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

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

Mr. Speaker, the NDP does not usually rise in the House in support of a trade agreement, a free trade agreement with another country. In the past, we have been rather skeptical. We are still skeptical, because we are critical thinkers and we want trade agreements to benefit our economic sectors and workers, and to protect and defend our jobs. That being said, we are also aware that we must diversify our exports.

Canada and Quebec have always been nations of traders. Ever since we traded with the aboriginal peoples when we arrived, traded furs and dealt with our neighbours to the south, the Americans, we have always worked in production and commerce. We know that this is part of our economic and social fabric and that, today, we need to provide our goods and services to the whole world in order to keep thousands of jobs in the country and to sell our products, be it in Africa, Japan, Europe or China. We are aware that this is key to the economic well-being of our workers in all our economic sectors. However, we must consider and assess each trade agreement on its own merits and what we will or will not gain from it. We must ask ourselves certain questions every time we sign a treaty with another country.

The NDP determined that the trade agreement with South Korea had more advantages than disadvantages for many economic sectors. I will come back to that, but I must say first and foremost that we conducted a careful study to assess the benefits, the losses, the costs and the profits. I would like to point out that, unlike the Liberal Party, which gives the government a blank cheque by voting in favour of any free trade agreement without considering its contents, we think that we must do some serious work and determine whether it is truly advantageous for our businesses and the workers they employ. There are some very interesting things in South Korea's case.

We believe that we should always ask ourselves three questions before signing a treaty. For the most part, the Conservatives have botched these negotiations, which are not always to our advantage. That is why we have opposed these agreements many times in the past. In some cases, it was because we came out on the losing end; in others, it was because we were signing agreements with governments that had abysmal human rights records. Sometimes, the governments were linked to crime or there were politically motivated murders of union activists. For example, we were very concerned about the Conservatives' free trade agreement with Honduras, which we refused to support.

Question number one: Does the proposed partner respect democracy and human rights, and does it have adequate environmental and labour standards?

Question number two: Is the economy of the proposed partner of significant or strategic value to Canada and our exporters? We are a nation of traders, therefore exporters, and we are trying to diversify our exports. Opening up a new market can be a very attractive prospect, but does it have a significant strategic value?

As they say, the devil is in the details. The third question is the following: Are the terms of the proposed agreement satisfactory?

According to the NDP's assessment, the trade agreement with South Korea is positive and satisfactory overall. Why?

I have been involved with unions and the defence of public services. I believe that protecting our public services and procurement for various levels of government is vital when governments have to make purchases or provide services. In the proposed agreement with South Korea, there is absolutely nothing that affects procurement for various levels of government.

Our public services are not at all affected by any aspect of this trade agreement. It really affects only the private sector. That is very important to me and to the people I represent. The agreement proposed today does not pose any threat regarding the privatization of public services, but we have serious doubts about the proposed agreement with the European Union. We still have not been given any details or seen the text of the agreement.

This is a fundamental value for me and for many progressives and social democrats. Some safeguards are in place in the private sector. Agricultural production, a supply managed industry, is not subject to this agreement. That is good news for most producers and farmers in Quebec and Canada, and we are very pleased about that.

First, this agreement does not privatize anything or attack any public services, which is a good thing. Second, we are concerned about the dispute resolution mechanism as it now stands.

Every trade agreement contains a dispute resolution mechanism for the two partners, in case a company deems that it has been treated unfairly with regard to its investments or its production capacity, for example.

One of the mechanisms in this agreement is not what the NDP or the main opposition party in South Korea would have negotiated.

It is clear that, next year, when the NDP takes office, we will sit down with our South Korean partners and review this dispute resolution mechanism to ensure that companies will not be able to take legal action against a government or a level of government over future loss of profit. This seems undemocratic to us and we are particularly concerned about it. We want to resolve this issue.

We are able to live with this agreement as it stands because it contains a clause that allows us to terminate our relations or a dispute with six months' notice, unlike the trade agreement with China, which ties our hands and is binding for 31 years. This clause protects us and it protects our workers and businesses in Quebec and Canada.

We can live with this, even if we are concerned about it and it seems undemocratic to us. We want to renegotiate with South Korea when we take office.

Third, we are concerned about support for the automotive sector in this agreement. The agreement has some huge benefits for a number of economic sectors, including the forestry, aerospace and agriculture sectors, and I think we have everything to gain. This will enable us to increase our exports and sales to South Korea, the 15th biggest economy in the world, which has 50 million inhabitants with purchasing power similar to that of Quebeckers and Canadians. It is a very attractive market in which to sell our products.

However, we also know that this country produces a huge number of automobiles. There are 100,000 good jobs in Canada—not in Quebec anymore—in the automotive sector, and we encourage the Conservative government to adopt measures that will support the jobs in Canada's automotive industry.

We do not think that the existing 6% tariff really protected us from exports coming from South Korea, especially since they had plants in the United States, and later Mexico, so that 6% tariff did not exist.

However, we are concerned about the potential increase in the number of South Korean cars coming into the country. We would like the government to be more proactive about protecting and defending the automotive industry to protect these good jobs.

I remind members that this agreement will help our farmers and our aerospace companies, such as Bombardier, which is why the NDP will support it.

[Jeff Watson, Conservative, Parliamentary Secretary to the Minister of Transport]

Mr. Speaker, the member, like his colleagues, continues to bring up the auto industry.

I would remind the member that before he was a member of Parliament, this government introduced the first national auto strategy, a four-pillar auto strategy, in 2008, with former Minister of Industry Jim Prentice. This resulted in a significant number of investments in the Canadian auto industry, some of the most recent being in Ford in Oakville. These are good, high-paying jobs, as the member will well know.

The auto strategy, particularly the auto innovation fund, focuses on two key elements. One is the types of vehicles, and the significant investments that will go with them, and technology that will meet very stringent fuel economy standards by 2025. The second is the requirement that companies bring green research and development to facilities. When we reopened the Essex Engine Plant in 2008, for example, Ford was required to build a major engine research facility there, which is employing Canadians for the next generation of jobs and platforms.

We renewed the auto innovation fund in 2013. That member voted against it, and so did his colleagues. In 2014, we added $500 million to that fund, which he voted against.

What further automotive support does the member plan to vote against?

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

Mr. Speaker, I thank my colleague for his question. We believe that the government is not doing enough to support the automotive sector and that we should do even more to protect this sector, which is vital to many Canadian cities and municipalities.

I also want to point out that we are playing catch-up here. It is all well and good to sign an agreement with South Korea, but we are about nine years late. The United States and the European Union have long had agreements with South Korea. This caused our exports to Korea in the aerospace sector, for example, to drop by 80%, from $180 million to just $35 million in 2012. The same goes in the agricultural sector. For example, Canada used to be the top exporter of pork to South Korea. Now, we are fourth.

I think it is too bad that the government waited so long and that now we are forced to catch up to our American and European partners.

[Robert Aubin, NDP, Trois-Rivières, QC]

Mr. Speaker, I would like to thank the hon. member for his speech. I will pick up where he left off and talk about the losses our economy suffered because of how long it took to negotiate a free trade agreement with South Korea.

I am pleased that ridings such as mine will most certainly benefit from an increase in forestry exports; however, I cannot help but think that while we are considering sending wood to Korea—wood that may have been only minimally processed and turned into plywood or something similar—I bought a grand piano from Korea. That product has a much higher added value.

I did not get an answer when I asked this question of my colleagues from the governing party. Does my colleague feel that the government is doing enough when it comes to research and development to ensure that the products we are exporting have significant added value?

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

Mr. Speaker, I would like to thank the hon. member for Trois-Rivières for his excellent question.

No, and in fact the NDP has a very critical view of the government's current economic policy. It seems to be built on the idea that raw products and natural resources should be exported overseas as quickly as possible. Those exports will be processed abroad and then we will buy the final products. The other countries will benefit from the added value. Instead, we should have a solid industrial and manufacturing policy here in Canada. We have lost 400,000 jobs in the manufacturing industry over the past 10 years. That is completely unacceptable. Those were good, high-paying jobs.

An economy cannot be based solely on the mass export of raw natural resources. We need to be able to process those resources ourselves so that we can sell finished, processed products, such as pianos, to the world. There is value in that, and Canadians could put their expertise to good use.

[Blake Richards, Conservative, Wild Rose, AB]

Mr. Speaker, it is pleasure to rise on this debate today.

Our Conservative government is focused on creating jobs and opportunities for Canadians in every region of our country. That is why our government launched the most ambitious pro-trade plan in Canadian history. We are pursuing deeper trade and investment ties with many of the largest, most dynamic, and fastest-growing markets in the world. We are doing so to enhance Canada's competitive edge in a fiercely competitive global economy.

To this end, our government has developed the global markets action plan, GMAP, Canada's blueprint for creating jobs and opportunities at home and abroad through trade and investment, the twin engines of economic growth. Under the GMAP, our government will concentrate efforts on markets that hold the greatest opportunities for Canadian businesses.

In support of this, our government stands ready to harness Canada's diplomatic assets in the pursuit of commercial success by Canadian companies abroad, particularly by small and medium-sized enterprises. In fact, the GMAP establishes ambitious yet achievable targets over the next five years to expand the export footprint of the Canadian small and medium enterprise community.

Throughout the GMAP consultation process, it was clear that the Asia-Pacific region is a crucially important one to Canadian companies. It is home to the high-growth markets of the future. As Asia continues to prosper, the implications for Canada are profound in both the short and the long term. Trade has long been a very powerful engine for Canada's economy, and it is even more so in what remains a challenging time for the global economy.

It is shameful to note that during 13 long years in power, the Liberals completely neglected trade. They completed only three free trade agreements. The Liberals took Canada virtually out of the game of trade negotiations, putting Canadian workers and businesses at severe risk of falling behind in this era of global markets. In fact, the last time the Liberals tried to talk seriously about trade, they were campaigning to rip up the North American Free Trade Agreement.

It was also very disappointing to see this past summer the NDP trade critic protesting alongside well-known radical anti-trade activists, like the Council of Canadians and the Canadian Centre for Policy Alternatives, at an anti-trade protest. Fortunately for Canadians, they can count on this Conservative government to get the job done.

With the conclusion of negotiations for the Canada-Korea free trade agreement, our government has taken a meaningful and concrete step toward ensuring that Canadian companies have increased access to the Asia-Pacific region. South Korea has been designated a GMAP priority market. In addition to being the fourth largest economy in Asia, boasting a robust, export-oriented $1.3 trillion economy, South Korea is also a key gateway to the wider Asia-Pacific region that offers strategic access to regional and global value chains.

With a population of 50 million and a per capita GDP of more than $25,000, which is one of the highest in Asia, South Korea is one of Asia's most lucrative, dynamic, and advanced markets. It is home to many large global businesses, including household names like Samsung, Hyundai, and LG. I am sure almost every member in the House would be able to say they have products from some of those companies in their homes and offices, and I am sure most Canadian households would be able to say the same.

The priority sectors identified under the GMAP as holding promising opportunities for Canadian companies in the South Korean market include, but are not limited to, areas like agriculture, education, oil and gas, mining, information and communications technology, and sustainable technologies.

I will now touch on just a few of these priority sectors and emphasize how the Canada-Korea free trade agreement would transform these opportunities into engines of growth for Canadian companies and for the Canadian economy as a whole.

South Korea imported over 29 billion dollars' worth of agrifood and seafood products in 2013. Canadian exports to South Korea of those goods were nearly $416 million last year, representing less than 2% of the market share. This marks more than a 60% decline in Canadian agrifood and seafood exports over the proceeding two years. A key reason for this is the preferential access that our competitors have enjoyed since their free trade agreements with South Korea came into effect. Most notable are the Korea-EU and Korea-U.S. free trade agreements, which came into effect in 2011 and 2012, respectively.

South Korea's growing per capita income and demand for high-quality food present considerable potential for our Canadian products. Export growth in agrifood and fish and seafood products depend on the full implementation of the Canada-Korea free trade agreement. Only this would ensure that Canadian producers are on a level playing field with major competitors in the South Korean market.

Based on 2011 to 2013 average trade values, the Canada-Korea free trade agreement would eliminate tariffs on around 70% of agricultural imports from Canada into South Korea within five years, and about 97% of agricultural imports within 15 years. This includes all key Canadian products of interest. This duty-free access would give Canadian agricultural products, including beef, pork, canola and grains, the preferential access to the South Korean market that they need.

South Korea was Canada's eighth largest market for all goods exported in 2013. Even so, Canada is not ranked as one of South Korea's top 10 suppliers of mineral resources. Obviously, what that tells us is that there are significant opportunities for growth for Canada in this sector.

The Canada-Korea free trade agreement would significantly improve market access opportunities for Canada's metals and minerals sector by eliminating tariffs on all Canadian metal and mineral exports. This includes aluminum, iron, steel, nickel, non-ferrous metals, precious gems and metals, and other mineral products. Upon the agreement's entry into force, over 98% of South Korea's current metals and minerals imports from Canada, which currently face duties of up to 8%, would be duty free, and all remaining tariffs would be eliminated within five years.

If I may, I will move on to another sector that would benefit from the Canada-Korea free trade agreement and boost the ability of Canadian firms to expand their access into the South Korean market and beyond. That is the information and communications technology sector. South Korea is a major manufacturer of ICT products. Significant opportunities exist for Canadian ICT companies to partner with major South Korean companies, many of which are global leaders, and to leverage their global value chains.

In addition, South Korea is home to a large consumer base with a high propensity for adoption of new ICT technologies, particularly in telecoms, game development and entertainment. These are areas in which Canadian companies have significant expertise. The fast growth of 4G mobile services in South Korea also presents opportunities to be involved in the development of new wireless technologies and network services. South Korea has a high smartphone penetration ratio of 73% of its population, which is the highest in the world. That provides a great market base for Canadian game developers and digital entertainment producers.

The Canada-Korea free trade agreement would significantly improve market access opportunities for Canada's ICT sector by eliminating tariffs on all Canadian exports. Products such as cameras, transmission apparatus, and electrical conductors, which have current duties of up to 13%, would enter the South Korean market duty free upon entry into force of this agreement.

Without question, the Canada-Korea free trade agreement would level the playing field for Canadian companies and enhance their ability to tap into lucrative global value chains, boosting their global competitiveness, profitability and long-term sustainability. Going forward, our government will continue to work closely with industry stakeholders to keep the GMAP attuned to global trends and to align it with our government's priorities.

Working together, we will build on our past successes to ensure a prosperous Canada that remains a champion of global trade and investment. On that note, I urge all members of Parliament to join me in supporting the implementation of the Canada-Korea free trade agreement, which would create jobs, growth and long-term prosperity in every single region of this country.

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

Mr. Speaker, I took note of my distinguished colleague's strong desire to support international trade agreements. However, the NDP does not support agreements willy-nilly. It imposes conditions.

First, the NDP requires the partner to be a responsible democracy when it comes to social, environmental and labour issues. Second, the partner's economy must be of strategic value. We sometimes want to trade in situations where we are not in competition. We do not want to allow someone to import containers of cocaine, for example. Third, the terms of the agreement must be satisfactory. We support the agreement with Korea because it meets those three criteria.

Does my esteemed colleague not think that those three criteria should apply to all the trade agreements that Canada negotiates?

[Blake Richards, Conservative, Wild Rose, AB]

Mr. Speaker, I listened with interest to the question from the hon. member. It was almost as if he did not get the memo. He has such a reflex to oppose free trade agreements, because his party always opposes them, it almost sounded like he was going to indicate that New Democrats were opposing this one as well, until he realized that he had to go against his reflexes and that they are actually supporting this one.

Having said that, there were all kinds of reasons why they would not support free trade agreements. That is a typical NDP position, to not support free trade agreements. As a government, we know how important free trade is for our economy and how important it is for prosperity and growth of jobs in this country. It is something that we will continue to move forward on.

I certainly hope he was not suggesting that this agreement with South Korea is not one that he indicated the criteria of having important trade value. Certainly the Asia-Pacific market is a very important lucrative market for Canada and one that we are very proud to be entering into. I certainly hope that the member, despite his reflex to oppose all trade agreements, will vote in support of this agreement.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I believe the Liberal Party has been very consistent over the decades in terms of supporting the idea of world trade. Where it is possible for us to enter into free trade agreements, we encourage and support that in principle. Canadians need to be very much aware that ever since the Conservative government came to power there has been a graph that is fairly alarming. That is the surplus versus deficit of trade in Canada.

Ever since the Conservatives have been in government, we have seen a sharp decrease from when they took office and there was a multibillion-dollar trade surplus. Today we have a multibillion-dollar trade deficit. Even though the Conservatives like to crow about agreements, some of which, including this one, were initiated by Paul Martin, the former prime minister of Canada, why have Conservatives done such a poor job on the overall trade balance file? That equates to tens of thousands of jobs. Why such a poor performance on international trade?

[Blake Richards, Conservative, Wild Rose, AB]

Mr. Speaker, I really had to struggle to suppress my laughter when I heard the hon. member talk about the Liberal Party being consistent on anything. That is certainly not something that is a hallmark of the Liberal Party, to be consistent in its position on anything.

Having said that, I would put forward the following facts to the Canadian public and let them judge for themselves. During the Liberals' 13 long years in office, the Liberal Party signed three free trade agreements. Our government has seen that expand to 43 trade agreements. Which one sounds like they are getting the job done? I would suggest it is our Conservative government.

[Michelle Rempel, Conservative, Minister of State (Western Economic Diversification)]

Mr. Speaker, I am expanding on my colleague's last comment. Part of what has happened in the last decade and certainly in the last decade and a half is that we have seen extreme growth in the Asian market. Canada needs to secure entry into that supply chain to ensure that the delta between our products going into that market versus those coming from the United States or the U.K., where there are already free trade agreements in place, does not continue to widen.

I would like to give my colleague an opportunity, as a minister for a western economic portfolio, to talk specifically about the impact of this particular agreement on western Canada given the implications for the agricultural sector, as well as perhaps the Liberals' lack of knowledge on global economic dynamics, which have changed since their protectionist stance during their rule.

[Blake Richards, Conservative, Wild Rose, AB]

Mr. Speaker, I appreciate that opportunity because she is absolutely right. The Asia-Pacific region is such a vitally important potential market for us and a growing area of the global economy.

When I look at the time since the Korea-EU free trade agreement and the Korea-U.S. free trade agreement, which came into force in 2011 and 2012 respectively, certainly we have seen a decline in terms of our share of the market share in agrifood exports. Obviously, that means there is a lot of opportunity for us with the implementation of the Canada-Korea free trade agreement.

This is something the Liberal member who asked the previous question indicated was done under Paul Martin. We can speak about the famous words of one former Liberal leader to another of its former leaders, that they did not get the job done. Well, they did not get the job done. This Conservative government did get the job done and we are now going to have access to the Korean market.

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 second time and referred to a committee.

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

Mr. Speaker, I am honoured to talk about Bill C-41, a bill that is important to all Canadians. People everywhere, including in the riding of Laurentides—Labelle, have concerns every time there is a new free trade agreement. They automatically worry about it because they have seen the government sign agreements with dictatorships and drug lords, and they have seen all kinds of agreements that do not work. Of course they are wondering why, this time around, we are supporting a trade agreement. However, it should not be that surprising because we always use objective criteria to assess the treaties Canada will be signing.

I know that members across the way see our support of a free trade agreement as a historic event. That is not the historic event, though; what is historic is the fact that they have come up with something that we can support, something that makes at least some sense.

To take a hard look at the situation, we use an analytical grid and ask whether the country with which we are signing an agreement respects democracy. Is it a modern country with appropriate labour standards? Are its environmental standards acceptable? Then, we look at the country's strategic importance. In Korea's case, obviously, the economy is very advanced, much more than our own, because Korea has an industrial strategy and an international trade strategy, unlike us. It does not make things up as it goes along.

Then, we look at the terms of the agreement. We have reservations, of course. We would not have done things the same way, but the terms are reasonable overall and provide sufficient assurance that we know there will be no big surprises.

One of the reasons we support this agreement is because it has been in the works for so long already. It is clear that Korea's agreements with the United States and the European Union hurt markets for our pork and beef producers and our aerospace industry. These sectors suffered considerable losses, and signing the agreement may allow them to catch up somewhat and give them some compensation.

The Conservatives seem to look at international trade with rose-coloured glasses. There is a reason Korea is in the situation it is in today, with modern infrastructure and a very competitive industry. They adopted a consistent industrial strategy decades ago, while we winged it every step of the way. Korea had an economy based on subcontracting. It manufactured low-end automobile models for the American and Japanese industries. The Koreans decided to develop these niches.

They made investments in research and development, and produced high-quality products, which makes them probably one of most competitive in the world. If we had done the same, our manufacturing sector might not be floundering.

A number of my colleagues alluded to the threat this agreement could pose to the manufacturing sector, in particular the automotive sector. However, this is only a threat because of the government's inconsistency, lack of industrial strategy, lack of investment in research and development, and improvisation, with respect to the free entry of Korean vehicles into our market through the United States and Mexico.

I have to wonder why it has taken so long to sign this agreement. What caused this disaster for our exporters and caused them to lose a considerable share of the market? Do we simply have the government's diplomatic skills to thank for that?

The government shut down consular services in our embassies in Tokyo and Osaka, Japan, without even warning the Japanese government. That is not how you deal with parties who are serious and who care a great deal about details. These people run their country responsibly. If we surprise them and mess up, negotiations will drag on forever, and our manufacturing companies and farmers will be left to pick up the pieces.

The NDP is not supporting the agreement because of magic formulas, mantras or messages from the Prime Minister's Office. We take the time to analyze things. Rhetoric and magic formulas do not work. We need to carefully negotiate each detail and know what we are getting into. Once this process is complete, we can support an agreement without worrying about surprises. We need to show respect for serious players and be serious ourselves.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

Mr. Speaker, I thank the hon. member for his speech. I always enjoy listening to him.

The NDP wants to strengthen trade ties between Canada and the Asia-Pacific region. We recognize that this is vital to Canada's prosperity in the 21st century.

Could the member elaborate on our position?