Mr. Speaker, on behalf of the people of Surrey Central, I am pleased to participate in the debate on Bill C-32 regarding the proposed free trade agreement between Canada and Costa Rica.
The act tries to lay out the terms of a free trade agreement between two countries by gradually reducing trade barriers in goods and services. As we all know, free trade usually helps to raise the standard of living for both partners through increased competitiveness and lower prices. It can also do this if the agreement is balanced in its approach. If it is not, it will favour one partner more than the other. This is not the intention of free trade.
Taken alone, the bill may seem harmless, but if we look closer, the bill states that it would promote regional integration through an instrument that contributes to the establishment of the free trade area of the Americas (FTAA). Therefore, the bill is not just about Canada-Costa Rica free trade, but could be used as a model for a hemispheric free trade agreement.
We need to look at it very carefully. Canada already has a $100 million trade deficit with Costa Rica, so the relationship is already an unequal one. The bill would only make the situation worse.
One example of a sector where it favours Costa Rica over Canada is in the sugar industry. Sugar is currently refined from sugar cane and sugar beets. Sugar cane is grown in tropical areas, whereas sugar beets are grown in temperate regions, such as Canada and the United States.
Canada currently has three sugar refineries to process raw sugar. This is down from seven 20 years ago. While Canada has some of the world's most liberal rules regarding importing sugar, our tariffs on imported refined sugar are 8%, while we currently have no tariffs on raw sugar for processing in Canada.
In terms of exports, our only really viable market is to the United States which imposes strict quotas of 12,000 tonnes of sugar a year.
Other countries like Costa Rice hit us with very hefty tariffs when we export sugar to their countries. For example, Guatemala has a 160% tariff on sugar imports, whereas in Canada it is 8%.
There is a company in British Columbia called Rogers Sugar which stands to lose a great deal from this agreement. I invited its management to my office to tell me their side of the story. This 111 year old company supports the livelihood of 650 people, including 450 farmers, and produces 140,000 tonnes of sugar each year.
The House already heard the desperate shape that our farmers were in during the emergency debate on the agriculture industry last week.
Is it this government's intention to add insult to injury by taking away the livelihood of those farms and their families? What about the effects on communities such as Taber, Alberta where Rogers has its beet sugar refineries? What will happen to these communities?
This company currently injects close to $100 million into the Canadian economy through its operations in Vancouver and Taber, providing high quality employment to their employees, including 17 from my constituency of Surrey Central.
For companies such as Rogers, this agreement stifles the operation of market forces by giving Costa Rica more access to Canada than Canada gets to Costa Rica. So reciprocity is not fair.
Costa Rica does not currently use refined sugar, so there is no possible benefit to Canada on this score.
Trade agreements have to be negotiated fairly. The negotiations should be properly done effectively and efficiently for the benefit of Canada and Canadians. It should be a win-win situation over a period of time. An imbalanced approach cannot be used in negotiations.
I would say that this is not the only sector where this is true. One sector which is of great concern in British Columbia is the softwood lumber sector. We all know the fate of this industry. In this case, Canada is restricting trade to protect the domestic industry, not very effectively either I might add.
In the case of sugar, though, the government is signing an agreement which clearly benefits the other country more than us, and that is not fair. I thought CIDA was responsible for handing out foreign aid. I did not think that the international trade had similar intentions.
By not paying attention to the spirit of free trade agreements, our government is not providing our industries with a level playing field in bilateral trading relationships with Costa Rica.
As I mentioned before, this agreement does more than open the door for the exchange of goods and services with Costa Rica. It is a model for the whole FTAA framework and the rest of the world through the World Trade Organization.
Also, we must see that regional trade agreements, such as the FTAA, cannot conflict with our WTO agreements. That means we must provide the same benefits that we are providing Costa Rica to our trading partners. So then the agreement could be used as a lever for other countries to extract concessions from us in other sectors and other industries.
Free trade, when done right, leads to lower prices for consumers. However, free trade must also be fair trade. It must benefit both partners equally.
At the same time, at a time of economic uncertainty, we cannot afford to do anything which threatens jobs in Canada.
The people of British Columbia have already been hurt through the government's bungling of softwood lumber, tomato dumping in British Columbia, the mining industry, fisheries, tourism, the film industry and many others. We cannot let it do it to our sugar industry as well.
We owe it to the farmers and workers affected by these industries to oppose the bill and others like it. This will not be the last free trade bill that comes through the House. Markets work best where government intervenes the least. That is what a free market is.
When the government does intervene, it must try to promote fairness and look at the whole web of Canada's trade relations with other countries. We cannot afford to be too shortsighted about the issue. We must look at the bigger picture and its future implications. The bill sets a dangerous precedent so I must oppose it.
In conclusion, I would say that the elimination of the tariff on refined sugar imports from CA-4 countries would greatly enhance these countries' competitiveness in the Canadian market.
The cost of this to domestic producers could exceed $30 million Canadian in the short and medium term. The benefit to Canadian consumers would total between $9 million to $13 million Canadian.
The impact on the industrial end users and consumers and CA-4 producers and importers would depend ultimately on whether local producers concede market share or compete on price in the industrial market segment.
Also, given that the CA-4 producers would be able to supply the domestic market at a lower cost than the Canadian producers, the immediate removal of the tariff would result in an increase in competition in the local market.
Although we estimate that certain Canadian producers could compete with imported sugar on a cash cost basis, no industry is able to operate on this basis in the long term. However if the tariff were eliminated gradually, this would enable domestic producers to decide if and how they would respond to the new challenge and to implement their response accordingly.
In the longer term the FTAA will pose new and more complex challenges. In addition to opening up the Canadian market to imports of sugar from major sugar producing countries such as the United States and Mexico, both of whom have considerable logistical advantages in supplying Canada compared with the CA-4 countries and Brazil, which is an enormous and very low cost sugar producer, the FTAA would also increase the opportunities for industrial end users to relocate their production bases to other countries in the Americans.
This agreement does not have a balanced approach between Canada and Costa Rica. It is setting a precedent which would be dangerous for Canada and Canadians. Therefore I must oppose the bill.