Evidence of meeting #36 for International Trade in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was panama.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Jamie Kneen  Communications Coordinator, MiningWatch Canada
Donald-Fraser Clarke  General Manager, Clarke Educational Services
Joy Nott  President, Canadian Association of Importers and Exporters
Carlo Dade  Executive Director, Canadian Foundation for the Americas (FOCAL)
Marina Connors  Researcher, Canadian Foundation for the Americas (FOCAL)

4:45 p.m.

Conservative

The Chair Conservative Lee Richardson

Thank you, Ms. Nott.

I take it, Mr. Dade, you have a brief statement?

November 29th, 2010 / 4:45 p.m.

Carlo Dade Executive Director, Canadian Foundation for the Americas (FOCAL)

Thank you, Mr. Chairman.

It's a pleasure to be here again before the members of this committee. This time, I'm here with two FOCAL researchers.

We will all be happy to answer questions about our brief, which we have prepared and sent to you, in support of Bill C-46.

Just let me note that our presentation will be a little bit different from some of the others you've seen. You've had a great deal of information on specifics of the agreement. We'd like to step back and look at context for the agreement, where it fits in, and why it's important for Canada.

As you know, we've engaged in this country in a process of--

4:45 p.m.

Bloc

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

Mr. Chairman, I have a point of order. Mr. Dade just mentioned that he sent the committee a brief, but we don't have it to hand.

4:45 p.m.

Executive Director, Canadian Foundation for the Americas (FOCAL)

Carlo Dade

It was being translated. I received an e-mail from the committee clerk this morning saying it had arrived.

4:45 p.m.

Conservative

The Chair Conservative Lee Richardson

I'm sorry, I haven't received it either.

Apparently you don't have it?

4:50 p.m.

Executive Director, Canadian Foundation for the Americas (FOCAL)

Carlo Dade

I found it.

4:50 p.m.

Conservative

The Chair Conservative Lee Richardson

Well, there you go.

Apparently we do have one copy.

Oh, we have some more. Here we go.

Thank you, Monsieur Laforest. It's not one I would want you to miss.

4:50 p.m.

Executive Director, Canadian Foundation for the Americas (FOCAL)

Carlo Dade

It's not very long.

4:50 p.m.

Conservative

The Chair Conservative Lee Richardson

In any event, Mr. Dade, there will be some homework for the committee, and it will perhaps assist our members with questions. We won't take this out of your time.

4:50 p.m.

Executive Director, Canadian Foundation for the Americas (FOCAL)

Carlo Dade

I would say the graphs would be the most important thing, if one were to glance at it quickly, so I'll be referring to the graphs when I speak. The body of the text can be reviewed later.

With regard to the context for the agreement, we've been engaging in the process of trade diversification in this country, which is extremely important for Canada. The agreements we've signed have been an important step in accomplishing that.

Also at FOCAL we've recently engaged in some research on Jeff Rubin's thesis about the impact of the rise of oil prices on competitiveness. Working with the UN Economic Commission for Latin America and the Caribbean, we've essentially looked at what this sphere of rising oil prices means for the trade competitiveness of countries in Latin America versus countries in Asia. In essence, the research has proven Mr. Rubin's thesis, that rising oil prices will diminish the importance of globalization and increase the importance of regionalism. We'll be importing fewer goods from Asia and more goods from within this hemisphere. So getting ahead on treaties like Panama is fundamentally and crucially important for us as this new era of regionalism returns.

Another point about the agreement is that Panama, as has been mentioned, is a growing hub for services and finances in addition to trade. It's becoming, in essence, a Singapore or the Hong Kong of the hemisphere. This is a place where you're going to want a base business. This is a place where you're going to want to be deeply integrated if you're going to be doing more business in the hemisphere. In that regard, that is another reason the Panamanian agreement is important.

It's interesting. Last week, or the week before, in Ottawa we had Roger Noriega, former assistant secretary of state for western hemisphere affairs at the State Department. We asked him, given his insights about the change in Congress, what the trade agenda looked like and what he thought about Canada's work on the free trade agreements. He mentioned that they were worried about the Panamanian agreement because of what they had seen with the Colombian agreement. In essence, we had him here at Parliament, and at a speech in town he said that the U.S. stands to lose $2 billion worth of trade to Canada. And Panama is going to be more of the same.

It's actually kind of enjoyable to hear him say this, considering that Roger was the one, when he was a committee staffer in the Senate, who wrote Helms-Burton. So to have him back up here and to see him squirm about Canadian trade was quite enjoyable.

But let me offer another quote, from the U.S. Wheat Associates and the National Association of Wheat Growers in the United States. This is a statement from the U.S. Wheat Associates president and the National Association of Wheat Growers chief executive officer:

The Canadian parliament has ratified a bilateral free trade agreement...with Colombia that will, when implemented, allow Canadian wheat to enter that country duty free.

The agreement gives a major wheat-producing competitor an immediate price advantage in a market where U.S. wheat exports had earned a dominant market share. It means that U.S. wheat producers could lose sales worth $70 million today to Canada at a time when they can least afford it. In fact, U.S. farm families now face losing a substantial portion of agricultural exports to Colombia worth nearly $1.7 billion, including $330 million in wheat exports [alone].

In talking about Panama, we see more of the same. If you look at the brief, we've identified areas where Canada and the United States compete. And on the side of U.S. exports you can see several examples of places where we do very well in the region but where we currently do not do so well in Panama. There are opportunities there, and these are extremely important for us.

I would also note that the EU is working on an agreement with Panama. They signed one with Colombia.

Against the United States we have a price advantage based on tariffs. Against the EU we have an advantage based on distance and shipping costs. The advantage against the EU will increase and will be permanent. The one against the U.S. is temporary. So the importance of taking this window of opportunity while we have it is crucial.

As far as we can tell, we're looking at about four years until the U.S. gets its act together on the trade front.

If you remember, the Costa Rica and Chile agreements were passed, and there were lame-duck presidents after mid-term elections. We're probably looking at a similar scenario as the one time when the U.S. will be able to again look at movement on the free trade agenda.

Let me close with two notes.

The first is on Panama. It's a stable country that's well regarded and considered to be well governed. In the political risk reports, the human rights reports, or any sort of metric you want to look at for the country, it does fairly well. It's a good partner. It's a type of country with whom we want to do business, a country that is serious about trade.

These negotiations moved at record speed. I can't recall seeing another set of negotiations move so quickly. The Panamanians are serious partners, and they will remain serious partners as issues come up. They've proven this in their negotiations with us to this point. That's an important point.

But secondly, let me make a larger point about the trade agenda. We have a window where we enjoy an advantage vis-à-vis the United States, Panama, Colombia, and Peru. We've signed agreements up and down the Pacific coast. This is an agenda that will carry us through the near term. It's also an opportunity to think about the longer term. Where do we go from here with the free trade agenda?

The advantage with the U.S. is that it will be four years or so until the Americans come back in. We have a unique opportunity to look at the next big thing in trade. These are the trans-Pacific arrangements, the attempts to create a free trade agreement linking the countries that ring the Pacific.

There are three such agreements under way. Each one is stalled. The Asians have one, the Latin Americans have the Arco del Pacífico, and the Americans have the trans-Pacific partnership. The Americans are stalled for obvious reasons, given the Congress. The Latin American one is stalled temporarily because of intransigence on the part of Nicaragua and Ecuador. But believe me, the Latin Americans are looking to regroup and refocus. The Americans eventually will get their act together with this larger treaty.

But with each of the initiatives under way, we've been left out and marginalized on the sidelines. When these agreements start up again, we cannot afford to be left out again. Our moves in Colombia, in Peru, and in Panama have positioned us better than the Americans to take leadership and to move in this area.

When you think about the success of this agreement, you're looking at the largest trading block on the globe. You're looking at companies seeking to base firms in the new world, the Asian companies seeking to base themselves on this side of the ocean. Where are they going to base themselves? These are the types of jobs that we want to bring to this country.

McKinsey has done a report and some work on trade with Asia and the importance for Canada of going after this. If you look at transshipments, if you look at air travel, these are all areas where we really should have a distinct advantage. Our strength is that we are neither Asia nor Latin America. It's also our weakness. Only by taking advantage of these agreements, looking at a longer-term agenda, and making the types of investments we need in this country's institutional architecture can we be prepared for that.

With Panama, it's a great deal. It should be a no-brainer for this committee. But the question is really, where do we go next? How do we build upon success?

Thank you.

4:55 p.m.

Conservative

The Chair Conservative Lee Richardson

Thank you, Mr. Dade.

We're going to start this round and hopefully get through it, and perhaps two rounds this time.

We're going to begin with Mr. Cannis, with seven minutes for questions and answers.

4:55 p.m.

Liberal

John Cannis Liberal Scarborough Centre, ON

Thank you, Mr. Chairman.

I was quite intrigued with the phrase “a no-brainer”. I like that.

Thank you, and welcome to all our witnesses.

5 p.m.

Executive Director, Canadian Foundation for the Americas (FOCAL)

Carlo Dade

That means I can understand it.

5 p.m.

Voices

Oh, oh!

5 p.m.

Liberal

John Cannis Liberal Scarborough Centre, ON

You talked about Asian companies, European companies, and U.S. companies. They're all lining up to get their share of the pie, as I've often said. If I may quote you, “We've been left out.” That's something that I think many members here on this committee—the opposition and government—are saying. We don't want to be left out. We want our share of the pie within the proper guidelines, as you probably heard if you were in the room earlier.

Mr. Dade, I was really pleased when you said that we've signed the Canada-Colombia Free Trade Agreement. Even though there are some obstacles and concerns, there have been provisions to address those. Our colleague, the former critic, Scott Brison, brought forth an amendment that I think was well received.

With all of the difficulties, you said that Panama is a country we want to do business with. You used the words “stable country”. I've never been there--unlike the previous gentleman, who was not really at the mine--but I have heard from some Canadian friends of mine that they're quite impressed with the infrastructure there. They're also saying that Panama is not perfect. But name me one country that's perfect today.

I just want to add those comments before I ask Ms. Nott the following. She talked about the U.S. moving forward to sign an agreement. I note this because one of the obstacles that's been put before our committee is the financial instability—I'm trying to find the right words here.

I was wondering, Ms. Nott, if you could elaborate on that, because I assume, from what you were saying, that once the Americans sign that agreement—and it looks like they're going to be signing it—the next step is that they're going to move forward with signing an FTA. Am I correct in assuming that? Unless we move as quickly as we possibly can, we might do what Mr. Dade talked about and miss the boat again. We lost out a bit on the Central America free trade agreement as well, which, hopefully, we'll come back to.

Can you please give us some more on that?

5 p.m.

President, Canadian Association of Importers and Exporters

Joy Nott

Okay.

Relative to the Americans and the Panama situation, I was very recently in Detroit at a U.S. district council meeting, with approximately 500 U.S. companies in attendance.

Secretary Locke was there, and he made some comments relative to various free trade agreements and relative to various trade issues that they're currently looking at. In one of his comments, he in passing mentioned sitting down to talk about a free trade agreement with Panama, and the crowd erupted with applause, very much wanting and supporting that, which frankly took me by surprise. It's not a reaction I expected, personally, from the audience.

I can tell you that the role I was playing there that day was as a guest speaker. I was talking about Canada's negotiations, actually, with Europe. That's what I was asked to speak on. There were questions from the audience, and one of my co-presenters on the panel was asked about our current negotiations with Panama, which is what led Secretary Locke to make his comments about Panama.

The tension in the room that day I think was actually palpable, in that in the United States, at least, in that particular room on that day, there was definitely a feeling amongst the Americans that they have to hurry up because Canada is negotiating these deals and we're going to beat them to the punch.

5 p.m.

Liberal

John Cannis Liberal Scarborough Centre, ON

You mentioned, Ms. Nott, that they're looking at addressing the laundering of money and the bank accounts. The Americans are moving in that direction, yes?

5 p.m.

President, Canadian Association of Importers and Exporters

Joy Nott

That's correct.

5 p.m.

Liberal

John Cannis Liberal Scarborough Centre, ON

That is one of the issues that has been coming before our committee. So that issue is being addressed.

5 p.m.

President, Canadian Association of Importers and Exporters

Joy Nott

Yes. It is being addressed by the Americans.

5 p.m.

Liberal

John Cannis Liberal Scarborough Centre, ON

Okay. Good.

Mr. Dade, did you want to add to that at all, sir?

5 p.m.

Executive Director, Canadian Foundation for the Americas (FOCAL)

Carlo Dade

I would just note that on the movement, this last election saw an increase in anti-trade members of Congress. I think it's really going to take more of the Wheat Board and others going around pointing out what's happened for the American people to move. But rest assured they will. When the stories about the Wheat Board get out, when the balance tips in the country and the connection is made between jobs, the short-term aversion to trade will turn, and it will turn very quickly. We've seen this before in the States.

I would say that the near-term prospects probably aren't there. But in the longer term, as the job losses mount, as the trade losses mount, as farmers and other groups point to lost business, as the stories get back, it's coming.

5 p.m.

Liberal

John Cannis Liberal Scarborough Centre, ON

But, Mr. Dade, it's electioneering, and we tend to get a little bit vocal during a campaign and sometimes candidates tend to say a little bit more than what they should.

Everywhere we go.... We just came back from meeting our counterparts in the European Union. We read stories, we hear about these global difficulties that we're all experiencing, and there's one common denominator: we're all going to get out of it, they're saying, because we're going to increase our trade. We're going to do trade and we're going to create jobs.

So I'm puzzled when I hear witnesses come before our committee and say, “No, don't trade, don't trade. Let everybody else trade because that's how they're going to get out of their woes. But Canada should stay out.” Do you agree with that?

5 p.m.

Executive Director, Canadian Foundation for the Americas (FOCAL)

Carlo Dade

You know, this is something that you see in the States now. Reason and common sense with current U.S. policies, in several regards, don't seem to be well-acquainted. This appears to be another one of those cases in the States.

It's against self-interest; what they're doing is against self-interest. But we've seen elections in the States and we've seen politics shift in that direction, unfortunately. It's not terribly surprising. Places with a more reasoned discourse tend to do a little bit better.

Again, it's just a matter of time. With the last big round, the trade movements.... Mid-terms? Lame duck. So that's what we're looking at. That's the window. It's not huge, and you want your companies in there. Given the Americans' other advantages, you want a few years on the ground to build up ties, to build up relations.

5:05 p.m.

Liberal

John Cannis Liberal Scarborough Centre, ON

Thank you very much.

Mr. Chairman, thank you.