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

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Speaker, I have the utmost respect for the hon. member. I have had the opportunity to chat with him on occasion.

I see no contradiction there. Clearly, we would look at the benefits and disadvantages of any NDP policy that we would hope to apply. Obviously, if the policies implemented were a disincentive to investment, we would study that negative impact.

These conditions are more than just economic in nature. Other criteria should also be taken into consideration. For example, there is a possibility that non-tariff barriers in the auto sector could be lifted. We need to monitor that.

We must also ensure that this is a two-way street. The conditions applied here must also be applied by South Korea to our exporters.

We are completely consistent on that. We want this agreement to be reciprocal, to foster good trade relations and, at the other end, we also want to provide good conditions for the Koreans who are looking to invest.

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.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Mr. Speaker, I will be splitting my time with the hon. member for Don Valley West.

I rise today to talk about the landmark Canada-Korea free trade agreement. I will specifically concentrate on the benefits and opportunities created by this agreement for our agriculture and agri-food producers and exporters.

Canadian farmers and processors produce some of the best quality food in the world. Our products reflect Canada's dedication to excellence, safety and innovation.

In 2013, the agriculture and agri-food sector accounted for 6.7% of Canada's total GDP and contributed to one in eight jobs in Canada, employing 2.2 million people.

It is estimated that approximately half of the primary agriculture production in Canada is exported. The processed foods industry is also highly export dependent. Overall, with export sales topping a record of $46 billion in 2013, Canada is the world's fifth largest exporter of agriculture and agri-food.

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.

[The Acting Speaker, Conservative, Bruce Stanton]

When the House last left this question, the hon. member for Bruce—Grey—Owen Sound had eight and a half minutes remaining in the time, something I neglected to inform him of prior to statements by members.

Resuming debate, the hon. member for Bruce—Grey—Owen Sound.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Mr. Speaker, I am honoured to finish the major part of my speech and would remind you that I am splitting my time with the member for Don Valley West.

As such, continued success of the agriculture and agrifood sector is heavily dependent on an ability to compete in international markets over the long term. Therefore, it is no surprise that our government continues to work tirelessly to increase access to some of the fastest growing global markets, including South Korea.

Yet 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 and always will be ideologically opposed to trade. When the NDP talks trade, it is not the interests of hard-working Canadian families it has in mind; it is the interests of its core supporters, its radical activist group allies, which are of concern to it.

The Liberals are just as bad. During 13 long years in government, the Liberals completely neglected trade, completing only a paltry three—three—free trade agreements.

[An hon. member]

We signed NAFTA for God's sake. That is the biggest one, right?

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Mr. Speaker, by the sound of the heckling, they do not like the truth.

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 campaigned to rip up the North American Free Trade Agreement.

Canada's prosperity requires expansion beyond our borders into new markets for economic opportunities that serve to grow Canada's exports and investment. As Canada's first FTA with an Asian market, the Canada-Korea free trade agreement is truly a landmark achievement.

With average Canadian exports from 2011 to 2013 of agriculture and agrifood to South Korea reaching almost $644 million, Canada is one of South Korea's largest suppliers. This agreement would further deepen our trade ties by improving market access for all of Canada's key agricultural export interests.

In general, South Korea would eliminate tariffs on around 70% of Canadian agricultural exports within five years. Within 15 years, 97% of exports would be duty free. This would lead to substantial gains for agriculture given that this sector is so heavily protected in South Korea. For example, South Korea's average applied agricultural tariff is 52.7% compared to 6.8% for non-agricultural goods.

The Canada-Korea FTA is critical to re-establishing a level playing field for Canadian agriculture and agrifood producers competing in the South Korean market, where major competitors from the United States and the European Union currently benefit from preferential access under their free trade agreements. Australia signed an FTA with South Korea in April 2014, and is expected to enter into force in the coming months.

While these are just some of the broad benefits for the overall sector, there are also significant gains for key agricultural products, including in meats, grains, pulses, oilseeds, fur skins, animal feeds, processed foods, alcoholic beverages, and fruits and vegetables.

In particular, beef and pork were Canada's two top priorities and among the most challenging areas of the negotiation. Under the Canada-Korea FTA, tariffs as high as 40% on fresh, chilled and frozen beef and pork would be eliminated over periods ranging from five to fifteen years.

Importantly, the Canada-Korea free trade agreement rules of origin reflect the integration of the North American livestock industry, which is a key result for us.

This agreement also aims to further Canada's position as a global supplier of grain and grain products by opening new markets in South Korea. Our grain exports would benefit from the immediate elimination of South Korean tariffs on some of Canada's high-quality grains and special crops, including wheat, rye, oats, mustard seed, and canary seed.

Wheat flour would benefit from tariffs eliminated over five years, while Canada's exports of barley malt to South Korea would be immediately duty-free under large commercially significant transitional quota volumes and will gain unlimited duty-free access after 15 years.

This agreement also holds tremendous potential for Canada's oilseeds and oilseed products sector. Tariffs on canola would be eliminated immediately upon implementation, while the current tariff of 5% on refined and crude canola oil would be eliminated over three to five years. Canadian exports to South Korea of identity preserved soybeans would see immediate duty-free access under permanent quota volumes. This is a product of particular interest to Ontario and Quebec.

Other key sectors that would benefit are Canada's fruits, vegetables and pulse sectors. Under the agreement, current tariffs of 30% on frozen blueberries would be eliminated within seven years, while tariffs on pulses, such as kidney beans, lentils and chickpeas, would be eliminated over five years. Tariffs on feed peas would be eliminated immediately upon entry into force.

This agreement also includes notable benefits for processed foods and alcoholic beverages. Upon entry into force, duties on icewine would be eliminated from current duties of 15%. This is significant, as icewine makes up 90% of Canada's white wine exports to South Korea. Furthermore, duties on rye whiskey would be eliminated upon entry into force.

Canada would receive immediate duty-free access on Canada's key processed food exports, including frozen french fries, maple syrup, maple sugar and golden roasted flaxseed. Other products that would see their tariffs eliminated during a phase-out period include baked goods, chocolate, sugar, confectionery, and cranberry and blueberry juices.

These are just some examples of the types of agricultural sectors and products that would benefit from the Canada-Korea free trade agreement. Given this positive outcome, a wide range of agriculture and agrifood stakeholders, such as the Canadian Cattlemen's Association, the Canadian Pork Council, the Canadian Agri-food Trade Alliance, the Canola Council of Canada and Pulse Canada, to name a few, have strongly and publicly supported this agreement.

To ensure that Canadian farmers and food processors benefit fully from this groundbreaking agreement, the Minister of Agriculture and Agri-Food continues to work closely with the Canadian agriculture industry to open new doors in South Korea.

I would like to take this time to thank the Minister of Agriculture and Minister of International Trade for the great work that they have done in the past number of years in getting not just the Canada-Korea free trade agreement but all the other ones that the government has signed. There are more to come.

In April, the minister led a delegation of 30 agriculture associations and companies to seize on the opportunities for agriculture trade heralded by this agreement. The visit successfully strengthened agricultural trade ties between Canadian exporters and South Korean importers. As our competitors in the European Union, the United States, Austria, Chile and other countries have already signed or implemented agreements with South Korea, Canada's farmers and food processors are currently at a major disadvantage to access this market. This disadvantage would widen further if Canada delays in ratifying this agreement.

I know that I am running out of time, but I would like to emphasize the great importance of this deal for all Canadian business, and particularly agriculture. With that, I welcome questions.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Mr. Speaker, I thank my colleague for his speech. We support the bill as written, but there is a problem related to investor protection even though, fortunately, the time-limited clause can be cancelled with six months' notice.

I would like to know what it is about South Korean institutions and the country's legal system that is problematic enough to warrant this kind of investor protection clause.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Mr. Speaker, I understand that the member and his party are going to support the agreement. I certainly welcome that and would have hoped for nothing less.

When we are negotiating any deal, we all know that in negotiations—and they are exactly that, negotiations—we do not get everything we want. However, this deal would be a great improvement to the situation we have now, when it comes to trade.

If producers of Canada were not protected under this deal, simply put, this government would not sign it. Therefore, I feel quite confident, and I think he will too if he looks at the fine print, that this deal would have Canada protected and allow us to ship our products.

In my riding, I have everything from apples, to beef and pork. I have it all. In fact, it is the second-largest beef-producing riding in the country. This would be huge for our farmers across this country, and again, I thank him for his support when the time comes.

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Speaker, I do think the member for Bruce—Grey—Owen Sound outlined a number of the positive aspects for the agriculture community in the agreement, and that is good.

He said in his remarks that our beef and hog producers have been disadvantaged since the U.S. signed its agreement with South Korea, and that is true. To put that into perspective, I have to ask where the government has been and why it has taken so long to negotiate this agreement. The talks were initiated in 2004, and we have seen the Americans start to displace us in the market.

I worked with the member when he was chair of the agriculture committee and was at a meeting where Secretary Vilsack was speaking. It really bothered me that he stood in front of the hall and bragged to the Americans about how they were displacing Canadian beef in the South Korean market. Therefore, it is a good thing that the agreement is signed.

I think it is critical that the House and the place down the hall get this done before January 1, because on January 1, if this implementation agreement is not passed here and in South Korea, we will fall another 2.5% tariff behind, which would really disadvantage our beef producers.

Therefore, I ask the member opposite this. Does he have any ideas on how we can be absolutely sure that the implementation agreement gets signed in both countries by January 1? That is the critical point now.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Mr. Speaker, I think there was definitely a lot of support in there for this agreement. All I can ensure, as can he, is that I will, and I know this government will, do everything we can to see that this is done, and I feel confident that will happen.

I would urge him to do the same, follow with his words—and I am not going to doubt he will do that—urge all his colleagues, and urge the opposition across the way. This can be done in that time frame. I, for one, would be very disappointed if we, in the House, did not do our parts to see that this happened.

[John Carmichael, Conservative, Don Valley West, ON]

Mr. Speaker, I would like to thank my colleague from Bruce—Grey—Owen Sound for sharing his time with me and for his presentation this afternoon.

On Monday, September 22, 2014, thanks to the leadership of the Prime Minister, Canadians witnessed the signature of the Canada-Korea free trade agreement, Canada's first bilateral FTA in the fast-growing and dynamic Asia-Pacific region. This is more proof that our Conservative government is committed to protecting and strengthening the long-term financial security of hard-working Canadians.

South Korea is a key gateway to the wider Asia-Pacific region, offering strategic access to regional and global value chains. South Korea is the fourth largest economy in Asia, boasting a robust $1.3 trillion economy. It has a population of 50 million, with per capita GDP of more than $25,000, one of the highest in Asia, making it one of Asia's most lucrative, dynamic and advanced markets. It is home to many large multinational conglomerates, including now household names such as Samsung, Hyundai and LG. This landmark agreement is a pivotal step toward growing and deepening Canada's ties with this vibrant economy and the region as a whole.

South Korea is a priority market in the global markets action plan, or 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 its efforts on markets that hold the greatest promise for Canadian businesses, which include South Korea, and stands ready to harness Canada's diplomatic assets to support the pursuit of commercial success by Canadian companies abroad, particularly small and medium-sized Canadian enterprises.

To open new markets for Canadian businesses and create jobs and opportunities for hard-working Canadians, we have launched the most ambitious trade expansion plan in Canadian history. In less than seven years, Canada has concluded free trade agreements with 38 countries and is negotiating with many more.

Canada's prosperity requires expansion beyond our borders into new markets for economic opportunities that serve to grow Canada's exports and investment. This includes the comprehensive economic and trade agreement, or CETA, with the European Union, which will be the most ambitious trade partnership that Canada has ever negotiated.

Canada is also actively pursuing a trade agreement with 11 other Asia-Pacific countries through the trans-Pacific partnership, or TPP, negotiations. These agreements would open new markets and create new business opportunities to create jobs, growth and long-term prosperity for all Canadians.

South Korea has its own very active program of pursuing bilateral and regional trade and investment agreements. Aside from its agreement with Canada, it has signed FTAs with the United States and the European Union, in addition to eight other partners across the globe. It has also recently concluded an FTA with Australia. In light of South Korea's own ambitious trade agenda, there is an urgent need to implement the CKFTA as soon as possible to level the playing field for Canadian businesses and ensure they are able to compete in the South Korean market.

Canada and South Korea have a strong and robust bilateral trade and investment relationship. Two-way merchandise trade between the countries reached almost $11 billion in 2013, making South Korea Canada's seventh largest overall trading partner and third largest trading partner in Asia. South Korea's direct investments into Canada have climbed from $397 million in 2005 to $4.9 billion by the end of 2013, a more than twelvefold increase in less than a decade.

No government in Canada's history has been more committed to the creation of jobs and prosperity for Canadian businesses, workers and their families. During 13 long years in government, the Liberals completely neglected trade, completing only three small 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.

Similarly, the NDP only has the core interests of its radical activist-group allies in mind, not those of hard-working Canadians. That is why, despite all evidence that trade creates jobs, economic growth, and economic security for hard-working Canadian families, the NDP is and always will be ideologically opposed to free trade.

Our government recognizes that protectionist restrictions stifle our exporters and undermine Canada's competitiveness, which in turn adversely affect middle-class Canadian families.

The CKFTA is a comprehensive agreement that would eliminate tariffs and provide enhanced access and strong disciplines across all major areas of commerce. It would be a major boost to Canadian exporters looking for a foothold in the lucrative Asian market.

The agreement's most visible outcome is the ambitious obligation undertaken by Canada and South Korea to eliminate tariffs for all sectors, including textiles and apparel, chemicals and plastic, information and communication technology, aerospace, metals and minerals, as well as agriculture and agri-food, fish and seafood, and forestry and value-added wood products.

On the first day the agreement comes into force, over 88% of Canada's exports would be duty free, and over 99% would be duty free once the agreement is fully implemented. As average South Korean tariffs are three times higher than Canada's, 13.3% versus 4.3%, tariff elimination is absolutely critical for Canadian businesses exporting to the South Korean market.

For Canadian consumers, the elimination of tariffs under the agreement stands to reduce the cost of imported products and expand choices for them that are increasingly cost competitive.

This agreement would also strengthen the bilateral energy partnership, an area of significant potential for both our nations.

South Korea is already the world's second-largest importer of liquefied natural gas, LNG; fourth-largest importer of coal; and fifth-largest importer of crude oil. It is seeking to diversify its energy suppliers and improve its energy security.

Canada is a natural partner for South Korea. With some of the world's largest oil and gas reserves, Canada is poised to become a large, stable, and reliable supplier of energy to Asia. By removing tariffs on Canadian oil and natural gas, this agreement would make Canadian LNG and petroleum products more competitive in South Korea and help create jobs and opportunities at home here in Canada.

The CKFTA would also provide enhanced market access for Canadian service suppliers in areas such as professional services, environmental services, and business services, and temporary entry commitments that are the most ambitious South Korea has agreed to in any of its FTAs.

The investment provisions in the CKFTA would provide a more predictable and rules-based climate, including investor protections, which would encourage increased investment flows between Canada and South Korea and expand the prospects for joint ventures.

The CKFTA also includes a range of provisions governing government procurement, intellectual property, telecommunication services, and electronic commerce, as well as substantive environment and labour provisions in dedicated chapters. It contains strong provisions to reduce or eliminate non-tariff measures that hinder market access for exporters and investors, backed up by fast and effective dispute settlement provisions.

Going forward, the CKFTA represents a firm commitment by both sides to grow and expand this important strategic relationship.

Trade has long been a powerful engine for Canada's economy. It is even more so in what remain challenging times for the global economy. In these uncertain times, our prosperity depends on our ability to take advantage of economic opportunities in emerging markets.

The Canada-Korea free trade agreement would help Canada compete more effectively and thrive in the world economy.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Mr. Speaker, unfortunately, the hon. member for Bruce—Grey—Owen Sound did not completely answer my question. I will turn to my colleague, the hon. Conservative member for Don Valley West, and come back to the issue of the investment protection clause included in the agreement.

I would like him to tell me whether the Government of Canada insisted it be included. If that is the case, I would like him to explain why it is in there. Did Canada push for it?

[John Carmichael, Conservative, Don Valley West, ON]

Mr. Speaker, the investment arrangements within the agreement are fully reciprocal. They would operate under the same terms that we would operate, and one of the pieces that is particularly unique in ensuring that there is fairness and reciprocity in our negotiation and in protecting investors on both sides of the equation is the accelerated dispute resolution provision. This would create a fast, efficient, and functionally inexpensive way of ensuring that we could have accelerated dispute resolution in place to resolve disputes as they arise and protect our investors across both sides of the ocean.