International Trade Committee on Dec. 8th, 2010

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

I have one last question for Mr. Solís.

Earlier, Mr. Silva talked about progress and about some improvements made to the situation for Panamanians. As someone who's on site, could you tell us if you've noticed the progress Mr. Silva was talking about? Do you find that improvements have been made over the last few years?

[Félix Wing Solís]

Thank you for your question.

Actually, despite the fact the gross domestic product has increased in the last few years, according to UN figures Panama is the country with the second-worst distribution of wealth in Latin America. Only Brazil trails us. There is a huge difference between Brazil and Panama in size and population. The fact is that Brazil is an industrialized country, unlike Panama, which is an economy based on providing services.

According to those same figures from the UN, 20% of the population consumes more than 65% of GDP, while another 20% of the population consumes less than 3% of GDP. I say this only to illustrate how unequal it is. In fact, we cannot assume that an increase in GDP alone improves the lives of people. Panama has a poverty rate of between 30% and 40%. I don't know what the exact figure is, but it's between those two rates, so I don't think an FTA in itself will improve Panamanians' lives, especially if we do not have regard for environmental and social safeguards, as I mentioned earlier.

Thank you very much.

[The Chair, Conservative, Lee Richardson]

Thank you.

Thank you, Monsieur Laforest.

Mr. Julian, you have seven minutes to speak or ask questions, whatever you like.

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

Thank you very much, Mr. Chair.

I apologize for my colleague's behaviour earlier. I have a few additional questions for you.

Mr. Vaillancourt, as Mr. Laforest just asked, what have we heard from the Panamanian government? According to the representative who testified two days ago, signing a tax information exchange agreement is a non-starter. He said—and you can find this in the “blues”—that, since such an agreement is not in the interest of the Panamanian economy, his country would not sign it. That's been made very clear.

Our government is acting like the agreement is still on the table and is still being negotiated, but the Panamanian government has said that the agreement will definitely not be signed because the country's economy would be affected.

Do you think that the link between the Panamanian economy and money laundering activities, and often, according to the U.S. Internal Revenue Service, drug dealers accounts for the Panamanian government's refusal to sign this agreement, which should be a mandatory prerequisite to a free-trade agreement?

Mr. Vaillancourt, did you not understand that this question was addressed to you?

[Claude Vaillancourt]

Yes, I know it was. I'm sorry, I didn't understand.

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

Oh, my apologies.

[Claude Vaillancourt]

I totally agree with that statement. As I was saying, Panama is one of the most important and active tax havens. Organized crime plays a major role in the country's economy. That being said, I haven't really looked into this specific issue. However, I couldn't agree more with the theory you put forth and can only respond to your question in the affirmative.

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

Madam Healy, you stated today that there are aspects of the labour code that will not apply in the free trade zone of Barú for the first three years of employment. We heard from the Panamanian government representative on Monday, and I'll quote him. He said:

I can assure you that the Panamanian labour code applies throughout the republic.

You're saying very clearly, very specifically, that the labour code doesn't and that the labour code is being gutted. Briefly, because I only have a few more minutes, could you give us some of the details around this gutting of the labour code, which contrasts with what the Panamanian government was trying to put forward?

[Dr. Teresa Healy]

Certainly. I understand that the Panamanian government also indicated that while the labour code applies throughout the country as a whole, there are certain restrictions in the Canal Zone and in the export processing zone of Barú.

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

He didn't say that. He just said it applies everywhere. You're saying very clearly that it doesn't.

[Dr. Teresa Healy]

The labour code is modified in the free trade zones. For example, the right to negotiate collective agreements is inferior to the process outside the Canal Zone, and the right to other things such as overtime pay, for example, is much less than in the canal zone.

As I mentioned, the other specificity of the port of Barú is that there are limitations making collective bargaining discretionary for employers for the first six years of operation. Another article ensures that for the first three years of employment, certain protections of the labour code will not apply. This is a new law that was brought in over the past number of months and is connected to the special economic area of Barú. As well, article 18 provides that a worker can be legally dismissed if there are fluctuations in export markets that bring about a considerable loss in the volume of sales.

Very clearly, articles 7, 17, and 18 of the law regulating the special economic area of Barú do not correspond to the general labour law of the rest of the country.

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

Thank you very much.

My final question is for Mr. Solís. Thank you for joining us today.

Many people have criticized the investor-state provisions of the Canadian trade template as some of the worst in the world because they allow for an override of democratic decisions. Are you concerned about the impact on the environment that these investor-state provisions would have? You've raised concerns about the environment in Panama. Do you think the concerns could be worsened by giving this override on decisions that are made at the local or national government level?

[Félix Wing Solís]

Yes, indeed.

We feel these provisions would only benefit companies that run their business in Panama without regard to community livelihoods and without the appropriate citizen participation and public consultation in the decision-making process. We feel that foreign direct investment is a higher priority than people's human rights to help the environment and to participate in decision-making, and that could eventually affect our democracy, our democratic processes, and the way in which laws are applied and complied with.

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

Have you been concerned with what you've seen developing in other countries such as Guatemala, where companies are using the investor-state provisions and even incorporating themselves with a mailbox elsewhere to force the government off environmental issues and force local governments to not take environmental measures that will help their population and make for a better environment?

[Félix Wing Solís]

Absolutely. We participated in a hearing before the Inter-American Commission on Human Rights on October 25 of this year. We raised our concern, for example, as it relates to the language. Environmental human rights defenders are being persecuted all over Meso-America, from Mexico to Panama, because of their activism against mining companies, which happen to be mostly Canadian companies. They have, in some cases, been denounced for resorting to violence against communities that are defending their interests, their rights, and their livelihoods, supported by national governments.

On the other hand, as you mentioned, if a national government from this region—for example, in this case, Panama—tries to enforce new environmental regulations to look after the well-being of our own communities, and those regulations are in collision with this investment agreement, we can be absolutely sure that, unfortunately, environmental provisions will not be applied for the sake of foreign direct investment, regardless of whether it is environmentally and socially responsible or not.

Thank you very much.

[The Chair, Conservative, Lee Richardson]

Thank you, and thank you, Mr. Julian. That was good timing.

We're going to go now to this side and to Mr. Keddy, if you're all set. You're going to share your time.

Thank you.

[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. Trost, so I'm going to try to ask a couple of quick questions.

There was a comment made earlier—and I'm trying to think—by Mr. Solís, I believe, about the Canadian copper mine that's being developed in Panama. Your statement was that they were going to deforest a large portion of the property, and you thought it was an environmentally unsustainable project.

However,we heard from witnesses here two weeks ago from Clarke Educational Services, which is a first nations company from Canada. Donald-Fraser Clarke is a representative who works with the indigenous community in Panama to develop best practices and to have informed consent. I don't have, off the top of my head, the number of people represented, but I think it was 40,000 or somewhere in that area. I apologize for not having that number off the top of my head.

In his words, basically he is saying the entire opposite of what you're saying. He's saying that they're developing best practices, that the business community is well developed, that it is business-friendly, that Canadian business is well positioned, and that they have a culture of accountability, which I would agree with, so I can't understand why you would look at this mining development--with informed consent, with an educated group of individuals on the ground, and with both Canadian mining expertise and political expertise to develop those best practices on the ground, if you will--and be against that.

[Félix Wing Solís]

We're not against best practices, nor are we against business, and we're not against free trade in itself. As I said, we believe that free trade should be fair trade as well—

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

But your statement was that you were against this particular example, and on that particular example, we already had representation from someone who is working with the first nations community on the ground in Panama and is coming out with an opinion totally different from what you're coming out with.

[Félix Wing Solís]

Yes, but of course you have to look at the fact that they're being paid by the same companies that are interested in promoting this business in Panama, whereas we work directly with communities and represent them in court—

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

He's working with the community, with respect. He's working with the community. That's my point.

I'm going to hand the next....

I have one more quick question. It's on the taxation agreement and it's to Mr. Vaillancourt.

We've asked to sign a TIEA with Panama, a taxation information exchange agreement. The Panamanians are saying they want to sign a double taxation agreement, and from what you're saying, I was getting a negative opinion on that. However, if we put more rules around taxation, more clarity, more openness around taxation, how can that be a bad thing?

[Claude Vaillancourt]

I don't think that an agreement like this makes it possible to set clear rules. Nothing in this agreement would suggest this possibility. In fact, all that we know about tax havens is that they enable people to engage in large-scale tax evasion and avoidance—especially avoidance. I have studied this agreement and found no provisions that could help address the issue of tax havens in a new, different way.

Mr. Laforest talked about the Panamanian representative's testimony and about his closed attitude toward information exchange. However, it's absolutely necessary to fight against tax havens, against tax evasion and avoidance. Therefore, I fail to see how this agreement could help address the tax haven issue with new, more stringent controls.

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

Thank you, Mr. Chair.

My question is open to all three witnesses. Any of you may respond.

My job as a Canadian legislator is predominantly to look after my Canadian constituents who will benefit from this trade deal, particularly in the agricultural sector, which is substantial in my region. We've heard very little testimony arguing against that.

The argument I'm hearing--and I hope I'm not putting too many words in the witnesses' mouths--is that this deal is bad for Panamanians. To my understanding, Panama is a democratic country that respects the rule of law, so I'm wondering why I should impose my judgment over and above what Panamanian voters have done by electing their representatives. It strikes me as somewhat paternalistic to do that, so my question is this: why should I interfere in the democratic process down there?

I'll give you a bit of background about who I am. I'm a Conservative and I come from a mining background, so I know how the environmental groups in Canada have distorted the mining companies' records in Canada. As a Conservative, my dad was blacklisted by a union once upon a time, so I know how unions can abuse workers in Canada, and as someone who strongly believes in private property, I am adamant that investor stake elements be included in there so that socialist regimes, be they local governments or national governments, do not take Canadian investors' private property.

With that as a background, why should I not vote in favour of something that helps my constituents?

[A Voice]

Exactly.

[Félix Wing Solís]

If I may, I would like to answer.

The Canadian Supreme Court has adopted the precautionary principle as an international valid standard to prevent environmental and social impacts and damages. The kind of business that Canadian mining companies are trying to do here in Panama, and that they have already started to do here in Panama, would not be feasible in Canada according to those same standards, because in Canada the degree of protection given to the environment is much higher than it is in Panama. As a result, companies are coming here to do business on very unequal terms for our population, taking advantage of the lack of protection and also making the kind of infrastructure and using the kinds of chemicals that are likely to be widely spread by our huge rainfall--about five meters per year--in the area where these projects are going to take place.

Because of our rainfall, it's not possible to keep pollution caused by a copper mine or a gold mine enclosed in a single area and prevent it from widely spreading to rivers and communities located near these huge mining sites. It is unlike what happens in Canada, where there is no rain where mines are located. You can observe that. I would be very happy to host members of the Canadian Parliament here in Panama to talk to the communities and visit the sites so that you yourselves can make your own opinions about this after listening to the communities and seeing the actual places where those investments are taking place.

Thank you very much.