International Trade Committee on Nov. 3rd, 2010

[Alain Castonguay]

Yes, it is a model first used in 2004. All countries use the OECD model. Of course, in the case of bilateral negotiations, minor adjustments must always be made, but generally speaking, all of our agreements include OECD standards for the exchange of information.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

You said that you were very hopeful that the negotiations would resume shortly. When do you think that will happen?

[Alain Castonguay]

I can't say. We will have to continue trying to convince Panama to negotiate an information exchange agreement. I don't know what the next step is. Obviously, we can expect a response from Panama at some point, but I can't say when that will be.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Thank you.

[The Chair, Conservative, Lee Richardson]

Thank you, Monsieur Laforest. That was very helpful.

We're going to wrap with Mr. Allison. You have five minutes.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Thank you, Mr. Chair, and thank you to our guests for being here today.

I wanted to start out with a question on the FIPA. I realize there was one in place in 1998, and this one is going to be updated. Could you explain a little, specifically in terms of the updates? I know they talked about some provisions that would be enhanced. Could you explain them a little more to us, in terms of what that would look like? I know that part of it involves expropriation and things like that. Do you have any specifics for us in terms of how it will be different or how it's strengthened in relation to the original FIPA of 1998?

[David Plunkett]

I'll start, but if I don't give you enough then we can come back to you with more information. You're now into the bowels of this stuff, which is a bit tricky.

My understanding is that the agreement replaces and improves upon the provisions of the 1998 agreement by further locking in and expanding market access. We get a right to establish, acquire, and operate investments in Panama on an equal footing with the Panamanian investors. This investment chapter builds on the strength of the NAFTA provisions, which is largely the model we use. Each provision has its own twists and turns, but that's the base for a lot of our activities. It clarifies that non-discriminatory measures applied by a party to protect legitimate public welfare objectives, such as health, safety, and environment, are consistent with the objectives of the treaty.

The investment chapter urges parties to promote corporate social responsibility principles with investors, recognizing the important contribution that enterprises can make to sustainable development. It promotes greater transparency by making publicly available all documents submitted and issued to the tribunal. It recognizes the right of non-disputing individuals and organizations to make submissions to arbitral panels in order to make their views known on matters of issue. Specific provisions are made for consultations prior to arbitration and, as I said, parties are urged to promote corporate social responsibility principles with investors.

It touches on a number of areas, but basically we would normally go back to look at the existing agreement. Often the case is that it will be just tweaked or modified to make the language consistent with what we're doing elsewhere, because my legal friends always hate when there's different language in different treaties. They're constantly trying to harmonize language. Some of it may be more form than real, but that's the objective here.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Going to the actual free trade services, I know that when we were down there, we noticed there were a number of Canadian banks—Scotiabank being one we had a chance to meet with. When you start talking about provision for trades and services, I noticed a chapter on financial services, hopefully to enhance them. What would that enhancement look like? Would that benefit the banks already there or is it going to benefit new banks trying to make investments there? What does that look like?

[Jean-Benoit Leblanc]

It's a bit similar to what I was mentioning to your colleague, Madam Findlay, a few minutes ago. In a nutshell, it promotes and puts in place rules that ensure more transparency and predictability of the legal regime. In providing for these articles and the right of establishment—so that banks can establish themselves—it provides for what we call national treatment and most favoured nation. We essentially ensure that Panamanians wishing to establish a bank are treated on the same level playing field and that there is no discrimination in how foreigners will be treated. That's essentially what it does.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

All right, thank you.

Sure, go ahead.

[David Plunkett]

If I can fill in a bit here with some supplementary information, it includes comprehensive disciplines for financial services including banking, insurance, and securities; provides access to markets for cross-border financial service providers and financial institutions established in each jurisdiction; includes obligations to provide for right of establishment, to ensure non-discrimination, and to promote regulatory transparency, as Jean-Benoit was just mentioning.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Okay, thank you, gentlemen.

[David Plunkett]

If I might come back to Mr. Keddy's question, I can give him a couple of examples based on 2007 exports, just a quick-and dirty-assessment from the back row here.

For motor vehicles, we'd be looking at around $250,000 worth of tariff savings. For malt, it's around $150,000. This is based on immediate access. Pulses would be around $250,000 immediate access; frozen french fries around $750,000. Again, it depends on the volume of trade and what not. I don't know how many more examples you would like, but we can give you as many as you'd like.

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

I appreciate that. I think it's important just so we can put it in real dollars, because those dollars are going back to the businesses supplying that product.

[The Chair, Conservative, Lee Richardson]

We have concluded, but with the unanimous consent of the committee, in the interests of cordiality, I'm going to allow Mr. Julian one more short one, and then let Ms. Hall Findlay wrap up.

[Martha Hall Findlay, Liberal, Willowdale, ON]

I just wanted to add that's really helpful information. That's where I was going too, with some more specifics. So if that can be provided to the committee as a whole, the more the better. So if you're not sure about whether we would like it, please, that would be great.

That's all I wanted to say, Mr. Chair.

[The Chair, Conservative, Lee Richardson]

Thank you for that.

All right, Mr. Julian, the floor is yours for a question, and we'll get the seat belts fastened at the other end.

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

Thank you very much, Mr. Chair.

I'd like to come back to you, Mr. Castonguay. You talked about the double taxation agreement and the tax information exchange agreement, a subject that Mr. Laforest touched on.

If I understand correctly, a double taxation agreement relates to declared income. In the agreement, however, it is specifically noted that in the case of financial institutions and the treatment of certain information, one of the two parties is under no obligation to supply the information listed. That includes confidential information the disclosure of which would hinder the legitimate commercial interests of a given company.

What does it mean if we put the two together? If I understand correctly, there is no way to obtain confidential information, the very essence of a tax haven, even with a double taxation agreement.

[Alain Castonguay]

The standards are virtually the same for double taxation agreements and tax information exchange agreements.

The difference lies in the extent of the details in the latter compared to the former. In both instances, the standards are the same and the authority to request and obtain information is very broad.

The taxpayer can protect information, if trade secrets are an issue. Otherwise, if the information is relevant to determining a company's taxable income here in Canada, then the taxpayer must disclose that information to tax authorities in the country who in turn convey that information to tax authorities here in Canada.

Obviously, certain basic considerations must be taken into account, such as protecting lawyer-client privilege, trade secrets and so forth.

Even if a country has bank secrecy rules in place, under double taxation agreements, such policies are not relevant. Despite the existence of bank secrecy rules, information must be disclosed under information exchange provisions. That is the benefit of negotiating these types of agreements with many countries that have bank secrecy rules in place. They cover a broad area.

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

Mr. Chair, I don't know if you'll allow me to continue. If not, I can ask a question later.

[The Chair, Conservative, Lee Richardson]

Yes, we'll get to it at a subsequent meeting. I think it's been a pretty good round today, if you will, but thank you for your questions, Mr. Julian.

To our witnesses who appeared today, thanks for a great start and some good information. We have noted a couple of cases where members have asked for additional written material, and I thank you for your agreeing to forward that through the clerk to the committee. Thank you again for your visit. I'm sure we'll be chatting again throughout the course of this review of the bill.

So with that, I think we've concluded today. I don't have any further business. I think we concluded everything we needed to on Monday with regard to our next trip. So we'll see you in ten days.

Thank you.

The meeting is adjourned.