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

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Mr. Speaker, I thank my colleague for her speech on the bill.

I would like to ask her why it would be important for the government and the other opposition parties to adopt an approach as balanced as ours. As we know, the Conservative and Liberal approaches are not as balanced.

Sometimes, free trade agreements are signed with somewhat questionable countries. Other parties approve some free trade agreements without knowing all the details.

Why is it important to have a balanced approach and to read all the details of an agreement before voting on it? How important is this for Canada's economy?

[Ève Péclet, NDP, La Pointe-de-l'Île, QC]

Mr. Speaker, when we negotiate a contract or a free trade agreement, we must ensure that the people with whom we are negotiating are on an equal footing. We want to help our industries, but not at any cost.

The government negotiated dozens of free trade agreements that contained provisions to encourage economies to respect workers' rights. The government signs the free trade agreement and then later ensures, for example, that the countries' values are in line with Canada's values.

Personally, I believe that when we negotiate a contract or a free trade agreement, we must ensure that the people with whom we negotiate are on an equal footing. This applies to any situation. I am not going to tell someone that I am going to sign his contract and that I will check later whether or not he complies with the terms of the contract. First, we must ensure that the person signing the free trade agreement will and already does respect Canadian values concerning the environment and workers' rights, for example. I believe that is the least we can do. That is a realistic approach. It is a balanced approach, and that is precisely why the NDP is calling on the government to take that kind of approach.

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

Mr. Speaker, I am pleased, as this debate continues on the Canada-Korea free trade agreement, particularly on Bill C-41, which would bring the treaty into effect, that as the leader of the Green Party of Canada, I am able to put more fully on the record the position I have stated so far through questions and comments. The Green Party will not be supporting this treaty. I will explain the fundamental reason and then will go into some of the details.

Fundamentally, the Green Party of Canada will never support an agreement that includes an investor state provision. We believe investor state provisions are, by definition, anti-democratic. By definition, the notion that we should allow a corporation or investor from another country to have superior rights to Canadian companies in response to Canadian laws, whether passed at municipal, provincial, or federal levels, is offensive. The first of these was chapter 11 of NAFTA.

I will go into more detail later as to why we oppose investor state agreements and the particularities of the Canada-Korea agreement. I also want to back up and say that in the Canada-Korea treaty, the Green Party believes we missed our opportunity to ensure that we had a more balanced deal.

Let me say this about South Korea: what a tremendous economy it has built. In the wake of the collapse brought about by currency speculation, the trading in currencies that created a meltdown of what were then described as the Asian tigers, Korea, through a lot of state-led economic policy, has built an economy that is championing renewable energy, as some of my colleagues in the NDP have mentioned, and championing clean tech. There is a lot to be admired in what South Korea is doing. Therefore, the comments I am making about this trade deal are not in any way to suggest that South Korea is not a really impressive democracy doing a lot with technology.

The difficulty the Green Party has is with the way this trade treaty is going to go forward. We agree with the concerns of the auto sector in Canada, both the CEO of Ford and Unifor, representing the workers, that we will lock in our trade imbalances and not reduce them.

I know some of my colleagues have mentioned Unifor. Let me read into the record the views of the CEO of Ford Motor Company of Canada, Dianne Craig, who said, in response to this treaty, “...South Korea will remain one of the most closed automotive markets in the world” under the new deal. She went on to say that the trade agreements the U.S. and the European Union have executed failed to reverse their negative trade flows, but those treaties were more protective of their domestic car markets than Canada's treaty with Korea would be.

I am again quoting the CEO of Ford Motor Company of Canada: “No Canadian manufacturer can compete with a market controlled by non-tariff barriers and currency manipulation”. Of course, we know that this agreement does not deal with those barriers to Canadians' access to the automotive market.

It is quite true that we have a lopsided relationship in trade with Korea. In 2012, we were exporting $3.7 billion worth of exports to Korea, and $3.7 billion is an impressive number. However, we were importing $6.4 billion in imports from Korea. The story of what constituted that $3.7 billion worth of exports and $6.4 billion worth of imports is worth touching upon.

Canada has largely been exporting raw resources to Korea. Under this deal, the commodities touted in the materials that have accompanied the deal have talked about what this would do to improve agricultural exports and raw commodity exports, whereas when we look at what we have been importing from Korea, it has been high-value manufactured imports.

Let us look at what Canada has been exporting to Korea. I will quote Jim Stanford, who is a very respected economist who works with Unifor. He put it this way:

We export mostly raw material to Korea, and we import sophisticated high technology products from Korea.

Continuing the quote from Jim Stanford, he said:

Canada's top four exports to Korea last year were coal, copper, aluminum and wood pulp. Our top four imports were motor vehicles, electronic circuits, auto parts and smartphones.

There is nothing in this trade deal that is going to change the characteristics of what we are importing and what we are exporting. I referenced the history of what we have seen with the quote from the CEO of Ford Motor Company of Canada. She certainly mentioned the experience of the U.S. and the EU. Concluding trade deals with Korea did not change the gap that existed in trade flows. In other words, having executed deals like this, and ones that were more protective of their auto markets, they still saw the trade deficit with Korea expand.

There is something wrong. This is a larger conversation I would like to have someday in the House. The Green Party believes that Canada is losing out in productivity and in R and D by allowing our exports to be skewed over the last number of years from 60% value-added exports to, currently, 60% raw material exports. Being a compliant resource economy for other countries around the world is not in the best interest of our economy and certainly is not in the interest of rebuilding our manufacturing sector.

I turn quickly to the issue of investor state agreements. By definition, they are perverse, but it is interesting how different they are becoming, depending on what country we have negotiated with. It is at least important that on the Canada-Korea agreement we are being given the opportunity to vote on something. We are having a full debate in the House of Commons. On the most devastating, damaging agreement yet negotiated by any government in Canada, the Canada-China investment treaty, the so-called FIPA, we did not have debate. We did not have votes. We did not have a bill go to committee. That was because it was not a trade deal; it was an investment deal. It was a stand-alone treaty. It gives, because it has now been ratified, the People's Republic of China the ability to bring arbitration cases against Canada for changes in our domestic legislation, whether municipally, provincially, or federally. That treaty includes no transparency whatsoever and binds us for 31 years.

At the far end of the extreme of trade agreements with an investment provision, which showed that the Government of Canada was dealing with a negotiator from another party that wanted to reduce the pernicious nature of investor state agreements, we have the new text of CETA with the EU, the comprehensive economic trade agreement. The Green Party will not be supporting CETA. However, when I read through the investor state provisions, what a revelation. It is quite different. It is night and day in terms of transparency. If the CETA goes through, for arbitration cases brought by investors from the EU against Canada or by Canadian investors against the EU, the arbitrations themselves will be open to the public. The most we can expect out of any other trade agreement, such as, in this case, the Canada-Korea free trade agreement, is that we will get public notice of the fact that these proceedings are happening at all.

That is also what occurs under most of the intermediary bilateral investment treaties that were negotiated after chapter 11 of NAFTA. Chapter 11 of NAFTA, like the Canada-China investment treaty, has no transparency whatsoever. The CETA is at the far end of the spectrum. It says that they will open up these arbitrations to the public and let people with an interest actually present evidence and participate. It is almost getting like a court as opposed to a private arbitration in a hotel room somewhere.

In the case of the Canada-Korea free trade agreement, the investor state provisions fall in the mid-range. They are not as pernicious, nor do they lock us in for 31 years, as the Canada-China agreement does. Neither are they bending over backwards to try to win over people who oppose investor state agreements. Clearly, that is the case in the European Union. They stand in opposition to CETA because of investor state agreements, at least in Germany. However, the Canada-Korea free trade agreement still includes that measures adopted by a party include municipal, provincial, federal, and local governments and non-government bodies acting with authority from local parties. In other words, we are opening up the gates once again to investor state arbitration suits that could cost us billions, this time from Korea.

Both of us in the Green Party will be voting against this treaty. I urge other members of this House who are concerned about the impacts of this treaty to join us, no matter what their party instructions are.

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.

[Ted Hsu, Liberal, Kingston and the Islands, ON]

Mr. Speaker, I wanted to ask my hon. colleague from the Green Party about her party's very strong opposition to investor state dispute resolution provisions.

I talked to some experts in my own riding of Kingston and the Islands from Queen's University, lawyers who specialize in dealing with some of these disputes and in writing treaties, to try to understand this issue. They seemed to uniformly emphasize that Canadian businesses need that protection in other countries, and that on the whole, Canada probably gains from these agreements.

The other thing they emphasized is that if we look at all the damages Canada has had to pay so far, if we take out the AbitibiBowater settlement, which reflects the value of assets that were seized, expropriated, by the Newfoundland and Labrador government, and add them up, it comes to only about $20 million so far. We have to put that in the context of $600 billion worth of foreign investment in Canada. It is one thirty-thousandth. If we put that in context, what I have gotten from the experts I talked to in Kingston is that it is very small compared to the amount of investment in Canada.

I want to ask my hon. colleague if she could comment on that and explain her party's opposition.

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

Mr. Speaker, the Green Party's strong opposition is drawn from empirical data and extensive experience, including advice from international lawyers, particularly Canada's leading arbitration lawyer in this area, and the only one who is not personally benefiting from participating in these investor state disputes, Prof. Gus Van Harten, at Osgoode Hall Law School.

His view is buttressed by an EU think tank study called “Profiting from Injustice”, which examines the hundreds of investor state agreement disputes around the world and finds a very distinct pattern. The smaller economic power almost invariably loses, whether it is an investor corporation from the smaller power versus a larger government or, reversing it, a larger government investor suing a smaller country.

The reality is that no U.S. company suing in the U.S. under Chapter 11 of NAFTA has ever won, and the U.S. private sector companies suing Canada have almost always won.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Speaker, I want to specifically hone in on one aspect of the speech by the member for Saanich—Gulf Islands with respect to the auto sector and put some context around where we are right now. I look to her for some recommendations she might support.

Right now there is a 6% trade barrier Canada raises against Korean automakers coming into the Canadian market. Korea, reciprocally, holds an 8% barrier.

Korean automakers have been building in the U.S. and in Mexico, and that is the way they have been entering the Canadian market and avoiding that trade barrier. They are not building in Canada right now.

I would suggest that this would also be cited as a current problem in our trading relationship. What types of steps would the member be encouraging a more progressive Canadian government to take to encourage some of that auto manufacturing to take place in the Canadian context, as it is taking place in the U.S. and on the Mexican side of the border, thereby avoiding the trade barrier we currently impose, prior to the agreement being ratified?

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

Mr. Speaker, I think we need to have trade deals that have targeted measures that would protect and allow our sectors to expand and allow us to have Korean vehicles made in Canada, as my hon. colleague suggests. Therefore, tariff reduction should be tied to measurable targets in reducing bilateral trade imbalances in strategic sectors, such as in the automobile sector.

It would certainly be helpful in creating a tariff-free zone if we had specific measures to require that larger Korean firms start building in Canada. We should be able to retain the ability, as the Korean government has retained its ability to intervene in its markets, to create the kinds of interventions that moderate the damage of trade imbalances. This agreement would not do it but as I mentioned even the CEO of Ford Motor Company thought we should be dealing with it. The trade agreement should include provisions regarding currency misalignment.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Speaker, I have the honour and the pleasure to rise to make a short speech about Bill C-41, An Act to implement the Free Trade Agreement between Canada and the Republic of Korea. It is a pleasure for me because this proves that the official opposition, the NDP, examines the context of each bill introduced in the House. It studies bills not based on its ideology, but on the facts, and with a view to determining the merits of each free trade agreement.

We have some concerns about this agreement, but there are also benefits for the Canadian economy.

It has been said that the problem with rigid ideology is that we often get the answer before we ask the question.

We have often seen with trade deals by the Conservatives and often their strange bedfellows, the Liberals, that they say yes before reading the text. They say yes before trying to understand what the impacts are going to be. The NDP has taken a very transparent and clear approach to the trade deals as they have been presented to us over the previous years in the House of Commons. Applying a consistent and transparent approach to trade negotiations allows Canadians to judge us on our approach to those trade negotiations. It also allows the New Democrats to apply a consistent measure to the trade deals, and judge each one in context as it comes forward.

What would some of those criteria be? Certainly, one would be the strategic diversification of the Canadian trading relationships we have with the world. Korea obviously meets this test. It is the seventh largest economy and the fourth largest in Asia. It is a key entrant into the Asian market, with which we presently have no trade deals.

My hon. colleague preceding me mentioned an agreement that the New Democrats do not support, which is one that was negotiated, signed and ratified in secret with the Chinese government. That is the so-called FIPA, or the foreign investment promotion and protection agreement. We do not support it for obvious reasons, which I could get into but I want to stay focused right now on the Korean deal that is before us.

Another key condition for us as New Democrats in looking at any deal is an element of reciprocity. It is no good for Canada, often as a more primary resource economy and an economy that is smaller when dealing with the United States, China and other potentially larger economies, to not embed reciprocity into the very DNA of the negotiations. That has been accomplished in this deal and it gives us some comfort.

Are we trading with another nation that has at its heart democratic rights and institutions so that they can have a free and informed debate on their side, not only of the trade deal but of the relationship going ahead? That is clearly a test that has been met by the Republic of Korea, which has a strong and long history of democracy. It holds high standards not only for democracy and human rights, but for workers' rights and the environment. These are tests that are important to us as New Democrats.

There has been a number of trade deals signed by the government with foreign regimes that cannot make that claim. The reason that it is so important is that when we make a trade deal or relationship, we assume that all ships will rise in the harbour, as Reagan used to say. That depends on whether our trading partner is willing or able to enforce a higher standard for environmental protection, for workers' rights and for democracy.

If we are dealing with a regime, as the Conservative government has been only too willing to do, that is unwilling, unable or unlikely to do that, what is the positive force that we are looking for in trade in the world? If what is happening at the end of the day is that a regime that is abusive of human rights and does not uphold high standards for workers and the environment is allowed to continue, it gets to wrap itself in the good name of Canada. It can say, “We must be a good country because Canada has agreed to a trade deal with us”. The Conservative government has done that too often.

Allow me a moment to contrast this, as I alluded to earlier, with the Conservative and, I would say, Liberal approach to the foreign investment protection agreement with China. It was negotiated in secret and then signed in Russia. It was held for two years before it was ratified by the government, with no debate and no transparency whatsoever. It is a deal that locks Canada in for 31 years, even after we decide that it is no longer beneficial to us.

Take a moment to consider that. What country in its right mind would sign an investor protection agreement with 31 years before it is able to withdraw from such an agreement?

Questions of reciprocity need to be taken right off the table. I can recall a brief blip in the Prime Minister's logic that was exposed here in the House when the NDP was asking questions about the reciprocity, the reciprocal nature of such a deal as the China FIPA deal. The Prime Minister said Canadian companies will be protected by the rule of law in China, and then he had to pause because such an assurance is obviously ridiculous on its surface and in its intent. We have seen what the challenges have been to many foreign companies attempting to operate in China, rules around intellectual property agreements, rules around just basic protection for those seeking to do business in China. It is farcical for the Prime Minister of Canada to suggest that there would be any such protection.

FIPA was entered into in this mix of secrecy and the notion of “just trust us” from the Conservative Party, which no one does when it comes to things like this. With such a large trading partner only growing in influence and power, and with serious concerns about human rights abuses, about impacts on the environment, about democratic institutions that are not yet robust in China, we were able to say with a great deal of confidence that Canadians were overly wary of this. Chinese Canadians, recent immigrants to this country from China were also wary of such a deal. Any government that lacks the confidence to bring a trade agreement of any kind to the floor of the House of Commons speaks volumes about what is behind that trade deal.

In any trade deal, and this is true regardless of the nature of the trade deal, regardless of the trading partner, there are certain aspects of our economy that will greatly benefit, others that will benefit less, and others that may be hurt.

We are asking important questions about the agreement with Europe right now, because the government has refused to give us details on support to the dairy sector, for example. That sector will obviously be harmed by what is happening with the European trade deal. There are potential impacts on pharmaceutical medications and costs to Canadians and to the provinces, which are already reeling from a $36 billion cut to transfers in health payments from the federal government. Canadians want to know if their prescription medications are going to get more expensive under the trade deal with Europe, and the Conservative government has offered us absolutely nothing. This goes back to the Conservatives saying, “Trust us, do not worry”.

I mentioned the auto sector earlier in a question to my friend from Saanich—Gulf Islands. Korea is a growing and significant power in auto manufacturing.

Let me summarize the context that we are faced with. Canada levies a 6% barrier on autos coming in from Korea. Korea inversely puts an 8% barrier on Canadian imports with a number of other non-tariff trade imbalances. Korean manufacturers have been building cars in the United States and Mexico. Obviously, a car manufactured in those places will enter Canada trade-barrier free, and they have been for a number of years. When the U.S. signed its trade deal just two years ago with Korea, the gap widened but the overall volume of cars going to Korea and cars coming from Korea into the U.S. went up.

Canada has been lagging behind. We are concerned because the government has been slow to move in negotiations with Korea and our auto manufacturing sector has been losing market share. Market share has also been lost across agriculture, wood products and a number of other things that have raised concerns for many of us.

Let us take the global context for a moment. Foreign direct investment in the auto manufacturing sector alone approached nearly $18 billion last year. Do members know how much foreign direct investment came into Canada? The answer is zero. That should be a concern to all Canadians whatever their political stripe and their influence. Canada may be and in fact is slipping behind our competitors when it comes to investing, particularly in the new technology, the advanced stage cars that are coming on line that take us away from the carbon economy. Canada has fallen too far behind in that.

More support needs to be given to build that next generation of automobile. If $18 billion globally has gone into the advanced auto sector and manufacturing and Canada has received nothing, this should be cause for alarm. However, we see in this trade deal that even though we are opening up this new segment to Korea, there is no support for the Canadian auto sector whatsoever. This raises concerns for us. The concerns raised by Unifor, Ford and others are important for us to consider.

The New Democrats will support this deal with some reservations on the investor state protection agreement in particular. Our Korean counterparts in the opposition government right now are also raising concerns. A future New Democratic government would revisit those aspects of the bill, take out the most odious aspects. Hopefully a Korean opposition would see likewise the benefits of having a good trade deal for Canada and Korea without some of the more egregious parts of the act that we have concerns with today.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, the member concluded his remarks by saying that the New Democrats would reopen the agreement. I acknowledge the importance of our automobile industry in Ontario. The member had the opportunity to highlight his concerns. Would he like to add anything further to it given we have to be brief?

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Speaker, yes, highlighting the importance of the Canadian auto manufacturing sector is incredibly important.

[The Acting Speaker, Conservative, Bruce Stanton]

Is the House ready for the question?

[Some hon. members]

Question.

[The Acting Speaker, Conservative, Bruce Stanton]

The question is on the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

No.