Yes.
Evidence of meeting #46 for International Trade in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was witnesses.
A recording is available from Parliament.
Evidence of meeting #46 for International Trade in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was witnesses.
A recording is available from Parliament.
4:05 p.m.
Director, Bilateral and Regional Labour Affairs, Department of Human Resources and Skills Development
Yes.
4:05 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Would you say the level of benefits is comparable to what Canadian employers have to pay for their workers?
4:05 p.m.
Director, Bilateral and Regional Labour Affairs, Department of Human Resources and Skills Development
Obviously the level of benefits is different in Panama from what it is in Canada.
4:05 p.m.
Director, Bilateral and Regional Labour Affairs, Department of Human Resources and Skills Development
The unionization rate would be around 15% of the private sector.
4:05 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
If you don't have that handy, would you mind providing us with those figures?
4:05 p.m.
Director, Bilateral and Regional Labour Affairs, Department of Human Resources and Skills Development
I'll double-check. It's within that range.
4:05 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Do Panamanian employers have to pay into an old age pension fund equivalent to our Canada Pension Plan for the workers?
4:05 p.m.
Director, Bilateral and Regional Labour Affairs, Department of Human Resources and Skills Development
That contribution would be a general social security contribution. It is normally taken from employees' paycheques and it goes into a government fund, and then they get some kind of a pension from that.
4:05 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
In your statement you said that this agreement will help ensure that neither side will weaken existing commitments on the environment or labour in order to gain a competitive advantage. Would you agree with me that nothing in this agreement will compel Panama to raise its standards? The commitment is that they will not lower their existing standards to attract investment. Is that a fair comment?
4:05 p.m.
Director General, China Trade Policy Bureau, Department of Foreign Affairs and International Trade
There are several so-called “non-derogation clauses” in the FTA that prevent the parties on both sides from lowering their current standards, and there are also several provisions that encourage both parties to live up to and enforce their various environmental and labour standards.
4:05 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
You said “encourage”. Does that mean compel them or encourage them? Does this agreement require them to raise their standards or does it encourage them to do so?
4:05 p.m.
Director General, China Trade Policy Bureau, Department of Foreign Affairs and International Trade
Why don't we answer that question with respect to labour, given that Mr. Bouchard is here?
4:05 p.m.
Director, Bilateral and Regional Labour Affairs, Department of Human Resources and Skills Development
Mr. Chair, the goal of our agreement is to establish some basic principles that the government has to respect in terms of labour laws and enforcement of its labour laws. As long as they're above those standards or labour laws—we don't address benefits—it's a matter of the government and society, in discussion with employers and unions, to decide how they want to manage this. What we ensure is that workers are able to form unions if they want to defend their interests.
4:05 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
I would like to move to tax information. A few years ago, Panama refused to sign a tax information exchange treaty with Canada. Is that still the case?
4:05 p.m.
Alain Castonguay Senior Chief, Tax Treaties, Tax Policy Branch, Department of Finance
No. Canada and Panama started negotiations for a tax information exchange agreement in March of this year. Negotiations went well, and they're ongoing.
4:05 p.m.
Senior Chief, Tax Treaties, Tax Policy Branch, Department of Finance
As I said, they're ongoing, and we'll perhaps have an announcement later this year.
4:05 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
I did some research in a Cornell University publication. Cornell did a study that examined a study done by the Internal Revenue Service of the United States between 2004 and 2007. It found that Panama as a country was tied for first in the world as a source of tax-laundered money emanating from the drug trade. Of the criminal cases identified by the IRS, 45% included illegal transactions from legal income and in 55% illegal income was involved. Of the 161 cases that dealt with drug traffic, 29% of those were Panama and 29% were the Cayman Islands.
Have you given any study or consideration to the fact that Panama is quite a renowned tax haven for laundered drug money?
4:05 p.m.
Senior Chief, Tax Treaties, Tax Policy Branch, Department of Finance
I can't really answer questions about money laundering, which is not really my area. My area is confined to taxation. All I know is that Panama committed in 2002 to exchange information to help partners enforce their tax laws. They have negotiated a number of deals. A number of them are in force, and they keep negotiating others, including one with us. We're hopeful that once it is in place, we're going to have bigger tools to assess and to address tax evasion and people avoiding paying their taxes.
4:05 p.m.
Director General, China Trade Policy Bureau, Department of Foreign Affairs and International Trade
I might point out, further to that question, that in the period you referred to when Cornell did the study, Panama was on the so-called OECD grey list for not having negotiated enough tax information exchange agreements with other partners. Since then, it has negotiated the minimum number of 12 and is continuing to negotiate more, so that's some indication of some improvement in the situation.
4:05 p.m.
Conservative
The Chair Conservative Rob Merrifield
Very good. Thank you for that information.
Mr. Keddy, the floor is yours for seven minutes.
4:05 p.m.
Conservative
Gerald Keddy Conservative South Shore—St. Margaret's, NS
Thank you, Mr. Chairman. Welcome to our witnesses.
This is an FTA that we've debated and discussed around this table. I think we are now on the third incarnation, so I appreciate your patience and your ability to come back here every time we ask.
I would like to pick up where the first questioner left off. On the minimum wage, compensation, and unionization numbers, it's easy to paint a negative picture. You can try to compare a mature economy to an emerging economy, but in reality what we've seen in just about every emerging economy that we do business with is that when that economy starts to mature—when they do better and provide more jobs and more opportunities for their workers—a number of things happen.
First of all, there's a different level of respect for the workers generally. I say generally, but I want some input from our members here. We would expect to see wages go up. We would expect to see the workers' and compensation benefits increase as they have in every other emerging economy, whether that's India or China or anywhere else in the world. It's only common sense, quite frankly.
Would you comment on what we've seen in emerging economies? That's a generalization, but I would like to hear a comment.
4:10 p.m.
Director General, China Trade Policy Bureau, Department of Foreign Affairs and International Trade
I'll keep it specific to Panama and this free trade agreement.
Certainly that was a major motivation, not just for the Canadian government but of course the Panamanian government as well, to negotiate these market-opening opportunities in the trade agreement and have more rules-based liberalized trade to create economic opportunities in both countries. It was the Panamanians, in fact, who approached the Canadian government first, I think. They're quite committed to their own trade liberalization and they see that this is a way for the people of Panama to move up the value chain and basically take advantage of the global economy. It's been very much part of the Panamanian government's plan over the last two Panamanian governments, in fact, and not just the current government.