International Trade Committee on May 12th, 2009

[Hassan Yussuff]

I think that had to do with our strategy around negotiations to a large degree, to be very candid. I don't think it's impossible. Had we chosen to do so, we wouldn't have achieved the same success as the U.S. in their negotiations.

There has been a change in thinking in the U.S., because they have evolved along the same path we have in negotiating a free trade agreement. They have seen the same inherent weakness we have encountered in dealing with labour and environmental provisions of trade agreements.

I think they fundamentally believe that incorporating those two elements within the core of the agreement gives equal recognition that labour and environment matters will be treated with the same weight and commitment as public policy. More importantly, it sends a clear message to the countries we're negotiating with that they have the same reciprocal commitment.

In the absence of failing to give a clear commitment to enforce their labour and environmental provisions, they could suffer some significant penalties under the agreement. That certainly brings it into a better balance. The ultimate objective is to improve the conditions in which labour and the environment will be treated in both countries.

From our perspective with our trade negotiators, this is just a question of tactics. We have chosen not to go that route. Some would argue that's using a sledgehammer to deal with the issue. But I believe, to be fair, that despite our prodding and encouragement we haven't yet achieved the degree of success we are claiming for labour and environment within our trade agreements with the countries we've been negotiating with.

[Malcolm Allen, NDP, Welland, ON]

My colleague talked earlier about whether you could accept any paragraph or sentence inside the agreement. Others have talked about whether the labour movement is hiding its head in the sand when it comes to trade. I would suggest to my colleagues that the only way you can belong to a trade union is if you work. Since we understand that we're a trading nation—and I don't want to put words in your mouth—it would be to the advantage of the CLC if more folks were working so they could have the opportunity to belong to the trade union movement.

If trade is going to work for Canadian workers and for those workers in the host countries that we enter into agreements with, what do we need to see in those agreements to enhance them so there are protections, and so this rules-based system we all accept is level and fair for everyone participating?

None of us are in isolation in this. Those folks who are going to work are going to be covered by the agreements. Other things like the environment and civil society that encompass all of the attributes of that particular country and ours are going to be parts of it.

So is there a model that we should emulate or at least look to as an approach that we should take?

[Hassan Yussuff]

I'll just offer two points. We did anticipate this debate when the FTA was being highly debated within the Americas and we did produce a document because we felt it was important. It was not just to be critical. You have to have some alternatives to suggest, and we did suggest that there are things that government can do. If you are serious about having an integrated market, what would that look like? We produced something to speak to that.

As a matter of fact, many governments in the Americas are now looking to this as a document. We go on to say that many of the governments in the Americas believe in fair trade as opposed to free trade. And what does that mean? It means they want to talk about trade and trade and development in the same context, not separately. Because these are emerging markets, they are countries obviously not of the same development as Canada, but they do recognize that, like us, they obviously have to move forward.

I would suggest, again, that the erroneous part of the free trade agreement is chapter 11, which still seems to prevail in every agreement. And similarly, I think what the U.S. has now done in dealing with labour and environment by incorporating those in the agreement certainly brings added dimension.

I also think it's critical, as we go down this road, for Canada and for these other countries, that there be an impact study especially in the context of what the employment growth would be if we're going to have a free trade agreement. What sectors would be affected, but more importantly, what transition measures would we put in place to allow those sectors to deal with changes? I think it's only fair because we ought not to do this in isolation. These agreements do have an impact.

There is no question that Peru has a large trade deficit with Canada, and we have to take steps to try to address that. But we ought not address it in a blind way. We ought to address it in a way that says this will lead to giving Canada a real voice in the Americas. How we are going to conduct our relationship with other countries is how they will conduct a relationship with us.

We are viewed very differently from how the U.S. is viewed in the Americas. We don't have the same history. We don't have the same prejudices the Americas have for the U.S. They see Canada in a very different way, but except for policy, we don't necessarily take a different approach. And I think it's critical, given our own development, living beside the United States; there is a need for us to take a different approach.

Canadian trade unions are not suggesting we should bury our heads in the sand and not talk about how we are going to conduct ourselves with regard to trade with other countries, but in doing so we need to be very clear about what the underlying pillars are that we are going to promote. Most importantly, is one sector going to benefit more than others? And with regard to this agreement, the primary objective, I believe, and maybe I'm wrong, is to deal with the investment side of the agreement and then with the other sides of the agreement.

[The Chair, Conservative, Lee Richardson]

Thank you.

Thank you, Mr. Allen.

Mr. Brison.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you, Mr. Chair.

Thanks to each of you for your interventions today.

We've met with stakeholders representing a range of sectors. The Canadian Chamber of Commerce, of course, represents a range of sectors. We've talked to, and I've had discussions with, the manufacturers. We've had the Canadian Federation of Agriculture before us, indicating that across the agricultural sectors this is a good agreement for Canada and represents opportunities.

During a period when Canada, as a small open economy that is dependent on external trade for our prosperity, has just had the first trade deficit in 30 years and has an excessive dependence on the U.S. market, it's clear we need to diversify our trade relationships. And historically we've learned that protectionism during a time of economic downturn can have a pernicious effect. We saw in the 1930s that it was protectionism, the Smoot-Hawley Tariff Act in the U.S., that led to retaliatory trade actions and protectionism from around the world that turned a recession into a full-fledged depression.

Right-of-centre economists and left-of-centre economists, people like Joe Stiglitz at Columbia, who was an economic adviser to Clinton and a Nobel Prize winner, have expressed real fears of protectionism and the need to liberalize trade.

My question is to Mr. Yussuff. Take the following agreements: Canada-U.S. FTA; NAFTA; Canada-EFTA, the more recent one; and the current negotiations with Canada-EU. Do you support any of these trade agreements?

[Hassan Yussuff]

As to the U.S. relationship, it's not a debate about the benefits of NAFTA. When we got into the free trade agreement with the U.S. we were going to end the harassment of our softwood lumber industry. Let me go back a bit in history. We're still dealing with the softwood lumber industry today, but we've evolved. Our trade with the U.S. has grown, but I would argue that our trade with the U.S. would have grown anyway. It's a natural evolution of our relationship and our integrated market.

There are things that I think we need to pursue, because they have a broader interest. But in regard to the concerns we've been raising, there has been little reflection on how the government approaches the policy mechanism. It's the same standard, or some variation of it. Nothing has really changed. We're not suggesting that we shouldn't have a good trading relationship with the European Union, similar to the one we have with the United States, Mexico, and other countries. We just think that a mechanism for dealing with the concern we're raising needs to be addressed in an adequate manner.

[Scott Brison, Liberal, Kings—Hants, NS]

We have a trading relationship with the EU, but we don't have a rules-based system to protect us under it. Are you suggesting that we're better off without a rules-based system to protect our interests?

[Hassan Yussuff]

No, I'm simply suggesting that the concerns we're raising, if we're going to have a rules-based system, should be addressed adequately, as opposed to being ignored. We don't want to be told that it will be adequately dealt with when it won't.

[Scott Brison, Liberal, Kings—Hants, NS]

But how is a rules-based system a step backwards?

[Hassan Yussuff]

I'm not suggesting it's a step backwards. I'm saying the rules-based system only covers a certain aspect of our concerns, not all of them.

[Scott Brison, Liberal, Kings—Hants, NS]

You're saying that the Peru FTA with the U.S. has some advantages compared with the Peru FTA with Canada. Is the labour movement in Peru supportive of the FTA with the U.S., based on that advantage?

[Hassan Yussuff]

We didn't ask them that question. We asked them specifically about our trade agreement. With respect to the U.S. labour movement, their desire to see the chapters dealing with labour and the environment incorporated in the agreement has been addressed by the U.S. government. How they will deal with this needs to be evolved. This is something we will watch very carefully. But we think it is a positive development.

[Scott Brison, Liberal, Kings—Hants, NS]

On the issues of labour rights and the environment, it strikes me as self-evident that we have a better capacity to influence countries on those issues if we have an economic relationship under a rules-based system. This has been proven repeatedly. Increased economic engagement helps to provide legitimate economic opportunity. In some cases, it has weaned countries off illicit activities that subordinate rights and threaten security.

There's no trade agreement that's perfect. But if a trade agreement puts labour and environmental issues on the table for an ongoing discussion and evaluation, isn't it an improvement over no agreement at all?

[Hassan Yussuff]

I can only go on experience. Despite our commitment in the NAFTA agreement to adhere to each other's legislation in regard to protecting labour, and despite the mechanism for us to have those discussions, I would argue that we haven't really enhanced labour protection within the three countries.

It's not just me saying this. I have the most recent summary of public indications from the NAALC desk that monitors these matters. We don't believe that's the case. Having an economic relationship with a country doesn't necessarily mean we have more influence on it.

As a country that believes in multilateral relationships and engagements, we have more than one way to engage countries in regard to their responsibilities, whether we're talking about labour, the environment, or other things that concern us. I believe we have to use every one of those mechanisms to address our broader concerns, not just the economic relationship. Every country in which a violation occurs needs to have some criticism. The economic relationship doesn't necessarily mean we're going to be more successful in swaying a country to our perspective than we would be if they chose to ignore our perspective in the first place. We have to continue to use all available mechanisms.

[Scott Brison, Liberal, Kings—Hants, NS]

I agree with that.

[The Chair, Conservative, Lee Richardson]

Mr. Brison, we can come back to you. You don't have time for another question now.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you very much.

[The Chair, Conservative, Lee Richardson]

Mr. Keddy.

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

Thank you, Mr. Chairman.

Welcome to our witnesses. I'm going to share my time with Mr. Harris.

I guess I have a statement, then a question for the board. There's a fair amount of discussion here on how we have a side agreement on labour, how we have an agreement on labour, and how we implement corporate social responsibility standards. I can't help but think....

When I was in Honduras, I went into Yamana Gold in San Andrés. There was a little town there of about 1,500 people. About 20,000 people are there now, because they're looking for jobs and opportunity at the mine. The mine's been widely criticized by NGOs and by former member of Parliament Alexa McDonough. I visited the mine site. I spoke to the workers. The people who were being most critical weren't there. They had never visited it. The people whose names were in the paper had never actually set foot into the town. So it's pretty difficult to criticize something you actually have not seen.

I think the challenge on labour protectionism—it's the same for corporate social responsibility—is the whole question of extraterritoriality here. How do you implement that? You ask for and expect Canadian companies to abide by high standards wherever they're working around the world. You expect them to respect labour. But you also have two different economies with a totally different level of sophistication. I suggest if you went back 50 years in Canada, the level of sophistication and understanding of protecting labour would not be the same as it is today.

All I'm hearing is that we're not going to accept any free trade agreement, no matter what's been signed. It doesn't matter how you can improve it, we're simply not accepting it. We'll accept the jobs they bring, we'll accept the opportunity they bring. I think it needs to be said that in third world countries and in growing economies and countries where the level of poverty is extreme by our standards, there's tremendous opportunity here. I want to put that on the record. I simply don't understand where the mindset comes from.

On that comment, to Ms. George—because you made the comment of corporate social responsibility for Canadian companies—we do have very good corporate social responsibility, especially in the extractive sector, since there have been some pretty serious questions raised about that sector around the world.

On the whole issue of extraterritoriality, for all those who are saying it's a voluntary standard, you cannot have anything beyond a voluntary standard for Canadian companies working around the world in foreign jurisdictions that, hopefully, we still respect as a nation, their ability to be an independent country and to pass their own laws and regulations. We should always look out and try to improve the standard and raise the bar. We should expect our companies to be at the forefront of that.

Would you comment on that? I know I'm cutting into Mr. Harris' time, but the whole question of extraterritoriality, I think, is one that some people want to ignore, and we cannot ignore it.

[Shirley-Ann George]

I think you raise a critically important point. Some of the concerns around CSR make the assumption that we can go into any country and do whatever kind of investigation or enforcement we'd like, but it's not that simple.

I do think that there are some measures Canada can support that do raise the bar. To give an example, most mining investments include World Bank financing. The World Bank has some very specific standards that have to be met in order to get World Bank financing. This puts everybody at a level playing field, so it doesn't matter if we're competing against a company out of Australia, or China, in order to get that financing, you need to meet that standard. Those kinds of international mechanisms can make a difference, and it does provide a platform for Canadian companies.

The issue of extraterritoriality is something that.... We can encourage our companies to step forward and meet high standards through voluntary mechanisms, but we do not have the ability to go into other countries and enforce things that they don't agree with.

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

There's a whole other issue of Canada's ability to work in Central America, Latin America, South America, the Caribbean. We are a welcome partner there--largely, quite frankly, because we're not American. There's a huge degree of that. And we've never inserted ourselves into the governance of many of these nations. There's unfortunately a sad record of foreign intervention in many of them. Because of that, Canada has a different reputation. We do have an ability to work with these countries, and we are treated differently from other countries.

I don't think that's something we want to lose by suddenly becoming the nation that wants to employ gunboat diplomacy--you know, if you don't like it the way we're doing it, then we'll just come in here and change things for you. I think that recommendation, which I'm hearing from some of my colleagues, is just wrong.

[Shirley-Ann George]

I think the point you raise of how Canada does things differently from some other nations, and the work that we're doing now in increasing our resources, though groups like CIDA, to help countries put in place the right kinds of environmental and labour standards, and other corporate social responsibility--it goes beyond just those two mechanisms--to help put in place the right kinds of standards, the right kinds of mechanisms for monitoring and enforcement, that will have far more influence than our standing in Canada and suggesting that a country isn't doing what they should do. It's that cooperation that makes such a difference.

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

Thank you.

[The Vice-Chair, Liberal, John Cannis]

Monsieur Cardin, s'il vous plaît.

[Serge Cardin, Bloc, Sherbrooke, QC]

Thank you, Mr. Chair.

By definition, parallel lines never meet. So, if these are parallel agreements, there is less chance that there can be consensus on trade, labour rights and environmental rights. There is no point in concealing the fact; people are interested in investing overseas because there is an advantage for them in doing so, whether it is that labour costs are much lower or that environmental standards are often much less strict. There are also the raw materials, which brings me back to the mines, and to the idea of responsibility.

Let me give you a very quick little example. The Canadian mining company Barrick Gold is currently operating two huge projects high in the mountains where gold is extracted by cyanide lixiviation. This means that from 110 to 200 litres per second of cyanide-bearing liquid are pumped into glaciers in order to extract gold. We know what that can mean. Just one project, and there are others, covers an area of 3000 km². The mining company has managed to obtain all the necessary permits, except, of course, the one allowing it to dissolve the glaciers.

So I believe that companies must show social and environmental responsibility. I chose a mining company as an example because the case is so flagrant. In environmental matters, Canada has a responsibility that it must not leave to companies mining in foreign countries to determine. This has to be studied in the overall context of a free-trade agreement.

We in the Bloc Québécois prefer multilateral approaches to bilateral ones, but we also agree with doing business. So these agreements must be improved. I know that my colleague wants to talk to you about a concern of his, so I will yield the floor to him.