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

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

Mr. Speaker, history shows that when a country with a strong economy competes in the marketplace in a world economy as it was in 2008, it really suffers, but we will find that the countries that suffer the most are doing most of the exporting to try to get their economy going.

Canada had the luxury of being almost a net buyer of goods and services from other countries, and that was helping those countries recover from the recession that we had in 2008.

However, I can assure members that as we open more markets, it just means that our balance of trade will improve, because Canadian companies are aggressive and are well-equipped to compete in these global markets.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Mr. Speaker, certainly in Ontario one of the concerns has always been the lack of reciprocity in the auto markets. Our automakers are a powerful force in the economy here in Canada. We receive competition from the Asian markets, but we have seen in the past a real reluctance to allow us to export a fair share into their markets. We have seen all manner of blocks put up. Meanwhile, we certainly have dealt with a wide array of Asian vehicles coming into Canada.

I would like to ask my hon. colleague what provisions made it possible for us to get access to the Korean market, which has not been the most open in terms of access for automobiles from Canada?

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

Mr. Speaker, as we go into a free trade agreement with any country, we make sure that those barriers are eliminated and that there is market access.

As we have stated, in the agreement we have an easier mechanism to sort out any challenges that we would see as barriers. I believe we have to have a certain amount of faith in the agreement and have faith that those we are signing an agreement with are going to uphold those values.

The purpose of the agreement is to open up markets to both countries, and I have full confidence that Korea will give Canadian companies access to their market.

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

Mr. Speaker, I am very pleased to rise in the House today to debate Bill C-41 on the Canada-Korea free trade agreement.

The Liberal Party and I support the initiatives that lead to free trade agreements. There are definitely many advantages to free trade agreements, and it goes without saying that Canada's economy gains strength when markets are opened. That is why we will support the bill to establish a partnership between South Korea and Canada.

We believe that it is important to establish a special relationship with South Korea, since we do more than $10.8 billion of bilateral merchandise trade with this country. Furthermore, South Korea already has free trade agreements with the European Union and the United States, which is an incentive for us to act quickly. We are now playing catch-up. We could end up at a serious disadvantage if we delay an agreement with South Korea even further.

Canada already lost more than 30% of its share of the South Korean market when South Korea signed agreements with the United States, the European Union and Australia. Since negotiations have been going on for nearly 10 years, we sincerely hope that this agreement will take effect quickly. Strategically, we are lagging far behind on markets we should already have access to.

This is the first free trade agreement that establishes an agreement with an Asian country, yet our primary trading countries are Asian countries, including Japan, China and Korea. The government is lacking a clear vision when it comes time to targeting new markets or quickly carving out a space in emerging markets.

The government boasts about signing free trade agreements, as we saw with the last member who spoke, but we have had some significant trade deficits since 2009. The announcement of a free trade agreement with South Korea will not magically fix that situation, as the Conservative government hopes. We think that the government needs to commit resources and make investments to increase trade.

For example, since the free trade agreement between South Korea and the United States was established, Canadian pork producers have lost the Korean market to the United States. This situation is unacceptable. We should have acted much more quickly before these kinds of things happened. Now that the agreement has been signed, this government has the duty to protect these industries and ensure that they regain their market share.

As the Liberal critic for small business, I am aware of the importance of this agreement for Canadian workers. Removing tariffs is often the support small and medium businesses want, to ensure that they have an equal chance of being competitive on the markets. The agreement can only help Canadian companies doing business with South Korea and the many subcontractors involved.

This agreement is even more beneficial when you take into account that the customs tariffs imposed by South Korea are about three times higher than Canada's, and they will be eliminated, on different schedules, once the agreement is in effect. These are small things that will matter a lot at the end of the year for Canadian small and medium-sized businesses.

I am pleased to hear the news for Canadian entrepreneurs who do business with South Korea, but I hope it is not too late for those who would like to enter the Korean market. Indeed, the various competitors from other countries have already become well-established since the signing of free trade agreements that preceded ours.

From another perspective, what concerns me about the free trade agreement between Canada and South Korea is the current situation with the Canadian automobile industry and what will happen once this agreement is implemented. The Canadian and North American auto market has already been significantly infiltrated by Korean vehicles.

About 100,000 Korean vehicles worth $2.6 billion are imported into Canada annually, while Canadian or North American vehicles do not really reach the Korean market. One hundred or so Canadian vehicles worth about $12.5 million are exported annually to South Korea.

Objectively speaking, it would be wrong to believe that free trade will create a balance. The government is really turning its back on the auto industry under this agreement.

In the final agreement summary, only South Korean imports from Canada are mentioned. There is no mention of Canadian imports from South Korea. We can therefore neither compare nor see the scale of the imbalance.

The government has gotten us used to that kind of thing: hiding important information to make it easier to pass bills that might be controversial. My concern is that the gap will only grow wider.

According to Unifor, Canadian auto sector imports from South Korea have increased by 1,010% since 1997. In that sector, the benefits are exclusively South Korea's. A greater number of Korean cars will enter the Canadian market, and it will get harder and harder to compete.

Another important and interesting aspect of the bill we are debating today is that it would not change anything in terms of intellectual property. Since becoming a member of the Standing Committee on International Trade, I have seen how big a global issue this has become. There are increasing demands to improve intellectual property protection, and there is a lot of pressure around that in various agreements.

From negotiations with the European Union to creating a trans-Pacific partnership, there is always disagreement about intellectual property. The surprising thing is that when a country complies with international intellectual property protection standards, a negotiating partner can ask it to do even more than the good things it is already doing, can expect all the parties to an agreement to use the same system. I am surprised but pleased to see that a free trade agreement that respects each country's system can happen.

Will the government be able to respect and protect our own Canadian standards as it negotiates agreements with the European Union and the countries working on a trans-Pacific partnership? It is difficult to tell at the moment, but our preliminary information suggests that the European Union's high expectations regarding intellectual property seem to be finding their way into the final agreement.

Over the course of the committee meetings, we repeatedly heard concerns about increased protection for intellectual property from representatives of various fields, including the pharmaceutical field.

Just this week, since the text of the final Canada-EU agreement was released, Canadians have already expressed concern about the potential increase in costs for drugs, as well as the possibility of higher costs in our health care system. I sincerely hope that their concerns will be taken seriously by this government.

To get back to the bill being debated today, I wish to support it so that it can be sent to committee for further study. I hope that we will have the viewpoints of all the sectors and stakeholders of society in the testimony at committee.

I hope that this agreement will not add significantly to the imbalance we can see in the automotive sector or that the government will at least keep an eye on the health of the Canadian sector.

I also hope that this agreement will help Canadian businesses by fostering more and more trade between the two countries. I think the elimination of trade barriers can only benefit the majority of Canadian businesses.

As I said before, such agreements have significant repercussions on local entrepreneurs. In fact, customs tariffs alone can account for many unnecessary direct and indirect expenses for small businesses.

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

Mr. Speaker, I thank the hon. member for Saint-Léonard—Saint-Michel for his speech.

He was very silent on an issue that comes up in every free trade agreement. It is something the NDP has many concerns about. I am talking about the settlement of investor-state disputes. This requires the state to compensate a private company for what it would estimate to be a potential loss of profit, because the government is doing its regulatory duty to safeguard the public good.

Do the Liberals agree with this type of provision, which we routinely find in the free trade agreements negotiated by Conservative and Liberal governments?

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

Mr. Speaker, that is a great question, but it cannot be answered with a simple yes or no. It is a double-edged sword because some areas of technology require us to intervene pretty much right away. During testimony before the Standing Committee on International Trade, people from the technology sector said that they cannot wait years, as was the case during the softwood lumber dispute, which was dragged through the courts for years. Canadian technology companies like BlackBerry expect disputes to be resolved pretty quickly. They need a system that can hear both sides and reach a verdict as soon as possible.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, my colleague asked a brilliant question just before his speech in which he juxtaposed all of the Conservative free trade deals, which they have agreed to, signed and boast about on the one hand. On the other hand, we went from a situation of trade surpluses under Liberals and descended into deep trade deficits under the Conservatives.

The NDP might say that free trade deals cause deficits, but I am enough of an economist and a Liberal to think that free trades are good for the economy and should normally lead to improved trade balances.

When the Conservatives sign free trade deals, they should be good for the economy and trade, yet they have descended into massive trade deficits. Is there some other aspect of Conservative mismanagement which, notwithstanding these trade deals, led to huge trade surpluses?

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

Mr. Speaker, I do not know if that is a loaded question, but I will try to answer it in a non-partisan way as much as possible.

It is one thing to sign trade deals and another thing to follow up on. The world is changing and we see it as one world, a global economy. Leading trade partners in the last number of years are Canada, Japan and Korea. We started negotiating with Korea over 10 years a go. Japan has been negotiating more or less the same period of time. We are one of the last countries involved in TPP negotiations, and that has been going on for years.

Since the Conservative government came to power, we are always last. Signing a free trade deal does not provide us with extra trade. It is nice to say we will sign a free trade deal. The Prime Minister has signed a free trade deal with Europe I do not know how many times, I think at least three or four times in the last six months. However, it is not yet in law because we do not even know what Europe will do. It has not even begun. It just released the text. There is a bit of a disconnect between reality and announcements and what really goes on the business world.

[Randy Hoback, Conservative, Prince Albert, SK]

Mr. Speaker, I am pleased to rise today to talk to the Canada–Korea free trade agreement, or CKFTA, specifically the benefits and opportunities created by the agreement for the Canadian beef and pork farmers.

Canadian beef and pork are world renowned and a significant contributor to our national economy. In every region of our country, hard-working beef and pork producers produce reliable and high-quality products that are constantly in high demand. The size of the industry is staggering. By 2014, there were 12.2 million head of cattle on over 82,000 Canadian farms and ranches. In the pork sector, there are approximately 12.9 million hogs on over 7,000 farms.

Our government, along with Canadian beef and pork producers, understands that Canada's prosperity requires expansion beyond our borders into new markets for economic opportunities that serve to grow Canada's exports and investments.

While the United States is a major export market for Canadian beef and pork, diversification and ensuring that Canadian farmers have access to a wide range of export markets for their products is key to their success. That is why our most recent Speech from the Throne committed to expanding trade in the Asia-Pacific region to benefit hard-working Canadians and businesses, especially to our crucial small and medium-sized enterprises and industries across Canada.

South Korea represents a significant market for beef and pork, and there exists much potential for increased Canadian exports. Between 2010 and 2012, South Korea's global imports totalled an average of approximately $1.3 billion annually, while global pork imports were worth an average of approximately $1.1 billion annually. Currently, Canada supplies only a fraction of South Korea's beef and pork markets. Canada's market share is also currently falling due to the competitive disadvantage vis-a-vis the United States and the European Union that benefit from lower tariffs and preferential access due to the FTA they presently have with South Korea.

Specifically, following the implementation of the Korea-U.S. or Korea-EU FTAs, Canada's share of South Korean fresh, chilled and frozen pork imports dropped from 14.2% in 2010 to 8.9% in 2013, representing a loss of export value in excess of $22 million. During the same period, U.S. and EU market share increased from 66% to 76%.

In 2012, following the resumption of Canada's access to South Korea's beef market, Canada's fresh and chilled beef exports to South Korea were valued at around $10 million. However, in 2013, Canadian beef exports declined to $6.7 million as a result of a growing tariff differential, again vis-à-vis U.S. competition.

Our Conservative government is committed to levelling the playing field and opening new markets for high-quality Canadian beef and pork as Canada's first free trade agreement in Asia. The Canada-Korea free trade agreement provides critical new market-access opportunities in a dynamic region where there is significant demand for both beef and pork.

Starting with beef, exports to South Korea of fresh, chilled and frozen beef, which totalled over $43 million in 2002 prior to the BSE outbreak, are in the rebuilding phase following the restoration of access to the South Korean market in 2012. Canada's exports of beef to South Korea reached an average of $5.5 million from 2011 to 2013, while exports of bovine genetics, offal and tallow averaged at over $15 million.

Importantly, the Canada-Korea free trade agreement would eliminate high tariffs that serve as a barrier for increased Canadian exports. Specifically, the 40% tariff on fresh, chilled and frozen beef cuts, as well as the 72% tariff on some processed and prepared beef, will be eliminated within 15 years. Tariffs of 18% on most beef offal will be eliminated within 11 years, while tariffs on beef fats and tallow will be eliminated upon entry into force of the free trade agreement. In addition, the 18% tariff on embryos will be eliminated upon entry into force.

Beef stakeholders from across the country have unanimously and publicly supported this agreement. These include the Canadian Cattlemen's Association, the Canadian Meat Council, Manitoba Beef Producers, British Columbia Cattlemen's Association, Alberta Beef Producers, Saskatchewan Stock Growers Association and Beef Farmers of Ontario. Martin Unrau, past president of the Canadian Cattlemen's Association, said, “This announcement means Canadian beef will be able to compete for meaningful access in the South Korean market”.

Canada's export of fresh, chilled and frozen pork to South Korea reached an average of $138 million from 2011 to 2013, while exports of processed pork, pork offal and fats reached $9 million during the same period. Although Canadian pork farmers are already exporting to South Korea, high tariffs remain for many of the pork products they produce. Thus, there is remaining significant untapped potential for this industry to export to South Korea, potential that can only be accessed through a tariff elimination pursuant to the Canada–Korea free trade agreement.

Under the agreement, the 22.5% and 25% tariffs on fresh, chilled and frozen pork guts will be eliminated within five to thirteen years. The 18% to 30% tariffs on most processed and prepared pork will be eliminated within six years. As well, the 18% tariff on pork offal will be eliminated within five years, while the 3% tariff on pig fats and oils will be eliminated upon entry into force of the Canada–Korea free trade agreement.

In addition to the industry associations mentioned above, key pork stakeholders across the country have publicly voiced their support for the agreement, including the Canadian Pork Council, Canada Pork International, Éleveurs de porcs du Québec, Alberta Pork, Maple Leaf Foods, Olymel, HyLife Foods, and the Canadian Agri-Food Trade Alliance.

This agreement also recognizes the integrated nature of this industry in the North American economy. It provides the rules of origin that would allow these world-class products to benefit from preferential treatment in South Korea. This is important as it allows Canada to continue to compete with other exporters of beef and pork to South Korea, including the United States and European Union, competitors that have benefited from lower tariffs since the implementation of their own respective free trade agreements with South Korea.

Take what Michael McCain, president and CEO of Maple Leaf Foods, said, “This agreement is a major win for Canada's agri-food industry”.

Shamefully, despite all the evidence that trade creates jobs, economic growth, and economic security for hard-working Canadian families, the NDP, together with its activist-group allies, is always ideologically opposed to trade. Just as bad are the Liberals, who during their 13 years in power completely neglected trade. The Liberals took Canada virtually out of the game in trade negotiations, putting Canadian workers and businesses at severe risk of falling behind in the era of global markets.

In these uncertain times our prosperity depends on our ability to take advantage of economic opportunities in emerging markets. Not only would the Canada-Korea free trade agreement provide robust outcomes for Canadian beef and pork farmers, but it would allow Canada to level the playing field with key competitors and reverse the decline in beef and pork exports to South Korea.

Our government understands the importance of trade to our economy. It represents one out of every five jobs in Canada and accounts for more than 60% of our country's annual income.

Any delay in ratifying this agreement would place Canadian farmers at a further disadvantage against their competitors, and Canadian jobs and opportunities. As Australia is nearing the implementation of its own FTA with South Korea, there is even a greater urgency for Canada to implement the Canada-Korea free trade agreement and gain preferential access as soon as possible so as to establish an even stronger foothold in this most important export market.

In order to support Canadian farmers and expand their export opportunities, the Canada-Korea free trade agreement needs to be passed now. This would create jobs and opportunities and contribute significantly to Canada's long-term economic growth and prosperity.

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

Mr. Speaker, I thank my distinguished colleague for his remarks.

One element of his speech really stood out: he referred to this government's most recent throne speech. I clearly remember that in the last Speech from the Throne, the government said it was going to prohibit companies from charging customers a fee for paying their bills through the mail. We are still waiting for that.

Therein lies the problem. We are always waiting for this government to do something positive for Canadians, and I mean for people, not just corporations. That is the crux of the problem. Since this government came to power, the manufacturing sector has lost 500,000 jobs. We would like to know what the Conservatives plan to do with this agreement, which could be very good, to ensure the return of Canada's industrialization and to ensure that Canada is not merely a source of raw materials.

[Randy Hoback, Conservative, Prince Albert, SK]

Mr. Speaker, this is the government that brought in close to 1.2 million net new jobs since the global recession. This is the government that reduced taxes for families and provides some $3,200 in additional benefits to the average family.

One thing that the NDP does not understand is that companies employ Canadians, so if we give market access to Canadian companies we can improve their chances of employing more Canadians. If we give market access to Canadian farmers we are allowing them to take advantage of higher prices, so they too can expand their operations and have a better quality of life.

I wish the NDP would get this. Those members just do not seem to understand what trade really means for Canada.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Mr. Speaker, I think that what my Conservative Party colleague fails to understand is that we are voting in favour of a free trade agreement with South Korea. I do not see what there is to criticize about that.

However, I have a question for him about something concerning at least 100,000 workers with well-paid jobs in Canada. The concern has to do with the automotive sector and Korean cars. We want to know what is the government's plan for protecting the car manufacturing sector in Canada and for supporting these jobs in light of the Korean competition. What does the hon. member's government propose for defending Canadian jobs?

[Randy Hoback, Conservative, Prince Albert, SK]

Mr. Speaker, here is one thing I find very interesting about farmers. When farmers make money, they buy things. They buy vehicles, cars, trucks, tractors, and combines. They reinvest in their farming operations. Where are those jobs located that make those types of products? They are in Ontario in the manufacturing sector. Therefore, as we strengthen the agricultural sector, thus we strengthen the manufacturing sector that provides input into the agricultural sector.

I think if NDP members understood that, they would vote more aggressively on more free trade agreements.

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

Mr. Speaker, the smears by my colleague across the way do not really bother me because I know that the entire Conservative Party has gotten into the habit of reciting and reading House briefing notes.

The Conservatives say that the NDP does not understand certain things, but I will provide an example of things that they do not understand. Korea used to manufacture Toyota Corolla replicas on old assembly lines bought from the Japanese. The quality was questionable. Today, the Koreans are at the forefront of the automotive industry because they developed serious industrial strategies and invested in research and development.

Would it not be nice if our government learned a thing or two from the Koreans?

[Randy Hoback, Conservative, Prince Albert, SK]

Mr. Speaker, one thing a free trade agreement does is bring in forced rules for both parties to follow, so that they understand what they can or cannot do. Of course, patent protections and licence agreements fall into those types of rules.

Again, I will come back to the Canadian farmers and producers that I talked about here today. They look at this agreement for the benefits. They understand what can happen when a market gets shut down, such as what happened to our beef producers when the U.S. closed the border due to BSE, or the country of origin labelling and the frustration they have been experiencing with that. They get it. They understand that the more market access they have around the world, the more chance they can sell all the products they produce.

When farmers are looking at marketing a cow, they may look at marketing steaks to Canada, parts of the beef to the U.S., and different parts to Asia and the Middle East. They need a variety of markets to take the different types of cuts that come from a cow.

Of course, these are the types of advantages they get from a free trade agreement. They can efficiently use the entire animal and sell what they can, most of the product and byproducts, to the variety of markets that have these different needs and desires.

It is the North Korea, or rather the South Korea free trade agreement—I was thinking the NDP was supporting the North Korea free trade agreement, which we have not done, which is why I was kind of confused when NDP members supported this agreement. I thought they must have heard the word “North” instead of “South”, but it is actually the South Korea free trade agreement.

This is a really good agreement for Canadian farmers and producers. I think everybody should get behind it.