International Trade Committee on April 16th, 2008

[Ed Fast, Conservative, Abbotsford, BC]

So they go hand in hand.

[Carol Nelder-Corvari]

Yes, they go hand in hand, and the side agreements are where we're negotiating the key obligations.

[Ed Fast, Conservative, Abbotsford, BC]

Okay.

I think you've heard two different perspectives on how liberalization of trade should proceed. Some people believe that before a country that has underdeveloped democratic institutions signs a free trade agreement with Canada, they should fully develop those democratic institutions. The other perspective is one that I certainly support, where there's clearly a thread that links free trade with prosperity, with human rights and democratization.

There are so many examples in the world now of free trade agreements. I'm thinking of, say, a country like Chile, which in the sixties and seventies had a horrendous human rights record. We now have a free trade agreement with it, and I'm assuming at the time that we signed on to that free trade agreement, they didn't have fully developed democratic institutions.

Can you point this committee to models where a free trade agreement has actually contributed toward the development of democratic institutions?

[Carol Nelder-Corvari]

I think you answered it well. A trade agreement assists and promotes economic prosperity. When there's economic prosperity, it does promote stronger democratic institutions, better social conditions. Those are all part and parcel of the same progress in terms of economic advancement. I think Chile is a good example of such progress.

You know, economists aren't very good at pulling this information out, and that's why I did point to the study of Professor Sala-i-Martin of Columbia University in the United States. He did the study for the Inter-American Development Bank and he deals specifically with Colombia in that study and talks about the relationship between poverty and economic development, and institution-building in general. I think there's more and more evidence that that is the case.

In Colombia obviously we're dealing with a specific situation, a long-running internal conflict, and that carries with it very problematic issues. But the Uribe government is making progress. It is trying very hard on all fronts, as Jamie Lambert has explained. The United Nations High Commission has an office there, and they're very transparent about what their efforts are.

So in terms of the argument as to whether free trade agreements lead to greater economic prosperity that reinforces poverty eradication and helps fortify democratic institutions, I think there's increasing evidence of that, and that economists are now turning their attention more to trying to derive that information from the studies they do.

[Ed Fast, Conservative, Abbotsford, BC]

Mr. Chair, could I ask that Ms. Nelder-Corvari table with this committee the report or the study she referred to? I think that would be very helpful. I haven't seen a copy of it.

I will just follow that up with a quick question about your consultation process. Obviously you've had consultation with industry in Canada. Presumably you've had consultations with the manufacturing sector. Are they supportive of our proceeding with a free trade agreement with Colombia?

[Carol Nelder-Corvari]

Yes, I haven't heard any opposition from the manufacturing sector to this deal. There are specific industries that have an interest.

[Ed Fast, Conservative, Abbotsford, BC]

Can you name those?

[Carol Nelder-Corvari]

In the auto sector, in particular, they're supportive of this effort. I explained that we do have exports down there and we have activities in Colombia as well. So yes, they're very supportive of this effort.

[Ed Fast, Conservative, Abbotsford, BC]

Now, are you talking about the manufacturing sector broadly or just specific groups within that sector? I'm thinking about the clothing industry. Would it not be a little bit concerned about entering into a free trade agreement with a less-developed country?

[Carol Nelder-Corvari]

Well, textile and apparel is traditionally sensitive. Of course, the focus is on importations from China. The case of Colombia is not seen as a major threat.

[The Chair, Conservative, Lee Richardson]

Good. Thank you.

And thank you, Mr. Fast.

We're moving right along, so we're going to be able to go to a third round, and we're going to begin that round with Mr. Dhaliwal.

Try to do five minutes. I think it'll work.

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Thank you, Mr. Chair.

I would like to thank and welcome the talented panellists we have here.

My question is going to Ms. Nelder-Corvari.

You mentioned that most of our focus will be on the extractive industries. I have great concern about the dangers this agreement will pose to the people who are living near valuable resources. I haven't been to Colombia, but I can certainly tell you, from my experience with developing countries, that the extractive industries have been known to force the displacement of poor people from the land they want to develop.

What guarantee and what mechanism will we have in place that would lead these industries not to displace those poor people?

[Carol Nelder-Corvari]

Thank you.

I obviously can't speak to any particular operation or firm. I know there was recent information about one incident that I think you may be referring to. But in any case, with Canadian investments—and I think you're going to be speaking to the investors, and this is a good question to ask them—we expect investors to adhere to good standards, high standards of corporate social responsibility, and all evidence to us is that they are. In fact, there have been leaders in Colombia. Some have been internationally recognized for their efforts.

They are, first and foremost, expected to follow the laws of the land in terms of requirements in Colombia for property rights, environmental laws, and labour laws. But also we expect them to adhere to higher standards such as those that are promoted under the multinational enterprises, the guidelines of the OECD, and the Global Compact, and we're working through our embassy with them.

But I can tell you that most industries realize they have to be accountable. Globalization has required that they be accountable for their activities everywhere. It can negatively affect their brand and their share prices.

In Colombia, once they're there, they have to make a large commitment. Evidence is that they are making that commitment. The communities in particular are important. In some cases they have to convince people who are involved in the drug trade that they would prefer to work in their operations. It's a large commitment, and it's an effort that involves activities on all fronts, as I indicated: working with the community, working with the regional government, working with the unions. It's a comprehensive effort. It has to be.

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

If you're leaving everything to the private enterprise, then we don't even need you here to sign that agreement. So if those private enterprises do not follow those regulations--the rules that will protect the human rights of the people who are living around those neighbourhoods--what are the sanctions you would approve so that those people would not be able to get into those unacceptable practices?

[Carol Nelder-Corvari]

Canada doesn't generally extend its laws to apply to actions of Canadian companies operating beyond its borders. Canada does not support other countries, either, in extending application of their laws to Canada in respect of the right of other countries to regulate activities taking place on their soil.

CSR is about initiatives, our voluntary initiatives in terms of what we're trying to promote, but voluntary initiatives can be very effective if they're made to work. That sounds like an oxymoron, but it means hard work, and that means government activity as well as corporate and local level activity. It means all parties have to work together to ensure that progress is made, and that is why we've been having discussions with our companies, as I indicated, in Bogotá.

I can tell you that they speak very passionately about this, and you will see that when you go down. When we think of corporate social responsibility in Canada, we talk about environment and we talk about basic principles. It's much more of a commitment there, and I'm sure you will find that if you have an opportunity to visit Colombia.

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

On one hand, we're trying to see that this free trade will help our efforts to reduce poverty, but on the other hand, we are saying we are not guaranteeing that there are any sanctions for those people there, either from the Colombian government or from the Canadian.

You are saying, well, it's all voluntary, but I don't see it, because I have a lot of experience with developing nations. What happens in agreements like this is that the poor are getting poorer, the rich are getting richer, and that gap between rich and poor is increasing. That is the kind of thing that worries me. How will we be able to work on child poverty? Putting $1.2 million into UNICEF and what not is not going to help. We have to have certain mechanisms in place so that the rights of those children and the rights of women, the rights of the labour force there are protected somehow.

[Carol Nelder-Corvari]

I think the Colombian ambassador spoke most eloquently to this on Monday. He says Colombia needs these agreements; we need to offer economic opportunity other than the drug trade. They're seeking this. That's part of their aggressive campaign to seek agreements with the European Union, with EFTA, with Canada, with the United States. They feel this is their best opportunity to experience consistent, stable economic growth and to deal with poverty and, along with that, all the other issues that they've been trying so hard to address over the last six or seven years.

[The Chair, Conservative, Lee Richardson]

Mr. Lambert.

[James Lambert]

Perhaps I could add to that, and this relates back to the question Mr. Fast posed about what the benefits are of these mechanisms and the knock-on effects that they have in terms of advancing human rights in the country.

One of the important elements that these kinds of agreements focus on is rule of law, because from a commercial point of view and an investment point of view, that's core to the security that one needs to do business in the country. And it's almost self-evident, but it has been seen in the implementation phases too, that the kinds of legal and judicial standards that are set and that are adhered to as a result of these agreements also have knock-on effects for the stability and the credibility of the judicial system as a whole in those countries.

So strengthening a judicial system to deal with the economic facts on the ground of an FTA also has an important benefit of strengthening the capacity of judges and lawyers and the level of expectation about good governance in a country.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Dhaliwal.

Mr. Tilson.

[David Tilson, Conservative, Dufferin—Caledon, ON]

We've heard a lot of negative things about what you're going through, and I commend you for facing the trying times you have ahead.

I would like you to tell me what you perceive to be the good things about the deal. Who in this country, whether in manufacturing or agriculture, will gain the most?

[Carol Nelder-Corvari]

We have exports to Colombia in the range of $660 million. Those are largely grains and pulses. Pulses include a range of products—lentils, beans. I'm learning as I go through the tariff items. I never knew there were so many varieties. But those are traditional exports to this market.

I've met with some of the importers in Colombia who say that, given the transportation costs and other things, they import Canadian wheat because it's of a higher quality. But once the U.S. deal is in place, with the higher transportation costs, they will shift. There's a real interest from grain producers expanding their markets. We're also looking to expand in oilseeds, and we're in discussions with those industries as well. Pork and beef producers are also interested in this deal. So is the manufacturing sector—parts and accessories for motor vehicles, motor vehicles for the transportation of goods. There's a range here.

As for imports from Colombia, 80% are already duty-free. For Canada, that's not the case. We're trying to effect an agreement that is not only defensive but also a balancing mechanism in our bilateral trade relationship.

As for Canada, when you get beyond North America, our trade share with a lot of these countries is a fraction of 1%. But in the case of Colombia, it's dynamic, promising, and growing. It's growing at a pace that is quite remarkable, and that's likely tied to our investment interest. Our companies are there. They're expanding. We're doing all we can to support them.

[David Tilson, Conservative, Dufferin—Caledon, ON]

Will the manufacturing industries in this country like what you're doing?

[Carol Nelder-Corvari]

In the case of autos, let me put it this way: we haven't heard anything negative. We've been in consultations even with the traditionally sensitive industries such as textiles and apparel. They understand where we are in these negotiations. To my knowledge, they haven't spoken out in opposition.

[David Tilson, Conservative, Dufferin—Caledon, ON]

As in the EFTA deal, the main components of supply management have been carved out—specifically the over-quota tariffs. Is there something that you as a negotiator will be able to secure in this deal?

I represent an agricultural community, and we're interested in supply management. I assume that as part of your mandate you're able to reject any deal that involves cuts to that over-quota tariff.