International Trade Committee on Oct. 2nd, 2012

[Cameron MacKay]

There are financial services provisions to provide rules to allow Canadian financial services providers more predictability, transparency, and stability in terms of their doing business in Panama, but with respect to flows of capital back and forth and facilitating the drug trade, I'm not aware of a potential connection between the trade agreement and that—

[Don Davies, NDP, Vancouver Kingsway, BC]

Has that been studied?

[Cameron MacKay]

To my knowledge, it has not, not by the Canadian government.

[Don Davies, NDP, Vancouver Kingsway, BC]

I presume an economic analysis was done using the standard computable general equilibrium model. Is that correct? Was one of those done with Panama?

[Cameron MacKay]

No, we didn't. Because the trade with Panama is so small, as we discussed earlier—it's fast-growing but it's relatively small—we didn't do that kind of modelling for this agreement. Instead, we took the approach of consulting stakeholders, etc., across the country trying to narrow down to specific trade and investment issues and tried to negotiate around those. But we didn't do the broad economic modelling that you're referring to, as we've done with some of our much larger trading partners.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Cannan, you have seven minutes.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you, Mr. Chair. Welcome back to the officials.

I just want to clarify the timelines. This was first introduced in fall 2010. In September 2010, I believe, Parliament started debating this free trade agreement.

[Cameron MacKay]

I believe that's correct. The agreement was signed in May 2010. The first implementing bill was introduced in the fall of 2010.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

It's October 2012. In my records, that's about two and a half years. Do you consider that fast-tracking?

[Cameron MacKay]

I'm really not in a position to comment on how quickly Parliament moves or doesn't move on a bill, but it has been that long, yes.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

I just want it on the record that we've had over 50 hours of debate on this and have gone through three ambassadors to this committee. I think it's important to reiterate why we believe that time is of the essence.

Could you enlighten the committee on the situation in the U.S.? When is their agreement anticipated to come into effect?

[Cameron MacKay]

We touched on this briefly last week. The United States Congress approved the U.S.-Panama free trade agreement in October 2011. President Obama signed it later that month. Our understanding is that the United States and Panama are now moving forward to implement that FTA as early as this month of 2012. The Panamanian congress is considering some final pieces of legislation in order to implement all the commitments it has made to the U.S. in that agreement. The agreement could come into force very soon. That's certainly the intention of those two governments.

If that happens, and tariffs will be cut for U.S. imports into Panama and not for Canadian imports into Panama, there could certainly be an effect on Canadian exports.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

We've had a couple of witnesses, one being the pork association. Their representative stated how important it is, because it will be a trade disadvantage for the industry, obviously, if we don't get this agreement in place before, or at least at the same time as, the Americans.

One other witness was from MiningWatch. Their concern was from the environmental perspective. Maybe you could just enlighten the committee with respect to the side agreement on the environment and how that will change the situation. Obviously, industry wants to be more responsible. This will hold industry to be more responsible and accountable with regard to environmental concerns.

[Cameron MacKay]

Certainly.

Broadly speaking, the so-called side agreement on the environment is a high-quality agreement. It's along the model the Canadian government has negotiated with other recent FTA partners. It requires both parties, that is to say both countries signing the agreement, to have environmental laws, to implement them, and to enforce them. There is a so-called non-derogation clause that prevents either country from lowering its environmental standards to encourage trade or to attract investment. There are provisions on corporate social responsibility encouraging both governments to implement corporate social responsibility practices and policies. There are provisions for dispute settlement, etc. We're quite pleased with that agreement, and we think it will help.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

We've heard from the opposition, who are not in favour of trade agreements, that it's only 0.3% of our overall global trade. My understanding is that Panama is the fastest growing economy in Latin America. It is anticipated to grow over 6% during the next five years.

Can you maybe elaborate on that 0.3% number and the potential increase in opportunities for Canadian businesses from this trade agreement?

[Cameron MacKay]

Again, as I alluded to in my opening comments, our trade with Panama is small, but it's dynamic, and it's growing. You yourself referred to the growth rates. I think you heard last week from representatives of the Canadian pork industry, for example, who see a growing market there. They are already exporting in the millions.

We've had other broad statements of support that I think the committee has heard in the past. And we've heard public statements of support from the likes of Scotiabank, Bombardier, SNC-Lavalin, etc., all of which see business prospects in Panama. Certainly those would be at a certain risk if there is a United States agreement with Panama and no Canadian agreement.

The trade is small, but it's growing. Frankly, I think the fact that Canadian exports are so dominated by our exports to the United States, which are very important, shouldn't lessen the importance of our moving forward and trying to diversify our trade with other strategic partners, such as Panama.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

I have one last quick question.

With regard to the expansion of the canal, when we were there—the committee—a few years ago.... It's an engineering marvel. I'm just wondering if this agreement will provide any additional opportunities for Canadian engineers and expertise to capitalize and use our Canadian expertise on that specific capital improvement.

[Cameron MacKay]

One of our principal objectives in negotiating the FTA with Panama was to make sure that Canadian businesses all across the board had a level playing field with respect to their U.S. counterparts, in particular, given that we were negotiating at a time when the United States had already concluded its free trade negotiations with Panama.

Across the board, including with respect to the Panama Canal, for example, with respect to services and the government procurement provisions of the agreement, we achieved that objective of parity with respect to the U.S. FTA. So we believe that the government, through this agreement, has laid the foundation and opened the door for Canadians to do business in that market on a competitive basis vis-à-vis their competitors from other countries. Now it's up to those businesses to go and take advantage of those opportunities once the FTA is in place.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Mr. Reeder.

[Neil Reeder, Director General, Latin America and Caribbean Bureau, Department of Foreign Affairs and International Trade]

Maybe I'll just add a couple of points in terms of opportunities in Panama.

You're quite right, sir, that the current level of trade is small, but again, as you said, this a very dynamic economy and one for which the projected growth levels are significant going forward.

As a second dimension, just to follow up on Cameron's point on procurement, I have three quick bullets.

For the Panama Canal expansion, it's $5.25 billion.

We also have the strategic plan with the Government of Panama for 2010 to 2014. The infrastructure projection is for acquisition in the area of construction of $13 billion in new infrastructure projects, so we want to be positioned for that.

The final one of interest to our government is the new metro project in Panama City. Now that's really clogged with traffic. There's tremendous infrastructure going on, but they're not able to cope with the volume. They have to get people off the streets and into metro, and it's a $1.45 billion project. As this table will know, Canada has excellent expertise in the metro sector that we would like to share with them.

Those are important opportunities for us, and we're looking to capitalize on these with a trade mission to Panama and South America in the coming months.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

That would be Bombardier from Quebec, I guess.

Thank you.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Easter, you have seven minutes.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair, and thank you for bringing the answers to the questions that were raised at the previous meeting.

Certainly 300ths of a per cent of overall global trade is not high. We do look forward to that increasing.

One of the reasons the question is asked is that you can be absolutely sure that if and when this trade agreement passes the House of Commons, the minister and the government propaganda machine will be talking about this as the most massive trade agreement ever signed. On this side, we get a little exasperated by the exaggerations coming from the government's side, just so you know, because they're all about exaggeration.

I'd also like, though, to thank each and every one of you individually and collectively for your effort in trying to get the basis of an agreement negotiated. And if the House leader on the government side gives it some priority, I do think it will move along relatively rapidly. But it will be up to the House leader—and I say that to the parliamentary secretary to give this a priority.

[The Chair, Conservative, Rob Merrifield]

Do you have a question for the witnesses?

[Wayne Easter, Liberal, Malpeque, PE]

Ron talked about the pork and potatoes and other products in there. I do think it is critical in terms of where the U.S. is at.

What's the kind of timeframe in which the U.S....? If we don't have a signed agreement, or don't have the implementation, what's the timeframe we're looking at wherein we would look at the reality of being displaced in that market?

It's a huge issue for my province in frozen potatoes.