International Trade Committee on Dec. 13th, 2010

[The Chair, Conservative, Lee Richardson]

Thank you.

Mr. Julian.

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

Thank you, Mr. Chair, and merci, monsieur Laforest.

I just want to come back to the two points that Madam Hall Findlay raised.

The first, of course, is the sense that we should push forward because the U.S. Congress has concerns about money laundering and drug trafficking in Panama. The reason why the legislation has never been ratified, of course, in the U.S. Congress is precisely because of the concerns that Mr. Laforest has raised and that I have raised--that the IRS sees Panama as the leading money laundering capital for drug traffickers in the western hemisphere. The U.S. Congress has said--quite rightly--that, no, unless there is real action on tax evasion and money laundering, we're not going to ratify this agreement.

I get the sense—perhaps I've misunderstood--that the Liberal Party position is that we should run in and endorse this lack of action by the Panamanian government because the U.S. Congress is saying very clearly that unless there is a tax information exchange agreement in place and implemented, they're not going to ratify the agreement.

I don't understand this position. If something is wrong, and if the Panamanian government has to change its practices, it seems to me that we have a responsibility as parliamentarians to then say, “Well, no. We're not going to give you a blank cheque. We're not going to ratify this agreement until a tax information exchange agreement is put into place.”

So that is the position we're in now. We've had a number of witnesses recommend for that. We've had very clear evidence and testimony that has suggested that putting the agreement in place, that does not allow for the exchange of information, actually helps to fuel money laundering and drug trafficking. There is nothing...and the government recognized that by requesting a tax information exchange agreement, that not having that in place means there's no backup.

What we would be doing would be irresponsible. Certainly we would be providing succour to drug traffickers and money launderers. What we need to do is to take our responsibility and ensure that there is leverage put on the Panamanian government so that they put in place the measures that have already been requested by the government and that the Panamanian government has very clearly said they are not going to put into place.

The last point I want to raise is around the issue of whether we implement because of the enormous opportunities in Panama. Well, we certainly heard the same thing that the committee around Costa Rica did ten years ago. If you look at the testimony at the time, many of the same players came before the committee and said there were enormous opportunities and we needed to ratify the agreement.

At the time, prior to ratification, we exported $77 million worth of products to Costa Rica. Almost ten years later, we've gone from $77 million to $73 million. So it's actually gone down over the last ten years, not up. Exports have declined.

So even though I know there will always be testimony to the merits of free trade in a vacuum without the fundamentals being covered, the reality is that in Central America we have an existing trade agreement that has actually gone backwards for us. I think that is what, as the trade committee, we should be looking at correcting before endorsing Panamanian government practices that very clearly have earned international reprobation and very clearly need to change.

It's our own government, the Conservative government, saying so, that they need to change their practices. We don't do that by ratifying this agreement and saying it's okay to have those money-laundering practices, it's okay to money-launder drug trafficking money.

[The Chair, Conservative, Lee Richardson]

Thank you.

Madam Hall Findlay.

[Martha Hall Findlay, Liberal, Willowdale, ON]

I will keep it brief, Mr. Chair.

First of all, I will respond to my Bloc Québécois colleague. The situation is this. Panama's people did not want a tax information exchange agreement because they favoured an agreement on double taxation, an agreement that includes article 26, which provides for the exchange of tax information.

Secondly, I would point out that the Panamanian officials were speaking to a very specific context.

With respect to the comments made by Mr. Julian, we will agree to disagree. I don't know that we really want to draw this out. We will just accept that we agree to disagree.

I think the fact that Panama has signed a large number of tax treaties, including with some G-8 countries, has shown they have a willingness to engage in these agreements. The fact that they also signed a tax information agreement with the United States only two weeks ago you can take one of two ways. You can take it as, for instance, this was wonderful for the Americans to use leverage; or you can take it, as I do, as an indication that Panama is not afraid to engage in these discussions and to sign on these agreements.

My impression is that neither government--Canada nor Panama--has really pushed on this, and now, I think, ratifying a free trade agreement benefits a large number of Canadians but also sets the stage for a greater push to in fact engage in those discussions.

I don't want to argue--we'll agree to disagree--but I just want to explain why we will be not supporting either the motion or the amendments.

[The Chair, Conservative, Lee Richardson]

Thank you again.

Monsieur Laforest.

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

I do not want to get into a debate with Ms. Hall Findlay. So, since we have experts here to help us today, I would ask them this.

I believe the finance minister wrote to his Panamanian counterpart to ask whether Panama was prepared to sign a tax information exchange agreement. Officials told the committee that nothing came of that request, that Canada's finance minister did not receive a response. So it went nowhere.

Then, Panama's deputy minister for international trade, along with the ambassador, told us that it was not in Panama's economic interest to sign the agreement requested by the Canadian government. Ms. Hall Findlay is telling us that they are interested in a double-taxation agreement that includes a section on the exchange of tax information. Does the section Ms. Hall Findlay is referring to, that is, the one on information exchange, do the same thing as the tax information exchange agreement sought by Canada's finance minister?

I would assume not, because Panama's deputy minister told us that such an agreement was not in his country's best interest. I am trying to wrap my head around this.

[Gérard Lalonde, Director, Tax Legislation Division, Director's Office, Department of Finance]

Thank you very much for your question.

[The Chair, Conservative, Lee Richardson]

Just go right ahead.

[Gérard Lalonde]

I apologize, sir.

[The Chair, Conservative, Lee Richardson]

You're here to answer on clause-by-clause. This is a motion preceding clause-by-clause.

It's not appropriate to ask a question of these witnesses at this time. I was going to say that you can go with your assumption, if you like, but that's not the purpose of having these witnesses at the table now.

That said, Monsieur Lalonde has kindly offered to go ahead and answer.

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

That would be unfortunate, Mr. Chair.

[The Chair, Conservative, Lee Richardson]

I'll let him proceed.

[Gérard Lalonde]

The short answer is no. Both types of agreements impose the same obligations in terms of sharing tax information.

I think it is obvious to everyone on the committee that I am an anglophone, even though my name is Gérard Lalonde. So I will give the rest of my answer in English.

The two types of agreements have the same types of obligations vis-à-vis tax information exchange. But double taxation agreements go far beyond that, and provide for other obligations with respect to withholding taxes on dividends and on interest and on other features of the tax system that are not included in tax information exchange agreements.

It may very well be that from the perspective of Panama, they would like to tap into some of those provisions, and for the same reason, Canada is reluctant to enter into those.

[The Chair, Conservative, Lee Richardson]

Thank you.

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

Thank you.

[The Chair, Conservative, Lee Richardson]

We did have an opportunity with the witnesses from the Department of Finance earlier to have those questions answered, so I didn't mean to be....

Are there any more questions on this?

Mr. Julian.

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

This is not a question, Mr. Chair, just a comment.

The Canadian government has specifically asked for a tax information exchange agreement, so that is what is on the table. The Panamanian government has refused to implement that because it goes much further than a double taxation agreement. That's really the issue here.

[An hon. member]

[Inaudible--Editor]

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

No, it does not. I think that's been very clear from the witnesses before the committee. It has been very clear.

This is why the Canadian government, the Conservative government, has been asking for a tax information exchange agreement, for the simple reason that it goes further. The Conservative government is concerned, as it should well be, about money laundering--and drug trafficking, one would certainly hope. That is what was requested and that is what has been refused.

So if we do not endorse this motion today, what we are doing is saying to the Panamanian government, “You don't need to sign one. We'll take you as you are, with all of the money laundering and drug trafficking moneys that are flowing through Panama right now.”

[The Chair, Conservative, Lee Richardson]

Is there any further debate on Mr. Julian's motion?

All right. Seeing no indication that there's further debate, I'll call the question....

Sorry?

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

Could I ask for a roll call vote on this, please?

[The Chair, Conservative, Lee Richardson]

Of course you can.

(Motion negatived: nays 8; yeas 3)

It appears the motion has been defeated.

We'll proceed to clause-by-clause.

Thank you for that, and thank you for the assistance.

Before we proceed, let me at this point introduce--I'm sorry I didn't do it earlier, but I didn't expect I was going to have to--some of the witnesses from the departments who are here today to assist us with clause-by-clause.

Appearing from the Department of Foreign Affairs and International Trade, we have Jean-Benoit Leblanc, the director of trade negotiations, second division; and Robert Brookfield, deputy director of market access and trade remedies, law division.

We also have, from the Department of Human Resources and Skills Development, Kim Oliver, deputy director, bilateral and regional labour affairs.

Of course, as previously mentioned, we have Gérard Lalonde, “anglophone” director of the tax legislation division in the director's office at the Department of Finance.

I see we also have some pretty impressive backup strength for any tough questions.

I should think that most of the matters to be dealt with have been dealt with. We've had dozens of witnesses on this matter. Most of the questions have been asked, I think, and answered, but I appreciate your being here in any event.

We will now begin clause-by-clause consideration.

Pursuant to Standing Order 75(1), consideration of clause 1 is postponed until the end of our consideration of the bill.

(On clause 2--Definitions)

There are proposed amendments, in fact two.

Mr. Julian, you have an amendment to clause 2.

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

Thank you very much, Mr. Chair.

The first amendment I'd like to offer is the definition of “sustainable development”. The amendment would include a definition of sustainable development:

“sustainable development” means development that meets the needs of the present without compromising the ability of future generations to meet their own needs, as set out in the Brundtland Report published by the World Commission on Environment and Development.

I think the amendment speaks for itself. Hopefully there will be a torrent of support from all four corners of this table.

I so move the amendment.

[The Chair, Conservative, Lee Richardson]

We have heard the amendment from Mr. Julian.

Is there any debate on NDP-1?

I will ask for a vote on the amendment.

(Amendment negatived)

You have another amendment, Mr. Julian, and that's NDP-2.

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

Thank you very much, Mr. Chair.

My Conservative colleagues are uncharacteristically silent today. I'm hoping we'll be able to provoke some vigorous debate--