International Trade Committee on March 20th, 2013

[Nicolás Lloreda Ricaurte]

Yes. I thank you for that question.

As I mentioned in my opening statements, and I'll try to be brief, this is one issue where we think that Colombia and Canada can definitely work a lot more closely together. There we don't want to threaten any immigration or security policy that Canada has in any way. But we've found with other partners—for example, with the U.S.—that we've improved our immigration requisites significantly, and we've eased the flow of businessmen, tourists, and students to the U.S. significantly by working closely with the authorities. This is done by recognizing our security systems and understanding them, and by improving them together we can work significantly. I think that is an area in which Colombia and Canada need to work a lot more.

[Marc-André Morin, NDP, Laurentides—Labelle, QC]

Could you tell me the difference between the alliance and existing treaties like Mercosur and the Andean Community?

[Nicolás Lloreda Ricaurte]

Yes. That's a very good question, a hard question.

It's a hard question because I worked many years ago at the Andean Community. I was based in Lima and I spent a few years there. At the time the Andean Community was an example of integration. We managed to multiply trade with our partners in a relatively short period of time. Once we opened the barriers and we started to harmonize rules, trade with our partners increased dramatically. However, that's no longer the case. There are unfortunately a number of barriers that are difficult with some of the trade in the Andean Community. That is a regional integration bloc that is going through a relatively difficult time in some respects. As you know by the history, some countries have come in and others have left.

Mercosur is an important bloc. It has the largest economy in South America. I don't want to comment on a bloc that Colombia doesn't belong to. I certainly think that the initiatives of many integration blocs are similar. The objectives of many integration blocs are the liberalization of goods, services, capital, and people. I think it's very important—as we have in the WTO, when you look into this—that we have strong dispute settlement mechanisms. Where you're missing them, it is not easy for investors and the business community. They're all different, but they are very similar in many aspects.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Holder.

[Ed Holder, Conservative, London West, ON]

Thank you, Chair.

I'd like to thank our guests for being here today. I really appreciate this. It's interesting, and I'm not sure if you're familiar with a show on television called The Twilight Zone. It went back many years ago and has been reconstituted today. The setting basically is of someone going into a dream and then waking up and they're not sure if it's still the current reality or the next reality.

I find it really curious, as someone who has been on this committee since I was elected several years ago, remembering the NDP being so aggressively against the free trade deal with Colombia. They were so strong. They condemned Colombia, accusing it them of government-sponsored deaths, corruption, association with FARC, subjugation of citizens, subjugation of trade unions. It was unbelievable and it was brutal, even though from our standpoint we felt there were so many optimistic things to do with Colombia.

But I want to give a bouquet to the New Democratic Party because I think through the leadership shown by Mr. Davies, it certainly seems that they now have an enlightened approach. And I say this with deep respect. I want to say thank you for the approach you've taken.

But then I contrast that with my colleague from the Liberal Party who supported strongly the position of Colombia and would say so. But I've heard him talk at length about Colombia and other deals and I wonder just how much worse Canada would be if we didn't have free trade deals, because now it seems that we have Liberal Party who is against removing tariffs. They seem to be against making rules and investor provisions clear for folks who are trying to do business in Colombia. They're against the dispute settlement mechanism, and they must be, because I constantly hear the member from the third party say how bad it is that we do these deals, because look at these trade deficits.

I just don't get it. I'm not sure if it's an affliction of being the third party at a time. I say this with no disrespect, but it feels like a role reversal.

[Some hon. members]

Oh, oh!

[The Chair, Conservative, Rob Merrifield]

Is there a question?

[Ed Holder, Conservative, London West, ON]

There is a question, and my question is as it relates to your relationship among the Pacific Alliance. You talked of the importance of the alliance, and we as a country understand our relationship with the four countries we currently deal with and we think it's consistent with where we're trying to go.

But I'm trying to understand, where does Brazil fit into the thinking of the Pacific Alliance? I didn't hear it when we had the ambassador from Chile here—who was cited in today's Embassy magazine as supporting Canada's membership should we choose to do so. But where is Brazil in your mix or thinking, please?

[Nicolás Lloreda Ricaurte]

Mr. Holder, I'd like to start by thanking you for your words about Colombia and by just saying that I don't think the critics of the things that were happening in Colombia were just in Canada. I think they were worldwide in many respects, and I think some of the criticism was valid. I think Colombia had a lot of things to fix and I think we've fixed many of them. The government is aware that we haven't fixed them all and that we have to keep on working and investing. That's the purpose and the line that our president has put before us.

I can't comment on another country. We enjoy a close, good relationship with Brazil. We have a lot of Brazilian investment. My staff was reminding me that another very important sector in which Canadians are heavily investing in Colombia is infrastructure, helping us with energy and especially with the new transportation initiatives that the government has. So we have a lot of companies moving there, checking, asking questions, visiting and bidding. We also have a company from Brazil doing the same thing.

I think for Colombia opening our economy has been very useful.

[Ed Holder, Conservative, London West, ON]

That's very diplomatic and very thoughtful. I guess if you don't mind me pressing it a little bit, I will because it has some bearing on Canada's approach to Mercosur. There you were correct about our emphasis on the southern hemisphere in terms of the Americas. As vice-chair of ParlAmericas, I really respect and appreciate what Colombia has done and I say this with the deepest of compliments to your country.

As we choose where we as a country want to be—and I think we're all looking to determine where Canada fits into this mix—I am trying to get a sense from you of whether you could imagine inviting Brazil in at some point to this. Does including Brazil fit into the longer-term plan of the Pacific Alliance? Do you have a sense of that?

[Nicolás Lloreda Ricaurte]

I don't. By that I mean I don't have a sense either way. I mentioned that we have two countries that were observers initially and now have specifically said that they want to join.

[Ed Holder, Conservative, London West, ON]

Sorry if I'm interrupting you, because I know I'm just down to the last moments. Would a condition of Canada's participation be visa-based? I know that when I've travelled to Chile and Costa Rica, even most recently, that issue came up and I know we're mindful and selective and sometimes I would say painfully slow, but would that be a condition of participation in your view?

[Nicolás Lloreda Ricaurte]

I think that the issue of the free movement of people is essential to the alliance. That is an issue that every country that wants to participate has to tackle in some way. I'm not saying that you have to do this and get rid of that if you want to join, but I'm saying that it is on the table.

There has to be some interest in improving the facilitation of movement of people, clearly, if you want to join a group whose objective and one of the core reasons is goods, services, capital, and people. You can't avoid that issue completely. Any country that wants to join has to consider that issue and has to figure out a way to work with the other members on that matter.

[The Chair, Conservative, Rob Merrifield]

We want to thank you very much for coming forward and participating in this round of questioning and dialogue with regard to this Pacific Alliance.

With that, I just want to remind the committee that we will have bells at 5:15, so we will suspend for just two minutes as we ask our second guest, Ambassador Bellina from Peru, to come forward and then we will start the second round.

We'll suspend for two minutes.

[The Chair, Conservative, Rob Merrifield]

We'll call the meeting back to order.

We also want to thank the Ambassador to Peru. Your Excellency, thank you for being here. We look forward to your presentation and then we'll follow it up with some very good questions, I'm sure.

The floor is yours, sir.

[His Excellency José Antonio Bellina Acevedo, Ambassador, Embassy of Peru]

Thank you, Mr. Chairman.

I know that you are short of time and I appreciate this invitation very much.

Good afternoon, everyone. It is a pleasure for me to be here with members of Parliament. My government has authorized me to be here to answer your questions about Peru and the Pacific Alliance.

I would like to make a very short presentation regarding how is Peru right now. With this you will have the framework of my country.

The Peruvian economy continues showing high growth rates. The GDP growth rate in 2012 reached 6.3%, almost the highest in America and the highest in the world. A growth rate of 6.5% is forecast for 2013. Peru's economy had the highest GDP growth in the region over the last decade. During the last decade Peru has shown one of the lowest inflation rates in the world. Growth in the last 10 years has been based on a strong external position. The Central Bank of Peru has accumulated international reserves in the amount of $67 billion.

Investment was 26% of the GDP in 2012, and announced investment projects amount to $35 billion for 2012-13.

Exports have almost tripled during the period 2001 to 2011. In 2011 Peruvian exports accounted for almost $46.30 billion. Traditional exports were $35.84 billion, and non-traditional exports were $10.13 billion.

As a result poverty has decreased significantly. Steady growth has contributed to an important reduction in poverty during the last decade. In the last 10 years Peru has experienced the largest poverty reduction in the region, from 53% to 27%. Peru is currently considered a middle-income country, a status not achieved since the 1950s.

This is not a miracle of Santa Rosa de Lima. No. It is because in the last 20 years we have had the same policy in trade and investments. We are one of the most open economies in the world, supported by a full democracy, enforcement of law, and the work capacity of the people of Peru. This is not a miracle. It is about work, and work, and work in democracy.

In recent years the relationship between Peru and Canada has achieved a high level, mainly as a result of the entry into force of the bilateral free trade agreement of August 1, 2009. Currently the high-level dialogue between both countries is dynamic, and the bilateral agenda comprising a diversity of issues, including the development of social inclusion, the strengthening of economic ties, and the projection into third markets, particularly Asian markets.

From the hemispheric perspective, both countries share objectives such as governability and democratic stability, and economically and socially sustainable development. In this framework both countries are working toward achieving a strategic partnership.

I am not going to mention all the visits that we have had in the last years, but I would like to recall the presence of the General Governor in December last year, the Minister of Foreign Affairs in January—

[Roberto Rodriguez, Deputy Head of Mission, Embassy of Peru]

February.

[José Antonio Raymundo Bellina Acevedo]

February. And there were many visits of Minister Ablonczy, Minister of the Americas, and Minister Ed Fast from International Trade. There was also the Minister of Labour. I think we have had a very important exchange of high authorities between the two countries. If you want, I can leave the list with you.

[The Chair, Conservative, Rob Merrifield]

I think you also spent time with the trade committee.

[Voices]

Oh, oh!

[The Chair, Conservative, Rob Merrifield]

Carry on.

[José Antonio Raymundo Bellina Acevedo]

A new approach to bilateral cooperation is a partnership based on shared interests and goals—a non-aid approach.

In terms of cooperation programs, Peru is one of the 20 focus countries for Canadian international cooperation, from a political decision of the government of Prime Minister Harper. In terms of the Canadian cooperation to Peru approach, it is $30 million Canadian, especially in program development in such areas as capacity building, particularly in rural governments in Peru; conflict management; and education for employment, among others.

With regard to economic relations, the total bilateral trade between Peru and Canada in 2012 was $3.906 billion U.S. The main Peruvian exports to Canada are minerals—gold, lead, silver—fish, oil, and coffee. The main Canadian exports to Peru are wheat, lentils, paper, machinery, and airplanes. Canadian investments in Peru approached $8 billion, mainly in the mining sector.

I would like to state here that in the last year, the importation of Canadian goods, after the signing of the free trade agreement, grew and grew each year, maybe by 10% to 25% per year, in terms of exports from Canada to Peru.

We have other areas on the bilateral agenda: defence and security, immigration issues, multilateral affairs, labour, environment, etc. We have a shared agenda toward common goals, such as an economic alliance, of course in the framework of the free trade agreement.

With regard to developing social inclusion, Peru acknowledges Canadian government action to support economic growth and social development in partner countries with strong extractive sectors, which share with Canada such values as democratic governance, human rights, and social inclusion.

Peru has already expressed its willingness to work jointly with Canada for the establishment of a branch of the International Institute for Extractive Industries and Development, which is at the University of British Columbia. The Government of Peru confirms that a branch of this institute has been put in Peru.

In terms of entry into the Pacific Alliance, as you know, the Pacific Alliance was established by the Lima declaration signed by the presidents of Peru, Chile, Colombia, and Mexico on April 28, 2011.

I would like to say very clearly that it was a Peruvian initiative. It was an initiative of the Government of Peru.

The main objective of the alliance is to attain the four fundamental freedoms of a common market: the free movement of goods, capital, services, and people.

Bilateral free trade agreements enforce among all member countries a significant basis for common negotiations. Member countries of the alliance are strongly committed to the promotion of democratic regimes, the rule of law, and international trade.

You have some slides here that can show you how....

[The Chair, Conservative, Rob Merrifield]

Yes. We've been following them.

[José Antonio Raymundo Bellina Acevedo]

As to the value of the Pacific Alliance, the Pacific Alliance is a platform aiming at fostering economic growth, competitiveness, integration, and effective cooperation among its member countries.

Colombia, Chile, Mexico, and Peru consider the alliance as an effective mechanism for the promotion of economic growth, developing open economies and market diversification, and investing in technological innovation. In this sense, the alliance has a priority in the four countries' foreign policy agendas.

In the face of the global economic and financial crisis, the alliance encourages open economies and revitalizing international trade as tools to promote global economic growth. The economies of these four member countries already show steady growth in a diverse global financial environment. In this connection, the alliance shows great potential as a forum for the articulation of economic cooperation in Latin America, the Pacific, and Asia-Pacific areas.

The population of the countries of the alliance is 205 million people. Their combined GDP is $1.88 trillion US dollars, which is more than 35 per cent of the GDP of Latin America as a whole. Half the exports from the region come from the four member countries of the Pacific Alliance. According to 2011 global figures, the Pacific Alliance economies were positioned in 10th place, after Italy and the Association of Southeast Asian Nations, ASEAN.

The promotion of democratic regimes, the rule of law, and international trade are the main commitments of the Pacific Alliance, and are now considered as the driving force of their economic growth. The four member countries are among the most open economies and the most stable democracies in the world. The alliance has four of the most dynamic economies in the Latin American-Pacific basin. The four economies share a clear appreciation of the Asia-Pacific.

Cooperation is a key component of the Pacific Alliance: free movement of people, security and public safety, climate change, academic change, integration of its top markets, establishment of joint diplomatic and trade offices, electrical and physical interconnection. This means that it's more than a trade agreement; it's a full integration project.

Canada has the support of Peru to be an observer. We fully support the possibility that Canada is going to be a full member of the Pacific Alliance. There are a lot of steps that the observing countries have to achieve to be full members. Right now, observing members are Costa Rica, Panama, Canada, Uruguay, Spain, Australia, New Zealand, Japan, and Guatemala.

Regarding Peru's perspective of the Pacific Alliance, Peru considers the Pacific Alliance as a means to promote economic growth with social inclusion. The Pacific Alliance is not an ideological bloc. It aims to complement all the existing regional integration efforts. Peru sees with great sympathy Canada's interest in joining for the first time a Latin American integration process.

Finally, a favourable location in the Americas, as well as the fact that the Canadian government has signed a trade agreement with the four members of the alliance, puts Canada in an advantageous situation compared with the other observer countries. The Pacific Alliance is moving toward an ambitious integration process that will go beyond the strengthening of commercial and investment ties among the most open and dynamic economies of the region. In this context, political dialogue and cooperation, together with free mobility of people, are key factors in this process.

From an inter-regional perspective, economic and social sustainable development is a main goal of the alliance. From an international point of view, a main goal is the strengthening of the bloc economy to Asia-Pacific markets. This is the first time that Canada has expressed an interest in joining a Latin American integration bloc. This could be a first step leading Canada to a better knowledge of Latin America and to concrete and effective integration with the region.

Thank you very much, Mr. Chair.

[The Chair, Conservative, Rob Merrifield]

Thank you very much. I appreciate that.

Mr. Davies, the questions start with you.