Mr. Speaker, I rise today to speak on Bill C-55, which would implement the free trade agreement that Canada has negotiated with the European Free Trade Association, which is composed of Norway, Switzerland, Iceland and Liechtenstein.
It marks the successful end of nine years of negotiations. This process began under the leadership of the former Liberal government and represents a significant achievement for Canada as a trading nation. It secures free trade with our fifth largest merchandise export destination.
Canada has always been a trading nation. From the early days of fur and fish to the present, when a remarkable 90% of our gross national product is attributable to exports and imports, Canadians have relied on international trade to bolster our economy.
Trade is the way of the future. The ratio of world exports to GDP has more than doubled since 1950.
This agreement is a proud achievement for our trading nation.
That being said, I share the legitimate concerns of our country's shipbuilding industry, and I have been careful to examine the provisions affecting that industry before offering my support.
The EFTA agreement strikes a balanced approach by providing new and important market access for Canada's exporters, while also ensuring that an important domestic industry is protected against unfair competition from Norway. Norway subsidized its shipbuilders and built up a tremendous shipbuilding infrastructure, growing the industry into a world leader. However, Norway eliminated its subsidies in 2005 and has no plans to reintroduce them in the future.
Nonetheless, the effect of this buildup still gives the Norwegian industry an advantage. As responsible legislators, we must be careful to ensure that this advantage does not allow it to compete unfairly against our own shipbuilders.
The EFTA agreement provides several protections against this historical advantage. First, it phases out tariffs on ship imports over 15 years, the second longest phase-out ever negotiated in a free trade agreement. This is also the longest tariff phase-out that Canada has ever negotiated. Our negotiators are to be commended for this achievement.
Furthermore, if imports from EFTA countries cause harm to our Canadian shipbuilders during that time, we can revert our tariffs to the pre-free trade tariff rate for up to three years.
This two-pronged approach provides important protection and a long transition period for our shipbuilders. This is the fairest, most balanced deal that can be achieved in the real world.
The only exception to these rules is for the largest type of ships, the post-panamax cargo ships, which is not a size of vessel that our shipyards can produce.
These provisions are critical. A carve-out option for these ships, as suggested by my hon. colleagues in the NDP, was a huge stumbling block to making this important agreement a reality.
All of this is not to say that shipbuilders will not see some benefits as well. Earlier, the NDP member for Halifax in fact said that the shipbuilding industry in British Columbia and Atlantic Canada will see some benefits from this agreement.
The buy Canada procurement policy for ships will not be threatened by this agreement, and shipbuilding is also being supported through a $50 million renewal of Industry Canada's structured financing facility.
The objective of the program is to stimulate demand for Canadian-built vessels and increase innovation in our shipyards. It has been able to attract foreign buyers to Canadian shipyards, and the $50 million reinvestment is an important part of continuing this trend.
We should also note that the EFTA agreement presents no threat to our agricultural supply management system. This system is specifically exempted in this agreement.
In my remaining time, I want to talk about the benefits of the trade agreement with EFTA.
The European Free Trade Association is a significant bloc of countries when it comes to their combined economic strength. They are our fifth largest export destination in the world and our twelfth largest destination for foreign direct investment.
Canadian exporters and producers will benefit considerably through the reduction and elimination of tariffs under this agreement. Benefits include the elimination of duties on all non-agricultural goods, the elimination or reduction of tariffs on selected agricultural products, and a level playing field with the European Union exporters in EFTA markets.
There are many farm owners and workers in my community who will be pleased to know that this agreement also eliminates the EFTA countries' agricultural export subsidies for products covered by the agreement. A significant number of agrifood products will receive tariff treatment no less favourable than the tariff treatment accorded to the European Union for the same goods. This is an important competitive gain for our farmers.
The agreement itself is a first generation agreement: it focuses on tariff elimination and trade in goods. Unlike NAFTA, the agreement does not include provisions on investment, services or intellectual property.
The focus on goods is justified. The activities of goods producers account for roughly one-third of total value-added of all industries in the Canadian economy. Between 1997 and 2004, the GDP growth for goods producers averaged 3% per year.
These exclusions have made it an easier deal to secure. However, these provisions should remain long term goals for Canada.
We need to secure provisions on services in the future. Services are the fastest growing part of the economy. Services are things that we cannot drop on our foot. Service producers account for two-thirds of industry-based GDP.
We also need to negotiate agreements on investment. Canadians need to be able to invest abroad with the full confidence that they will be treated equally to domestic producers. If they are not, they need the ability to seek legal solutions.
Finally, we will also need to secure an agreement on intellectual property. An intellectual property policy provides the foundation for investment and growth opportunities in the knowledge-based economy. When we look at our future generation, if we have to compete with giant markets like China and India, we will have to be a self-sustained knowledge-based economy here in Canada.
The free trade agreement with EFTA does not cover safeguards, anti-dumping and countervailing duties, which will continue to be addressed at the World Trade Organization. However, there are provisions that will allow these issues to be revisited after three years, leading to more negotiations and potential gains later on.
The EFTA agreement also has a strategic importance that cannot be discounted. It shows the European Union that we are a serious and important partner, which will help our hope to eventually secure free trade with the European Union.
Yet, the EFTA countries are important in their own right. There has been significant growth in our exports to them, with the past few years showing an amazing 27.6% annual increase in merchandise exports. They are an important market for Canadian natural resources, industrial products and forestry products.
The EFTA countries are also our seventh largest source of imports, including medical products, chemicals and machinery. My colleagues may not be surprised to know that Switzerland is also a key supplier of clocks and chocolate to Canada.
There is also strong foreign direct investment between both sides of this new agreement. Canadian direct investment abroad within these four countries totalled $8.4 billion in 2006. Similarly, Canada is an attractive place for foreign direct investment from EFTA. In 2006, the EFTA bloc invested a total of $15.6 billion in Canada, which was up an unbelievable $9.7 billion from 2004.
This agreement is also welcomed from the point of view of the relationship with Europe more widely. We have found common ground with four European countries. My daughter is currently studying medicine at a school in Europe.
As I go on with this case, I can see that we have a market that we should also be looking forward to because of the strength that the European Union brings to this agreement. We can have a marketplace to go to. This should also help us to find common ground with a much larger and more diverse European Union in the future. The EFTA agreement is an important stepping stone on the path to a Canada-European Union free trade agreement.
Other immediate advantages also include opportunities for trade diversification and enhanced industrial cooperation. We will also have a leg up on the U.S., which has yet to sign such an agreement with EFTA. It also keeps Canada ahead of China, which is already negotiating its own free trade agreement, and India, which is expected to begin negotiations this year.
The Liberal Party supports the broad, multilateral process of trade liberalization under the World Trade Organization. Securing equal access to all countries is ideal. It is especially important for countries where it would be difficult for Canada to get a deal with on the same terms, or even at all, due to our relative size.
Multilateral, non-discriminatory trade liberalization is the ideal. However, given what we are currently experiencing, the multilateral process is often cumbersome and slow. Regional trade agreements, like the one concluded between Canada and the EFTA, can be good and useful supplements to the multilateral process.
Finally, the agreement also has symbolic importance: it increases investor confidence, even without provisions on investment in the deal.
Culturally, Canada shares close ties with the EFTA countries. The largest Icelandic population outside Iceland is in Canada, estimated at more than 100,000 people. Large numbers of Canadians hail from the other member countries of the EFTA. Our countries share the values of democracy, freedom, human rights, freedom of expression and free market economies. We have so much in common with these countries.
Canada is a trading nation and the Liberal Party is the party of free trade. The EFTA agreement is an important agreement and it represents a launching pad to larger trade possibilities down the road. This is a trading relationship that every member in this House should rise to support. I thank the House for giving me the opportunity to share my views. I welcome questions from hon. members.