International Trade Committee on Dec. 13th, 2010

[The Chair, Conservative, Lee Richardson]

Welcome to the 40th meeting this session of the Standing Committee on International Trade.

We continue, pursuant to our order of reference, with Bill C-46, An Act to implement the Free Trade Agreement between Canada and the Republic of Panama, 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 have completed hearing from witnesses and testimony to this point. Pursuant to Standing Order 75(1), we're going to proceed to consideration of clause-by-clause today.

It appears we have a number of amendments. We also have, as of Thursday last, a notice of motion from Mr. Julian regarding Bill C-46.

It had been our suggestion, and we felt we had some consensus from the committee, that we would conclude clause-by-clause today. So I'll deal with it in this order. We will deal, first of all, with Mr. Julian's motion with regard to suspending review of the bill. That's first. And depending on how long that takes, we will then proceed to clause-by-clause. We will deal with relevant amendments as we go through the clause-by-clause.

There is also a Bloc motion...or is it an amendment?

[A voice]

It's an amendment.

[The Chair, Conservative, Lee Richardson]

It's an amendment. Okay.

We'll deal with that, then, at the end of clause-by-clause.

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

It is an amendment.

[The Chair, Conservative, Lee Richardson]

Oui.

We have been dealing with this bill for quite some time, a couple of years back and forth, and have heard several witnesses, some more than once. It was our intention to conclude clause-by-clause today so that we could report the bill to the House before our adjournment.

With that in mind, I had suggested that we would not meet on Wednesday. There seems to be some broader consensus that we may be able to conclude this session on Wednesday, so I think it would be preferable, since we have votes on Wednesday afternoon, that we don't have a meeting on Wednesday.

That brings me back to this meeting, and to Mr. Julian's motion, and also to the amendments.

Go ahead, Mr. Holder.

[Ed Holder, Conservative, London West, ON]

I'm a little confused insofar as you've said twice in your opening comments, sir, that it was your understanding that we would conclude clause-by-clause today. I recall very specifically in prior meetings that this was exactly what we said we would do.

When I look at some of the clause-by-clause consideration, I seem to see a lot of pieces to this that have the NDP's initials in front of them. But it was clearly my understanding that if we were to show some consideration, I think, to various witnesses...forward, that we would be able to conclude clause-by-clause.

Do you have any sense or understanding that we will not conclude clause-by-clause today, sir?

[The Chair, Conservative, Lee Richardson]

I guess that's up to Mr. Julian. Frankly, if we're going to go....

I mean, we're happy to hear your motion. I doubt there will be other speakers put up--certainly not by the party on my right--so let's just get to it.

So we'll proceed on that basis. If we don't get through it today, we will have to meet Wednesday, unless we carry on tonight to meet again...and there'll be but one reason for that. I think we're all clear on that.

With that, I think we can get started.

Mr. Julian, you have a motion.

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

Thank you, Mr. Chair.

Mr. Holder is correct: the witnesses whose names we submitted to the clerk all came before the committee. Mr. Holder is right in what he mentioned about the witness list, absolutely.

The reason I'm bringing this motion forward is that I think it should be clear to all of us, after the testimony we've heard from those witnesses, that we need to suspend our consideration of the implementation legislation around this agreement.

I'll read my motion, Mr. Chair:

That the Standing Committee on International Trade suspend its review of Bill C-46 until the government of Panama signs a tax information exchange agreement with Canada and commits Panama to take effective measures with respect to tax evasion and money laundering.

I will speak to that relatively briefly, Mr. Chair. As you know, I could bring a lot of information to this table. I'm sure the members have all reviewed the witnesses' testimony that we've had, so I won't need to make a long speech, but I do have some points I'd like to bring up.

[Dean Allison, Niagara West—Glanbrook, CPC]

[Inaudible--Editor]

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

Thank you, Mr. Allison, that's very kind of you.

Yes, I'm taking contributions. Yes, if anybody wants to send me back to B.C., I'd be more than happy.

[Ed Holder, Conservative, London West, ON]

I have a last point of order, Mr. Chair.

[The Chair, Conservative, Lee Richardson]

Excuse me, Mr. Julian.

Mr. Holder.

[Ed Holder, Conservative, London West, ON]

Through you, Mr. Chair, is it a point of order or is it a point of relevance that I'd ask whether it's the intention of members present to complete clause-by-clause today?

Is that an appropriate question to ask, through you, sir?

[The Chair, Conservative, Lee Richardson]

Well, it's an appropriate question to ask. I don't know whether or not you're going to get an answer. We'll have to wait and see. We know the parameters and we'll just have to wait and see.

But right now we're going to try to--

[Ed Holder, Conservative, London West, ON]

In the spirit of Christmas.

[The Chair, Conservative, Lee Richardson]

--pay attention and be quiet and not interrupt Mr. Julian while he proceeds with his motion and his remarks, his brief remarks.

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

Thank you, Mr. Chair.

I thought Mr. Holder would read between the lines. I'll re-emphasize that though I could go over all of the testimony that was offered that backs up the motion I'm putting forward, I'm going to choose just to give an executive summary of the information that Mr. Holder and other members of the committee have.

So it will be a brief speech.

[Ed Holder, Conservative, London West, ON]

I look forward to it.

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

Yes.

As Mr. Holder knows, I'm capable of giving somewhat longer speeches. If I say it's a “brief” speech, that means I won't be holding up the committee unduly before we actually vote on this motion.

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

You already have.

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

I'm certainly hoping that this motion can have support from all four corners of this table.

Mr. Chair, the reality is that when we look at this issue of drug trafficking and money laundering.... I'm going to cite, as we've had cited around this table, the issue around tax havens that was in the Cornell University Press publication on tax havens. It stipulates that some 75% of all sophisticated drug trafficking operations use offshore secrecy havens. As well, of the criminal cases identified in IRS investigations--I'm particularly targeting Mr. Holder on this, because I know he will be interested in this reiteration of the argument--45% involved illegal transactions derived from legal income, and in the other 55%, illegal income was involved. In this case, 161 of the cases dealt with drug traffic. Of these, 29% involved the Cayman Islands. An equal amount involved Panama, and then other offshore tax havens. The four offshore tax havens alone accounted for 85% of the cases involving transactions of illegal income.

We've heard from witnesses who have said very clearly that adopting this implemented legislation without an accompanying tax information exchange agreement would be a boon to money laundering and drug trafficking. That's been very clear from the witnesses we've heard.

We've also heard from Panamanian government representatives that they have no intention, because it's not in their economic interest to adopt a tax information exchange agreement. Now, this is despite the fact that the government did request it and has had pending now for many months a letter asking for exactly that kind of information.

A double taxation agreement only tracks legal income. What we need is a tax information exchange agreement that would track the illegal income. That is what the Government of Canada's position has been. The Panamanian government is refusing to implement that.

I think it would be responsible on our part to say that we are not intending to move ahead with implementation of this agreement until such time as the Panamanian government steps forward and signs a tax information exchange agreement.

In the U.S. we've seen that type of agreement signed. There are loopholes, and there is a long process for implementation of that with the U.S. But the fact is that the U.S. Congress has not ratified the deal, and the fact that the U.S. Congress did not ratify the deal has pressed the Panamanian government to action.

I think it's very clear from the witnesses we've heard and the fact that the Panamanian government is refusing to sign this agreement, refusing to implement it, that as a committee we have a responsibility to say, no, we're going to suspend our deliberations on it, and we'll do clause-by-clause some other time. We'll bring it back to Parliament at a time when the Panamanian government responds to the Government of Canada's request for a tax information exchange agreement and puts into place the mechanisms that start to stop the tax evasion and money laundering that is endemic in that jurisdiction, according to the sources that we have cited here and from what our witnesses have said.

That's why I'm bringing forward the motion. I hope all members will support it. If that is the case, I think there will be enormous leverage to get the Panamanian government to act.

[The Chair, Conservative, Lee Richardson]

Somewhat astounded, he says thank you--thank you very much.

Is there any further debate on the motion?

Ms. Hall Findlay.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Thank you, Mr. Chair.

I understand the concerns raised by our colleague. My comments will also address the proposed amendment from the Bloc Québécois, because it's on the same issue. I think everyone is concerned about the opportunities, perceived or real, of taking advantage of certain tax circumstances by people who...we would rather prevent that from happening.

My view is that our first interest is to all of the businesses and all the farmers' businesses--the large ones, in terms of taking advantage of the infrastructure of the increased building in the canal, and also the small and medium enterprises that will stand to gain from this agreement. We also heard significant testimony that suggested that Canada signing on and ratifying this agreement will provide a significant competitive advantage to many Canadian businesses and farmers--indeed, specifically because the United States has not signed on.

Our job is to look out for the interests of Canadians. I appreciate that we need to look out for the interests of people in other countries, but our first responsibility is Canadians. I'll repeat, a tremendous number of businesses, both large and small, and a large number of farmers and people involved in the agriculture and agrifood businesses stand to gain significantly from the ratification of this agreement sooner rather than later.

In terms of the tax approach, my understanding is that when these discussions first happened, Panama offered to Canada to enter into a double taxation agreement, the type of agreement that Panama has entered into with many countries. They have specifically stated that's their preference.

Canada, of course, has many double taxation treaties in place with other countries as well. Article 26 of the OECD model convention double tax agreement does provide for the exchange of tax information.

Panama made that offer to Canada. Canada responded with, no, we would prefer a tax information exchange agreement. Panama came back and said, no, we would prefer a double tax agreement.

As I understand it, that was the last in the back and forth, so Canada is still in a position to respond to that last offer.

I strongly encourage all of those involved to continue those negotiations. I do think it's in our best interests to have an agreement of some kind with regard to double taxation and/or tax information exchange. As I say, the double tax treaties include information exchange, so either one is something that we need to pursue.

I strongly do not support holding up the ratification of this free trade agreement simply because those negotiations have not continued. I understand the desire to have some kind of leverage, but I simply do not believe this comes anywhere close to outweighing the benefits that so many would have through quick ratification of this agreement.

Thank you, Mr. Chair. I just wanted to put that position forward.

[The Chair, Conservative, Lee Richardson]

Thank you.

Monsieur Laforest.

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

Thank you, Mr. Chair.

I want to respond to what my colleague, Ms. Hall Findlay, just said. I am perplexed by her claim that Panama is looking for a double-taxation agreement that includes an exchange of tax information. Panamanian officials appeared and told the committee that signing a tax information exchange agreement was not in Panama's best interests.

The way I see it, something does not add up; there is a misunderstanding about what Panama wants versus what Canada wants. All of that to say that the Bloc Québécois supports Mr. Julian's motion. We have heard from a number of witnesses who have been pretty clear about the fact that Panama is a tax haven where money laundering is rampant, particularly drug money laundering.

Signing a free-trade agreement with Panama, without first having a very clear and well-defined tax information exchange agreement in place, is akin to sanctioning and, to some extent, supporting this kind of regime, in my view. One of the arguments in favour of the agreement is that it would greatly benefit farmers and businesses. But since it would open the door to tax avoidance, it would put many people at a disadvantage, namely all those who do not support tax avoidance or money laundering.

Ultimately, Panama's minister or deputy minister for international trade put it very succinctly; he told the committee that he saw no benefit to signing a tax information exchange agreement. I would say that contradicts the claims made by those who say that Canada will benefit from the agreement.

Consequently, we will support Mr. Julian's motion.

Thank you, Mr. Chair.