Madam Speaker, generally speaking, we oppose NAFTA style agreements that put big business interests before workers and the environment and that have increased inequality and decreased the quality of life for the majority of working people.
In the case of Canada-Peru, our concern is that a much larger and more developed economy will take advantage of a developing one and that large corporate interests will end up shaping the so-called free trade architecture to serve their needs and not the public interests of the two trading nations.
The most egregious aspects of the free trade agreement are similar to those found in the Canada-Colombia agreement that will be coming forward shortly.
I will begin first with labour rights. The Canada-Peru free trade agreement does not include tough labour standards. The labour provisions are in a side agreement outside of the main text and without any vigorous enforcement mechanism. Trade unions in Peru have expressed concern as Peruvian labour law is deficient in several areas.
The hon. member for Kings—Hants earlier was talking about enhancing labour rights and that free trade agreements can do that. I would like to use as a reference some comments made by the Council on Hemispheric Affairs with regard to the U.S.-Peru free trade agreement. It stated:
Despite the FTA's condition that labor standards in Peru must not be lowered, a number of President García’s recent decrees have put the country’s Public Service workers in jeopardy. [Last year, in 2008], the Inter-sectional confederation of State Workers...organized a strike in protest of legislative decrees 1025, 1026, and 1057, which, according to the union, compromise the labor rights of public employees. The new laws are designed to “modernize” the public sector through “punitive evaluations” of current employees’ work performance, as well as through a reorganization of positions and salaries. The power to implement these changes is granted to the National Civil Service Authority, omitting any possibility of collective bargaining. This leaves labor organizations with little leverage to protect the jobs of their members.
While these concerns raised by organized labor in Peru are significant, much larger problems plague a majority of the country’s population. Because unionized sectors in fact make up only a small portion of the nation’s labor force, few have the ability to collectively protest when labor laws are changed. Worse still, even the limited labor standards presently on the books are largely unable to extend their reach to a majority of working Peruvians. According to a 2007 Human Rights Report, only 9 per cent of Peru's labor force is represented by unions, and more than 70 per cent of it works in the informal sector. Thus, regulations affecting minimum wage and working conditions do not protect most Peruvians, making concern over labor laws almost a moot point.
While the national minimum wage was raised to $176 per month in October of 2007, many workers in the informal sector earn merely between $20 and $30 per month, according to the U.S. Bureau of Democracy, Human Rights, and Labor. The Bureau also reported that the Peruvian government “often lacked the resources, capacity, or authority to enforce compliance with labor laws.” Hence, most Peruvian workers are not protected against the potentially damaging effects of the FTA, which could leave them even more vulnerable to the self-serving demands of foreign multinationals.
I will now talk briefly about the environment. By addressing the environment in the side agreement there is no effective enforcement mechanism to force Canada or Peru to respect environmental rights. The Canada-Peru agreement on the environment commits both countries to pursing environmental cooperation and to work to improve their environmental laws and policies but it can only ask both parties to enforce their domestic laws. If they do not, there is no consequence.
Let me speak briefly about investors. Copied from NAFTA's chapter 11 investor rights, the Canada-Peru free trade agreement provides powerful rights to private companies to sue governments over their public policy, enforceable through investor-state arbitration panels. We have seen through our NAFTA experience how this type of corporate rights regime undermines the legitimate role of government in protecting and improving the lives of its citizens and the environment.
The Canada-Peru agreement is a somewhat improved copy of the outdated George Bush style approach to trade, but it still puts big business before people. There is no effective enforcement of human rights and it pays lip service to environmental protection, without any real measures or dispute resolution mechanisms.
These types of NAFTA copycat agreements are meant for trade between highly industrialized and developed countries, but Peru is a developing nation. This trade deal will not help Peru grow sustainably and increase the standards of living for its citizens. Instead, it will open the country up to exploitation by multinational corporations. Canadian corporations are very active and large investors in the natural resources sector in Peru. This kind of neo-liberal trade regime is strongly opposed by civil society groups, trade unions, environmental groups and citizens from both Canada and Peru.
As the hon. member from the Bloc pointed out, Peru is not a major trading partner with Canada. Two-way merchandise trade between the two countries reached only $2.8 billion in 2008. Over $2 billion of that money was Canadian imports, of which over 50% was from Canadian gold companies operating in Peru, taking advantage in 2008 of rising gold prices.
The trade deal was negotiated in record time, which should be a cause of concern for everyone in the House, and was negotiated without any consultation with trade unions, environmental groups, civil society and citizens.
By far, the trade deal does not provide investors and labour with a level playing field. While under chapter 11 investors have the right to seek binding arbitration that they can pursue independently, a trade union in Peru does not get to pursue a case to arbitration. It can file a complaint that would lead to an investigation and report, but it is up to the government to seek remedies and damages. Our experience with the NAFTA template shows that government is unwilling to do this. Empirical evidence strongly suggests that the minister of the day will not pursue the matter.
Market access is a concern. Let me reference this by talking about, in some cases, the technical aspects of the Canada-Peru free trade agreement in relation to the U.S.-Peru free trade agreement.
Before I talk about market access, I will provide a little primer.
It eliminates the vast majority of tariffs immediately upon entry into force. For Canada, most tariffs that will not be eliminated immediately will be phased out over a three-year period, which includes things like certain types of gloves, boots, textiles and imitation leather; and over a seven-year period for boats and other floating structures.
For Peru, most tariffs that are not eliminated immediately will be gradually phased out over a 5- to 17-year period. This includes foods such as rice, and certain cuts of meat.
Canada did not make any commitments to reduce over-quota tariffs on supply-managed goods, and that is a concern. We have in Canada a supply management system, province to province and territory, that protects farmers, producers and consumers. Canada did not make any commitments to reduce over-quota tariffs on supply-managed goods such as dairy, poultry, meat and eggs. Eggs are a product that we always think of in Ontario. It did, however, commit to gradually eliminating the within-quota tariff on these products. Canada will also allow partial access to the domestic sugar market, and Peru is placing the same restriction on imports of Canadian sugar.
Canada pursued market access under the same terms as those granted to the U.S. Canada received the same tariff concessions as the U.S. for wheat, barley and pulse foods. Canada did not, however, receive the same concessions for pork and beef.
Regarding investment protection provisions, the agreement with Peru was negotiated using the 2003 template based on chapter 11 of NAFTA. In spite of the so-called improvement to chapter 11 from lessons learned, chapter 11 is built on the principle of a corporate charter of rights that overrides the democratic will of a nation and puts labour at a disadvantage.
Under the terms of the agreement, Canada and Peru commit that their labour laws respect the 1998 Declaration on Fundamental Principles and Rights at Work. It also includes a dispute settlement process and a financial penalty should a country fail to respect ILO principles or fail to enforce domestic labour laws. The penalty for non-compliance is determined by a review panel that has the power to require the offending country to pay up to $15 million annually into a co-operation fund. Our labour allies have made the case that, although it is a step in the right direction, those side agreements are just side agreements, with no effective and vigorous enforcement mechanisms, where the last word belongs to a bureaucrat.
In the U.S.-Peru deal, the labour and environmental sections are not side agreements but chapters in the main text, chapters 17 and 18 respectively. In the U.S. agreement, the first articles of chapter 17 explicitly restate the standards and declaration. The Canadian agreement mentions the side agreements in the preamble and then makes reference to them throughout the rest of the agreement.
NAFTA just focused on the enforcement of labour standards while each partner retained full regulatory control to establish or modify its labour and employment standards. The Canada-Peru agreement is more substantive and seeks to prohibit violating core labour standards when they have an impact on trade and investment. There is, however, no empirical evidence that this kind of enforcement mechanism actually works at all.
Let me speak briefly on the environment.
The application of domestic law trumps all other considerations. The agreement on the environment does not contain a dispute settlement mechanism or specific penalties set out for non-compliance. Basically the side agreement says that the parties agree to abide by the commitment they have agreed to.
Unlike the Canada-Peru free trade agreement, the U.S. incorporates the environment and the labour side agreements right into the accord. The U.S. accord provides for a consultation process, after which the parties have access to a dispute settlement mechanism.
In fact, even though the environmental provisions appear stronger in the Peru-U.S. free trade agreement, the Council on Hemispheric Affairs has reported that the Peru-U.S. free trade agreement has provided the president with an excuse to lower environmental and labour protection standards by anticipation, through a flurry of decrees aimed at facilitating foreign ownership and the acquisition of land. About 40% of these presidential decrees were deemed unconstitutional by the Peruvian congress constitutional commission.
We in the NDP have great difficulty with this agreement, and not just the chapter 11 portions of it that are much like the chapter 11 portions in our NAFTA agreement with the United States that are causing so much trouble these days. There are a whole host of problems.
I would like to end there and I look forward to any questions that hon. members might have.