Mr. Speaker, I am pleased to resume my remarks on Bill C-46.
I was going to provide a description of the current situation of trade between Canada and Panama. As of 2007, the two-way merchandise trade between Canada and Panama totalled a modest $149 million, including $128 million in exports from Canada to Panama, and $21 million in imports to Canada from Panama. Panama at the time was Canada's seventh largest export destination in Central America and the Caribbean and Canada's 12th largest source of imports from that region.
As for the export category, what Canada sends to Panama, the key piece in the last years has been flight simulators and parts. Next would be medications and other pharmaceutical products, then machinery and equipment and electrical/electronic products, followed by agricultural goods and food products, malt, pulses, potatoes and meat, and finally paper products and aircraft.
The imports that Canada received from Panama in 2008 were heavily concentrated in a couple of areas. The key one was crude oil and refined petroleum products. In 2008 more than one-half, 55% or $11.7 million, of Canada's imports from Panama consisted of refined heavy oil. In recent years crude oil has made up as much as 86% of Canada's imports from Panama. After crude oil and refined products imports, Canada has imported small amounts of tropical agricultural products such as bananas, melons and coffee and some silver ore. Those were the key imports from Panama to Canada.
Panama is not a major destination for Canadian direct investment abroad. Canadian direct investment in Panama totalled $111 million in 2006, falling from $143 million in 2005. Panama's modest source of direct investment in Canada with foreign direct investment stocks was $50 million in 2008. With regard to services, trade in services between Canada and Panama is negligible.
That gives us some sense of the trade situation currently between Canada and Panama. It is not a big player in terms of our export business, or imports to Canada.
There are some particular problems with the deal between Canada and Panama that we are being asked to ratify in Parliament. One of them is labour standards. We have heard a lot about that in the debate so far.
Panama's record on labour standards is not great, to put it mildly. The International Labour Organization, the ILO, has raised concerns about whether workers in Panama's export processing zones actually have the right to strike, even though unions and collective bargaining are permitted. The laws establishing and regulating these export processing zones in Panama do not include arbitration or specified procedures to resolve labour disputes. There are some problems with the existing labour laws in Panama and they need some attention.
Furthermore, there has been a record of violence against union organizers, union members and labour leaders in Panama. Labour leaders have been assassinated while demonstrating and working for workers' rights. Notably, in 2007 two members of the construction union were killed. Just this past summer anti-union repression escalated in Panama with the result that several workers were killed, over 100 were injured and 300 were arrested. There is a serious problem with anti-union and anti-worker violence in Panama.
This free trade agreement with Panama would provide a maximum government fine of $15 million for labour violations to the side agreement on labour. However, these fines are likely to be very difficult to collect and even if they are collected, they are paid to a joint commission to improve labour rights enforcement in Panama, which could also allow them to be funnelled back to the government of Panama.
A fine for the violation of labour rights in this scenario is then to be used to help the government do what it should have been doing in the first place. It does not seem like much of a punishment for the failure to respect labour laws and workers' rights to be forced to pay oneself a fine, essentially, and do what one should have been doing in the first place. This is an ineffective mechanism to enforce this side agreement on labour that is part of this agreement.
In this House in the past, when we were debating the Canada-Colombia deal, we talked about the side agreement on labour but that deal amounted to nothing more than a “kill a trade unionist and pay a fine” kind of agreement. It seems that this deal is no different as it follows the same pattern as the Canada-Colombia deal.
There are very serious problems with recognizing labour rights, respecting the rights of workers in Panama and providing any effective mechanism to uphold what has been negotiated as a side agreement. As we have pointed out many times, if labour rights and the recognition of workers' rights in Canada and Panama are important to these deals, then they should be part of the main agreement and not hived off to a separate side agreement with ineffective enforcement procedures in place.
There is also a concern about child labour in Panama. Poverty is a huge issue in Panama. Many people have very low income; a dollar a day in many cases. The United Nations radio reported that 55,000 children have dropped out of education to go to work because of extreme poverty. That report came out earlier this spring. Many children in Panama are not in school and the prime cause of that is the need for them to go to work. They leave their education and go to work at a very early age.
The Panamanian government reports that 114,168 children between the ages of 5 and 17 are working in Panama, most often in agriculture. In a country of just over 3 million people, over 114,000 children between the ages 5 and 17 working because of the poverty in which their families live is a huge number. This has increased from 2008 when 89,767 children in this age group were working.
Clearly, the efforts that the Panamanian government have agreed to undertake to make universal education available to children and to ensure that child labour is no longer an issue in Panama is not working. The efforts to get children out of the workforce and into school are not working.
We need ask whether that is the kind of country with which we want to enter into a trade deal. Is that the kind of country that we want to reward with special trade arrangements when it is not making progress on this kind of very serious child labour issue?
We have also heard a lot of serious concerns raised in the debate about entering into a free trade agreement with a country that is a notorious tax haven and a centre for money laundering. Panama is regarded as a tax haven by the Organization for Economic Co-operation and Development, the OECD, as well as several other countries, including the United States. In 2008, Panama was one of 11 countries that did not have a tax information exchange agreement signed or enforced. Panama is one of only three states, with Guatemala and Nauru, that would not share bank information for any tax information exchange purpose.
This situation led the OECD, back in 2000, to blacklist Panama as an unco-operative tax haven. In response to being blacklisted, the Republic of Panama wrote to the Secretary General of the OECD in 2002 with a commitment to meet the OECD's standards for transparency and information sharing so that it would no longer be considered a tax haven. The OECD has responded to that commitment and, I think, has bumped Panama off the blacklist and onto the so-called grey list. However, Panama has not followed through on that commitment.
Panama has not, to date, substantially implemented the internationally agreed tax standard to which it committed in 2002. That standard would have obliged Panama to share information upon the request of other countries such that those other countries could effectively implement their domestic tax laws.
Panama has gone from the blacklist to the grey list with a commitment to improve things but has done nothing about making those improvements. I have to wonder whether or it is not destined to be back on the blacklist before too long.
This has been an issue for the American Congress, which is looking at a trade agreement with Panama as well, and where that deal has also been delayed because of problems with the deal. U.S. Congressman, Michael Michaud, put it this way. He said:
Panama's industrial policy is premised on obtaining a comparative advantage by banning taxation of foreign corporations, hiding tax liabilities and transactions behind banking secrecy rules and the ease with which U.S. and other firms can create unregulated subsidiaries. According to the State Department, Panama has over 350,000 foreign-registered companies.
The congressman points out a very serious problem with the legislation in Panama that allows it to be this kind of tax haven.
We need to ask whether we really want to be signing a trade agreement with a notorious tax haven and centre for money-laundering.
Again, the U.S. Department of Justice notes that Panama is a major centre for money-laundering related to the drug trade and in fact there have been very serious concerns raised about the Colon Free Zone in Panama being linked to trafficking of drugs and other illicit substances.
The International Monetary Fund notes that the Colon Free Zone is a centrally located transit area for drugs. It is a very serious accusation coming from a respected international agency and one that we should be taking into consideration as we look to negotiating a deal with this country, in a sense rewarding the country with this kind of deal. There is no doubt that the government of Panama will trumpet its success in obtaining a deal with Canada and, given the very serious problems, do we really want to make that something easy for it to do?
I think all Canadians believe that the wealthy and big corporations should not be able to avoid contributing their fair share to the development of this country. They should be paying their taxes. Should we be dealing with a country that makes it possible for them to avoid paying taxes by operating as a tax haven? I am sure that most Canadians would answer very clearly that it is wrong and that we should not be entering into an agreement with a country has not cleaned up its act on that score.
There is not a word in this agreement about the tax haven situation and not a word about correcting this failure to exchange tax information with other countries. Today in question period we heard the Prime Minister say, very clearly, that the government had no tolerance for tax havens. I have to say that we would not know it by the fact that we have this agreement before us. The government is proposing that we enter into an agreement with a well-known and notorious tax haven in the Republic of Panama and it has put this agreement forward without any mention in the agreement of dealing with that issue. It is a very serious problem.
New Democrats are not opposed to trade. We are not opposed to fair trade deals. We want to ensure that Panama meets its international commitments and that it continues to develop, but this trade deal is not the mechanism to ensure that. We are not talking about ending our relationship with Panama. We are not talking about ending the trade that exists there or looking for other opportunities to expand that trade. We are not talking about ending diplomatic relations with Panama. However, what we are saying very clearly is that this deal does not meet the kinds of standards that Canadians would want us to uphold. Canadians would want to ensure that it was a fair agreement for Canadians and for Panamanians. Unfortunately, this agreement does not meet the test and, therefore, we cannot support it.