International Trade Committee on April 8th, 2014

[Erin O'Toole, Conservative, Durham, ON]

Thank you.

So 2001, that goes through three separate Canadian governments, with some interesting perspectives.

Under the global markets action plan, and the economic diplomacy focus in the last year or two, Honduras is one of our 20 countries of focus. We're talking a lot about trade today, and certainly we're at the culmination of negotiations for 13 years in various forms, but we're also the third-largest bilateral donor in development aid, capacity building, institution building.

Mr. MacKay, from your experience as an ambassador, could you give some thought on two things, probably in the remainder of the time. First is Canada's presence as the third-largest bilateral donor assisting with capacity building. Second, in your experience on the ground as an ambassador, not from Google searching, could you give me your perspective on whether trade and increased economic activity on the ground improves the standard of living, quality of life—even if gradually—for the average Honduran slowly over time?

[Cameron MacKay]

Thank you for the question.

When I was head of mission in Honduras, I had the opportunity to visit several of the major development projects we have ongoing there. As you mentioned, Honduras is a country of focus. The department that used to be called CIDA had a list of top-20 countries of focus, and Honduras was one of them because the need there is so great. There are some terrific projects going on there with respect to maternal, newborn, and child health. We work directly with the Honduran Red Cross to support programming with the World Food Programme, the so-called school feeding programs for malnourished children in the rural areas, where they're now attracted to come to school to get breakfast because of food programming that Canada is co-sponsoring with the World Food Programme.

Leading to what you asked about with respect to the opportunities under the free trade agreement, we also have development cooperation programs that help Honduran coffee growers exploit international markets. We're working with cacao producers to help them develop more sustainable ways to grow their local cacao product.

Turning to Canadian investment in the country, Gildan—and I believe you will be hearing from representatives of Gildan later today—is currently the largest private sector employer in the country. It has roughly 20,000 employees in Honduras, creating jobs and opportunities there. Gildan is seen as a very attractive employer in the country. Hondurans want those jobs. The Government of Honduras at that time was very supportive of all the activities of the Canadian government with respect to the development cooperation program I outlined, and the private-sector investment from Gildan. The Honduran government saw Canada as a very important partner for them in trying to address some of the very serious challenges they face, as was outlined earlier by another member of the committee.

[Erin O'Toole, Conservative, Durham, ON]

That's an interesting point: a Canadian company...our brand is there...largest private sector employer. Is the unemployment rate in Honduras...? It certainly would be high for our standards, but where does it rank with respect to Central America? Is it high or low, or is it improving on the trend line?

[Cameron MacKay]

I don't know offhand the unemployment rate in Honduras.

I don't know, Pierre, if you happen to....

But maybe what I can say is that employment in Honduras and in the region is a top concern for every government. Unemployment rates are typically high and also the quality of jobs in the region is a challenge. So Honduras, like other governments in the region, is always looking for private sector investment to help increase employment opportunities, and we think the trade agreement will help in that regard.

I think Mr. Bouchard may now have some figures to share.

[Pierre Bouchard, Director, Bilateral and Regional Labour Affairs, Department of Employment and Social Development]

These are figures from the ILO department of statistics, June 2012. For Honduras, the unemployment rate was listed as 2.9%, but there is still a large sector of the population that is employed in informal sectors—nearly 73.9%. Overall, the labour force participation rate is still relatively low. It is at about 38%.

[The Chair, Conservative, Rob Merrifield]

Very good.

We'll now move to Mr. Pacetti. The floor is yours, sir.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you, Mr. Chair.

Thank you all for coming today. It is very interesting.

Mr. MacKay, maybe just take it back a step in terms of before Canada enters into a trade deal. What are the criteria used? You stated in your brief as well that Honduras is a relatively small trading partner. So are we looking at the end and saying, okay, we can probably get into a trade agreement with Honduras, and a labour agreement, and any other type of agreement? Or does it start with a beginning, and say, we want to target the poorest countries in the world? Can you expand on that?

[Cameron MacKay]

Well, when we first began negotiating with Honduras back in 2001—and I was not working on the file at that time—I can imagine that the government of the day was looking at both commercial opportunity in the region and also wanting to build a stronger economic relationship with a region that had been torn apart by a civil war and revolution in the 1980s, and frankly, needed the kind of economic opportunity that trade liberalization, when it is supported by the other appropriate programs—

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

No, I understand. Sorry, I must interrupt because my time is limited.

I believe you said you started with four countries. So wouldn't your ultimate goal be to finish trading with four countries? I understand there were things that happened along the way, but wouldn't you want to carry at least a second country or a third country along the timeframe? These are small trading partners, very small trading countries.

[Cameron MacKay]

We would have preferred to conclude an agreement with all four of the CA-4 countries, but after 10 years of negotiations, it simply proved impossible. So we concluded an agreement with the one country that, frankly, was willing to negotiate an ambitious—

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

So what would the status be with the other three?

[Cameron MacKay]

The other three negotiations are currently inactive.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Okay. Would the other three have free trade agreements with the United States or the European Union?

[Cameron MacKay]

They do. They have agreements with both the U.S. and the EU

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

So would they just say it's not important to trade with Canada? What would their philosophy be? Why would we not pursue that?

[Cameron MacKay]

In order for Canada to conclude a trade agreement with any country, particularly a country that already has an agreement with, say, the United States and the European Union, as these countries do, we're looking for a market access package that allows Canadian companies to compete on a level playing field in those markets with their U.S. and EU counterparts. If our negotiating partners are unwilling to negotiate that kind of a deal with us, then we are unable to conclude an agreement that leaves the playing field unbalanced for Canadian exporters.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

There are human rights abusers in Guatemala, and we have companies in Guatemala. I still don't understand why we wouldn't pursue a free trade agreement with Guatemala?

[Cameron MacKay]

Frankly, the Canadian government was willing, and at the time that we were actively negotiating with Guatemala, the Guatemalan government simply did not engage at the level that was required to conclude a trade agreement.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Does the funding from CIDA follow, or does it start...? Is that a factor that's considered in negotiating free trade agreements?

[Cameron MacKay]

Let me go back and speak about Honduras. As I mentioned earlier, Honduras is one of the top 20 countries of focus for Canadian development cooperation, and that is unrelated to commercial considerations.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

When it comes to the other agreements—for example, labour agreements—is that a criteria for free trade? How does it work in the department? Is it all negotiated at the same time, or is it, let's work on tariffs, then we'll work on the environment, and then labour? What order is it?

[Cameron MacKay]

We negotiate the 23-or-so chapters of the free trade agreement and the parallel agreements on labour and environment all effectively at the same time, in parallel. It's very much a whole-of-government exercise. There are more than half a dozen government departments involved, including ESDC and Environment Canada.

Our aim is to conclude one package at the same time, which is what we have done with Honduras, and before Honduras, with Panama, Peru, Colombia, etc. That's effectively the model that we are using and the model that countries in the Americas are accustomed to. It's standard practice in the hemisphere.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

If you were to start your free trade negotiations, it would be under the understanding that it would have to include the labour component and the environmental component?

[Cameron MacKay]

Yes.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Okay, two more minutes...?