Still on the topic of what happened at committee stage, the NDP was the only party to step up to introduce Canadians' concerns. We made three motions regarding investor protections. The first one was to protect the right of the Canadian government to legislate in the public interest. The second motion was to prohibit the fading of environmental standards in order to encourage investments. Last but not least, we wanted to repeal the investor state dispute settlement chapter from the agreement. In that matter, the main opposition party in South Korea joined its voice to ours.

Despite the relevance of these interventions, both the Liberal and the Conservative parties rejected these amendments.

In conclusion, the NDP supports open trade, especially when it comes to breaking down harmful trade barriers and decreasing tariffs and protectionism. Nevertheless, past experience has shown that a completely hands-off approach to the economy just does not work. Therefore, I concur with the Chamber of Commerce of Canada that there is a common sense role for government to play in promoting our exports and helping Canadian companies get into the Asian market.

I want to reiterate to my community and to all Koreans in my riding and in the greater Montreal area, whom I often deal with, that I am very proud we can conclude this free trade agreement and that I will help them. Some production companies have already approached me for help in developing markets with Korea. I will do everything in my power to help them.

According to the criteria I listed, this is a good agreement. I would have liked us to study it a bit more in committee, but this is a step in the right direction for our country, and I am pleased to say so again today and support this bill.

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

Mr. Speaker, I know that there remain deep concerns. I am sure my hon. colleague from the official opposition is aware of the concerns from the auto workers and the unions that work with the Canadian Auto Workers. The trade situation with South Korea is likely to remain one in which we primarily import finished products from Korea with lots of value added and export raw resources to it. The experience with other countries in trade deals with Korea has not redressed this balance of trade to the advantage of those countries.

We will obviously be going forward with this treaty, since every major party in the House supports the Canada-Korea treaty and the Green Party is the only party that does not. I wonder if the official opposition has any proposals for steps we can take to make sure that we do not just export raw resources and import high-value exports from Korea.

[Isabelle Morin, NDP, Notre-Dame-de-Grâce—Lachine, QC]

Mr. Speaker, I thank my colleague for the question.

Indeed, Canada exports a lot of raw materials, since it is a country of natural resources. I would prefer it if we processed those materials here and boosted our industry, because that would create good jobs. Nonetheless, as the hon. member said, will sending South Korea a lot of raw materials that come back to us as processed goods increase or decrease this trade? I do not have an obvious answer.

We said we want to encourage the auto industry. I support any suggestions for making it easier to process our own raw materials in Canada, because that would create good jobs. A country like ours that has a lot of natural resources would certainly benefit from exporting value-added processed materials. I encourage that. For now, we have not proposed any amendments to that effect. We wanted first to protect our industries. However, we should look into this shortly because we must correct this import deficit.

[François Choquette, NDP, Drummond, QC]

Mr. Speaker, I have a question for my hon. colleague, who gave an excellent speech and demonstrated that she is very knowledgeable about this issue.

A Department of Foreign Affairs document indicates that Canada dragged its feet on signing trade agreements with countries of strategic interest. While the Conservative government was wasting time negotiating less important agreements, it neglected agreements that are of great value to the Canadian economy and create jobs in Canada. This incompetence on the part of the Conservatives is deplorable.

I am wondering what my colleague thinks of this document, which shows the Conservative government's shortcomings when it comes to negotiating free trade agreements.

[Isabelle Morin, NDP, Notre-Dame-de-Grâce—Lachine, QC]

Mr. Speaker, I thank my colleague for his excellent and very pertinent question. When we want to engage in trade with other countries, the NDP asks itself three questions. Does the country respect human rights and workers' rights? Is there added value for Canada? Are the trade terms satisfactory?

Clearly, human rights and workers' rights are not an important consideration for the Conservatives. Canada, which is the free trade partner of choice for most countries in the world, should use this as leverage to improve workers' rights and living conditions abroad.

Regarding the document my colleague mentioned, we have to consider the countries that provide the greatest benefit to Canada based on what we want to import and export. The free trade agreement with South Korea should have been signed long ago. Other countries that have less to offer Canada from an economic perspective were given priority.

This is about priorities. The government should not be helping countries that are friends; it should be signing agreements that will benefit Canadians and our workers. I hope that other countries were mentioned in the document and that Canada will put more effort into signing free trade agreements that are good for Canadians.

[The Acting Speaker, Bruce Stanton]

I would like to advise the House that there have been more than five hours of debate on this motion since this first round of speeches. Consequently, the speeches will now be 10 minutes and the period for questions and comments will be 5 minutes.

Before handing the floor over to the Parliamentary Secretary to the Prime Minister and for Official Languages, I should inform him that I will have to interrupt him around 2 p.m. for statements by members.

The hon. parliamentary secretary.

[Jacques Gourde, Conservative, Parliamentary Secretary to the Prime Minister]

Mr. Speaker, the government is committed to protecting and strengthening the long-term financial security of hard-working Canadians.

It is with great pleasure that I rise today to talk about the Canada-Korea free trade agreement, a landmark agreement that will strengthen our trade and investment ties across the Pacific, increase the prosperity of both countries and result in job creation and enhanced opportunities for Canadian and Korean businesses, investors, workers and consumers

I would like to focus my remarks today on the benefits the Canada-Korea free trade agreement will bring to my home province of Quebec.

With Canadian agricultural exports to South Korea facing an average tariff rate of close to 53% over the 2011-13 period, Quebec businesses stand to gain considerably from the Canada-Korea free trade agreement. When fully implemented, the agreement will eliminate tariffs on over 99% of agricultural tariff lines. This duty-free access will not only give Quebec exporters preferential access to the South Korean market, but will also create a level playing field on which to compete and win.

Upon entry into force, the Canada-Korea free trade agreement will eliminate tariffs on almost all of Quebec’s key exports and provide access to new opportunities in the South Korean market. Quebec exporters will also benefit from non-tariff provisions that will improve conditions for exports in the diverse South Korean market. The Canada-Korea free trade agreement will, for example, ease regulatory barriers, reinforce intellectual property rights and ensure more transparent rules for market access.

I would now like to highlight some of the broad benefits for Quebec. The Canada-Korea free trade agreement will provide enhanced market access for key sectors of interest to Quebec, including industrial goods, agricultural and agri-food products, forestry products and professional services.

The Canada-Korea free trade agreement will also provide predictable, non-discriminatory rules for our investors and ensures that their investments will be protected in the South Korean market. Access to South Korea’s government procurement market will also be improved. Suppliers from Quebec will benefit from expanded opportunities at the central government level, putting them on an equal footing with suppliers from the United States and in a better position vis-à-vis others such as Japan and the European Union.

The strong provision on non-tariff measures, backed up by a fast and effective dispute settlement provision, will also contribute to facilitate trade between Quebec and South Korea.

Now, I would like to turn to some of the specific benefits the Canada-Korea free trade agreement will bring to Quebec in different sectors, including industrial goods and agricultural and agri-food products. The area of industrial goods is a significant component of Quebec’s economy. There are over 295,000 hard-working Quebeckers and their families that depend on the industrial goods sector for their livelihood, with the sector accounting for approximately 11% of Quebec’s GDP.

From 2011 to 2013, Quebec’s exports of industrial goods to South Korea were worth an annual average of $280 million. The Canada-Korea free trade agreement will significantly improve market access opportunities for Quebec’s industrial goods sector by eliminating all tariffs. Upon entry into force of the agreement, over 96% of South Korean tariff lines for industrial goods will be subject to immediate duty-free access, with the remaining 5% eliminated within 10 years.

The House resumed consideration of the motion that Bill C-41, An Act to implement the Free Trade Agreement between Canada and the Republic of Korea, be read the third time and passed.

[Jacques Gourde, Conservative, Parliamentary Secretary to the Prime Minister]

Mr. Speaker, upon entry into force of the agreement, over 96% of South Korean tariff lines for industrial goods will be subject to immediate duty-free access, with the remaining 5% eliminated within 10 years. For example, South Korean tariffs on flight simulators, cosmetics, ferro-alloys, gas turbines and scientific instruments, which run as high as 8%, will be eliminated.

This duty-free access will give Canadian products preferential access to the South Korean market and will create a level playing field with South Korea’s current free trade agreement partners.

Another key driver of economic activity in Quebec is the agricultural and agri-food products sector, which employed over 138,000 people in 2012.

From 2011 to 2013, Quebec’s agricultural exports to South Korea were worth an annual average of $93 million, led by pork, malt extract, food preparations and maple syrup.

Quebec will benefit from expanding exports of these and a wide variety of other products, including animal fats, soybeans, animal feed and fruits such as cranberries and blueberries.

The Canada-Korea free trade agreement will eliminate many agricultural tariffs immediately upon implementation of the agreement and will eliminate tariffs, in whole or in part, on 97% of current agricultural exports when the agreement is fully implemented. For example, South Korean tariffs on pork and most processed pork products, which face a current rate of up to 30%, will be eliminated. Tariffs on most food preparations, which run as high as 30%, will also be eliminated. For their part, exporters of blueberries and other berries will see current tariffs ranging from 30% to 45% eliminated. That is not all.

The Canada-Korea free trade agreement also contains robust provisions, which will ensure that Quebec agricultural and agri-food products are not undermined by unjustified trade barriers.

The chapter on sanitary and phytosanitary measures negotiated in the Canada-Korea free trade agreement 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 WTO members to take the sanitary and phytosanitary measures necessary for the protection of human, animal or plant life or health, as long as they are based on science and are not used as disguised measures to unnecessarily restrict trade.

Under the agreement, Canada and Korea will establish a new bilateral sanitary and phytosanitary measures committee through which experts can collaborate and consult on sanitary and phytosanitary measures to enhance bilateral co-operation and facilitate trade by discussing issues before they become problems.

Since South Korea is a large net importer of agricultural and agri-food products, importing nearly $20 billion in 2013, Quebec stands to benefit considerably from the Canada-Korea free trade agreement.

Beyond tariffs, Canada and Korea recognize the importance of fostering co-operation and transparency in standards-related measures and have committed to encourage the use of internationally recognized standards and membership in multilateral arrangements to minimize duplicative certification and testing of products, including those related to medical devices.

The agreement also includes provisions aimed at minimizing the impact of technical barriers, which will in turn help maximize market access for Quebec’s exports.

To conclude, Canadian companies that do business abroad rely on fair, transparent, predictable and non-discriminatory trade rules. With the Canada-Korea free trade agreement, we are looking to provide the rules they need so they can compete and win abroad and build a stronger economy here at home.

No government in Canada’s history has been more committed to the creation of 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.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

Mr. Speaker, the NDP certainly supports Bill C-41, An Act to implement the Free Trade Agreement between Canada and the Republic of Korea.

We use three criteria to determine whether or not we will support trade agreements. First, we must ensure that the proposed partner respects democracy, human rights, adequate environmental and labour standards, as well as Canadian values. If there are problems in that regard, is the partner making progress towards achieving these objectives? Next, is the proposed partner's economy of significant or strategic value to Canada? Finally, are the terms of the proposed agreement satisfactory? These are the criteria we use when studying agreements such as this one.

Since 2012, when the United States implemented trade agreements with South Korea and obtained preferential access for its businesses, Canadians exporters have lost 30% of their market share.

Why was this government so slow to act, and why has it negotiated an agreement that is not as good?

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Mr. Speaker, I thank my colleague for her question.

I think that the government took as much time as was necessary to negotiate an agreement that is in Canadians' best interest. It will create jobs and opportunities for Canadian workers in all regions of the country.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, it is important to recognize that this particular agreement was not an initiative by this particular government. In fact, it was South Korea, which back in 2003 put itself on track to go out to the world and sign free trade agreements. Within a year of that, Prime Minister Paul Martin put Canada in a position to begin the negotiations.

My question is in regard to the amount of time that it has taken for this current government to reach an actual agreement. We often hear about the United States, but other countries, such as Chile, India, and Peru, have been successful in getting an agreement in place earlier.

Why does the minister think it took Canada so long to actually achieve an agreement?

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Mr. Speaker, I think it is very hard to compare the Liberals' record on agreements with foreign governments to our own record.

Since 2006, and even before then, the Conservative government has signed agreements with partner countries that account for over 52% of the international GDP. That is a huge success, the kind of success that the other side of the House will never know.

[Bruce Hyer, Green, Thunder Bay—Superior North, ON]

Mr. Speaker, this is a lopsided deal.

In 2013, there was an almost $4 billion deficit in trade with Korea. It is going to get worse.

It is great for Korea. It is great for Hyundai. It is bad for Canadian automakers and auto workers, and I am surprised that the NDP is not standing up for auto workers.

My question for the Conservatives is this: why they are making Canada a resource-exporting colony of South Korea?