International Trade Committee on April 14th, 2008

[Jaime Giron Duarte]

Definitely. And not only that, but we certainly would be ready to assist the subcommittee in getting those appointments, if you so decide.

The only recommendation is that it's better to know first the places you are going to be, just in case the area happens to be somehow risky for visitors, in order to take the appropriate measures. I can say that if the visits take place in the cities or in areas that are already free from the presence of the guerrilla groups or the paramilitary, there is no problem at all.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Masse.

I should say we have received excellent cooperation in planning the event from His Excellency, from the embassy here in Ottawa, as well as from the Colombian government. The security concerns that have been expressed have been from our embassy and our government in deference to our members and the security of the members of the committee on the visit.

Thank you for that question.

We'll move now to the Conservative Party.

Mr. Keddy, are you going to begin? We're going to have to limit it to one round. We're averaging about eight minutes, so we'll have to wrap it up. If you want to share your time with your colleagues, we'll do that, because we have another witness to appear.

Thank you, Mr. Keddy.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Thank you, Mr. Chairman. It is my intent to share my time.

I welcome His Excellency, who is appearing here today as a witness. We appreciate your time.

By reading over the information we were given to prepare for today and by trying to cut directly to the chase and deal with some of the human rights abuses that have occurred both in the paramilitary and in the terrorist organizations, it certainly is troubling--the attacks on civil society, as Mr. Masse had mentioned.

The situation, you've explained, has improved over the last half a decade, in particular. Certainly it's still a dire situation for civil society in Colombia, and we recognize that.

Ambassador, where do you see this headed? If we don't move forward, if we were not to move forward with a free trade agreement, what do you think the results of that would be for civil society in Colombia?

[Jaime Giron Duarte, Interpretation]

In fact I have to tell you that for us it would be a very hard blow not to be able to conclude free trade agreements with countries with which we have identified and with which we share a vision of a democratic world that respects freedoms and that also supports the free and just exchange of products and services.

As I was saying, for Colombia, this is part of the country's political strategy. It would be of no use to recover our national territory; it would be of no use to try to work towards the re-incorporation into society of our people; it would be of no use if we cannot guarantee for them markets to which they can take products stemming from legal activities. We would lose lots of credibility as a government and we would take a considerably large step back, and we would return to a situation that we do not wish to recall.

For us, this would be the complement of the political strategy that we're promoting currently. We always have to work hand in hand with security, but in the democratic world we've done our work on the basis that we have to defend democracy and we've worked hand in hand with economic development.

If we go back, we would lose in terms of governance, democracy. It would take us years to recover and to bring back the strength we have now.

[The Chair, Conservative, Lee Richardson]

Mr. Cannan.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you, Mr. Chair.

Thank you, Excellency. It's a pleasure to have you here, and I look forward to visiting your country in the near future and seeing the individuals first-hand and face to face. It will be of much benefit to this committee and to our country, I think, as we move forward in this agreement.

I know that since 2002, when President Uribe was democratically elected, the country has gone through great transformation. As has been alluded to, there are many changes and challenges still ahead, and one of them was recently identified.

I've spoken with the former Canadian ambassador to Colombia as well as a Canadian university professor I know, a historian who has been to Colombia on several occasions, and the concern as we enter into a free trade agreement--and I believe it's a fair trade agreement as wel--is that one of the things we've noticed is at times when developers move in, especially for mining explorations, people are moved off their land.

My question to you, then, is what kind of commitment would be provided as we move to strengthen the economic gap in these communities that individuals' property rights will be protected and homeowners won't be displaced off their land?

[Jaime Giron Duarte]

This is one of the issues covered in the parallel agreements that deal with environmental and labour issues. As you've pointed out yourself, and for those who know Colombia, we are a country that has been classified as a mega-diverse country, and we're very interested not only in the great variety of animal, mineral, and plant resources that we have, but also we want to guarantee sustainable development and exploitation of our resources. And we want to provide social corporate responsibility. This is what we expect to do.

The concept of corporate social responsibility has been applied in Colombia since very early on. We have a lot of experience, and what I can tell you is that the encounter we have had with Canadian companies investing in Colombia has been very satisfactory. Some companies have established a structure that could actually resemble the structure of a small municipality in which the relationship between the employers and the employees and the relationship among all members has allowed for a system that will be multiplied throughout Colombia and will have positive effects.

Colombian legislation is ready to request that each investment agreement is made with respect to the principle of corporate social responsibility. We are obviously interested in investors not only having the security required for their investments, but also we want investors to feel that a commitment is not only financial or economic, but is also a commitment toward Colombian society. This is where we're headed.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

That's excellent, because some of the people I've spoken to see great opportunities as long as there's that free and fair trade agreement in place.

One specific trade agreement that has been debated at great length is the U.S.-Colombia free trade agreement that is presently before the U.S. Congress. If that trade agreement is passed--I believe there are tariffs as high as 60% right now--it would really affect our Canadian manufacturers, specifically in companies across the country. What likelihood do you see of that trade agreement being passed by the U.S. Congress?

[Jaime Giron Duarte]

Well, I would not want to speculate, but in fact we Colombians hope that the agreement will be passed, and we want to reach an agreement with Canada also quickly for the same reasons. Now, on the subject of the approval or not and the effect this could have on Canada, well, we have to look at this from the point of view of what it would mean for the United States or for Canada not to have an agreement that links the countries to other countries like Colombia and Latin America through the trade network that's being established. For example, the relationship between MERCOSUR countries and the Andean countries and with the Caribbean countries and the Central American countries—all these relationships are important.

Now, the negotiations we've carried out with EFTA and with the European Union at this point in time and the review of the agreement with Mexico, all of this would mean that Canadian and American markets, if that's the case, would not have a tool that would guarantee subtle access to these other markets. I would say that from the point of view of the Canadian interest, you should think of investments, but obviously we should think of economies as complementary economies. It would be very favourable, but if there's a delay in the approval of the agreement with the U.S. I do hope that the agreement with Canada will work. Colombia buys all its barley from Canada and has a need for other cereals and manufactured goods. There is a possibility for Canadian producers to trade, and I think any delay in the U.S. could at one point in time mean a very good advantage for Canadian exporters.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Cannan, and thank you to Mr. Keddy as well.

Well, that concludes the time we have allotted. I do much appreciate first your opening comments but also the excellent manner in which you conducted yourself throughout the answering of the questions. I thought it was quite helpful to all of us to get that information out and provoke a lot more questions that we hopefully will answer in the visit to your country.

Again, on behalf of the committee, thank you very much for your attendance today. I'm just going to ask for about a two-minute break here while we say goodbye to His Excellency and greet the ambassador from the Republic of Panama.

[The Chair, Conservative, Lee Richardson]

Ladies and gentlemen, we will continue.

We now have the pleasure and honour to welcome to our committee Her Excellency Romy Vasquez de Gonzalez, the ambassador of the Republic of Panama to Canada.

With the growing eminence of Panama as a gateway to Latin America due to the expansion of the Panama Canal, there is great interest in the general region. It was suggested and accepted by the committee that, in addition to our visit to Colombia, we would visit Panama. So I'm very pleased that Her Excellency has agreed to come today to give us a brief overview and answer your questions about that part of the visit and the Republic of Panama.

I appreciate your taking the time to come. I'll ask you to begin with an opening statement, Excellency.

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

Thank you very much, Mr. Richardson.

Good afternoon, honourable members and chair of the Standing Committee on Foreign Affairs and International Trade. It's an honour for me to be invited to this forum to present you with a summary on Panama so the honourable members of this committee may anticipate the trade opportunities that are available between our countries when planning your upcoming visit to Panama.

The Republic of Panama is a sovereign state and is also independent, represented by unitarian, republican, democratic, and representative government. Power comes from the people and is enacted through three branches of government: legislative, executive, and judicial. The president and the vice-president are elected through direct universal suffrage for a five-year mandate, as are the deputies of the National Assembly. Elections will be held in May 2009.

President Martin Torrijos, who took office on September 1, 2004, with the Patria Nueva political alliance composed of the Democratic Revolutionary Party, PRD, and the People's Party, PP, obtained a majority in the National Assembly with 42 of the 78 seats. The PRD returned to power in 2004 with a large majority after being in opposition. So far eight political parties have registered for the coming election.

Panama has an area of 75,512 square kilometres, with a population of 3.2 million people, 50% of whom live in the city of Panama and 38% in rural areas; 10% are indigenous. Panama is considered a country of high to medium income, with a GDP of $6,000. These are approximate figures recently published by the national office of the comptroller.

Panama is a member of the UN and has had a seat on the Security Council five times. At this point we are members of the council until December 31, 2008. We are a founding member of the Organization of American States, and the general assembly took place in Panama in June 2007. Canada has been a member of the OAS since 1990.

Currently we are the seat of the Parlatino, the Latin American parliament, which will move from Brazil to Panama in 2008, and we're also a member of Parlacen, the Central American parliament. The Ciudad del Saber, City of Knowledge, is a space where education and technology converge. This will be the regional centre for the Latin American United Nations. It already has offices of UNICEF and UNDP, the United Nations Development Programme, among other organizations.

The development of the Panamanian economy has been strongly linked to a privileged location and also because we provide three basic types of services: the Panama Canal, the Colón Free Zone, and an international banking centre. Our economy is fully dollarized, and we don't have a central bank. The economy depends mainly on the service sector, which represents 68% of GDP. Services include the operation of the Panama Canal, banking activities, the Colón Free Zone, insurance company activities, the ports on the Atlantic and Pacific, the shipping registry, tourism, and the building construction industry.

Panama is one of the countries of the world that has contributed the most to international trade. It has allowed thousands of vessels to travel more speedily throughout the world and has facilitated a more efficient and more economical exchange of products, which has benefited several national economies.

For almost 100 years the United States of America managed the Panama Canal as merely a transit route. The adjacent areas were not commercially developed. As of December 31, 1999, with the official transfer to Panama of the Panama Canal and the adjacent areas, everything has changed. What were before lands and goods aimed mainly at managing the canal and the security of the canal are now the centre of unique development and research in several sectors of economic activity.

During the first four years of Panamanian administration, the Panama Canal contributed $870 million to the Panamanian state, which represents 46% of the total amount paid to Panama during 85 years of U.S. administration.

Over the past three years, the Panamanian economy has grown sustainably by an average of 8.5%. In 2007 the economy grew at a rate above 9%. Economic growth has increased considerably because of the decisions made by the current government on, for example, tax law reforms, social security reforms, the improvement of democratic institutions, and the enhancement of public administration. This is not only reflected in the construction sector but also in the tourism and industrial sectors. That is why we're promoting investment in several areas.

We're also adding services in order to respond to the needs of foreigners that choose Panama as a second retirement place of residence. Panama offers the advantages of financial and political stability. The U.S. dollar is the currency in the country. Panama has also become a hub for international transport of passengers and cargo and for telecommunications. A development strategy for Panama includes the participation of businesses and workers. One of the pivots of this strategy is the signing of free trade agreements, these being an essential part of economic development.

A free trade agreement with Canada would be based on a complementary trade relationship and on a relationship of growth. Trade between Panama and Canada has increased considerably since 2004. For example, in 2005 it grew by 8.9%, and in 2006 it grew by 34.7%. Canadian exports to Panama reached $28.6 million, and Panama's exports to Canada were worth a total of $4.1 million.

The Panama Canal is the pride of Panamanians as a result of the historic struggle that led to its recovery and because of the viable, profitable, secure, and transparent way in which it's been managed since its return on December 31,1999. The construction of the canal, which was begun by a French company in 1879, led to bankruptcy. Finally, the U.S. took over in 1903, and the canal was actually finished in 1914.

The Panamanian struggle to achieve fairer conditions for Panama, and the return of the canal, with the signing of an agreement in 1977 on the final return, has led to seven years, so far, of Panamanian administration that reflects a history and belief that has been forged with sacrifice, passion, and vision.

We've already shown the international community that we are capable of managing the canal with the highest standards of efficiency.

Honourable members of the international trade committee, we cannot reach conclusions, not before you have the opportunity of visiting my beautiful country, the Isthmus of Panama, the Panama Canal. But before answering your questions, I would like to leave you with a message, and that is that the advantage the geographic position of Panama offers the Canadian market is a point to expand in terms of trading products and services with greater access for international trade. Expanding trade links will not only increase economic opportunities, but will also enhance security matters in the hemisphere as well as democracy and the prosperity of our peoples.

Thank you very much.

[The Chair, Conservative, Lee Richardson]

Thank you, Your Excellency. It's a great start. I appreciate that. Thank you.

We are going to begin our questions now. As you know, we have until 5:30. We're going to try to keep it tight to seven minutes. We went a little over last time around, but we'll do our best to keep it even.

Who will begin for the Liberal Party?

[John Maloney, Liberal, Welland, ON]

Why don't we stick with perhaps five minutes, to give more people an opportunity?

[The Chair, Conservative, Lee Richardson]

We have time for only one round. You can share your time if you like.

Who's going to begin with the Liberals? Mr. Maloney.

[John Maloney, Liberal, Welland, ON]

Your Excellency, our trading relationship with Panama is modest, but I'm amazed by the increase that your figures show for 2005, which was 8.9%, and for 2006, which was 34.7%. I'd be interested in seeing what 2007 is going to be.

Is there an appetite in Panama for a free trade agreement with Canada? I notice that you already had one in 2006 with the United States. Would you envisage it as being similar to the U.S. agreement?

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

I think that with Canada it will be a bit easier than with the U.S., definitely. We feel that with Canada there are more complementary conditions and we feel that Canada is a service economy very similar to the Panamanian economy. We've seen that we have particular characteristics in ports, transport services. We can work in mining, for example. This is something we do not do with the U.S. We've discovered that Canada is definitely a leader in the mining sector, and Panama has considerable potential in mining at this point in time.

A Vancouver company, Cominco, is very interested in developing a project in Panama, and we have already carried out a couple of seminars in mining and corporate responsibility. This is something that we do not do with the U.S. So here you have an example of something that we would not deal with in relation to the U.S.

Exports to Canada have increased in terms of non-traditional exports--melons, watermelons. This is something that we have not done with the U.S.

I think that it might be similar, but it won't be the same. I don't know if this answers your question.

Take banking services, for example. Scotiabank operates in Panama. We have more investments from British banks in Panama than from American banks. There's a greater Canadian banking presence than U.S. banking presence.

[John Maloney, Liberal, Welland, ON]

You mentioned corporate responsibility that you have with Cominco, but not with the United States. Is there any reason for that? Could you elaborate what you mean by corporate responsibility? Is it the way they treat their workers?

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

Precisely. We have had corporate social responsibility seminars in relation to the mining sector, and we haven't done that with the U.S. Now, that doesn't mean there are no social responsibility issues with the U.S.; I was just talking about the mining sector. So in mining, we believe that Canada leads the way. We haven't specifically developed this with the U.S. So it's an item in relation to which we want to progress with Canada, and we've never dealt with it with the U.S. That's what I meant.

Panama has never exploited its mines, but we've discovered that we have a couple of projects that we could operate, and we would wish to do that with Canadian companies that do have corporate social responsibility, that are responsible. I believe that Canada—as a country and because of the experience it has had in other countries—has been able to correct, through its experiences, situations of corporate social responsibility. That's why we've approached Canada for that sort of project. That's what I meant. I didn't mean we had problems in relation to corporate social responsibility with the U.S. I didn't mean that. It's only that with the U.S. we deal with other sectors, and they are equally responsible from a corporate point of view.

[John Maloney, Liberal, Welland, ON]

Mr. Chair, I'm going to share with my colleague here, Mr. Tonks.

[The Chair, Conservative, Lee Richardson]

Thank you.

You have just a little over two minutes, Mr. Tonks.

[Alan Tonks, Liberal, York South—Weston, ON]

Thank you, Mr. Chairman.

In 1966, Ambassador, I visited your country, coming out of a freighter at the south end of the canal, very high on the water. It was a very long way down Jacob's ladder to get to the pilot's boat. I have a great memory of your country.

From our briefing note, the Panamanian Centre is a distributor for funds that offer international trade credits to Latin America, and the Canadian Export Development Corporation makes those funds available. The whole issue—you are here with the Colombian ambassador—relates to tying trade to stability in that part of Latin America and South America. Venezuela is indicating some very difficult times.

What role does Panama play and what role can Canada play, through closer trade relationships, in contributing to the stability we would like to see in this particular area? Has the Panamanian government given any instructions through its diplomatic corps to not only use the Organization of American States as a trade facilitator, an investor, distributor, but to invest in a strategic way that would achieve human rights and stability in the region?

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

Your question has two parts, so let's address the first, on stability. You mentioned Colombia. Now, the second question is clearer: what is the role of Canada as a facilitator in terms of international trade and Venezuela? But the first question wasn't clear to me. Could you please clarify it?

[Alan Tonks, Liberal, York South—Weston, ON]

Just in terms of the role of the Panamanian Centre and the investments with respect to credits that are made available through the Canada Export Development Corporation, are those investments made in a strategic way that would guarantee human rights, that would see the region stabilized as we want to see developing economies invested in, that will percolate down to the populations, perhaps not as much as in the case of Panama or Costa Rica, but certainly Venezuela and certainly Colombia, where there are many, many poor people?