International Trade Committee on Sept. 25th, 2012

[Jochen Tilk]

I'm not aware of a court case or an injunction that allowed our company.... The only thing I can think of that might be related to the point you're making is the existence of a contract law. We're governed under a contract law called Ley 9 or Law 9 of 1997, which was enacted through the Parliament of Panama in that year, and this law sets out certain terms. It's effectively a contract law that determines how we are governed, but I wouldn't qualify it as a court case or an injunction.

[Don Davies, NDP, Vancouver Kingsway, BC]

Are you mining in the Meso-American biological corridor?

[Jochen Tilk]

The deposit is located in the Meso-American biological corridor. That's correct.

[Don Davies, NDP, Vancouver Kingsway, BC]

Have there been any concerns raised in Panama about that activity, Mr. Tilk?

[Jochen Tilk]

There are definitely concerns that we raise and that we as a mining company concur with. I think it is entirely appropriate and paramount that as a responsible company, we not only concur with those concerns but also raise them ourselves. I listed a few of the IFC performance standards, of which there are eight, which clearly govern how extractive industry mining companies, if they mine in sensitive areas—and there are many around the world—have to govern themselves and to which they must adhere in order to conduct their business.

We've gone through the effort of proving and demonstrating that compliance independently as well as vis-à-vis the government, so the answer is yes, there are concerns, which we share, and we have demonstrated that we—

[Don Davies, NDP, Vancouver Kingsway, BC]

Mr. Tilk, I have limited time, so I'm going to try to move to something else.

We know this trade agreement would require Panama and Canada not to lower their environmental standards to attract investment. I want to get your views on the state of environmental regulation in Panama. How would you contrast the state of environmental regulation in Panama with that in Canada? Would I be correct in saying that their environmental regulations are at a lower standard than Canada's?

[Jochen Tilk]

No, the environmental regulations, in our experience, are not lower than the environmental standards in Canada, but what is different, in our experience, is standards that companies voluntarily adhere to. They would be very different in Panama from in Canada. In fact, in Canada the extractive industry is a self-regulated industry. In Panama there's—

[Don Davies, NDP, Vancouver Kingsway, BC]

Mr. Tilk, I'm talking about legislated standards. I want to know the state of law in Panama. For instance, here we have an environmental assessment process. Do they have a similar process in Panama before a project can go ahead?

[Jochen Tilk]

Yes, of course they do.

[Don Davies, NDP, Vancouver Kingsway, BC]

Is it as stringent, in your view, as are Canadian standards?

[Jochen Tilk]

I would think so, yes.

[Don Davies, NDP, Vancouver Kingsway, BC]

Okay.

In this agreement there is a $15 million fine proposed for non-compliance with the labour side agreement, but there are no financial penalties included with respect to the environmental side agreement. Would you suggest it would be wise to have a penalty for any potential violations of the environmental provisions of this agreement, similar to what we have with the labour side agreement?

[Jochen Tilk]

On the basis that the environmental standards in Panama are similar to what they are in Canada, I would have to understand why there is a penalty in one case and there isn't in the other, but I just don't feel competent to provide the answer, because I'm not aware of the background as to why there is a penalty for the labour part of it.

[Don Davies, NDP, Vancouver Kingsway, BC]

Fair enough, Mr. Tilk.

Mr. Harvey, I have time for a brief question.

One of the chief concerns is that the state of Panama historically has been a money-laundering centre and an offshore tax haven. There are obviously great concerns about the laundering of drug money there. Does you group have any comment on that?

[Michael Harvey]

I think the situation has improved quite a lot and, in general, bringing Panamanian justice systems or legislative systems more in line with what we're doing in Canada would help the country advance in that direction.

[Don Davies, NDP, Vancouver Kingsway, BC]

Do you think the tax—

[The Chair, Conservative, Rob Merrifield]

Thank you very much. The time is gone.

We'll move to Mr. Holder.

[Ed Holder, Conservative, London West, ON]

Thank you, Mr. Chair.

I'd like to thank our guests for participating in this discussion today to help us understand better their perspective on Canada-Panama free trade.

Everything old is new again in that this is now the third time we have tackled this important arrangement.

I want to come back to something that my colleague from the Liberal Party made reference to before—

[A voice]

He left.

[Ed Holder, Conservative, London West, ON]

That's good, because there won't be as much of a retort.

It strikes me that when he talked about the size of this deal and came back and talked about the importance of the arrangement with the United States, it is rather interesting that around this table we all accept that our relationship with the United States is important, but I don't think everything is mutually exclusive. That is to say, Mr. Harvey, that when I think of your organization, the Canadian Council for the Americas, it is related not strictly to our dealings with Panama, but, quite frankly, to those throughout the Americas.

Is it fair to say that we as a country can multi-task and that we can do business both with the United States and with other countries simultaneously and that we can put in free trade agreements while we try to continue to improve that relationship with the United States?

[Michael Harvey]

Yes, absolutely. I think we have a pretty big bureaucracy that can work on deals all over the world at the same time. Also, we have a business community that's interested in different parts of the world. Sometimes it's the same company all over the world and other times it's different companies.

[Ed Holder, Conservative, London West, ON]

Well, I would agree with you. Sometimes it does feel as though we have a very big bureaucracy.

That said, what struck me about what you said is that you were very articulate on several points as to why this must proceed. I'd like to touch on one thing.

You might well be aware, as I think you may have heard in prior testimony, that the United States is close to putting a deal in place; there are a few administrative arrangements, I believe they were called, to make that happen as early as next month. What's the disadvantage for Canada to not play in that pond? I think you said one of the reasons was that everybody else is doing this deal for this very strategic country. From your standpoint, how does that disadvantage Canada? Let's talk about our country and why it matters to us.

[Michael Harvey]

I could give an example. Let's say it's a Canadian engineering firm that's looking at a big opportunity in Panama. If it doesn't have the same investment protections that a firm from the U.S., the EU, or another country has, then they're going to have to pay for some sort of political risk insurance somewhere. That would make things a bit more expensive. It might be the thing that tips the balance to not wanting to go for that opportunity. It's just a cost.

[Ed Holder, Conservative, London West, ON]

if I might reinforce what you've said, we've heard in prior testimony that tariffs from 15% to 70% for areas such as agriculture trying to do business in Panama would be lifted. I can't imagine any party around this table or in the House of Commons that would want to oppose growing our agricultural opportunities, particularly in areas such as pork and beef, in various parts of South America and particularly in Panama.

I heard my colleague opposite speak twice now, in two different sessions, on this issue of money laundering and tax havens. I want to come back to the point—and I want to stress this—that you said in your testimony that Panama has dramatically improved. I imagine there is some advantage, since it's now been a couple of years since we opened up trade discussions in 2008. There have been some dramatic improvements. Panama is no longer on the grey list.

Are you more or less optimistic about Panama's ability to handle its financial affairs to a standard that Canada would be comfortable with?

[Michael Harvey]

I'm much more optimistic. Panama went through a lot of years in military dictatorship, and they've had a fairly stable democracy now for several elections. Panama is now a place where, when we have elections, the man or woman the people vote for wins. There's not going to be a military coup or anything like that. It's a country that's stable now, that's democratic. It has challenges like everybody else, but it's not the Panama of those days, for sure.