International Trade Committee on June 12th, 2012
A recording is available from Parliament.
On the agenda
The Chair Rob Merrifield
We'd like to call the meeting to order.
We want to thank the members and the witnesses for being here. We will be joined by one more witness by video conference very soon.
What we want to do is explain to the committee that due to our extenuating circumstances I believe there's agreement to go until 1:30. I guess it will be 1:28, as I believe bells are going to ring again at 1:28. Nonetheless, we have agreement to do that. Business will be carried over to the next meeting. I believe Mr. Easter had a motion he'll present at that time.
So everybody is getting along here. It's in the House that we have problems.
Nonetheless, we want to welcome our witnesses to a continued study.... We're actually studying a report on the Canada-Colombia Free Trade Agreement Implementation Act.
We have with us, from Colombia, Juan Diego Gonzalez Rua.
Are we coming through all right, sir? Can you hear us?
Juan Diego Gonzalez Rúa Researcher, Escuela Nacional Sindical
Yes, I can hear you very well.
The Chair Rob Merrifield
The floor is yours. We look forward to your presentation to the committee.
Researcher, Escuela Nacional Sindical
After a long debate during the negotiations of the free trade agreement between Canada and Colombia, in particular with a great number of questions asked about human rights violations and provisions dealing with trade union human rights violations and murder attempts as well against trade unionists, we think that what is happening in our country is an elimination of the trade union movement.
When the free trade agreement entered into effect between the two countries it was on August 15, and that free trade agreement represented for Colombia the first free trade agreement with what is called a developed nation. It was an attempt to agree to come to a final agreement aimed at moving forward in labour rights and in environmental rights, with some principles to ensure the protection of workers' rights, with the obligation to ensure protection of the environment.
The commitment was achieved through the negotiation of parallel agreements that established a number of obligations, and some mechanisms as well for cooperation. The purpose was to help strengthen institutions and programs in the relevant areas, namely labour and environment.
With regard to protecting trade unionists, labour, and environmental rights, there was the decision made to have an annual report to assess the human rights impacts of the fulfilment of the free trade agreement. The report that was presented by the Canadian government recently was very superficial, and there was no report presented by the Colombian government.
Furthermore, the Colombian government has not yet had any type of consultation with the communities and population groups that have been affected by the agreement. There has been no public announcement of the government's intention to establish any kind of policy with regard to the implementation of the free trade agreement in Colombia. So the idea of protecting rights in side agreements was progress and was an indication of intent and commitment, but it has not been fulfilled. There now needs to be a clearing up of the ethical problems surrounding the negotiations.
There has been a group of social organizations, union leaders, women, ethnic groups, and NGOs from Colombia and Canada who decided to begin a political and technical initiative to build a strategy that would make it possible to monitor and assess the impact of the free trade agreement on human rights in general. The purpose is to establish a baseline that can give an idea of what the current state of rights in communities is, and then be able to measure the human rights impact.
It is too early to make final conclusions about the impact of the agreement's implementation on human rights, but we do know what has happened since the agreement went into force. That is what we are doing to create the baseline so that we can have a reading of the major changes that have taken place in the sectors where Canadian investment is most present. From that baseline, then, we would establish a strategy for future monitoring, and we believe that monitoring should take place on an annual basis.
In the report we obtained an idea of the trade relationship between Canada and Colombia, with an emphasis on the presence of Canadian companies in the country. We focused on the main social, labour, and environmental impacts that have occurred due to the presence of certain Canadian companies in Colombia.
In the study we took into account two specific cases. The first case was linked to the presence of the Pacific Rubiales Energy oil company in Puerto Gaitan. The study addressed the violation of labour rights in recent years. Almost 10,000 people have been affected. The second case studied was the case linked to Gran Colombia Gold. That company wanted to have open-pit mining in Marmato, in the Caldas region. That would have meant displacing the town to another area.
In the executive summary you have in front of you, you will find some statistics that deal with the trade flows between Canada and Colombia. Some of these statistics will give you an idea of how much trade is taking place. A number of Canadian multinational companies are on Colombian ground, and there has been an exponential increase in the number of those companies over the last ten years. That presence has been concentrated in mining and natural resource extraction, mostly in coal, oil, and gold. The companies become established in the country by creating branches that undertake exploration and mining activities for all types of resources.
Canadian investment in telecommunications, oil, energy and gas, and transportation has increased steadily since 1994. In particular, in recent years new companies have begun to invest in mining, paper, shoes, educational software, and construction, among other things.
In addition to that trade presence, which began through foreign direct investment and the establishment of subsidiaries of major multinational companies in the country, Canada has played a significant role when it comes to defining legislative frameworks with regard to preparing the ground to welcome Canadian companies to Colombia.
CIDA is the main Canadian cooperation agency for Latin America. It has had a role with regard to, in particular, the reform of the country's mining code. In 2006 CIDA was involved in a code to liberalize Colombian gold mines. The purpose or the intent was to provide greater access for foreign mining companies. Before that, claiming to protect jobs and the environment, CIDA and the CERI decided to plan, starting in 1997, a project in which almost $11 million were invested to support the freeing up of mining and to create a legislative framework that could be used so that multinational companies could have easier access to mines in Colombia.
In the executive summary that you have in front of you, you will find some of the major findings of the study that was carried out in Puerto Gaitan and in Marmato, in those two municipalities. I won't go through those findings, as they are in the report, and I do not have much time.
I will finish my short presentation by talking a bit about the future. Less than a year after the free trade agreement between Canada and Colombia went into effect, the impact on human rights, labour rights, and environmental rights must be considered in a way that recognizes the technical conditions that exist to be able to measure the impact and also the political will of the official parties involved to conduct rigorous monitoring of the effects in both countries of the free trade agreement.
Given these considerations, it is important to point out that the official parties to the agreement, with regard to Colombia in particular, should not be responsible for establishing a monitoring system that measures the actual impact of the free trade agreement on human rights.
There is no public information available. The communities that are most affected have not had any role, and they have been shunted to the side.
The Chair Rob Merrifield
I'm sorry, I have to interrupt you here. Your time has gone. It's such an abbreviated committee meeting that I want to be respectful of the others in the testimony.
Researcher, Escuela Nacional Sindical
The Chair Rob Merrifield
You may get some questions and answers on that; I'm sure you will.
We are now going to move to Jennifer Moore, from MiningWatch Canada.
I would ask those testifying to please keep their remarks as tight as possible in order to leave a little more time for questions.
Go ahead, Ms. Moore. The floor is yours.
Jennifer Moore Latin America Program Coordinator, MiningWatch Canada
Good afternoon, Mr. Chair and committee members. Thank you for the opportunity to present to you this afternoon.
I will do my best to keep my remarks short. I do hope that Juan Diego has a chance in the questions and answers to continue his recommendations to the committee.
The implementation of the Canada-Colombia Free Trade Agreement comes at a time when human rights violations in Colombia remain at crisis levels on a global scale, as well as when Colombians are fighting hard to improve protections for their collective rights in the face of a booming mining sector, which is a key area for Canadian investment in Colombia and the focus of my comments today.
The Canada-Colombia trade pact is also very much an investment agreement. Given that Canada did not have a prior investment agreement with Colombia, it provides powerful new provisions for Canadian investors. Meanwhile, it lacks binding measures to help protect human rights, labour, and the environment.
The accompanying agreement to produce an annual human rights report on the part of both the Canadian and Colombian governments was a poor substitute for the recommendation, which we supported, for an independent human rights impact assessment prior to deciding on its ratification. The tabling of the Conservative government's non-report several weeks ago reaffirms earlier suspicions that this was mere window dressing to get the agreement passed.
At MiningWatch Canada, we continue to be very worried about the potential for mining investments to perpetuate, aggravate, or benefit from serious human rights violations in Colombia, as well as the likelihood that companies might use investor-state dispute mechanisms in the agreement to put a chill effect on stronger human rights protections and democratic policy development in the country.
As you've no doubt already heard from other witnesses, Colombia is still the most dangerous place to be a trade unionist, with the highest rate of internal displacement worldwide and an overwhelming number of human rights violations taking place, particularly in mineral-rich parts of the country. Over the course of 2011, we saw threats against human rights defenders on the rise, especially against leaders of displaced communities and those seeking return to misappropriated lands, mainly by paramilitary groups.
Regarding one of the cases that was examined in the Colombian study, short weeks after the Canada-Colombia Free Trade Agreement was passed into effect last August, Father José Reinel Restrepo, a parish priest of the municipality of Marmato, in the western department of Caldas, was murdered. Restrepo was an outspoken opponent of Canadian mining company Gran Colombia Gold's proposal to construct an open pit gold mine that would require the displacement of an entire town. He had recently travelled to Bogota and spoken openly about his situation on national television.
This is not an isolated incident. There have been reports of an increase in mining companies publicly singling out communities that are speaking out about the possible impacts of their operations, which can be equivalent to a death sentence in Colombia, and there have been numerous cases of massive detentions of those protesting such megaprojects.
Protests have been frequent because, quite literally, thousands of mining, oil, and gas concessions have been granted or requested across some 40% of Colombian territory, creating a tremendous amount of insecurity, given overlap with protected natural areas and important sources of water, the territories of indigenous and Afro-Colombian people, and lands being worked for agriculture or artisanal and small-scale mining. As we're seeing elsewhere in the region, the rise in local level conflicts is also giving rise to national controversy.
In Colombia, the office responsible for granting mineral concessions has been highly criticized and has repeatedly suspended receipt of new requests for concessions during the last year. Given a backlog of some 20,000 petitions, the country also lacks the capacity to properly monitor existing mining operations, and the mining code reforms passed in 2010 were recently overturned for lack of prior consultation with indigenous organizations. Indications are that the mining code will soon be reformed again.
In other words, this is a situation that's ripe for policy reform and in which there are serious struggles to ensure stronger protection for water supplies, indigenous Afro-Colombian rights, and the livelihoods of small-scale and artisanal miners, as well as to remedy the serious harm that communities have already faced and are facing from forced displacement and armed conflict in mineral-rich areas.
With the Canada-Colombia Free Trade Agreement now in effect, however, how might a Canadian company respond should its concessions or project be suspended, revoked, rejected, or otherwise affected by a significant shift or administrative decision? Might it sue or threaten to sue the state of Colombia? Recent experience would suggest this is a strong possibility. Currently there are 137 cases pending before the International Centre for Settlement of Investment Disputes, in Washington, up from three cases before the same tribunal back in the year 2000. One-third of these cases relate to natural resources and one-half are against Latin American states.
One example we have been monitoring is a lawsuit that Vancouver-based Pacific Rim Mining launched against the state of El Salvador in 2009 for more than $77 million, after failing to obtain necessary permits to develop a gold mine. Pacific Rim was carrying out exploration in the north of the country. Shortly after it went into exploration, opposition arose among local communities over the effects they were observing on water supplies, and it was feared that this would worsen if the mine went into operation.
The company's own testimony before the Washington tribunal indicates that rather than ensuring that it had fulfilled all the requirements in El Salvador to obtain needed permits, it worked its high-level contacts to try to obtain approval. Meanwhile, the local conflict went national, and public opinion turned against metal mining, given the existence of not just one but several dozen projects across the Salvadorian highlands, and given that this tiny, densely populated country is largely reliant on a single and already overtaxed watershed. This led to a national moratorium against metal mining, which has led to a strategic environmental impact study.
Because we don't have a free trade agreement with El Salvador, the company's response was basically to move a Cayman Island subsidiary to Nevada in order to file a lawsuit in April 2009 at the International Centre for Settlement of Investment Disputes in Washington, under both the Central America-U.S. free trade agreement and a little-known Salvadorian investment law. At the same time, we saw violence occurring in the northern area of El Salvador, where the mine had been in development. Threats and murders took place and have yet to be fully investigated. Meanwhile, El Salvador has already spent some $5 million in fighting the lawsuit, and the process to reform the country's mining code drags on.
Now, in this sort of circumstance, could a group of citizens—Colombian citizens, for instance—exercise provisions in the Canada-Colombia Free Trade Agreement to effectively protect their rights? It's very unlikely. Neither the labour nor the environmental side agreements include the possibility of any punitive sanction, and disputes will only be decided by consensus. The mention of corporate social responsibility in the text of the agreement is purely aspirational and completely unenforceable.
From our perspective, given the gravity of the human rights violations that Canadian investors could be aggravating or benefiting from in conflicted parts of Colombia, the non-report that the Conservative government tabled was very upsetting. Not only was there no serious effort made to document the human rights situation in which Canadian companies are investing, but neither was there much indication that a serious report will be forthcoming. A truly independent, transparent, and participatory human rights impact assessment of the implications of the Canada-Colombia Free Trade Agreement would still be a valuable step, and it should also be contemplated in other scenarios in which we're currently pursuing agreements, such as Honduras.
Based on our own observations to date, we also think that, in particular, the investor protections included in the agreement should be an element that needs serious examination in any human rights impact assessment of Canadian free trade agreements moving forward.
From our perspective and based on our observations, we think that these provisions that allow companies to sue states in international tribunals ultimately need to be removed, given how these can enable companies to leapfrog domestic law and undermine current and future human rights protections. We think this would be a serious step forward if we're serious about promoting democracy and human rights in the region, and certainly a necessary step towards balancing out the tremendous power differential that exists today between investor and human rights protections pertaining to the extractive industry abroad.
Thank you very much.
The Chair Rob Merrifield
Thank you very much for that.
We'll now move on to Bogota, Colombia. From the Association of Colombian Flower Exporters, we have Augusto Solano, the president.
Mr. Solano, can you hear us?
Augusto Solano President, Association of Colombian Flower Exporters
Yes, I can very well.
First of all, good afternoon. I want to thank the committee for giving us this opportunity to participate in this audience.
My presentation is going to be in four parts. First, I want to give you a brief overview of the Colombian flower industry. Secondly, I'm going to describe the labour profile of the Colombian flower industry. Then I will give the impact of the Colombia-Canada Free Trade Agreement, and then some final remarks.
The Colombian flower industry was established 45 years ago, and now Colombia is the number one supplier of fresh cut flowers to the United States. Colombia is the number one producer and exporter of carnations in the world and is the second-largest exporter of flowers worldwide, after Holland. Holland is way ahead of us. Colombia is exporting to 88 countries, and Canada is one of the main ones, maybe in fourth place. Last year Colombia exported $1.25 billion U.S. worth of flowers. On top of that, we generate about $350 million in air freight, because most of it is sent by airplane.
The industry has about 7,000 hectares under greenhouses and generates 150,000 legitimate direct and indirect jobs. This is very important, because in our country about 60% of the jobs are what we call informal: they don't have contracts or anything. In the flower industry, since the beginning, everybody has a contract and social security and many other benefits. We're looking at mainly 35% of the industry around Bogota, 20% around Medellin, and the rest in the coffee-growing areas, mainly for tropical flowers and foliage.
Security in cities like Bogota and Medellin depends very heavily on the flower industry, because we provide full employment in those towns and municipalities where the flower industry is. We support very much intellectual property rights, because we depend on the companies that are developing new varieties of flowers. Colombia is handling about 100 species of flowers, roses that flower, carnations, etc., and each one has different varieties. Altogether, Colombia handles about 1,600 varieties, which is more than other flower-producing countries.
In the labour and social profile, of these 150,000 direct and indirect jobs, 50% of them, or a little bit more, are direct jobs. They are jobs in the farms. Of those, about 65% are for women, most of them heads of households that didn't have any other opportunity in agriculture, because cutting cane or handling palm oil is very difficult for them.
In the past five years the industry has lost about 30,000 jobs because of the appreciation of the peso. I know you have suffered this very much and you know how it is. So it's mainly because of this and mainly because of what's happening in our main markets, which are the developed countries.
Asocolflores, the association, is going to be 40 years old next year. The main programs are social and environmental programs. We have a program called Florverde, which is 15 years old, which is a social and environmental code of conduct. We have partnered for these programs with many foreign entities, mainly USAID and GTC from Germany. We have housing programs and we have day care centres for the kids of the workers.
We also have oral health programs, and we have a program for cultivating peace in the family, which is something we established to help people resolve conflicts by non-violent means.
We publish our sustainability report, the GRI, the Global Reporting Initiative. Ours is the first industry association in the world that has used this methodology used by the UN. Usually it's only used by companies. We have also belonged for more than ten years to the child labour eradication program of the ILO. As a matter of fact, today child labour eradication efforts are being celebrated worldwide.
We're also members of the World Business Council for Sustainable Development in Switzerland. We're founders of the chapter here.
In terms of unions, about 40% of the workforce is unionized. The average in Colombia is 5%, including government workers. Without them, we're talking about only 2% as an average for the country. So 40% is high compared to that.
Now I want to talk briefly about the impact of the FTA. In the case of the flower industry, it has been very important. Without the duties, we see that it is increasing. Just a few weeks ago we attended a trade show in Mississauga. We had 14 growers, and we were able to bring about 40 buyers from all over Canada, including Loblaws, which is one of the main buyers. I think this is going to increase. Right now, the sales to Canada are about $67 million, and total imports of fresh cut flowers to Canada are $130 million. We think we have some room to improve.
The main point I want to make, which the FTA has helped, is that on one hand, we're facing the challenge of the appreciation of the peso and the economic crises in our main markets. Having this market is a way to fight back against the peso appreciation and also the problems in the other markets.
I think the most important contribution of a free trade agreement like this, not only to the flower industry but to Colombia, which is not mentioned in the report, is that it's a very effective tool for fighting the drug problem in Colombia.
As we have mentioned in the past, giving people trade opportunities will create more jobs. What people here need are opportunities to have legitimate, decent jobs. The market in Colombia is not big enough. A lot of people in the drug business, especially those who grow coca and all that, are there because they are looking at that as a means of survival. I think this is really important in that sense.
I want to thank you all for the FTA and for approving this. The flower industry it is really important. We think we can improve that. I also want to mention that the way the agreement between Colombia and Canada was handled is a model for all the other free trade agreements. It was efficient. It was balanced. It was free. And it's working.
Thank you very much.
The Chair Rob Merrifield
Thank you very much.
Mr. Solano, we have Spanish translation. You can either speak in English or speak in Spanish, and it will be translated here. Then Mr. Rúa can actually participate.
President, Association of Colombian Flower Exporters
Perfect. I can speak Spanish. No problem.
The Chair Rob Merrifield
With that, we have Carlo Dade from the University of Ottawa. He's a senior fellow from the School of International Development and Global Studies.
The floor is yours, sir. Go ahead.
June 12th, 2012 / 12:40 p.m.
Carlo Dade Senior Fellow, School of International Development and Global Studies, University of Ottawa
Welcome to our guests from Colombia. It's wonderful to be here.
First, I would like to thank the chair and the committee members for inviting me to testify this afternoon. This is our second, third or fourth time together to talk about Colombia.
This time it's actually to celebrate the successful implementation of the free trade agreement and to look forward to the other agreements that are coming down the road.
It's good to see some familiar faces and several new faces on the committee.
Before I start, you'll be happy to know that I did learn the most important lesson for any witness testifying in front of this committee, something that really should be added to the instructions you send out to the witnesses, and that is to bring your own coffee.
Some hon. members