International Trade Committee on April 22nd, 2010

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

To our witnesses, I very much appreciate your coming in. I know you have a difficult job. I echo Mr. Brison's words that we have a first-class, top-quality bureaucracy in the members of the foreign service and members of international trade working throughout the world on our behalf and on behalf of our companies. So thank you for that.

The other point I want to raise is that this is the worst economic recession since the Great Depression. Every country in the world has seen a decrease in their trade balances. It only makes sense that Colombia would see a decrease in their trade balances.

But I'd like to add one other point, and I'd like to get your opinion on it. One of the reasons is that this bill has been held up in our Parliament for far too long. It's been held up for, I believe, the wrong reasons, and many of our companies, rather than pay 15% duty to do business in Colombia, have started doing business through Mexican sub-companies that they own. That business now is being certified and goes on Mexico's balance sheet instead of Canada's balance sheet. I can certainly produce witnesses who are looking at doing business in Mexico right now rather than building equipment in Canada and shipping it into Colombia, because we have not been able to ratify this free trade agreement.

Would anyone like to comment on that fact? And are you aware that this is occurring?

[Carol Nelder-Corvari, Director, International Trade Policy Division, Department of Finance]

Thank you for that question.

When I was preparing to come before this committee, I was thinking back; it's been two years since negotiations have been completed. Part of the reason this FTA was aggressively negotiated was due to the recommendations of this committee to undertake defensive FTAs to ensure that we don't become uncompetitive in markets in which our trading partners are negotiating FTAs.

The U.S., of course, has negotiated with Colombia. They have just completed negotiations with the EU as well. We're facing tariffs from 10% to over 100%, so I don't know how the elimination of those tariffs would lead to a decline in exports. Of course, the economic recession has seriously undermined trade around the world.

We have an opportunity here. It's a very strong agreement. There is broad-based support among industry across Canada and among agricultural producers.

Now is the time to move to creating an advantage for Canada, which is what we're trying to do with this agreement and our global commerce strategy in general.

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

I'd like to make another comment, because I think it bears repeating. It has been said at this committee before. When the committee was in Colombia, we met with President Uribe. I'd like to tell you that I was extremely impressed by both President Uribe and his cabinet. They're accused of being a right-wing government, but I would call them a coalition government.

There were people within Mr. Uribe's cabinet from every persuasion, from the far left to the far right to centre-right to centre-left. People who had been kidnapped by FARC are now in cabinet, and people who had been kidnapped by paramilitaries are now in cabinet. To me, they had one unifying detail, and it stood out among them all: they all wanted to pursue a better Colombia, a Colombia that, although steeped in democratic traditions, had faced serious obstacles in the last 20-year period.

They saw themselves coming out of this period. They had safety and the ability to travel. They've not had that for many years in Colombia. No one is saying that the situation is perfect there, but I cannot understand how anyone could say that Colombia has not improved. Colombia, by every standard, has improved in every single area that I can use to mark their progress, from human rights to labour laws to abolition of child labour to a better understanding and protection of the environment, and on and on in every category.

I know you folks have travelled in Colombia and I know you understand what this trade agreement does. I'd like your take on the fact that, yes, there is work to be done, but Colombia is moving in the right direction.

[Alexandra Bugailiskis]

Thank you very much, Mr. Keddy.

I can only concur with your assessment. It's always difficult when you're dealing with statistics. I mean, you cannot look at a photo stop; you have to look at the trend lines.

As I said in my opening remarks, that is what we've monitored, and that's what we're hearing reported by very reputable UN organizations, that the trend lines are very positive. There continue to be challenges, but what you have in Colombia is a government that's willing to take on those challenges and to be able to continue to improve.

The reason we're interested in a trade agreement is that we think this is one of many tools in our toolbox that we can use to help the Colombian people to have a much stronger future, to have alternatives, to have greater opportunities, to have prosperity and security in their country, and to become even a better member of our neighbourhood.

Thank you.

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

If there's any time left--

[The Chair, Conservative, Lee Richardson]

There is no time. There will be time if we do an extra round, so I think we will. We have other business to do today, but if we could keep it to five minutes, I would be happy to entertain a quick round.

We'll start with Mr. Silva for a five-minute round.

[Mario Silva, Liberal, Davenport, ON]

I'll be very brief, because I think I want to share my time with Mr. Brison.

I would like some clarification, and maybe you could help us clarify things. I've been trying to follow the elections in Colombia. My understanding is that the two front-running candidates were former ministers in the Uribe government and that the third one is the former mayor of Bogotá.

I believe all of them are pretty much on the same page on a lot of security issues and also on trade, but I wanted to know whether departments on the ground have learned whether there is disagreement among them on the issue of the trade agreement we're looking at.

[Alexandra Bugailiskis]

I'm not aware of any disagreements among the major parties that are contesting the election with regard to moving forward on a free trade agreement with Canada or with regard to the general agreement on moving forward on the security and democracy policy that has, as I said, engendered this greater participation and monitoring by the international community. There seems to be bipartisan agreement moving forward.

[Mario Silva, Liberal, Davenport, ON]

Thank you.

I'm not sure if the chair will allow me to ask my other question, but you were at the subcommittee before, talking about Venezuela. There is an issue of concern, that a dual Canadian-Colombian, Dr. Cossio, in fact has been charged with espionage in Venezuela.

What is the department doing about this particular human rights situation? Are you looking at monitoring the situation?

[Alexandra Bugailiskis]

I think, Mr. Silva, you're very aware that I'm unable to comment on such cases because of the privacy requirements.

[Mario Silva, Liberal, Davenport, ON]

I thought I would ask.

[Alexandra Bugailiskis]

Yes.

[Mario Silva, Liberal, Davenport, ON]

Thank you.

[Alexandra Bugailiskis]

But we are aware, and we are very much engaged.

[The Chair, Conservative, Lee Richardson]

Go ahead, Mr. Brison, quickly.

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

The broader question, besides the case of Dr. Cossio.... Dr. Cossio and seven members of his family were arrested by the Venezuelan police on April 1. Foreign Affairs Minister Bermúdez in Colombia has spoken out on this, and is loudly protesting this before the UN, the OAS, and other international fora. That's one specific human rights issue that we're concerned about with Venezuela.

But in terms of the broader risk that the Chavez regime represents in the Andean region, given the threats of Chavez to close the border to Colombian goods--I believe the Venezuelan market represents about 40% of Colombian exports now--and given the fact that FARC is increasingly basing itself in Venezuela and is being harboured by Chavez, in terms of the geopolitical aspects and the geopolitical stability of the Andean region, how important is this agreement to fortifying Colombia in the face of the threat that Chavez represents?

Could you speak to the human rights situation in Venezuela and compare the trend line with Colombia's in recent years? We know that civil society, freedom of the press, and freedom of speech don't exist in Venezuela, as an example, but I'd be interested in your thoughts and observations based on your analysis on the ground.

[Alexandra Bugailiskis]

Thank you very much.

I would need to be a bit cautious, given the public nature of the forum. I would say, though, that we lead by example. What I mean is that our interest in engagement on a dialogue on human rights, whether it's with Colombia or Venezuela, or on a free trade agreement in the case of Colombia, is really led by our values--our adherence to open markets and to opportunity. It is not part of a larger geopolitical agenda. I think the best way to promote greater peace, security, and prosperity in the region is really through those three pillars of our engagement policy on democracy, on security, and on prosperity.

The impact, I would think, would be a positive one. I believe very much that when Canada puts forward it best--its values and its principles--it can only help to improve conditions. When countries like Chile, with which we have a free trade agreement, continue to thrive both economically and democratically, it's an example that can speak better than any other speech about the benefits of open trade and democracy.

With regard to a comparison, I would prefer to defer, because I think it's very difficult when you get into the realm of statistics and comparisons. No two countries are ever exactly alike. Their constitutions differ and change.

I just gave testimony earlier today at the Subcommittee on International Human Rights with regard to Venezuela, where the trend line is very disturbing. We are seeing a greater concentration of power. We are seeing--not only us, but also organizations such the Inter-American Commission on Human Rights--decreasing space for opposition, commentary, and freedom of expression. At the same time, the security situation has very much worsened. I think it might be surprising to find out that the homicide rate in Venezuela is actually far higher than it is in Colombia.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Brison.

We're going to have to move on to Mr. Trost.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Thank you, Mr. Chair.

From my perspective, this is quite a timely report. A couple of weeks ago I was down in Bogotá and Cali. I have a sister-in-law from Cali, so I was down there on some family business. I've been there before, and it's an absolutely beautiful and spectacular country. We drove an hour outside of Cali in the countryside.

I think the thing that would surprise a lot of people who haven't been there is how secure it is. I didn't see a single police officer, with the exception of a couple of highway cops checking for speeders, as they would in Saskatoon, and I only saw one soldier the whole way. The public image of the country and the reality on the ground are quite different.

I want to follow up on something Mr. Plunkett spoke to, and Mr. Cannis was going this way in some of his earlier questioning: Canada's advantage in ratifying the treaty earlier, relative to the EU and the United States.

I was wondering, Mr. Plunkett, if you and perhaps other witnesses could elaborate in more detail on the advantages Canadian businesses would get if we went earlier. Could you give some specific examples, such as the auto industry--where apparently tariffs in Colombia are dropping 35%--or agriculture and so on?

What are our advantages--speaking very specifically--by getting this done sooner?

[Carol Nelder-Corvari]

Thank you.

As I indicated, this is a very robust market access agreement. Most Colombian tariffs will be eliminated on most Canadian exports immediately upon implementation of this agreement, and that includes wheat, pulses--which are key exports--a variety of paper products, machinery, and equipment.

I think you're thinking of some off-road motor vehicles that are being exported from Canada. Those, I think, are being phased out over a five-year period; I'm not sure, so I'd have to check specifically on that. But for most of our exports, the tariffs will be eliminated immediately, and those tariffs range from 10% to over 100%, depending on what the products are. The rest--

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

In some of these products we compete directly with the Americans in selling to the Colombian market. Is that correct?

[Carol Nelder-Corvari]

Absolutely, and our wheat exports in particular compete head-on with the United States. I would say that in all categories we're competing with the United States. In paper products, machinery, and equipment, that is certainly the case. So yes, this agreement provides an important advantage to our exporters.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

On certain crops--you named pulses, wheat, barley, etc.--the tariffs will be vanishing, but the Colombians chose not to eliminate all the tariffs on all the agriculture crops. On beans, for example, I believe the average tariff is going to be around 60% going forward.

From your perspective, what was the Colombian reasoning? Why were they very free and open on certain crops, but protective on a couple of specific crops? What was their reasoning behind total elimination in some agricultural products and high protection in others?

[Carol Nelder-Corvari]

In these types of negotiations, the negotiations focus on areas where there are sensitivities, and in those areas where Colombia had domestic sensitivities, they'd be demanding to phase the tariff out over a period of time to allow for adjustment. Those sensitivities are accommodated by these longer phase-outs.

In the case of beans, I believe there was a tariff rate quota, a free--

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

There's a basic amount that's allowed tariff-free, and then the tariff goes up.