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

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Mr. Speaker, I appreciate the opportunity to talk about one of the historic agreements that Canada has embarked upon and what it means in the creation of jobs and prosperity, not only for the individuals in Canadian businesses but for individuals and their families as well.

I am pleased to talk about the Canada-Korea free trade agreement and the effects it will have on our economy.

My riding is Lambton—Kent—Middlesex in southwestern Ontario, so I am likely going to focus a little more on the particular area of southwestern Ontario. However, in Ontario in general, Ontario's exports to South Korea were an average of about $516 million. When this agreement comes into force, Ontario's key exporters and providers will see a significant amount of new opportunities. Exporters to South Korea will benefit not only from markets that open, but from non-tariff provisions as well. These provisions will ease regulatory barriers, reinforce intellectual property rights and make open, transparent rules for market access.

Today, colleagues will be speaking, and from what I understand, we are going to see consent to support the agreement, which is good.

I want to also direct my comments and appreciation for the Minister of International Trade, who spends so much time not only travelling but with his colleagues across the world to make agreements like these come into place. In this case it is South Korea.

A little while ago we heard the Parliamentary Secretary to the Minister of International Trade speak. He spoke in depth about the trade and benefits that would be seen, not only by Canada but also the reciprocal benefits for South Korea. He spoke with compassion that comes with the history of why Canada and South Korea were able to make such a strong agreement that would give Canada, in some cases, such preferential treatment.

We have talked about the Korean war and its effects on Canadians. Because of our government wanting to recognize that significant conflict, these tributes have been made across Canada to recognize our veterans who died in that conflict.

This agreement will not only improve market access, but it will also look at the interests of Ontario in many areas. We think about agriculture, minerals and metals, but in many cases we do not think about aerospace, medical devices and clean technology. We are a leader in the environmental aspect of clean technology. We have food manufacturing, information, communications technology and life sciences. Canada and Ontario are leaders in these areas. It will also improve access to professional services with Ontario, with greater and more predictable access to a diverse South Korean market.

The agreement would also provide predictable and non-discriminatory rules for our investors and ensure that investments benefit from greater protection in the South Korean market. Suppliers from Ontario would also benefit from preferential access to procurement by South Korean central government agencies for contracts that would be valued above $100,000.

There will be strong provisions in the agreement, such as on non-tariff measures. That is a critical point. When we talk about developing trade agreements, we need to talk about effective dispute settlement provisions for non-tariff measures.

As was said earlier, particularly by the parliamentary secretary, the benefits for Canada in terms of those dispute settlement provisions in this agreement will give strong reference to Canada, should those issues ever arise. We often look at how that would work for Canada in relation to the examples of Europe and the United States. What we have is a stronger agreement with South Korea than even Europe or the United States have. That is not in all areas, but they are comparable, and in some areas we are preferred.

Let us talk a bit about the industrial goods sector, which accounts for about 12% of Ontario's GDP. It affects about 525,000 workers in Ontario. Once this agreement is in place, 95% of tariffs on industrial products will immediately go away. This is going to be a huge benefit to Ontario and to the industrial sector. Unlike in the United States, where they will go in three to five or 10 years, the majority of ours will go right at the start.

In terms of the Canadian Manufacturers and Exporters, most of us in this House recognize the name Jayson Myers, who is its representative. He said:

Our Free Trade Agreement with South Korea is...a first step in gaining more open access for Canadian exports.... this agreement should make Canada an even more attractive destination for investors and manufacturers, create jobs and opportunities for Canadians and level the playing field for Canadian businesses making them more competitive on the global stage.

I want to also touch a bit, as others have, on the automotive sector, which will benefit from this agreement. It looks at going beyond the traditional North American markets and reaching into South Korea. It will provide a level playing field for competition for our auto industry. In fact, in terms of this agreement, Canada got preferential treatment over the EU and the United States, particularly around accelerated dispute settlements. Our agreement between Canada and the South Korea government will have an expedited dispute settlement agreement provision.

I want to get to an area that is close to my heart, and that is agriculture and the processing part of agriculture. As we know, the agriculture and food processing industry is a significant driver in Ontario, with some $44 billion in GDP generated by that industry alone. Almost one-third of that $44 billion comes from agriculture and food processing. As well, the total agriculture-agrifood system, which includes primary agriculture, processing, food services, retail, and wholesale accounts for almost 12% of jobs in Ontario.

Since the implementation of Korea's free trade agreements with the U.S. and EU, Canada's share has dropped significantly, which is the other reason this agreement is so important to get into place now. This agreement will eliminate tariffs, in whole or in part, on 86% of current agricultural exports. This duty-free access will give Canadian products, particularly beef and pork, preferential access to the South Korean market.

We know that there are other products in Ontario, and those are our great wines. This will take away that 15% tariff on our ice wine, something that is unique. The 20% tariff on Canadian rye whisky will also disappear. Spirits Canada has been very supportive of that.

We are looking forward to getting the agreement signed by January, because it is not only good for Canadians as a whole but is good for Ontario and Lambton--Kent--Middlesex.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Mr. Speaker, I would like to thank the hon. member for his speech.

The NDP will support this agreement, not because it is a free trade agreement, but because we think that it is reasonably worth supporting.

Obviously, some aspects of the agreement bother us. No agreement is perfect. For example, there is a mechanism for settling disputes between private companies and the government.

Could my colleague tell me whether he is comfortable with the idea that a state or a government could be partially limited in what it can do because of a dispute settlement mechanism? Can a private company have the upper hand on its own government and prevent it from doing what it wants to?

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Mr. Speaker, I had a little trouble with some of the translation. I do not want to answer the member's question wrongly, so I am wondering if he could give a summary and maybe I could pick up the translation a bit better. Maybe it is a problem with my hearing piece.

[The Acting Speaker, Conservative, Barry Devolin]

Questions and comments. The hon. member for Saanich--Gulf Islands.

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

Mr. Speaker, I am very troubled by this legislation. I do not know if the Green Party is going to be alone in opposing it. Maybe the Bloc Québécois will join us, and we will have a mighty force of four.

It occurs to me that this deal is not going to be in Canada's best interests, and I say that because I am concerned about the investor state provisions and because of Korea's history of robust economic policy and its success in continuing to expand the trade deficit the EU and the U.S. were experiencing even after the EU and U.S. concluded deals with Korea.

Korea manufactures high-value exports, particularly cars, and has a frankly brilliant, but difficult for competitors, trade strategy, with the government of Korea working strongly with its private sector. It leaves us in a situation where we can see on the record that neither the U.S. nor the EU were able to close the gap in their trade deficits with Korea after signing deals. In fact, those gaps widened.

Could the hon. member tell me why he thinks Canada will be any different?

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Mr. Speaker, the hon. member touched on the auto industry. When the United States and Europe signed agreements with South Korea, their exports to South Korea doubled.

Our auto industry supports this initiative. Last year Ford Canada had the largest exports to South Korea in its history.

The companies and individuals who support this deal belong to chambers of commerce. Perrin Beatty, for example, told us that he saw first hand how Canadian companies were losing their footing in markets in other countries. Some were even making the difficult choice to shut down their marketing offices.

A free trade agreement between Canada and South Korea will help our businesses and will increase growth opportunities across our industries, industries such as ag-food, aerospace, infrastructure, energy, and chemicals, and the list goes on.

We have a list of industries, companies, and organizations that all support this deal, because it will give Canada a great opportunity not only to expand its markets but to expand its investments.

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

Mr. Speaker, I am delighted and very proud to rise in the House today to speak in favour of Bill C-41, An Act to implement the Free Trade Agreement between Canada and the Republic of Korea. I would like to congratulate the minister for his work on this file.

The vast majority of Koreans who live in Quebec live in my riding. I speak with them a lot, and I take part in many of their activities. This agreement was a frequent topic of conversation in recent months. They are proud that such a free trade agreement has been concluded with Canada. They are very happy. This Thursday, I will be in Montreal with them to celebrate the Republic of Korea's national day. I am sure that we will have some very rewarding discussions about this agreement.

This will be the first time that the NDP will vote in favour of a free trade agreement because the NDP has a very rigorous position on this. We use three key criteria to support or reject this kind of opening up of markets, which will be the focus of my speech.

First, the proposed partner must have utmost respect for democracy and human rights, as well as adequate environmental and labour standards. The partner must basically share Canadian values. If those criteria are not met, the country must be on its way to meeting them.

Second, we look at whether the proposed partner's economy is of significant or strategic value to Canada. Finally, the terms of the agreement must be satisfactory.

In this case, the NDP feels that this free trade agreement has net benefits for Canada. I will address these benefits sector by sector in my speech.

The reason why we have been opposed to most free trade agreements, whether under the Conservatives or in the past, is that the environmental, human rights and labour law criteria were not met. To me and my party, entering into a free trade agreement with a country is a lever that Canada can use to raise the standard of living of people in the country. South Korea is a very democratic country with a high rate of unionization. It upholds human rights and is quite advanced in green technology.

Since its transition from a dictatorship to civilian rule in 1987, South Korea has become a vibrant, multi-party democracy with a very active trade union movement. South Korea's economy made it possible to industrialize the country and raise the standard of living of the Korean people.

Two years ago, I travelled to Asia with some of my colleagues in the House. We went to Thailand and Cambodia. I found that the standard of living in Asian countries is unfortunately not adequate sometimes. The leaders of those countries must raise the bar, because the world is becoming more industrialized and is developing more and more positively. That is why Canada must do its part on the world stage. I am glad that we are signing an agreement with a country that is well aware of that.

South Korea is currently ranked 15th on the human development index, the highest ranking of all East Asian countries. South Korea has introduced social programs and sound rule of law. It has low levels of corruption and provides high access to quality education. South Korea has the highest level of post-secondary education participation in the OECD. That is quite impressive, and I congratulate them.

Furthermore, Korea has emerged as a world leader in renewable energy and green technology. Canada could increase its trade with Korea in this important sector. Canada should be thinking more about the green economy and renewable resources. Perhaps we could learn from Korea.

The right to unionize is very important to us, and Korea allows that. Here, convenience store owners are going out of business because they are not allowed to unionize. In contrast, Korea is trying to encourage people to unionize and have good working conditions, specifically humane working conditions, and decent wages. We are very proud of that aspect of Korea.

We are still wondering if this proposed partner's economy is of significant and strategic value to Canada. As I said earlier, Korea is Canada's seventh-largest trade partner and its third-largest in Asia, behind China and Japan. Canada already does a great deal of trade with those countries.

In 2013, Canadian exports to South Korea were valued at $3.4 billion, while South Korean exports to Canada were worth $7.3 billion. Canada and Korea already do a fair bit of trade. Canada imports roughly the same amount from Korea as it does from the United Kingdom. Our exports to Korea are about the same as what we export to France. Thus, it is already a reliable market.

South Korea is an important player in Asia's global supply chain. In fact, South Korea is the gateway to Asia. A free trade agreement will allow Canada to potentially discover new markets through this country.

However, there is a caveat. Right now, Canada and South Korea have complementary markets. To date, the two countries have not developed the same specialities.

Many sectors have already indicated that they are in favour of this free trade agreement, including some very significant segments of the manufacturing industry. For example, the Aerospace Industries Association of Canada has indicated that it will benefit from the agreement. Bombardier, in my riding, is also very happy about the agreement. The Aluminum Association of Canada and the Mining Association of Canada, which represent heavy industry, have said that this is a good agreement. The agreement will certainly be good for wood products. By all accounts, Canada will be able to export many forestry products. Canada will also have to expand its agricultural sector. The food processing, seafood and high-tech sectors have already indicated that they support the free trade agreement and that it will be beneficial for them.

The terms of a free trade agreement are the third criterion the NDP uses to determine whether it will support that agreement or not. For example, what will the agreement do for jobs in Canada? It will level the playing field for Canadian workers and Canadian businesses that export their products to South Korea. Ever since the European Union and the United States signed free trade agreements with Korea, Canadian exporters have been losing market share. We are going to try to gain it back.

Every year, Korea's tariffs are reduced for European Union and United States exporters. Right now, tariffs are costing Canadian producers hundreds of millions of dollars a year. We are going to try to recover that money.

Since I only have a minute left, I cannot talk about all of the sectors that I wanted to. Personally, I support the agreement. Had the NDP negotiated this agreement, we would have made some small changes. My colleagues spoke about the automotive industry, which may be affected. Parliamentarians will be responsible for discussing this situation and finding measures to help that industry. The automotive industry provides good jobs, and we must make sure that those jobs are not lost. I admit that I am a bit concerned about that.

I would like to state once again that I will vote in favour of the agreement and that I am proud of it. I am now ready to answer my colleagues' questions.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Mr. Speaker, earlier in the debate we heard a number of Liberals talking about the fact that the NDP had chosen not to support a majority of the free trade agreements, but I would like to point out some of the reasons that this is different from other free trade agreements.

This is a reciprocal agreement. The Korean FTA does not apply to provincial, territorial, or municipal procurement, unlike other agreements, and it does not apply to or negatively affect supply management of agriculture. As well, shipbuilding is completely exempt.

Those were some of the areas that were very troubling to us in other free trade agreements. Would the member say this is perhaps indicative of our relationship with South Korea, which has been in place since the 1950s?

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

Mr. Speaker, I thank my colleague and friend for his question.

Indeed, I based my speech on the NDP's criteria. I know that the Liberals and some Conservatives have attacked us, saying that this is the first time we have voted in favour of a free trade agreement. I explained why we are in favour of this agreement. Canada has had a good relationship with Korea for many years. Last year, or two years ago, we celebrated the 50th anniversary of diplomatic relations with Korea. This is very important to us and to my constituents. As I said, there are hundreds of Koreans in my riding. This is a free trade agreement with a democratic country that respects the unions, human rights and workers' rights. That is what our party advocates, and I hope that is what our country advocates. Of course we should be entering into free trade agreements with ally countries that share our values.

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

Mr. Speaker, I thank the hon. member for Notre-Dame-de-Grâce—Lachine.

My question has to do with what the hon. member from Hamilton was asking about this agreement with Korea. He may not be right. This is about investment and the possibility of lawsuits for damages following decisions by provincial and municipal governments. I will cite section 8.1.

I only have it in English in front of me, but it says in section 8.1, in relation to scope and coverage of investment, in subclause 3:

For the purposes of this Chapter, measures adopted or maintained by a Party means measures adopted or maintained by:

(a) a national, sub-national, or local government and authority...

This to me means that all levels of government are open to suit by Korea if Korea's investors do not like the provisions of those measures.

Could the hon. member comment?

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

Mr. Speaker, I would like to thank my colleague for her question. I did not have time to get to that, but as I mentioned at the end of my speech, if the NDP were to negotiate a free trade agreement with Korea, some of the provisions would not be included. Some aspects would not exist. We would perhaps have spent more time studying the provision mentioned by my colleague.

That said, we have to consider the benefit to Canada at present. When the Aerospace Industries Association of Canada, the Asia Pacific Foundation of Canada, the Canadian Chamber of Commerce, the Japan Automobile Manufacturers Association of Canada, the Seafood Producers Association of British Columbia, the Lobster Council of Canada, the Forest Products Association of Canada and others too numerous to mention all say that they support the agreement, we have to ask ourselves whether it will benefit Canada.

I would say to my colleague that we would not have included some elements in the bill. However, I believe that Korea will be a very strong ally. We should have free trade agreements with countries that, as I was saying, have the same values as we do. I think that is part of it.

[Colin Mayes, Conservative, Okanagan—Shuswap, BC]

Mr. Speaker, it is a pleasure to stand before the House today to speak about the benefits of the Canada-Korea free trade agreement.

This free trade agreement, Canada's first with an Asian market, would create thousands of new jobs in Canada and provide Canadian businesses and workers with a gateway to Asia, enhancing their global competitiveness.

No government in Canada's history has been more committed to the creation of jobs and prosperity for Canadian businesses and workers and their families than this government. Deepening Canada's trade relationships in dynamic and high-growth markets around the world is a key to these efforts.

I would like to focus on the benefits of the Canada-Korea free trade agreement in relation specifically to small and medium-sized enterprises. Small and medium-sized enterprises, or SMEs, make up the backbone of the Canadian economy. This importance is highlighted in our Conservative government's global markets action plan. In fact, a key part of this government's pro-trade plans is to provide SMEs with new and improved market access so that they can expand and win in the global marketplace.

The reality is that many barriers exist that prevent SMEs from accessing new market opportunities and taking advantage of global and regional value chains, and one of the most significant barriers for SMEs is high tariffs. High tariffs pose a significant barrier for any business trying to break into a new market, but this is especially true for SMEs, which tend to have fewer resources and a smaller market share. As we know, tariff reductions are at the core of the Canada-Korea free trade outcome.

Our Conservative government understands that when SMEs sell more of their goods, they create jobs, so when our free trade agreements bring tariffs down, helping our SMEs compete and win, those free trade agreements create jobs for Canadians.

I am happy to report that the Canada-Korea free trade agreement would eliminate tariffs on virtually all current exports from Canada to South Korea. The Canada-Korea free trade agreement would result in the elimination of 100% of South Korean tariffs on industrial goods, forestry and wood products, and fish and seafood products, as well as the elimination of the vast majority of South Korea's agricultural tariffs. In all, once the agreement is fully implemented, South Korea will remove duties on 100% of non-agricultural exports and on 97% of current agricultural exports. This would significantly improve South Korean market access for Canadian SMEs.

To help business owners, the Canada-Korea free trade agreement contains simple and clear rules of origin that would make it easier and less costly for Canadian SMEs to do business in the South Korean market. The Canada-Korea free trade agreement also contains clear and transparent origin procedures that would ensure the effective and consistent administration of the rules of origin so that they do not represent costly barriers to trade.

Non-tariff barriers are a growing concern in international trade. Non-tariff barriers, whether in the form of unjustified trade restrictions or lack of transparency, could seriously undermine gains made in market access. The effects of non-tariff restriction barriers tend to be magnified for SMEs that do not have the level of resources of a large national or multinational corporation. The Canada-Korea free trade agreement contains strong disciplines on non-tariff measures that would help SMEs reap the benefits of this agreement.

For instance, the agreement promotes and requires the use of internationally accepted standards to minimize duplicative certification and testing of products. Moreover, the Canada-Korea free trade agreement would improve transparency with respect to standards and regulatory development by ensuring that SMEs and other companies have access to information such as laws, regulations, and administrative rulings that can affect trade.

I would like to note that these strong disciplines on non-tariff measures are backed up by the Canada-Korea free trade agreement's fast and effective dispute settlement provisions.

The benefits of the Canada-Korea free trade agreement do not end there. In addition, through tariff elimination, user-friendly rules of origin, transparent origin procedures, and reduced non-tariff barriers, the Canada-Korea free trade agreement contains strong provisions that would improve access for services and facilitate business mobility.

With regard to services, Canadian SMEs would benefit from preferential market access in key areas of export interest, including research and development services, professional services, environmental services, and business services, among many others.

In addition, the Canada-Korea free trade agreement would enhance business mobility by giving Canadian business people new and preferential access to the South Korean market by removing barriers to entry, such as economic needs tests. It would also ensure that new barriers in this area, such as quotas and proportionality tests, will not be introduced in the future.

Some of these provisions are the most ambitious that South Korea has ever agreed to in its free trade agreements, and they would allow Canadian SMEs to compete with key competitors in the U.S. and the EU on a level playing field.

Lastly, I want to speak briefly on investment.

Canada already has significant foreign investment in South Korea, including in the automotive, transportation, financial services, and life sciences sectors. The Canada-Korea free trade agreement includes a robust framework of rules that will result in an environment characterized by greater predictability and stability for Canadian firms that already have investments in the South Korean market and for companies that wish to expand their investments or make new investments. This is relevant to Canadian SMEs whether they exist on their own or are looking to partner with larger Canadian firms.

These are just a few examples of how the Canada-Korea free trade agreement would enhance market access for SMEs and make them more competitive in the global market. As we can see, the Canada-Korea free trade agreement is a much needed, high-quality agreement that would bring significant benefits to Canada's small and medium-sized enterprises as well as to Canadian consumers and other businesses.

Our government understands the importance of trade and exports to our economy. Exports are responsible for one out of every five jobs in Canada. The prosperity of Canadians depends on the continued expansion beyond our borders into new markets that serve to grow Canada's exports and investment.

However, this past summer the NDP's critic protested alongside well-known radical anti-trade activists, like The Council of Canadians and the Canadian Centre for Policy Alternatives at an anti-trade protest.

The NDP's record is just as bad and shameful as the Liberal record. During 13 long years in government, the Liberals completely neglected trade. When our government was elected in 2006, Canada only had trade agreements with five countries, the most important two being the United States and Mexico, and that agreement was signed by another Conservative government.

The Liberals took Canada virtually out of the game of trade negotiations, putting Canadian workers and businesses at severe risk of falling behind in the era of global markets. With the free trade agreement with Korea and the historic agreement between Canada and the European Union, Canada will have ratified free trade agreements with 43 countries.

Only our government is focused on what matters to Canadians: jobs, growth, and long-term prosperity. The Canada-Korea free trade agreement is just another example of how this Conservative government is getting the job done.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Mr. Speaker, I would like to thank my esteemed colleague for his remarks. I did not realize that I was a radical activist and that the people who had the decency to vote for me did not have political judgment.

In the case of this agreement, we should not confuse South Korea, a developed and democratic country, with Honduras, where drug traffickers have the upper hand.

It is vitally important that we ask how this government will ensure that Canada exports not just fish, but high-value-added manufactured goods.

What mechanisms will again spur the industrialization of Canada so that we actually export high-value goods?

[Colin Mayes, Conservative, Okanagan—Shuswap, BC]

Mr. Speaker, taking tariffs off will just make Canadians more competitive, and I really believe that Canadian companies and workers can compete in the global market.

Just to give members an idea, British Columbia trades $1.76 billion a year with Korea. A small item of that is fish and seafood exports to South Korea. There are currently tariffs ranging from 10% to as high as 20% on those exports. They would disappear. That would make our fishery more competitive. It would open the market and maybe even expand the market. That would be a positive thing for Canadian companies.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Mr. Speaker, the member said that when the Liberals were in government, they had a difficult time with trade agreements.

However, I am looking at the statistics since 2003. For the years 2004 through 2008, on average, we had a trade surplus of at least $50 billion per year. Then from 2008 to 2011 and all the way to 2013, there was only one year when we had maybe half a billion dollars of trade deficit. In all the other years, we are looking huge amounts of deficit in trade.

Would the member agree that the trade agreements they are signing are insignificant and are maybe not doing the job?