Now that we've cleared up the background noise, which I was also hearing, what I had begun to say was that I can certainly vouch for the importance of and the increasing interchange between Koreans and Canadians. My nephew is about to marry a young Korean woman this Christmas.
Today, however, I think we have to focus our attention on the deal that is actually on the table. I'm very grateful for the opportunity to raise some serious concerns about that agreement.
In the time allotted, I wish to address three issues: the Canada-Korea trade in goods and Canada's manufacturing crisis, the pursuit of WTO-plus intellectual property rights in the talks, and the deal's investor-state dispute resolution mechanism.
Since the Asian financial crisis in 1997, Canada-Korean trade in goods has been very unbalanced. Canada has consistently run large merchandise trade deficits with South Korea, $2.5 billion last year. Moreover, Canada's largest exports to Korea are natural resources--for example, wood pulp, coal, aluminum--while Korea's biggest exports to Canada are manufactured goods--for example, finished vehicles, TVs, radios, electronics.
As you are well aware, Canada-Korea automotive trade is especially lopsided. In 2006, Korea sold $1.7 billion in automotive products to Canada, while Canada sold only $11 million worth in Korea, a ratio of 153:1.
The Canadian Vehicle Manufacturers' Association, representing the North American and Japanese manufacturers, is concerned that the deal would provide disproportionate benefits to Korean automakers. Only last week, Ford Canada warned it would have to re-evaluate its current investment position in Canada if the Canada-Korea deal goes ahead as planned. The Canadian Auto Workers Union has released a study that estimates significant job losses from the deal.
The proposed agreement would certainly include rapid, perhaps immediate, tariff liberalization for manufactured goods. The negative impacts in Canada would be felt not only in autos and shipbuilding, which have received the most attention, but also in a broad range of high-tech manufacturing sectors, such as electronics, machinery and plastics.
The proposed deal would worsen Canada's large bilateral manufacturing trade deficit with Korea and reinforce an unhealthy and unbalanced trade pattern, where Canada's primary exports to Korea are low value-added natural resources, while our main imports are high value-added manufactured goods.
Canada has lost 291,000 manufacturing jobs since November 2002, due mainly to the rise in the exchange rate of the Canadian dollar against the U.S. dollar and the rising non-North American--mostly east Asian--share of the North American market.
The proposed deal would be a blow to Canadian manufacturers and manufacturing workers at a critical time when they are struggling to cope with this crisis. They are justifiably looking to Canadian governments for supportive policies, not initiatives that would make their current situation even more difficult.
Turning to intellectual property, in a significant departure from its approach in previous bilateral free trade agreements, Canada is negotiating an intellectual property chapter in both the Canada-Korea and Canada-Colombia-Peru deals. Since the conclusion of the WTO Uruguay Round, no Canadian bilateral FTA has included an intellectual property rights chapter.
Since Korea and Canada are both WTO members, to which the WTO Trade Related Intellectual Property Rights, or TRIPS, rules already apply, the only rationale for including an IP chapter is to negotiate WTO-plus obligations.
What types of TRIPS-plus rules are Canadian negotiators seeking? Even at this late stage in the negotiations, the public does not know for sure. This committee can play a vital role in lifting this veil of secrecy.
It can be surmised, however, that Canadian negotiators are actively considering so-called data exclusivity and linkage provisions that reduce access to affordable drugs here at home and would have harmful impacts on access to medicines in FTAA partner countries.
The monopoly protections afforded by data exclusivity can delay generic competition in cases where a pharmaceutical product is not patent-protected or where a compulsory licence has been granted on a patent. Such provisions can also compel generic drug companies to conduct time-consuming and redundant clinical trials before they are able to market cheaper medically equivalent versions of brand name drugs.
Canada recently extended its own minimum period of data protection from five to eight years, among the longest in the world. It would be a serious mistake, however, for Canada to lock in these new rules by binding them in its bilateral trade treaties, which would make them very difficult to change. It would also harm public health in partner countries by driving up drug costs and reducing access to affordable medicines.
Another concern is that the intellectual property chapter would include rules that prevent health regulatory agencies from granting approval for a drug if another company claims a patent. Health regulatory agencies should not be saddled with patent enforcement. The practical effect of such rules is to frustrate and delay the introduction of cheaper generic medicines through pointless and costly litigation.
Pursuing monopoly protection beyond what is required by WTO rules in the Canada-Korea or the Canada-Andean pacts would set a very bad precedent, locking in domestic policies that Canadian governments may want to change in the future and reducing access to essential medicines in FTAA partner countries. An analysis by Oxfam, for example, estimates that similar provisions in the U.S.-Colombia draft FTA would cost Colombians an extra $940 million a year to buy more expensive medicines.
I urge this committee to investigate why Canadian negotiators are breaking with past practice by pursuing intellectual property rights in these bilateral agreements and to recommend a halt to this practice.
Turning finally to the investment chapter, the Canada-Korea deal and the Andean deals would also contain investment chapters replicating NAFTA's controversial investor state dispute settlement mechanism, which allows investors, as you know, to sue governments over public policies that allegedly breach stringent investment protection rules.
Binding arbitration can be invoked unilaterally by investors without first seeking consent from their home government. Tribunal decisions are final, although they may be reviewed on narrow procedural grounds in the domestic courts. Although tribunals cannot compel governments to change inconsistent measures, they can impose substantial fines.
The Canada-Korea agreement would expand these investor rights, which are unparalleled under multilateral trade rules. Under NAFTA there have been, by my count, 49 such claims. The number of challenges to U.S. government measures has fallen off in recent years, but new claims continue to mount against Canada. There were three in 2006 and another three already in 2007.
I will just tell you briefly about a couple of these disputes. One of them pits ExxonMobil, the world's largest and most profitable oil company, against development policies in Newfoundland and Labrador. Exxon, which is a partner in the Hibernia and Terra Nova oil and gas fields off Newfoundland, alleges that Canadian guidelines stipulating that energy companies active in the offshore invest in research and development within Newfoundland and Labrador are prohibited by NAFTA's investment rules.
In another recent case, the Adams Mine case, the U.S. investor is challenging the Ontario government's decision to halt a highly contentious project to dispose of Toronto's solid waste in a man-made lake on the site of a former open-pit mine in northern Ontario. In fact, nearly half of the investor state claims have involved challenges to environmental protection or natural resource management regulations. Beyond the immediate impact of such claims, there is concern about the chilling effect; the government may avoid regulating for fear of becoming involved in a potentially costly dispute.
At a time when Canadians are more concerned than ever about protecting the environment and ensuring that communities share equitably in the wealth created by resource development, the Government of Canada should not be expanding or entrenching such provisions through bilateral trade agreements.
To conclude, I commend the committee for holding these hearings. There needs to be full public and parliamentary debate on all aspects of this deal. The deal should not be rushed ahead simply for the sake of getting an agreement.
Trade expansion should be based on the principles of fair and balanced trade. Excessive intellectual property protection and investor rights have no place in Canada's bilateral trade treaties.
I just want to conclude by saying that my intelligence on the U.S.-Korea FTA and its prospects for ratification is very different from that of the previous two speakers. I think it appears very unlikely to come to a vote in the U.S. Congress before 2009.
Pending the results of the U.S. presidential and congressional elections, the fate of the deal is uncertain. Key provisions could certainly be changed. Given this, I think Canada, and also Korea for that matter, would be well-advised to bide their time and to delay or suspend their current talks.