International Trade Committee on Dec. 8th, 2010

[The Chair, Conservative, Lee Richardson]

I call the meeting to order.

Welcome. We were delayed by a vote in the House, so I apologize to our witnesses, who have been very patient, and most particularly to Ms. Healy, who has been more than patient, having had to go through this twice.

We will continue our discussion of Bill C-46, an act to implement the free trade agreement between Canada and the Republic of Panama, as well as the agreement on the environment between Canada and the Republic of Panama and the agreement on labour cooperation between Canada and the Republic of Panama.

We will hear from three witnesses today. We have--returning from a previous meeting that had to be cancelled because of votes--Teresa Healy, who is a senior researcher of social and economic policy development with the Canadian Labour Congress.

Welcome back. You'll have any time you need today.

We have something a little different today. We have a video conference, as all those around the table can see, but we also have a teleconference.

First, from Panama City and the Environmental Advocacy Center, we have Félix Wing Solís, executive director.

Mr. Solís, can you hear me?

[Félix Wing Solís, Executive Director, Environmental Advocacy Center]

Yes, I can.

[The Chair, Conservative, Lee Richardson]

There we go, and we can hear you loud and clear. Thank you.

Joining us by video conference from Montreal, from the Quebec Association for the Taxation of Financial Transactions for the Aid of Citizens, we have Claude Vaillancourt, the co-president.

For the ease of everyone, we'll start hearing from our witnesses. Give us a brief outline of your background and the contribution you're about to make today. We'll hear from each of our witnesses, and then proceed to questions.

Let us start in Panama City with Mr. Solís.

[Félix Wing Solís]

Good afternoon, Mr. Chair, members of Parliament, Canadian government officials, and guests.

Thank you for providing me with the opportunity to deliver my testimony via teleconference from Panama City, Panama.

Since its inception in 2007, the Environmental Advocacy Centre--Centro de Incidencia Ambiental, CIAM--our country's leading environmental law centre, has provided pro bono legal representation before government agencies, national courts and international human rights bodies to persons and indigenous communities affected or potentially affected by Canadian mining companies. At the same time, CIAM advocates for a stronger environmental law and policy framework that could prevent conflict through meaningful citizen participation, public consultation, and access to information, and provides citizens with the appropriate remedies should conflict arise.

As part of our mission, we felt it was important to make sure that the standing committee could listen to the views of the Panamanian communities that we represent. We hope this may allow the Canadian Parliament to adopt a more informed decision on whether or not the FTA between Panama and Canada should be ratified as submitted.

During the course of this testimony, I will make reference to two specific sections of the FTA that have cast serious doubt in Panama. They are the so-called environmental agreement and the investment agreement. The so-called environmental agreement, in chapter seventeen of the FTA, is made up of three articles that amount to a non-binding declaration of principles or good intentions. It then constitutes a non-self-executing treaty, the implementation of which relies on political will.

In fact, due to the lack of political will shown by both the Panamanian government and Canadian mining companies, we find it quite difficult to believe that the so-called environment agreement will allow Panama to pursue high levels of environmental protection and to continue to develop and improve its environmental laws and policies, based on the following:

One, Panama is not adequately enforcing its environmental laws. In fact, during the first year of the current government administration, the number of communities or individuals seeking legal advice from CIAM owing to environmental non-compliance or lack of enforcement has doubled in comparison with the previous two years.

Two, Panama is following a pattern of weakening current regulations while disregarding international standards and environmental protection in order to encourage trade or investment. In fact, our government has publicly committed to amending whatever laws are necessary to allow companies owned by foreign governments to invest in Panama's mining sector, even though this would require a constitutional reform. A Canadian company, Inmet Mining Corporation, has entered a financial agreement with a company owned by the Government of Singapore that depends on this legal reform.

Three, Panama has not provided a remedy to communities affected by the violation of environmental laws. For instance, there are three pending lawsuits filed by CIAM with the Supreme Court of Panama against the Molejón gold mine. Its construction began in 2005 without an environmental impact assessment. Owners at the time were three Canadian companies: Inmet, Teck, and Petaquilla Minerals. One of these cases has been sitting in court for more than a year waiting for its final decision.

Four, Panama has systematically denied the right of access to information on environmental and social impacts. Over the last three years, CIAM has filed 19 Freedom of Information Act lawsuits based on unanswered or denied FOIA requests. For instance, CIAM formally requested a digital copy of the EIA on Inmet's Cobre Panama copper mine. The government denied this request, while the company sent it to CIAM only after we complained about it at the UN conference on sustainable development and mining held in New York City last October, which, of course, Inmet did not attend.

The public hearing on the EIA was held November 26, and the recent comments were due December 6, but it has been quite difficult for communities and NGOs to go through a 14,500-page EIA written in very technical language, and seriously flawed, in such a short period of time.

Five, Panama actively sought to get rid of the EIA requirement by passing Law 30 last June. It is true that this act was repealed by Law 65 last October; however, draft regulations for the new law need to be submitted for public participation in order to define which projects will no longer require an EIA. This fact shows that the level of environmental protection provided by an EIA has effectively decreased.

Six, Panama has allowed environmentally and socially irresponsible companies to invest in our mining sector. For example, an Inmet subsidiary tried unsuccessfully to avoid EIA regulations by suing against them, alleging that their contract was the only law applicable. A successor company, Minera Panama, also owned by Inmet, is trying to overturn a resolution creating the Donoso protected area in 2008, which surrounds the Molejón gold mine and the Cobre Panama copper mine.

Seven, Panama has allowed, and continues to allow, such irresponsible companies to destroy an important portion of our incredible biodiversity. Actually, most of the area under the Petaquilla concession contract, including Inmet's Cobre Panama copper mine, was primary forest until construction of the Molejón gold mine started without an EIA in 2005, in violation of Panamanian law.

According to chapter 5 of the government's final technical proposal for the establishment of the Donoso protected area, more than 80% is still covered by forest, and the following biodiversity can be found: no less than 18 protected floral species, 8 protected mammals, 335 endangered birds, 67 endangered amphibians, and 12 endangered reptiles. Therefore, it is virtually impossible to build a 90,000- to 100,000-tonnes-per-day operation to produce around 200,000 tonnes of copper per year--all of this within the Donoso protected area, within the Gulf of Mosquitoes--an important bird area--and within the Meso-American biological corridor--without severely affecting this pristine forest.

Eight, Panama is not respecting the traditional practices of indigenous communities. Our government recently amended the Ngöbe-Buglé indigenous research act and sponsored their internal elections for the first time, which were boycotted by more than 70% of the electorate. It all happened as our government announced its intention to open Cerro Colorado, one of the largest copper mines in the world, located within the Ngöbe-Buglé region.

Nine, unlike other FTAs such as NAFTA and CAFTA, this agreement provides no specific mechanisms to local communities against these violations.

I will now briefly refer to the investment agreement in chapter nine of the FTA.

In order to bring fairness to international trade, CIAM firmly believes that developing countries like Panama need better trading conditions, which in turn may help them to achieve important goals such as environmental sustainability and social justice.

Unfortunately, we regret to say that this does not seem to be the case with the FTA between Panama and Canada in its 36-page investment agreement. It is a well-established fact that the vast majority of Canadian investments in Panama are currently allocated within the mining sector. Therefore, we may validly conclude that the investment agreement has been tailored to benefit Canadian mining companies, which under the current Panama mining code pay royalties of only 3% to 4% of their net profit. These companies also benefit from numerous tax breaks and tax exemptions.

In contrast, environmental damage caused by the loss of forest coverage and water resources associated with the Molejón gold mine has been estimated at $52.7 million U.S.

Another Canadian mining company, Pacific Rim, has just bought the El Remance mining project in Panama. Pacific Rim sued the Republic of El Salvador under the investor-state arbitration mechanism of the Central American free trade agreement, CAFTA, because the Salvadoran government did not issue an exploitation permit after the company failed to comply with legal requirements.

Based on all of the foregoing, CIAM requests the standing committee not to recommend the ratification of the FTA between Panama and Canada until this aspect has been renegotiated by both parties with prior informed consent from affected or potentially affected communities, considering the fact that both executive branches included a provision in the FTA that prohibits both legislative branches from formulating reservations at the time of ratification.

I thank you for your attention and look forward to answering your questions.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Solís, in Panama City.

We'll go to our teleconference. Monsieur Vaillancourt, can you hear me?

[Claude Vaillancourt, Co-President, Quebec Association for the Taxation of Financial Transactions for the Aid of Citizens]

Yes, I can hear you. Can you hear me?

[The Chair, Conservative, Lee Richardson]

I think we're getting you loud and clear.

[The Chair, Conservative, Lee Richardson]

From the Quebec Association for the Taxation of Financial Transactions for the Aid of Citizens, we have Claude Vaillancourt, co-president.

[Claude Vaillancourt]

Good afternoon. Ladies and gentlemen, thank you for inviting me and for giving me an opportunity to talk about this agreement, which, I must say, raises some doubts.

First, I would like to tell you a bit about ATTAC-Québec. We are the Quebec branch of an organization with local groups in some 20 countries on four continents. ATTAC is especially focused on taxation issues and is in favour of taxing financial transactions. Doing so could bring in between $400 billion and $1 trillion a year, while reducing the amount of short-term speculative activity, which is very damaging for our economy.

ATTAC is also interested in tax havens, whose only purpose is to enable people to evade and avoid taxes and to launder the proceeds of organized crime. Therefore, tax havens encourage the globalization of crime and help people circumvent the rule of law. Yet, Canada is preparing to conclude a free-trade agreement with one of the worst tax havens out there. Panama is among the most active, least cooperative tax havens, and it finds itself on the OECD's grey list. For that reason, we cannot condone concluding such an agreement, because it would more or less legitimize an important tax haven, whose major economic activity, as pointed out by Todd Tucker with whom we share analyses and who was summoned by this committee, consists in providing financial and legal services to multinationals and drug dealers.

Of course, a free-trade agreement could be of interest to many businessmen, but they do not make up most of Canada's population, and we at ATTAC-Québec do not feel that this agreement would benefit the populations of Canada and Panama. We believe that the tax losses Canada will suffer as a result of companies setting up branches in Panama will exceed the benefits some companies might reap. In a period of financial restraint like the one we are currently going through, one of the worst things the country can do is to encourage tax evasion because we need all our money more than ever to maintain the quality of public services.

We feel that this agreement could have an adverse effect on Panamanians. A tariff reduction can have the following consequences: first, making local products less competitive; second, depriving a state of much-needed income. We know that there are fairly serious poverty issues in Panama. Therefore, depriving the government of income could adversely affect a poor population.

The opening up of government procurement would deny the state one of its few tools for supporting the local economy by giving priority to national companies. Keep in mind that the poorest countries refused to sign the WTO Government Procurement Agreement, precisely because they thought they would be losing an important power. This agreement was ratified without proper consultation with the civil society. Of course, employers were consulted, but the Canadian population wasn't, and no proper public debate was held on the issue. However, we are talking about a first for our country. Canada signing an agreement with a tax haven is something of an anomaly, and it should have been the focus of a major public debate.

For all these reasons, ATTAC-Québec feels that the bill to implement the agreement between Canada and Panama should not be adopted.

Thank you very much.

[The Chair, Conservative, Lee Richardson]

Thank you.

That brings us to our next and final witness. As I mentioned, we had this witness last week and had to ask her to come back. She is Teresa Healy, senior researcher in the social and economic policy department of the Canadian Labour Congress.

I understand that you got through your statement last week, but I think we rushed you a bit. Give us a quick update, and if there's anything else you'd like to add, please feel free to do so. Then we'll go to questions.

Go ahead, Ms. Healy.

[Dr. Teresa Healy, Senior Researcher, Social and Economic Policy Department, Canadian Labour Congress]

Thank you for the opportunity to return to continue our discussion. I don't want to abuse the privilege of being able to speak here, so I thought I would just recap the main points of what I said last time and point out where we might benefit from further discussion.

To recap, I discussed some of the concerns that the Canadian Labour Congress has regarding the labour provisions in the Canada-Panama agreement on labour cooperation.

I also discussed the context of labour rights violations in Panama, and this is the context within which we're discussing this labour cooperation agreement.

I discussed the political crisis caused by the government's unilateral changes to labour law in the summer of 2010, and I discussed the problems with the new free trade zone of Barú, which makes collective bargaining discretionary for the first six years of operation. It ensures that certain protections of the labour code will not apply for the first three years of employment and allows employers to dismiss workers legally if sales decrease.

These new provisions for Barú were written after the Canada-Panama labour cooperation agreement was signed and are contrary to the commitments made by the Government of Panama in that document.

Today I will be pleased to return to these issues, in particular to the limitations of the labour cooperation agreement and some of the problems with Panamanian labour law. If you like, I could also touch on the question of the suggested tax information exchange agreement, as well as the problem of Panama's granting asylum to a high-profile Colombian official accused of serious violations of human rights.

[The Chair, Conservative, Lee Richardson]

Thank you.

Mr. Silva, will you begin today?

[Mario Silva, Liberal, Davenport, ON]

Thank you, Mr. Chair.

I appreciate the opportunity to ask questions of the witnesses who came forward with their presentations. They had quite interesting presentations on issues concerning the environment, taxation, and labour.

We realize that these free trade agreements are not always perfect. I don't know if we live in a world of perfect legislation and accords, but they are important steps in Canada for how we're going to do regulatory-type trade with these particular partners and countries.

Trade with Panama already exists, as it does with a number of other countries throughout the world. As a result of the collapse at the Doha meetings, which have not been very successful, Canada has been pursuing these bilaterals, which is probably not the way to go. However, given the circumstances, it's probably the only alternative that we have to figure out how we'll deal with trade.

In the process, Canada has been able to put in place some rules for trading regimes and has dealt with labour and human rights issues. These have not been included in many other accords that have been signed bilaterally by other countries. Canada has gone one step further and has been very progressive on those issues.

We realize that in all those countries the issues of human rights and labour are not treated the same way they are in Canada, but we know that Panama has much better human rights than Venezuela, for example. It has much better labour rights than Venezuela as well, in relation to how it deals with people who are critical of the government. We know that in Venezuela there is constant arrest and torture of people who don't sympathize with the government.

There are many issues of concern, but overall these issues are being addressed by the government. We have been working with our officials and the government. We're not going to resolve all the labour issues that we might have concern with, but progress is being made.

I would challenge anybody to say that there has not been progress made in Panama. If we look at Panama in the last 10 years, there has been remarkable progress made in that country in relation to labour rights and human rights. That is very positive and should be something to encourage. Maybe it's not perfection or to everybody's liking, but I would challenge anybody to say that they have not made progress in labour rights, environmental rights, and human rights.

We can always find unresolved issues and problems in every country. At the same time, what this country has gone through historically in the last many years, both in terms of civil unrest and dictatorship, shows incredible progress. They are doing extremely well economically as well. They've tried to engage with different partners throughout the world.

Canada, rightly so, would want to be a partner with Panama. Panama is strategically located in that part of the world and can play a major role. Canada also wants to play a bigger role in the Americas, and Panama would be a very supportive partner.

There is room to improve, I agree. If they have some suggestions for amendments to the legislation, I'd like to hear from them. At the same time, we have to be fair and remind the witnesses that there has been a lot of progress made in that country. We should be supportive and proud of the fact that Panama has made such incredible progress in the last few years. I invite anybody to comment that they have not made progress in the last 10 years. I'd like to know if that is the case. According to people I know on the ground and have spoken to, the progress has been phenomenal. People know what they've seen in the papers.

People have also had an opportunity to have a dialogue with the parliamentarians and NGOs and people on the ground. Canadians are also increasingly going abroad to Panama. The investment by Canadians there is phenomenal, as is the number of Canadians who want to retire there. I don't know if you're aware of it, but the number of Canadians who now want to retire to Panama has increased by over 200%.

I think there are issues that need to be addressed. I don't say everything is perfect, and I don't think anybody would write a report on how perfect Canada is on every issue, but I think we are mature democracies. Panama has evolved into a democracy, which I think all of us should be very proud of, given the fact a lot of these countries have gone through civil wars and lived through dictatorships for many years, and are only now slowly coming into being as fully democratic countries. I think we should be proud of that fact and supportive of governments that are making some strides.

You have seen, Mr. Chair, the phenomenal number of countries that have made progress in the Americas. It's not just Panama, but also Brazil, which is one of the countries that I'd certainly like to speak to, and we have to play our role.

One of the major problems a lot of these countries are facing--and Panama is one of them--is the issue of the drug trade. Drugs are a major problem that I think we need to work together on—

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

On a point of order, Mr. Chair, I understand Mr. Silva's comments, but out of respect to our witnesses, could he please ask some questions? We have people here who have a great deal of expertise.

[The Chair, Conservative, Lee Richardson]

Excuse me; I don't think that's a point of order.

It's a nice change for you to consider the witnesses, and not—

[Mario Silva, Liberal, Davenport, ON]

Well, I've only been on the committee for about a year, Mr. Chair, but I think I'm following the same process as Mr. Julian has with many witnesses. He basically decides to make comments instead of asking a question. I don't know why he would be upset. I'm still getting to my question, which has to do with the fact that—

[The Chair, Conservative, Lee Richardson]

Well, you won't this round—

[Some hon. members]

Oh, oh!

[The Chair, Conservative, Lee Richardson]

—because you have about 30 seconds to complete your 7 minutes allocated.

[Mario Silva, Liberal, Davenport, ON]

I actually feel I have asked the witnesses throughout the whole thing whether there was any way they could tell us there has not been development in the last 10 years in that country. That is what I have been trying to get at with my assessment of the development that's taken place in the country, and the investment there by Canadians, and the partnerships we've formed with them over the last few years. I've kept on asking the witnesses if they can challenge me and say that's not the case. I think that both statistically and in terms of the development of our trade and partnerships with them, it would be quite to the contrary, and that in fact the country has made incredible progress.

I think it's something we should recognize and respect. We should support the agreement, building on our relationship of friendship, which I think can develop into a partnership, so that we can actually engage on that country's many issues. We hope to be further involved not only commercially but also socially and culturally and on labour issues. I think that's a positive thing for Canada.

We're trading anyway; it's happening. The question is whether we want to have some rules in place and whether we want to have a template in place so that we both can work to achieve that.

[The Chair, Conservative, Lee Richardson]

I thought those were good and well-received comments, but you've just run out of time. There won't be time, unfortunately, for our witnesses to answer you on this round, but you may speak to your colleagues about trying to get that in during the next round.

We're going to have to move on to Monsieur Laforest.

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

Thank you, Mr. Chair.

Good afternoon, witnesses, whether present here or participating via teleconference.

Mr. Silva said that he has noticed progress in Panama over the last few years. However, that's not the issue. We should look at who has benefited from that progress. We should look at whether a free-trade agreement would only further benefit a small minority of Panamanians.

Mr. Vaillancourt, you talked about taxation issues. I don't know if you heard or read the comments made by the final witness who was here last Monday. We had with us Panama's chief trade negotiator and deputy minister of trade and international negotiations, who told us on two occasions that it was not in his country's economic interest to conclude a tax information exchange agreement. That helped us understand why Canada's Minister of International Trade is being asked whether he intends to conclude a tax information exchange agreement, which would be a prerequisite to signing a free-trade agreement.

I would like to know what you have to say about this, Mr. Vaillancourt.

[Claude Vaillancourt]

Let's get back to the issue of progress. No improvements have been made when it comes to taxation. Panama is still one of the most important and active tax havens. I think that the tax information exchange you mentioned, Mr. Laforest, is extremely important. However, based on what we know of tax havens, it's perhaps somewhat utopian to expect this, after all the efforts made to establish cooperation. I think that, since the G20 meeting in London, in 2009, the issue has been talked about somewhat openly.

It has become obvious that tax havens are not genuinely willing to change their current attitude. That's why we at ATTAC feel that the best thing to do at this point is to simply not negotiate trade agreements with tax havens. We don't think that changes are possible.

We think that we need to fight against tax havens both internationally and nationally. Canada should adopt real measures against tax havens by, among other things, cancelling the double-taxation agreement we signed with Barbados. We should also continue to fight against tax havens at the G20.

A few steps in the right direction were taken in London, but that's clearly not enough, since tax havens are still a serious problem. As I said during my presentation, negotiating an agreement with a tax haven of Panama's importance is tantamount to legitimizing the existence of tax havens.

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

Other witnesses, including Ms. Alepin and Mr. Deneault, told us the exact same thing. They said that, by signing the agreement, Canada would be legitimizing a money-laundering process. The international mafia would take advantage of such an agreement to launder even more money.

You said it would be utopian to even consider the possibility of a tax information exchange agreement. We suggested such an agreement to the minister, who said he had sent a letter to his Panamanian counterpart, but had received no response. I think this agreement is becoming more and more of a pipe dream. The negotiator did say that it was not in Panama's interest to sign a tax information exchange agreement.

I think that he gave us a fairly clear answer. It's obvious to us that, if Canada doesn't sign a tax information exchange agreement, we cannot really vote in favour of the free-trade agreement, and we will not. In addition, it was only after we asked for the preliminary agreement that we realized Panama is not really interested in one.

I would like to ask Ms. Healy a question. The group you represent, the CLC, is important. I support what Mr. Vaillancourt said to the effect that Canada is concluding a free-trade agreement for the first time with a country that is considered a tax haven. Isn't that an astonishing fact? You talked a lot about workers' rights. Is that another area your group is looking into?

[Dr. Teresa Healy]

One of the problems we face with the possibility of this agreement being signed and coming into force is that it will give legitimacy for multinationals to avoid their responsibilities in their domestic context. There is also the possibility that subsidiaries of corporations will use the investor-state provisions against democratic governments. It is astounding, in our view, that Canada would sign an agreement that would be so open to damaging Canada's economy by this linking with these sorts of criminal elements. We think the committee should take this very, very seriously.