International Trade Committee on Sept. 25th, 2012

[Cameron MacKay]

Certainly all of Canada's supply-managed products are excluded from tariff elimination or tariff cuts under this agreement, and likewise there were some sensitive products on the Panamanian side. They had also included some dairy and poultry products, for example, and certain sugar-containing products are excluded from the agreement. Those represent a very small portion—I think maybe 0%—of our current levels of trade. There was no particular sensitivity on that issue in this negotiation, just because of the structure of our current trade with that country.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

In your statement you said, “This agreement will provide service providers like these”—and you're talking about Canadian financial, engineering, professional, and information and communications technology providers, etc.—“with a secure, transparent and rules-based trading environment”. I think we may have an idea, but I wouldn't mind if you could expand on and clarify that, because the significance of this has boiled down to those main components of this agreement. I think it would be helpful if you could expand and clarify so that we all really know what it means.

[Cameron MacKay]

Canada and Panama now have certain commitments to one another with respect to trade and services via the WTO. Through this agreement we basically built on those commitments and liberalized trade a little bit more in those areas. In particular we negotiated both national treatment and most-favoured-nation treatment provisions that basically say that both countries will treat services imported from the other country in a non-discriminatory manner vis-à-vis national service providers or other foreign providers.

We've also agreed to take our current level of liberalization in the services area, both in Canada and in Panama, and we have a standstill provision that prevents either country from increasing its restrictions on trade and services. Also, we have an MFN ratchet provision going forward so that if, for example, Panama liberalizes its services regulations in the future further to, for example, an FTA negotiation with another country, Canada will benefit from that liberalization. In other words, we can only make our services regime more liberal as we move forward.

Panama also made commitments bilaterally to us in some new areas that they hadn't covered with respect to the WTO, including those with respect to mining and energy-related services, professional services like engineering and architecture, environmental services—in which Canadian companies can be quite competitive—distribution, and information technology. That's a quick picture of the services.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Does that pretty much cover the issues of non-tariff trade barriers also?

[Cameron MacKay]

Non-tariff barriers are a different issue. Those would be, for example, government regulations other than tariffs behind the border, which can sometimes—inadvertently, perhaps—discriminate against foreign products. We do have provisions with respect to technical barriers to trade. There's a small chapter there. As well, both sanitary and phytosanitary measures are covered in the free trade agreement as well.

Principally we refer to our WTO obligations, but we are satisfied, and we think Canadian stakeholders will be satisfied, with the provisions we negotiated there.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Mr. MacKay. I also want to say thank you for the work that you did as a chief negotiator to get us to this point.

Thank you very much.

[The Chair, Conservative, Rob Merrifield]

On behalf of the committee, I want to thank you for coming in and taking part in this discussion. We reserve the right, hopefully, to be able to call you back. It sounds as though there's interest in more questioning. For now I want to thank you for being here.

We'll now pause for a minute while we set up. I believe we have a video conference as well as another individual who will take his position at the table. Until then we will suspend.

[The Chair, Conservative, Rob Merrifield]

I'd like to call the meeting back to order.

We have two witnesses, and our time is going to be a bit abbreviated, so we want to move right along.

From the Canadian Council for the Americas we have Michael Harvey, president. You are at the table. Thank you for coming in.

We have, by video conference from Toronto, from Inmet Mining Corporation, Jochen Tilk.

Mr. Tilk, can you hear us?.

[Jochen Tilk, President and Chief Executive Officer, Inmet Mining Corporation]

I can.

[The Chair, Conservative, Rob Merrifield]

Very good.

We will start with Mr. Harvey.

The floor is yours, sir.

[Michael Harvey, President, Canadian Council for the Americas]

Mr. Chair, I am going to make my statement in my mother tongue, English. But I will answer any questions from members in the language of their choice.

I was here when Mr. Davies was talking about the problem of not having enough time to prepare for my presentation, and I'd just like to say that I'm totally available to come back, although I might do it by video conference the next time. I only found out myself on Friday afternoon and actually asked to have until Monday to make up my mind because I'd had a long week, so I only told the chair on Monday morning that I was coming.

I'd like to read a brief statement and then I'll answer your questions.

The Canadian Council for the Americas is an organization that strives to be a hub of thinking and events in the field of relations between Canada and the Americas. We are member-based and do not have any political affiliation.

The CCA supports a policy of increasing our trade and investment ties with the countries of the Americas. In this context, free trade agreements send a positive signal to Canadian companies that there is legal stability to the ties between our countries that will not be reversed on a whim.

In the specific case of Panama, we think an agreement is positive for a number of reasons. First, Panama's location is very strategic, connecting Central and South America. Second, the importance of the Panama Canal makes it very strategic for Canada to enjoy good relations with Panama.

Third, basically everybody else is signing free trade agreements with Panama—the U.S.A., the EU, the Pacific Alliance countries of Chile, Colombia, Mexico, Costa Rica, Peru. Canada should not allow itself to be left behind. Doing so could be interpreted as a lack of interest on our part.

Fourth, there are important Canadian business interests to protect in Panama. I think immediately of companies like Scotiabank, Bombardier, SNC-Lavalin, or Inmet Mining, but there are many more.

Fifth, Panama is a country that has made great strides since the much darker days of the dictatorships of Omar Torrijos or Manuel Noriega.

Sixth, the country is much more democratic and respectful of human rights than it was in the past.

Seventh, the judicial system is more and more independent than it was in the past.

To sum up, at the CCA we think this agreement can lead to deepening relations with Panama and with the Americas in general.

I will leave it there and let members ask any questions they want to.

[The Chair, Conservative, Rob Merrifield]

Thank you very much. I'm sure that will promote a significant number of questions as we get into it.

We'll now go to Mr. Tilk. The floor is yours, sir, if you would like to make a presentation. Please go ahead.

[Jochen Tilk]

My name is Jochen Tilk. I'm a citizen of Canada. I'm the CEO and president of Inmet Mining. I've been with the company for 23 years.

We've been involved in Panama for 20 years, essentially since 1990. I've been personally involved in Panama for much of that time, but quite significantly in the last 10 years. We're pursuing a very large development project in the resources sector, in mining. To be specific, it's a copper mine, and the investment is $6.2 billion, which is about a fifth of Panama's current GDP.

The commitment we have made—and this is really in conjunction with the Panamanian government—is to adhere to the IFC performance standards. Those are standards in the extractive industry that are set out by the World Bank and the IFC. We've adhered to what we call “free, prior and informed consent” with communities, which means asking communities to provide their consent and endorse the development in the extractive industry.

We've been working with the Panamanian government in capacity-building to ensure that as a regulator and governing institution, they have the capacity. We did receive the approval of an environmental and social impact assessment as a result of that interaction.

We've also moved forward on financing of that $6.2 billion, which involves a number of parties, including some other Canadian companies. To name one, Franco-Nevada is one of the Canadian royalty companies that provides financing and intends to provide $1 billion of that $6.2 billion as financing.

We also work very closely with Canadian contractors, as this project is now in construction. Construction commenced in earnest in May of this year. SNC-Lavalin, just named by my predecessor, is one of the leading contractors in the country.

We do have a partnership with some of the financial institutions. We do have one with the EDC in the area of sustainability.

We support the proposed act for a number of reasons. Number one is the significant investment that we are making; Inmet, as a Canadian public company, certainly has a vested interest in this act's going ahead. I concur with the conclusion that many improvements have been made in our 20 years of involvement, including capacity-building in the country, adherence to standards and to the highest environmental standards. We believe that all of that is beneficial both for Panama and certainly for Canada.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

We'll now turn it over to questions and answers. We will start with Mr. Davies. You have seven minutes.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you, Mr. Chairman.

Thank you, Mr. Tilk and Mr. Harvey, for being with us.

Mr. Tilk, I'll start with you. You've obviously been able to operate successfully in Panama in the absence of a formal trade agreement. You said that you've been there for some 20 years. Do you feel that your company has been treated unfairly by the Panamanian government in that time?

[Jochen Tilk]

I'm sorry. Treated fairly by...?

[Don Davies, NDP, Vancouver Kingsway, BC]

Do you feel that your company has been treated unfairly by the Panamanian government in that time?

[Jochen Tilk]

I don't think we've been treated unfairly, but there certainly have been periods when capacity within the Government of Panama was an issue for which we had to compensate, either by being patient or by supporting a government in building that capacity. There certainly would have been periods of uncertainty over a lack of arrangements, which presented us with a certain risk that companies, to be honest, don't normally like to take. In terms of capacity-building and elimination of risk, I would say yes, we had periods of uncertainty, but overall, I would qualify the government as generally being fair over the 20-year period.

[Don Davies, NDP, Vancouver Kingsway, BC]

Okay.

Now, we've heard stories here in Canada of protests by indigenous groups and other stakeholders—sometimes environmental groups—who are in opposition to mining operations throughout Central and Latin America. I think there have even been some deaths as a result of clashes with police.

Are any of your operations, or the operations of other Canadian mining companies that you're aware of, in conflict with any indigenous peoples in Panama?

[Jochen Tilk]

No, we're not in conflict with any indigenous people in Panama. In fact, we are not located in proximity to or within a comarca, which is the term for reservation.

However, I'm very well aware of the conflict situation that you are describing specifically in Panama, which took place in a comarca and was related to indigenous peoples essentially opposing government policy and government legislation.

[Don Davies, NDP, Vancouver Kingsway, BC]

I do understand that Inmet, through your subsidiary of Panama Mining, was involved in an injunction case, if I understand correctly, that allowed you to extract minerals in the Meso-American biological corridor. Is that correct?

[Jochen Tilk]

Did you say an injunction case?

[Don Davies, NDP, Vancouver Kingsway, BC]

Yes.

[Jochen Tilk]

It was an injunction on what?

[Don Davies, NDP, Vancouver Kingsway, BC]

I think it was a court case that allowed your subsidiary to extract minerals in the Meso-American biological corridor. Am I correct on that?