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

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I am sure the member is aware that for the last decade Korea has been fairly aggressive in pursuing other trade agreements. It was able to achieve some with the United States, the European Union, Chile and others. I am sure the member would recognize that there is and has been an advantage to those countries that were able to achieve an agreement earlier. We have seen that in terms of the pork industry, in particular, the agreement between the U.S. and Korea and the potential loss of market that Canada had.

I am wondering if the member might want to provide some comment in terms of what he believes it is going to take for Canada, in particular pork producers, to recapture some of the market that has been lost because Canada's the free trade agreement followed after the United States'.

[Mike Wallace, Conservative, Burlington, ON]

Mr. Speaker, my colleague's question hits home directly. As I said, our largest employer is a pork production facility in Burlington. It might be a competitor to some of them in Winnipeg. The free trade agreement with the United States has had a detrimental effect on the ability of that company to compete. I had a meeting with the president of that company recently and he was clear that signing an agreement on the first is not going to change things overnight, but it does level the playing field. Without that levelling of the playing field, the company has no chance of getting back that market share. They believe they can be competitive not just on quality, where I think our Canadian pork can beat other nations, but also on price. That is what this trade agreement will help us accomplish.

[Scott Armstrong, Conservative, Parliamentary Secretary to the Minister of Employment and Social Development]

Mr. Speaker, on that note, we recently negotiated a free trade agreement with the European Union. Looking at what happened with South Korea, we did lose some market share, which we now have to pick up. Does that not bode well to the advantage Canada is going to have with the European free trade agreement since the United States is now just beginning negotiations with that body?

[Mike Wallace, Conservative, Burlington, ON]

Mr. Speaker, absolutely, it does not take an M.B.A. to know that being there first in the marketplace, companies are going to be better off. They can get established with customers, and establish their products. They will be able to develop business relationships. That is what CETA will do for us. In my community, the vast majority of employers are at the 50- to 100-person level. I have done numerous plant tours and discussions. Almost all of them sell to Europe. This will help them to be more competitive and able to grow hopefully bigger than 100 employees.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Mr. Speaker, to the point by my colleague from Burlington, it is true that we are a trading nation. If we look at the size of our country, as the member for Burlington mentioned, it has some 34 million people. With the kind of GDP we have, $1.8 trillion and growing, these kinds of deals are important. If we look at what has happened with Chile over the years, it is not just trade; there is education and a whole bunch of factors that go into it. We have to consider the fact that as a small nation of under 35 million people, the only way we can grow our economy is by finding these kinds of deals to get our goods and services to the rest of the world.

I am pleased to rise here today to speak to this historic Canada–Korean free trade agreement and how this agreement supports the government's firm commitment to expand international trade. It is our government that is focused on what matters to Canadians: jobs, growth, and long-term prosperity. By pursuing an ambitious trade agenda, our government has provided Canadian businesses with access to new opportunities in dynamic markets around the globe.

As an export-driven economy, Canada needs free trade agreements. Trade accounts for one out of every five jobs in Canada and is equivalent in dollar terms to over 60% of our country's annual income.Yet despite all the evidence that trade creates jobs, economic growth, and economic security for hard-working Canadian families, the opposition has been traditionally opposed to international free trade agreements. This anti-trade behaviour negates Canadians who depend on trade for their jobs and puts Canadian workers and businesses at severe risk of falling behind in this era of global markets.

Our government recognizes that Canadian companies are at risk of being at a competitive disadvantage in key markets, as their major foreign competitors, such as the United States and the European Union, are currently benefiting from preferential access under existing free trade agreements. This is why Canada is pursuing the most ambitious trade negotiation agenda in Canadian history.

Eight years ago, Canada had only five trade agreements, but since 2006, Canada has successfully reached free trade agreements with 38 countries: Colombia; the European Free Trade Association of Iceland, Liechtenstein, Norway, and Switzerland; Honduras; Jordan; Panama; Peru; all 28 members of the European Union; and now South Korea.

In addition, Canada has 28 foreign investment promotion and protection agreements in force. These bilateral agreements establish a strong regulatory framework for increased investment by protecting and promoting foreign investment through legally binding rights and obligations. Focusing on sectors and markets that offer the greatest opportunity for growth is a priority under Canada's new global market action plan, or GMAP.

Let us turn now to the historic Canada–Korea free trade agreement. South Korea is identified as a priority market in the GMAP, and the Canada–Korea free trade agreement represents an important step in increasing access to this fast-growing economy. This agreement is a landmark achievement that will restore a level playing field for Canadian companies competing in the South Korean market. South Korea is a dynamic and important partner for us. This nation is already Canada's seventh-largest merchandise trading partner and the third-largest in Asia, with an annual GDP of $1.3 trillion and a population of 50 million people.

Stronger economic ties with South Korea will create new jobs and opportunities and will contribute to Canada's long-term economic growth and prosperity. With this agreement, Canadian companies will become increasingly competitive in the region. With half of the world's population living a five-hour flight away from Seoul, South Korea offers strategic access to regional and global value chains. As a result of improved market access for goods, services, and investment under the agreement, Canadian companies can use South Korea as a strategic base or launching pad for growing their businesses throughout the Asia-Pacific region.

The positive momentum of an agreement with South Korea will carry Canada forward in this vibrant region. However, creating new opportunities for Canadians in the Asia-Pacific region does not stop there. Canada is also actively pursuing a trade agreement with 11 other Asia-Pacific countries through the Trans-Pacific Partnership, or TPP, negotiations. The current TPP membership represents more than 792 million people, with a combined GDP of $28 trillion, or nearly 40% of the world's economy. A prospectively high-quality, state-of-the-art, comprehensive agreement, the TPP stands to provide broad-based benefits across all Canadian industries and regions.

We are also looking at new trade partners in Asia and other priority regions in order to provide a diverse range of opportunities for Canadians. By becoming a member of the TPP and signing more free trade agreements, our government is seizing new sources of export growth and opportunities for international trade and investment.

Canada is committed to updating its existing free trade agreements to maximize benefits and opportunities for Canadians.

During his official visit in January 2014, our Prime Minister announced the launch of negotiations to modernize the existing Canada-Israel Free Trade Agreement. These negotiations are well under way.

Canada will continue to take steps forward in expanding the Canada-Chile Free Trade Agreement. This modernization builds on our agreement with Chile, which dates back to 1997, and a trade relationship worth over $2.5 billion in 2013.

This year also marks the fifth anniversary of the Canada-Peru Free Trade Agreement, the third anniversary of the Canada-Colombia Free Trade Agreement, and the first anniversary of the Canada-Panama Free Trade Agreement.

Peru, Colombia, and Panama are among the fastest-growing markets in the Americas and thus serve as a strategic base for Canadian companies to expand into Latin America. Bilateral trade between Canada and the Americas reached $57 billion in 2013 and will continue to expand with the government's commitment to the region.

Let us not forget that this year Canada also celebrates the 20th anniversary of the North American Free Trade Agreement, another record accomplishment of a Conservative government committed to growing our economy. NAFTA has provided a solid foundation for Canada's future prosperity upon which Canada continues to build and advance North American trade and competitiveness.

Twenty years ago, trade with the North American region was over $372 billion; in 2013, total trilateral merchandise trade reached over $1.1 trillion. Canada is now the top export destination for 35 American states.

The comprehensive economic and trade agreement, CETA, with the European Union will be the most ambitious trade partnership Canada has ever negotiated. On August 5, Canada and the EU announced that the final CETA text had been reached, marking the end of the CETA negotiations. Once CETA is fully implemented, Canada will gain preferential access to the world's largest integrated economy, with more than 500 million consumers and a $17-trillion GDP.

Canada's competitive edge and combined access to these markets will lead directly to jobs and opportunities everywhere in Canada. Whether we are exporting meat, grain, fish, wood products, or industrial goods, the more markets we have access to, the more jobs are created for hard-working Canadians and their families.

Canada's long-term prosperity is directly linked to market access and economic opportunities beyond Canadian borders. Our government understands the importance of trade and exports to our economy. Exports are responsible for one out of every five Canadian jobs.

The prosperity of Canadians depends on continued expansion beyond our borders into new markets that serve to grow Canada's exports and investments.

This agreement represents one of the key economic opportunities and is a watershed moment in our historical relationship with South Korea. For this and other reasons, stakeholders from across the country have called for the agreement's entry into force as soon as possible. That is why our government is moving to pass this bill.

When the agreement enters into force, over 95% of South Korean tariff lines for industrial products will be subject to immediate duty-free access. This means a great deal to Canadian entrepreneurs and SMEs across the nation, which depend upon free trade to enhance their global competitiveness.

Since it was informed by public consultation, this agreement has already received widespread support from Canadian businesses and stakeholders. Our government negotiated this landmark agreement to further the priorities of Canadian businesses while creating jobs and opportunities for Canadian taxpayers across the country.

The agreement is expected to create thousands of new jobs in a wide range of sectors, including industrial goods, agricultural and agri-food products, wine and spirits, fish and seafood, and wood and forestry products. These industrial sectors are crucial for the prosperity of provinces and the continued development of local communities. The evidence demonstrating the growth to be had from agreements like this is overwhelming.

When the United States and the European Union signed their own free trade agreements with South Korea, they both experienced a doubling of their automotive sector exports. Since it is one of the key industries in Canada, this free trade agreement will provide a substantial boost to our own automotive sector and our economy as a whole.

With substantial increases in Canadian exports to South Korea, the agreement is projected to boost the Canadian economy by $1.7 billion a year. Strong trade partnerships are essential to Canada's long-term success.

Canada cannot afford to be left behind, and it is this trade agreement that will provide Canadian businesses a foothold in South Korea and the Asia-Pacific market beyond, opening the doors to economic prosperity and growth.

The Canadian-Korea free trade agreement is essential for securing Canada's economic future and ensuring the sustainability of a high-quality of life for Canadians across this country.

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, I appreciate the opportunity to ask this question. I want to preface it with some work that was done for me by the Library of Parliament. It is independent research on a question I asked about countries that had national automotive strategies. Twelve countries in the world have them, and Canada is not one of them. However, one of them is South Korea.

This is what came back from the Library of Parliament. It is a short paragraph that I would like to read to the member to get his response.

In The Republic of Korea, the national strategy for the automotive industry is entitled Strategies and Tasks for Developing the Green Car Industry to Become One of the World's 4 Major Car Making Countries. The tasks included the objectives of producing 1.2 million green cars, exporting 900,000 green cars, and occupying 21% of the local car market by 2015. The government also plans to support financing for the installation of 1,351,300 battery chargers at 168 locations by 2020.

There is more on the parts division.

What is the Conservative government prepared to do to ensure that there is going to be fair market access for Canadian companies to ship to South Korea? What is the government going to do if we get dumped on by South Korea?

South Korea's national government has decided to intervene with this industry at a historic level, and it continues to do so as we enter a so-called free trade agreement. If the fair market itself is being interfered with by the South Korean government, what will the Conservative government do to protect Canadian auto workers?

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Mr. Speaker, I want to thank the member for Windsor West for his question on the auto industry. It is certainly an important industry for us here in Ontario and southwestern Ontario.

I want to talk about some of the things that are going to be lifted as a result of this agreement, and the first thing is tariffs.

In South Korea, there is an 8% tariff on Canadian auto imports, which will be eliminated immediately. Canada's 6.1% tariff will be reduced in three cuts over two years.

The rules of origin will change. Canada will have the ability to source inputs from the U.S. and benefit from tariff-free access, which is not currently allowed under the U.S. agreement. There will be a number of other things in terms of safeguards, internal taxes, and emissions. There is a list of things this agreement has done to try to level the playing field.

Again, I believe that our Canadian companies are among the best in the world. I believe that they can compete and that their products can compete with any products in the world, and certainly our automotive industry is no different.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I want to go back to overall trade. I have highlighted before Canada's rather large trade deficit.

My question to the member is related to the agreement with Korea. We have a trade deficit with the Korea today. It is almost two to one. That is a bit of guesstimate.

Does the member believe that Canada will be in a better position as a result of this trade agreement and could anticipate seeing a balance between Korea and Canada when it comes to trade?

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Mr. Speaker, that is one of the reasons we enter into agreements. It is to create additional access. With trade deficits, we look at trying to get access to other markets, which is helpful to us.

I want to talk about a few of the trade deficits that will be reduced. There is a list for different provinces. However, I will speak specifically to Ontario, and I apologize to my colleague, who is from Manitoba.

In terms of examples of tariffs that are going to be reduced, we can look at aerospace products at 8%; clean technology products at 8%; and nickel, rubber, chemicals, and plastics at 8%. I have a list here of products that will be reduced.

Once again, any time we can have reduced tariffs, it goes a long way to reducing the price of our goods that are going to other countries, which we hope, in turn, they will be purchasing more and at a fairer price.

Quite frankly, we know that we can compete. This was said before by my colleague for Burlington. Take pork, for example. With the U.S. having a head start and our tariffs remaining high, this creates a competitive disadvantage and a disincentive for other countries to import our products.

We believe that by looking at these deals and reducing tariffs, it will give countries an opportunity to buy our goods at a cheaper price and hence give us an opportunity to export more.

[Wai Young, Conservative, Vancouver South, BC]

Mr. Speaker, as the member of Parliament for Vancouver South, I am honoured to represent my constituents who pride themselves in being the gateway to the Asia-Pacific. It is very timely indeed for me to be speaking to the Canada-Korea free trade agreement today.

As we know, the Canada-Korea free trade agreement is a historic initiative for Canada. It is an agreement that would strengthen our trade and investments ties across the Pacific and increase the prosperity of both our countries. It would result in job creation and enhanced opportunities for Canadian businesses, particularly small and medium-sized enterprises, as well as investors, workers and consumers.

Canada is a trading nation. Trade has long been a powerful engine for Canada's economy, even more so now in what remains challenging times for the global economy.

Our government understands the importance of trade to our economy. It represents one in five jobs, contributes 60% of Canada's GDP, and over 40,700 Canadian companies are exporters.

Currently, Canada's trade is heavily weighted to traditional partners such as the United States. The North American Free Trade Agreement has benefited Canadian and American businesses through increased export opportunities resulting from lower tariffs, predictable rules and reductions in technical barriers to trade.

In 20 years, merchandise traded within the North American region has grown from $372 billion to over $1.1 trillion in 2013. There can be no doubt that NAFTA played a critical role in this dramatic increase.

Nevertheless, Canada's traditional partners are not growing at the rate they once did, and neither has our trade with them. At the same time, Asia's transformation is reshaping the global economy. Driven by the rise of China, this transformation has also been influenced by the growth of India, the continued strength of South Korea and Japan and the expanding potential of Southeast Asia.

Asia today is not only a source of a growing proportion of economic activity, including exports, services and capital, but also increasingly a centre of innovation. This is why Canada has prioritized trade with the Asia-Pacific in recent years. We recognize that Asia is one of the world's fastest growing economic regions and that it will be an engine of growth for the global economy.

It is important to acknowledge that while trade with our mature partners remains important, it is no longer enough to secure Canadian prosperity into the future. Canadian companies need improved access to markets both new and old. Canada's prosperity requires expansion beyond our borders into new markets for economic opportunities to serve and grow Canada's exports and investments.

The reality we face today is one where our international competitors are giving their companies an advantage through new trade deals. This trend is both eroding Canada's preferential access to the United States and threatening our competitive position in other markets, including high-growth emerging economies in Asia.

Canada must respond to maintain Canadian access to existing markets and to open new ones. This means taking our guidance from our government's global markets action plan to conclude bilateral deals with important Asian markets.

Let me take this opportunity to highlight some of Canada's ongoing trade initiatives in the dynamic Asian region, beginning with the Trans-Pacific Partnership.

The Trans-Pacific Partnership is an ambitious, next generation initiative that has the potential to be a leading mechanism for regional economic integration. It covers Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam, and represents a market of close to 800 million people and a combined GDP of $28.6 trillion.

Concluding a high calibre Trans-Pacific Partnership will achieve several goals. It will deepen our trade ties in dynamic Asian markets, set strong rules for the region and strengthen our traditional partnerships in the Americas.

Canada remains as committed as ever to playing a constructive role in advancing the TPP initiative and bringing an agreement to conclusion as soon as possible. We continue to engage at all levels with our TPP partners with the resolute goal of achieving a high standard agreement that brings benefits to every region of our country.

India is another priority market for Canada, and the comprehensive economic partnership agreement negotiations with India are an important part of the government's pro-trade plan. We view the CEPA as a building block in expanding our long-term commercial relationship with India. A trade agreement holds the potential for creating jobs and economic growth for both Canada and India.

Canada is committed to negotiating a high-quality trade agreement with India. We are looking to sign an ambitious agreement, which would improve market access for goods and services, eliminate tariffs and reduce non-tariff barriers to trade.

Canada is also engaged in ongoing economic partnership agreement negotiations with Japan. Launched on March 25, 2012, by the Prime Minister, negotiations are proceeding well, with six rounds held to date.

The sixth round of the Canada-Japan economic partnership agreement negotiations took place in July, in Ottawa, where progress was made in a number of areas. We are looking forward to a productive round seven this fall, in Tokyo.

Given Japan's commercial significance, Canada is fortunate to have two ambitious, high-standard initiatives within which to pursue greater trade and investment ties with Japan. Canada and Japan view working together on the TPP to enhance greater co-operation in the Asia-Pacific region and working together bilaterally on our EPA as mutually supportive efforts.

With all this progress, we cannot ignore China, Canada's second largest single-nation trading partner.

In 2013, our bilateral merchandise trade relationship reached more than $73 billion. Building upon the positive momentum of the Prime Minister's visit to China in early 2012, bilateral commercial ties have been strengthened through the August 2012 release of the joint economic complementarities study, the July 2013 expansion of the Canada-China air transport agreement and, most recent, the ratification of the Canada-China foreign investment protection and promotion agreement.

Canada and China have a long-standing and comprehensive relationship, which operates on many levels. We are committed to deepening trade and economic relations with this large and fast-growing market.

As Asian countries are deepening their economic integration, Canada is also actively contributing to an important regional fora, such as ASEAN and APEC.

It was to the detriment of our reputation as a trading nation that during the 13 long years in government the Liberals completely neglected trade, completing only three free trade agreements. In fact, the Liberals took Canada virtually out of the game, putting Canadian workers and businesses at severe risk of falling behind in this era of global markets.

It is important to point out that the last time the Liberals tried to talk seriously about trade, they campaigned to rip up the North American Free Trade Agreement. This is absolutely shameful.

Thanks to our Conservative government, however, we now have the Canada-Korea free trade agreement, our first free trade agreement in the Asia-Pacific region, and it is projected to increase Canada's gross domestic product by $1.7 billion and boost our exports to South Korea by more than 30%.

Moreover, South Korea offers strategic access to regional and global value chains for Canadian companies, and the Canada-Korea free trade agreement would increase their competitiveness in the Asia-Pacific region.

The signing of the Canada-Korea free trade agreement by the Minister of International Trade, on September 22, was a momentous occasion that not only solidified Canada's bilateral relationship with South Korea, but also highlighted Canada's intensified focus on Asian markets.

The Canada-Korea free trade agreement is a significant step in Canada's orientation toward Asia, a shift that is integral to continued Canadian economic prosperity.

We must pass the bill quickly to ensure Canadians can start taking advantage of the benefits of the Canada-Korea free trade agreement and what it will bring to us.

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, I appreciate the opportunity to intervene again. I like to talk about autos and bridges in this place and will continue to do so. In this respect it has to do with the auto sector which will be affected by the Korea trade deal. We are really concerned because there is such an imbalance in our trade right now.

The United States negotiated better tariff time periods in terms of the reduction period being longer. It also negotiated a snap-back provision. South Korea, as we know, has a national auto strategy and intervention at the state level for its industry. It has that national advantage.

The U.S. has a snap-back provision that allows it to put a hold on the automotive component should dumping take place in South Korea. The Canadian version of the agreement does not have this. Why not?

[Wai Young, Conservative, Vancouver South, BC]

Mr. Speaker, as we all know, the Korea-U.S. free trade agreement is not as good, in fact, for the auto sector as the Canada-Korea free trade agreement. For example, the Canada-Korea free trade agreement would provide immediate duty-free access to South Korean auto markets, with a five-year phase-out on the Korea-U.S. one. We also have safeguards against import surges, the same as the Korea-U.S. agreement, and a permanent specialized dispute settlement that are connected with the Korea-U.S. procedures, which will expire over 10 years.

In terms of the snap back, we would like to make a point of saying that the U.S. snap back has a limited practical value and the U.S. tariffs are only 2.5% compared to Canada's 6.1%. This low tariff is why Korea agreed to the agreement. The U.S. snap back expires after 10 years and cannot be used in the first 4 years of the agreement.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I know the member could not seem to help herself reflect on what the Prime Minister's Office says Conservatives should talk about on this file. She went to great length to indicate to the House that while in government, the Liberal Party was ineffective on the trade file.

I remind the member that even the agreement we have today was initiated under Paul Martin. It was Korea that pushed it. It started the process in 2003 and virtually within the year, then prime minister Paul Martin initiated discussions on Canada's behalf. It took the current government many years to put it together. In fact, the United States, the European Union, countries like Chile and Peru have already signed agreements.

Could the member speak to the lost opportunities because of the government being so far behind in coming up with an agreement which many other countries around the world have already signed, sealed and delivered?

[Wai Young, Conservative, Vancouver South, BC]

Mr. Speaker, I remind the member that, in fact, I have raised my children in Vancouver and trade, as we know, is a very important thing for the Asia Pacific in Vancouver.

In this area, the member is absolutely right. The Liberal government did not get it done. Just like Kyoto, it did not get done. Just like child benefits, it did not get done. As a government, we did get it done, and we have these agreements in place right now.

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

Mr. Speaker, the Government of Ontario wants a team to be created to oversee the implementation of this agreement. Does the Conservative government plan to consult or work with that province? Second, what will the government do to protect Canada's automotive industry?