International Trade Committee on April 28th, 2008

[Dean Beyea]

That's right. Canada is an open economy. In fact half of our tariffs are MFN-free. We certainly don't apply them to coffee, bananas, and coal, which are the three primary exports from Colombia to Canada.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

So essentially we're talking about market access to Colombia. That's why I'm coming back to this question of the impact on the rural economy in Colombia.

But from what I gather, no study has been done, no indication has been made from the Canadian perspective of what that impact may be, whether or not it would be similar to the impact on the Mexican rural economy.

[Dean Beyea]

We have done economic analysis. As I mentioned earlier, it's available on the foreign affairs department website.

But I think you also have to think of the benefits of free trade at large, not on a sector basis. In fact, free trade leads to countries and firms competing in areas where they have a comparative advantage. We're seeing that in Colombia, as they're major exporters of certain commodities and net importers of most other agricultural commodities.

The dynamic in a free trade agreement is about generating investment, about providing technology transfers and the positive transfers that follow investment in that market, which allow companies to compete in a greater market. So it's much more than about getting rid of tariffs on 20% of the exports to Canada.

I don't know if there is something else to add....

[Denis Landreville]

One of the observations we made early in the presentation was the complementarity of our trade with Colombia. We import a significant amount of agricultural product from Colombia that is already duty-free, and that accounts for a large share of their exports to Canada.

They have been clear in terms of indicating some of their interests on the agricultural side in terms of their export interests to us. As well, in the case of our key agricultural exports to them, one-third of Colombia's imports of pork originate in Canada, 75% of their pulse imports come from Canada, in terms of beans, peas, and lentils, and about 40% of their wheat imports originate in Canada. As we've indicated, those correspond with our key agricultural export interests around which we want to be able to compete and continue to compete in Colombia on the same footing as some of their other preferential suppliers with whom we share imports.

In that respect, certainly we're aware of Colombia's import sensitivities. They've been clearly indicated to us. As well, we are cognizant of their export interests. How we view the negotiations is very much in terms of ensuring that our respective export interests are being adequately addressed in the FTA.

[The Chair, Conservative, Lee Richardson]

Good. Thank you very much, Mr. Landreville.

We'll have to move on.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Did you deduct your time, Mr. Chair?

[The Chair, Conservative, Lee Richardson]

Yes, I did.

We're going to move on. Before we move to the second round--I think we should be able to get through a second round--I might just say to the committee that we do have some housekeeping business with regard to the visit to Colombia. We could probably get it done in 15 minutes, so let's aim to wrap this up at five. We'll get through this round, in any event, however much time it takes. But I'll need about 15 minutes at the end of the meeting in camera to deal with the visit to Colombia and Panama.

Ms. Murray.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

Thank you, Mr. Chair.

Being new to this committee, I'm still trying to understand what my responsibilities are. Some of the other members have talked about needing to understand the free trade agreement enough to be able to decide whether this is one to support or what the concerns are, and how we can make it better.

This is a great introductory context and understanding, but to be able to say “Yes, this is a good agreement, I support it”, or “Here are some specific ways that it could be improved” is very difficult to do on the basis of general background information even though you have some specific figures.

This is what comes to mind for me, having been in negotiations for the Kyoto Protocol in 2001 in Marrakesh. There were also a lot of ways Canada didn't want to tip its hand, and those were also complex negotiations. But the delegation was privy to much more detail than what we're seeing here. So I'm wondering if we're going to get more detail or if it's possible to use a format similar to those negotiations, where there were very specific files that different negotiators were advancing. There was a much clearer idea as to the rationale for the push-back from the other negotiating members.

When there is a high tariff on a particular good, I don't know whether that is because they see that good to be receiving agricultural subsidies here, so they need to protect it there, or what the reasons are for it. The explanation that we don't want higher tariffs than our neighbour is a good one, or that we don't want to have tariffs on our goods when our trading partner doesn't have tariffs sending goods into Canada. I understand those generalities. But I would like to see much more clarity about the measures of success you have as negotiators. So that's my first question.

Do you have some measures of success that can be shared with us as to what you're looking for? What would make this a successful free trade agreement, from your perspective as representatives of Canada at the negotiating table? What would be the measures of success?

And secondly, how would we be able to know, say five years down the road, whether those measures were being met or not?

I'm looking for a better understanding as to what the components of the negotiation are, what we need, from Canada's perspective, for this to be an effective free trade agreement. And this is on the commercial side that I'm directing my questions.

[Dean Beyea]

Thanks very much for the questions. Maybe I can try to be more specific.

Certainly our objectives going into these agreements have been twofold. I touched on them earlier. One is defensive vis-à-vis the United States. We're hoping to achieve market access, certainly with respect to what we're already exporting to Colombia, on a level that's on par with the United States. That's an overriding objective. I think it's safe to say that it's difficult in many areas to do better than the United States, given the size of the economy and the weight they have in negotiations vis-à-vis what we do. So we certainly don't want to come out worse.

I think some of the sensitivities in Colombia--if you want something more specific--are a result of their agreement with the United States. They've just opened their market to the largest economy in the world, and are nervous about opening it some more, or potentially opening it some more.

I don't think any of these issues are unresolvable. Our goal is generally to get rid of the tariffs, as much of them up front as we can, and then try to balance import sensitivities on both sides by reducing tariffs over a longer period of time. Hopefully we can minimize those on both sides so that we can each enjoy the benefits of free trade as quickly as possible and not fall behind either what Colombia has done with the United States or will do with respect to Europe and EFTA, and Mexico in particular.

So from a market access perspective, that's what we're doing. Then where you come out is that you end up with a few problem areas: we'd like quicker and faster market access, they'd like a slower and more delayed entry into the market, and vice versa. That's perhaps where we've gotten to in this negotiation. We're trying to find a mutually beneficial balance of interests that will create a good economic agreement for each of our industries.

[Cameron MacKay]

Maybe I can just add to that a little bit, about the measures of success.

What we're going for with Colombia--we do this with all of our free trade agreements--is to look for a comprehensive, ambitious FTA that creates new opportunities for Canadian businesses doing business abroad. Reciprocally, of course, our trading partner is looking for opportunities here. We want to level the playing field with respect to that country's other trading partners, particularly those with whom they have preferential trading agreements, such as the United States in the case of Colombia.

We're trying to build on multilateral commitments. That is to say, take the WTO commitments that we have all made with respect to trade in goods and liberalization of services, etc., and build on those. Expand on them in the case of investment, for example, which isn't covered by the WTO. Ultimately the measure of success, broadly speaking, is are Canadians--that is to say, Canadian businesses, private citizens, SMEs, big businesses, NGOs that have a varying range of concerns about our FTA agenda--broadly satisfied with what we've negotiated?

We can never make everyone happy all the time, but we do our best. The ultimate measure of success is when we submit the FTA that we as officials have negotiated with this other country. When we submit it to the government, then on to Parliament, to the members of this committee and the other members of Parliament, to pass the bill to implement the FTA, it ultimately comes back to you to decide if we have achieved what Canada should have achieved in this negotiation.

[The Chair, Conservative, Lee Richardson]

I'm sorry, we're out of time.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

Could I have a quick clarification of the answer?

[The Chair, Conservative, Lee Richardson]

Sure.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

Thank you, Mr. Richardson.

So parity with the United States agreement--that's pretty objective. I presume we can see what those figures are.

Things are doing better with our importers and our exporters. Are there dollar goals for that--i.e., the exports to Colombia will go from level A to levels B or C? Can we get some idea of the objective?

The fourth one was that Canadians are happy with it. I would be interested to know how you would measure yes or no on whether Canadians are happy with this FTA. What would be the measure there?

Those things will help the members decide whether they want to assist in passing this bill or not. Things that have some objective quality to them would be welcome.

Thank you.

[The Chair, Conservative, Lee Richardson]

Thank you, Ms. Murray.

Monsieur André.

[Guy André, Bloc, Berthier—Maskinongé, QC]

Once again, welcome to the committee. I have two questions for you.

You mentioned on several occasions that a few detailed studies of the impact of the Colombia FTA could be found on the website of the Department of Foreign Affairs. Some sectors are more affected than others. For example, were farmers and some manufacturers consulted? That's my first question.

My second question relates more to the human rights issue, both from a different angle. What is your impression of this country that, fundamentally, has a problem ensuring the safety of unionized workers and certain groups of women and maintaining law and order in all regions, given the presence of the Revolutionary Armed Forces of Colombia, or FARC?

Any time an FTA is negotiated with a country, we see increased mobility of people, goods and investments. How can we ensure the safety of Canadian investors, given that this government seems to engage in questionable practices and does not have a firm grip on its economy, political system and security? This topic was again discussed in the weekend newspapers.

[Dean Beyea]

I think that overall, as always, when the government launches a free trade agreement, they do a broad consultation, a call for comments. But in thinking of potential questions today, I thought I would maybe write down the industries and sectors that have contacted me, and which certainly have an interest in the FTA, primarily an export one.

I know that Denis talks to the entire agriculture industry at least once a month, so I'll let him add his specifics, but we've certainly heard from the paper industry in Canada, the forestry sector—in fact, someone with an interest from Quebec; the auto sector; the beef industry; the pork industry; the chemicals industry; textiles and apparel; and we've spoken to the footwear people as well; the liquor industry; the grains industry; the mining industry; the sugar industry and the flour industry. Those are the ones I can list off the top of my head. Some of them call me weekly and some once a month, all with good interests in seeing this negotiation advanced and coming with terms pleasing to them. So we have ongoing consultations with them.

I know that the Department of Agriculture has a very formal process for doing this, and maybe Denis could speak to that.

Perhaps with respect to your other questions and the broader issues—which all seemed to be about whether there was market confidence in going into Colombia, whether we've seen changes in security and concrete facts on that—I thought that maybe one of the best ways to address these was to quote third parties. So I have a list of documents here.

The Economist from March 22, 2007, calls it the “Uribe effect”, a function of rising GDP since the time he came into power, referring to the decline in murders, the increasing gross fixed investment as a percentage of GDP, etc.

Over the last year, Standard & Poor's, Fitch Ratings, and Moody's have all upgraded the credit rating of Colombia.

Business Week in May 2007 called Colombia “The most extreme emerging market on earth”, saying:

The growing confidence in Colombia brings a new set of challenges. The streets are safer, and citizens are road tripping again. Export-import activity is steadily growing. Tourism has nearly tripled in five years, and beach-lined, historic Cartagena is among South America's most expensive real estate markets.

The Guardian, the U.K. paper, says:

In the space of just five years something remarkable has happened—the cities have become relatively safe. Murder and kidnapping rates have plunged, and there are no more bombs. The only explosions are in property prices.

Forbes Magazine calls Colombia a “key ally and fast-emerging global player”:

Last year, for the third year in a row, Colombia's economy grew by 5% and registered a surge in investment.

As well, Foreign Direct Investment Magazine, a journal of the Financial Times, refers to Colombia coming out of the shadows, and says that:

Colombia has been fighting to prove that it is a safe and worthwhile investment destination and has now put itself firmly back onto the investment map.

[Guy André, Bloc, Berthier—Maskinongé, QC]

According to you, this country is a very safe place. However, when we visited Colombia, we were warned not to leave Bogota or to venture into rural areas. The warning seemed to imply that this country was not very safe, contrary to what you are telling us.

[Dean Beyea]

What I am talking about is an improvement in security. Certainly they're not getting there overnight, as there is considerable work to do, and no one would argue with that. They certainly appear to be on the right path, and certainly the foreign direct investment into the Colombian market is indicative they are on the right path.

It's a good opportunity for Canada, and Canadian industry has an interest in investment in that country.

That's not to say it's perfect. There are certainly security concerns, but the proof is all positive.

[Guy André, Bloc, Berthier—Maskinongé, QC]

A number of foreign workers have allegedly been assaulted or had some unfortunate encounters. Several politicians have also been kidnapped.

Do you know if any foreign investors, workers or businessmen have encountered any problems? Do you have any statistics on the number of people who have either been assaulted or killed?

[Dean Beyea]

No, but I do have statistics, and these are brutal statistics, about the number of murders in Colombia. I'm happy to share them with you. They're from the ministry of social protection in Colombia. I think what you'll see is that they show steady and rapid declines. Between 2002 and 2006, murders of union members have decreased by 70%. The rate is certainly much higher than it should be, but you'll certainly see that progress is being made in this area.

[The Chair, Conservative, Lee Richardson]

Thank you.

Thank you, Mr. Cardin.

Mr. Keddy.

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

Thank you, Mr. Chairman, and welcome to our witnesses.

I didn't quite hear your last statement. From 2002 to 2006, murders of union leaders went down 70% or 60%?

[Dean Beyea]

Seventy percent.

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

Seventy percent.

Speaking to our witnesses, it would appear to me that although there are certainly some questions that are being asked and more that will be asked and many that need to be asked, we're missing the overall theme here. The overall theme, as I understand it—and I'm not trying to break this down into too simple a nutshell, if you will—is with a 30% increase in exports in the economy of Colombia, we've seen general violence decrease by 40%. Murders are down by 50%, kidnappings are down by 90%, and 45,000 paramilitary and guerrillas have been demobilized. I realize life is not perfect in Colombia, but I think the point many of our members are missing here is that we're headed in the right direction.

I guess the proof would be in whether or not, at the end of the day, this trend continues, but there's be nothing that I see so far, in my research, that would tell me that it wouldn't continue. I guess that's a very general statement.

Do you expect to continue to see this trend?