International Trade Committee on May 12th, 2009

[Serge Cardin, Bloc, Sherbrooke, QC]

Thank you, Mr. Chair.

Good morning, madam; good morning, gentlemen.

Last week, we had the pleasure of hearing from Mr. Pellerin, the president of the Canadian Federation of Agriculture. He told us that the agreement as it stands is no El Dorado, if you will excuse the expression.

Even so, Mr. Pomerleau, it seems like you perhaps find the agreement to have merit. But I would like a number. We are told that the quota of 325 tons will go up to 504 tons in 10 years.

How much pork do we export to Peru now?

[Jacques Pomerleau]

We export 45 tons.

[Serge Cardin, Bloc, Sherbrooke, QC]

Okay. That is something, but it cannot be said to be a lot. It may not be El Dorado, but the witness insisted that it be done as quickly as possible because, in general, most agricultural sectors could benefit as a result.

When we look at this agreement globally in order to try to see the bigger picture of all its elements, two things concern us: investment agreements that are modelled on chapter 11 and the behaviour of mining companies.

In Peru, most of those companies are Canadian—there are 80 of them, I think. Now, we know very well that Canadian mining companies are often foreign companies that plant their flags in Canada because Canada has no policy on its mining companies overseas. So, in terms of social responsibility, these are not the best behaved mining companies.

Since the government did not accept the recommendations from the roundtable on the mining industry, how can we get those two elements into an investment agreement? If environmental legislation is not very strict and if labour rights are not at a very high level, the agreements could be held up if, when it comes to protecting foreign investments, you have the sword of Damocles hanging over your head.

I would like to know your opinion on that.

[Shirley-Ann George]

Would you like me to respond to that?

[Serge Cardin, Bloc, Sherbrooke, QC]

Oui.

[Shirley-Ann George]

You raise a very important point. I think that the standards for corporate social responsibility have been rising over the last numbers of years, as they should.

It is our experience that Canadian-based companies are in fact stepping up. When I've visited some of these countries, it is their nationals who are talking about how the Canadian corporation was setting the example for their own national companies to meet.

What can we do? I think the important question is, what can we do to continue to raise the standard, and what can we do make sure that the right things are being done?

I believe the current government has recently made some announcements that are very important.

It's not the larger companies, but generally the smaller and less experienced companies, who can go into a country thinking they're doing the right thing and find themselves in a situation they probably didn't intend to happen, but that clearly needs to be resolved.

We need to do more training within the foreign governments themselves to help them set the right standards place, because companies will adhere to the law, but in many of these countries, they have no standards in place to be met. If we help those countries put in place the right kind of guidelines, and also put training in place for our foreign trade commissioners, then when these companies come to that country, the commissioners can sit down and talk to them right from day one and say, “Do you know that in this country these are the circumstances you need to be aware of and that you need to plan for? And if you put the right framework in place from the beginning, you will be in a position where you won't get yourself into trouble.”

So it's largely about education. It's about working with foreign governments to help them raise their standards, and it's about making sure that we have the resources in place in our department of international trade so that we can work with these companies.

[Serge Cardin, Bloc, Sherbrooke, QC]

That is why I still have my doubts. For companies with foreign operations, it is basically voluntary. So, if the agreement does not demonstrate a genuine will, I do not think that it can provide and real protection for people and governments, even foreign ones.

I will end there and give the floor to my colleague, who has a question.

[Claude Guimond, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Good morning, everyone.

My question is for Mr. Yussuff.

You talked about labour, and I am very interested in that. You were very clear in your comments, even though the agreement we are discussing today has been negotiated and even though it contains a complete dispute-resolution process. That does not seem to satisfy you.

In your view, when we sign agreements of this magnitude, how would we best protect workers in the future? What would we need to include to satisfy you?

[Hassan Yussuff]

Thank you for your question.

I think that is an appropriate point. There is no question, given the evolution of our negotiations with country and free trade agreements, that the labour side of the agreement has always been dealt with as an addendum to the agreement. It's not a core part of the trade agreement. I think in the context of how they have continued to address them and treat them, they are separate. I think if there is a commitment on the government's part to give real meaning and teeth to protecting labour--as there is on the part of the countries that we're negotiating with--then it should become a formal part of the agreement. It should be a part of the core of the agreement.

Similarly, we should put measures within those agreements that would have the same weight in regard to denying special status in terms of their products, but that would also give us the ability to have countervailing provisions should they not meet the requirements.

The core issues that we're seeking to protect, and which Canadian negotiators have been promoting, are really agreed to within ILO conventions. Canada is not asking Peru to do anything different than what Peru is obligated to do legally in regard to its obligations under ILO. I think we consistently get bogged down in this debate. Somehow we have to cajole them, somehow we have to encourage them, somehow we have to educate them. Peru is not a country, with all due respect, where there's a lack of knowledge or education. They're quite sophisticated. They fully understand their responsibility. But for some strange reason they can't seem to muster the political commitment to say that they are going to enforce their rules equally, as they're expected to do as part of the ILO agreement.

I think it's only fair for us to say that, given the different nature of the treatment of labour, it is quite understandable that these governments don't take these matters as seriously as we would like them to. Similarly, the same argument applies on the environment. I don't think we're asking Peru to do anything different than they're obligated to do in their responsibility under international treaties on the environment. But because it's an addendum to the agreement, it doesn't have the same weight or the same commitment.

I think it's critical that we at least have an agreement on this point, because it also provides an opportunity for these countries to undercut and set some different rules in terms of how we compete with them in the same market. I think if we're going to have a level playing field, we should have a level playing field. There should be some timeframe and process for us to get there. But it's fair for us to say that it shouldn't be any different for Canadian workers than it is for Peruvian workers if you're going to participate and benefit from trade agreements.

[The Chair, Conservative, Lee Richardson]

Thank you.

Mr. Holder.

[Ed Holder, Conservative, London West, ON]

Thank you very much, Chair.

I'd like to thank our guests for attending today. I had the privilege to be in Peru in March as part of a FIPA session--the Fórum Interparlamentar das Américas--where we talked about interparliamentary democracies. Much of the dialogue, when we met with congress people, business people, and indigenous people, centred around this whole dialogue of free trade. There was strong support of free trade in most circles.

I'd like to start, if I might, with Ms. George. You made some interesting comments. You're quite right that under the terms of our agreement, 95% of Canada's exports into Peru will immediately become tariff-exempt. And you talked about the trade with Peru from Canada's perspective--$1.8 billion in 2007 and rising. I get all of that.

Here's my question to you. As you've said, the deal has been done in the U.S. and China. The U.S. was done February 1st. The EU is coming up quickly. So my question is, from your experience and from your members' perspective, what would happen if we didn't do this deal? What's the implication, please?

[Shirley-Ann George]

The implications for some sectors are quite significant, especially in commodities, because so many of our Canadian farmers of course work in that environment. A small tariff change can basically shut you out of the market.

To give you another example, there was a situation where the U.S. put in place a free trade agreement in Central America in which potatoes were coming from the United States at a 0% tariff and potatoes coming from Canada still had a tariff of, I believe, over 15%, and overnight literally millions and millions and millions of dollars of Canadian french fries were no longer moving to Central America because of the difference.

[Ed Holder, Conservative, London West, ON]

Would you like to repeat that?

[Shirley-Ann George]

I said millions and millions and millions of dollars of Canadian french fries were no longer moving to Central America.

[Ed Holder, Conservative, London West, ON]

I thought I misheard. Thank you. That's huge.

I'd like to come back to another question, if I can, in a moment, but I have questions for other guests as well. If that's indicative of the kind of challenge we have by not proceeding with this deal, then we talk about the greater need for Canada proceeding with this as promptly as we can, so I would agree with you.

Mr. Pomerleau, you mentioned in your comments that Peru was not yet a significant market for pork. I'll come back to a question, but I'd like to bring us back to last week, when we had Mr. Pellerin of the CFA here. He supported the free trade agreement between Canada and Peru very strongly. He said it wasn't a perfect deal, and I gave him one of the quotes my mother often made, which was “don't bite off your nose to spite your face”. She made this up.

Here's my question to you. You made the comment that at least as it relates to the pork industry, you thought our negotiators were very creative, because the first time....

I'll look at the deal on the pork, where it says that for the first 10 years of the agreement, all Peruvian tariffs on pork products will remain in place, but in year one of the agreement, Canadian exporters will be able to export 325 tonnes of pork tariff-free, rising to 504 tonnes by year 10. Beginning in year 11 right through to year 17 in equal stages, that will then become tariff-free for the first time ever.

So I would like to ask you, what impact would that have on the pork industry? What's your sense of it, and how were we creative?

[Jacques Pomerleau]

We were creative in the sense that we couldn't get the same tariff elimination as the U.S., so we had to give some advantage to our producers and exporters. By getting that tariff-free quota that the Americans don't have, then at least we were able to introduce ourselves for the first couple of years and then be recognized. Otherwise, if we had something that was worse than the Americans, we would have been out of that market for 17 years.

[Ed Holder, Conservative, London West, ON]

So from your perspective, on behalf of your industry in Quebec and the rest of Canada, you support this deal?

[Jacques Pomerleau]

Oh, definitely.

[Ed Holder, Conservative, London West, ON]

So in Quebec and the rest of Canada. Thank you very much.

Mr. Yussuff, I'll put my final questions to you, unless I have another moment. I'm always concerned about Canada going back to becoming hewers of wood and drawers of water. My mother did not make up that expression.

I'm concerned when the CLC--and I have respect for the CLC--wants to turn this deal down due to Canada's economic crisis, if I took your quote right. I've read this free trade deal. I know you would have read this free trade deal. Is there even one clause in this free trade deal that you can support?

[Hassan Yussuff]

I would argue that the premise of the agreement is based on the premise of all other free trade agreements we've negotiated, and we think that's a flawed approach. Again, I will come back to the point that you started with. We got into this economic crisis because the levers of government to regulate the financial industry were taken away or abandoned. I didn't make that up; that's the reality. I think in regard to how we would manage investments in our two countries, it's critical we have rules that we can also enforce from both sides.

In the context of the agreement we said this is a failed model. We think we need to think of a different model, and we've worked with our trade union colleagues in the Americas to prove the point that Mr. Cannis raised earlier. We are interested in trade, and it's very clear in terms of some of the things we think that government should consider in trade agreements that would obviously deal with the concerns, not only from labour, but also on the question of how we can continue to allow the smaller countries to develop it. It's very clear in regard to where we are at, that had some of these provisions been considered....

Most of my Latin American colleagues, including my trade union colleagues, believe there should be fair trade agreement as opposed to free trade agreement. When we are talking about fair trade, there is obviously a different measure and a different mechanism in terms of where we start from the premise that both countries would benefit mutually. There is also a question of raising the social standards in our country as it is to protect the environment and the labour provisions of each country. That of course comes from a different premise from the one we've had, where we basically said with free trade you don't have to have the rules, essentially, other than having the right to export to each other's country. The rest of it is basically going to be subjected to whatever the parties decide.

Coming back to a point that was made earlier, all of corporate social responsibility, which has been promoted quite a bit, is about voluntary measures.

[Ed Holder, Conservative, London West, ON]

I appreciate all that you've said, although it did not answer my question. Can you name one clause within the Canada-Peru free trade agreement that you would support?

[Hassan Yussuff]

No, I don't think there is a particular clause that I could point to.

[Ed Holder, Conservative, London West, ON]

I think that makes the largest statement. I thank you for your candour.

Thank you all, guests.

[The Chair, Conservative, Lee Richardson]

I have inadvertently skipped Mr. Allen.

I welcome you to the committee today, Mr. Allen.

I'll hear from Mr. Allen for seven minutes of questions and answers, and then we'll go to Mr. Brison.

[Malcolm Allen, NDP, Welland, ON]

Thank you, Mr. Chair. I'm sure my mother always used to say that I should always share, and I was quite happy to share with my colleague Mr. Holder.

Let me turn my attention to what I heard earlier from, I think, Ms. George, about a rules-based system. There's no question that most of us who live in organized societies have a rules-based system of one form or another. I would posit the suggestion to you, in fact I would say it in all sincerity, that rules-based systems are wholly dependent upon who sets the rules, what those rules happen to be, and how those rules affect those of us who are interconnected within that particular society.

Based on that, and when I look at this agreement from the perspective of civil society, the environment, and, indeed, labour groups, the rules-based writing of this particular agreement sends them to the sidebar, because it doesn't wholly integrate them into the agreement. Those of us who have done collective agreements understand why we put things on the back page as addendums, letters, because we don't give them the full weight of a collective agreement. In this particular case I would suggest we haven't decided to give this the whole weight of the agreement. We've simply sent it to the back. That's a rule, which makes it based for those who are living with those rules...less than those who are living with another rule, which is the investor class, which is actually in the agreement. I would suggest to you that this is an unbalanced rule, not necessarily a balanced rule.

The Americans didn't do that. Let me quote to you: “In the U.S.-Peru deal, the labour and environmental sections are not side agreements but chapters in the main text, chapters 17 and 18....”

So the Americans decided it was worthwhile to put the environmental and labour codes right inside the agreement, not outside of it. Yet, we have chosen, this government has chosen, through this agreement, not to do that. I would suggest we're establishing two sets of rules: the rules-based system the Americans want to have with Peru and the rules-based system we want to have with Peru. Neither of those equate one another, in my estimation.

Mr. Yussuff, do you see any sense of why we would do that differently? Why would the Canadian government decide not to incorporate while the Americans did, if indeed we're still talking about the ILO? I know we all hate acronyms. The International Labour Organization is the one that wrote the rules that most countries accept. Why were the Americans successful, or why did they think it was the right thing to do, while we seem to be not successful, or maybe we didn't think it was the right thing to incorporate those rules inside the body of the agreement?