House of Commons Hansard #115 of the 41st Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was korea.
Mark Warawa Conservative Langley, BC
Mr. Speaker, I am honoured to present a petition from thousands of people in British Columbia.
This petition highlights the fact that 22-year-old Kassandra Kaulius was killed by a drunk driver. A group of people who have also lost loved ones to impaired drivers, called Families for Justice, believes that the current impaired-driving laws are much too lenient. The petitioners are calling for new mandatory minimum sentencing for people who have been convicted of impaired driving causing death.
Questions on the Order PaperRoutine Proceedings
Regina—Lumsden—Lake Centre Saskatchewan
Conservative
Tom Lukiwski ConservativeParliamentary Secretary to the Leader of the Government in the House of Commons
Mr. Speaker, I ask that all questions be allowed to stand.
Tom Lukiwski ConservativeParliamentary Secretary to the Leader of the Government in the House of Commons
Mr. Speaker, I ask that all notices of motions for the production of papers be allowed to stand.
The Acting Speaker Conservative Bruce Stanton
Before we go to the orders of the day, I have the honour to inform the House that a message has been received from the Senate informing this House that it has passed the following bill, to which the concurrence of the House is desired: Bill S-221, An Act to amend the Criminal Code (assaults against public transit operators).
Canada-Korea Economic Growth and Prosperity ActGovernment Orders
Abbotsford B.C.
Conservative
Ed Fast ConservativeMinister of International Trade
moved that Bill C-41, An Act to implement the Free Trade Agreement between Canada and the Republic of Korea, be read the second time and referred to a committee.
Mr. Speaker, I am pleased to have the opportunity to speak today about the landmark Canada-Korea free trade agreement and to outline clearly why it should be implemented without delay.
Both the 2013 budget and Speech from the Throne are clear that this government's top priority remains the creation of jobs, economic growth, and long-term prosperity.
As an export-driven economy, Canada requires an aggressive international trade strategy that continues to open up new markets for Canadian businesses.
One in every five Canadian jobs is dependent on exports, and over 40,000 Canadian companies are active exporters around the globe. They include global leaders in a diverse range of sectors, from aerospace to ice wine and everything in-between.
In a competitive globalized economy, hard-working Canadians depend on freer and more open markets for their economic security. That is a reality that this government understands. We know that our Canadian companies can compete with the very best in the world and win anywhere in the world, and our Conservative government is committed to supporting them as they grow and succeed.
The global economy is rapidly evolving, and emerging markets in Asia and elsewhere represent significant untapped trade and investment opportunities. It is imperative that we keep up with the times.
That is why this Conservative government has embarked upon the most ambitious pro-trade plan in our nation's history. Increased trade means greater employment prospects, more prosperity, and more food on the table for Canadians and their families. It also means more choice and better value for consumers. It means better priced and higher quality input, which would allow our Canadian manufacturers to remain competitive in a fiercely competitive global marketplace.
Let me provide some historical context. Members may recall that a previous Conservative government had the vision to negotiate the Canada-U.S. Free Trade Agreement, followed by the North American Free Trade Agreement, which, of course, included Mexico. Members may also remember that it was both the NDP and the Liberals who loudly opposed both of those agreements, claiming that they would cause Canada to lose its culture, its health care system, its sovereignty over water resources, and that we would see our economy hollowed out and lose millions of Canadian jobs. In fact, the Liberal Party of the day even threatened to tear up NAFTA.
Of course, none of those dire predictions came true. Over the last 25 years, Canada's economy has added millions of jobs and attracted hundreds of billions of dollars of foreign investment. Our trade with the U.S. has tripled, and our bilateral trade with Mexico has increased more than sevenfold. The last time I looked, our health care system was intact, we still had full control over our water resources, and Canadian culture is alive and well.
My point today is that many of those same naysayers and anti-trade activists are trotting out the same old tired arguments against every new trade agreement that Canada negotiates. I want to assure the members that their dire predictions were wrong 25 years ago, and they are just as wrong today.
Prior to 2006, the previous Liberal government largely neglected trade as an engine of economic growth. In fact, during 13 long, dark years in power, the Liberals were only able to sign three small trade agreements, putting Canadian workers and businesses at severe risk of falling behind in the global marketplace.
However, there is good news. We have delivered on our commitment to dramatically expand economic opportunities for Canadians through trade and investment. Over the eight short years since our Conservative government was elected, we have successfully concluded free trade agreements with no less than 38 different countries. That number includes the most comprehensive and ambitious trade initiative in Canada's history, the Canada-European Union free trade agreement. This past summer, we announced that we had completed the text of that treaty, and later this week we will be celebrating that achievement.
However, make no mistake about it, our efforts on the trade file are far from over. The cornerstone of our pro-trade plan going forward is the global markets action plan, which we call GMAP. We released it last fall. The GMAP guides our government's activities on trade and investment. It is our blueprint for increasing exports and supporting Canadian companies in markets all around the world. The GMAP outlines a broad array of trade initiatives, from negotiations of trade and investment agreements, to extensive stakeholder consultations and revamped market access plans. Crucially, we have identified priority foreign markets and priority sectors of our economy that are most important to Canadian exporters, and we are focusing our energies and resources on those priorities.
Not surprisingly, countries in the Asia-Pacific region figure prominently in GMAP because of the growing importance of that region of the world. That brings me to the legislation before us today. This past Monday, I was pleased to sign Canada's first free trade agreement with an Asian country, namely the Canada-Korea free trade agreement. South Korea is a modern economic miracle. That country's economic growth over the last 30 years has been remarkable. Since 1980, South Korea's GDP has grown more than six-fold and its economy has experienced an average annual growth rate of 6.5%. Korea has become a technological powerhouse and its global conglomerates, many now household names within our own country, anchor key regional and global value chains.
Given the size and dynamism of South Korea and our long history as friends and allies, implementing this historic agreement should be a no-brainer. As I noted, the Canada-Korea free trade agreement marks Canada's first bilateral trade agreement in Asia and will strengthen our economic ties with an increasingly important country that is both a priority market and a natural and complementary partner for us.
This agreement truly represents Canada's gateway to Asia. Commercial engagement between Canada and South Korea is already significant. Last year, two-way bilateral merchandise trade between our countries was roughly $11 billion and two-way investment is approaching $6 billion. But there remains great potential to expand this important partnership and this agreement will help unlock that potential. Indeed, the Canada-Korea free trade agreement will, in a very positive way, forever transform the way we do business with each other.
All told, this agreement is projected to boost Canada's economy by nearly $2 billion a year and increase Canadian exports to South Korea by 32%, creating thousands of new jobs in every region of our country and across every sector of our economy. As significant as those numbers are, there is another equally compelling reason to get this agreement implemented as quickly as possible. The Canada-Korea free trade agreement will restore a level playing field for Canadian companies in the South Korean market, where our fiercest competitors, including the United States and the European Union, are already benefiting from their own preferential access due to their own free trade agreements with South Korea.
Canada cannot continue to idly stand by as our competitors' goods maintain an advantage over Canadian ones. Implementing this trade agreement without delay is the best way to support Canadian businesses and the hardworking Canadians they employ. But one does not have to take my word for it. Stakeholders representing every sector and every region of the country have been calling on our government to move with dispatch to get this agreement in place.
On March 11 of this year, in Seoul, Korea, I was delighted to witness our Prime Minister and South Korean President Park announce the conclusion of negotiations. In the days that followed, many different companies and business associations publicly congratulated our government on that achievement. During the latest milestone in the implementation process, the tabling of the text of the treaty in the House this past June, we again heard from Canadians. Their message to us was loud and clear, that this agreement needed to be brought into force as quickly as possible.
Canadians overwhelmingly support this deal and when we look at the agreement, that should be no surprise. Our Conservative government is firmly committed to only signing trade agreements that are in the best interest of Canadians.
Let us look at some of the details of this agreement.
This is a 21st century, state-of-the-art free trade agreement that is ambitious in reach and comprehensive in its scope. It covers virtually every facet of modern commerce, including trade in goods and services, business mobility, investment, government procurement, intellectual property, technical barriers to trade, the environment and labour rights.
The centrepiece of the agreement is, of course, the elimination of tariffs on virtually all trade between Canada and South Korea. In numerical terms, nearly 90% of Canada's exports will be duty free upon entry into force of the agreement, and over 99% will be duty free once the agreement is fully implemented. These numbers translate into concrete benefits and opportunities for Canadian exporters, importers, investors, manufacturers and consumers all across our country and across all sectors of our economy.
Canada is a nation endowed with a wealth of both natural resources and human resources. We have people with the creativity and skill to turn the natural resources into a wide range of industrial goods, including in the aerospace, rail, information technology, chemical and pharmaceutical sectors, to name just a few.
I am pleased to say that over 95% of Canadian industrial exports to South Korea will be duty free immediately with the remainder being phased out over a number of years. This agreement will also result in the immediate elimination of South Korea's tariffs on liquefied natural gas, which is a commodity that has great potential to become a key driver of Canadian exports to South Korea in the future, especially from the provinces of British Columbia, Alberta and Saskatchewan.
Then there is Canada's forestry sector. This sector is another key contributor to the Canadian economy. In 2012, the sector contributed over $20 billion to Canada's GDP and employed close to 250,000 Canadians, many in well-paying, high-skilled jobs. This agreement will benefit Canadian forestry workers by eliminating tariffs on forestry and value-added wood products, while further diversifying our exports into Asian markets and reducing the sector's dependence on the United States.
I will speak for a moment about Canada's high-quality, premium fish and seafood products.
Canada's proximity to the Arctic, Atlantic and Pacific Oceans, the Great Lakes and other resources has allowed Canadians to develop one of the world's most valuable commercial fishing industries. This sector contributes more than $2 billion to Canada's GDP and provides over 40,000 jobs for Canadians in everything from fishing to aquaculture to fish processing. It is the economic mainstay of approximately 1,500 communities in rural and coastal Canada. We know the quality of Canada's fish and seafood products is second to none, and South Koreans are already showing a great appetite for our products.
In fact, shortly after the announcement of the conclusion of negotiations for this trade agreement, Korean Air Cargo launched weekly service to South Korea from Halifax and expected to transport a minimum of 40,000 kilograms of live lobster over the course of the last summer. Not only have these shipments helped to develop the South Korean market for fresh Canadian lobster, they have positioned South Korea as Canada's gateway for fish and seafood exports to other Asian markets, most notably Japan and China.
It goes without saying that in this free trade agreement, we have obtained a very favourable outcome for fish and seafood, one which eliminates 100% of South Korean tariffs, many immediately.
I do not have to remind my colleagues on the other side of the House, especially those from Atlantic Canada and the Pacific coast, that a vote against the speedy implementation of this trade agreement is a vote against Canadian jobs.
I want to also mention how this trade agreement will benefit our hard-working Canadian farmers and the more than two million people employed in the agriculture and agri-food industry.
In addition to Canadian beef and pork, Canadian icewine is becoming a hit with South Korea and throughout Asia. We want to promote those products. This trade agreement supports Canadian vintners and Canadian beef and pork producers to further expand their market share.
The tariff elimination package contained in this trade agreement represents a tremendous outcome for Canada, particularly given that South Korea's current tariffs are, on average, three times higher than ours. Beyond tariffs, the agreement also contains a wide range of commitments pertaining to non-tariff measures, which is an area that has been identified as a priority for our stakeholders.
The agreement includes ambitious outcomes on services and investment. This trade agreement includes a framework of reasonable protections that would result in a more secure and stable environment for investors in both countries. This will contribute to increased bilateral investment flows between our countries, creating more jobs, spurring creativity and technology, and linking Canada to global value chains.
Canadian investors are already recognizing the significant investment opportunities in South Korea, as well as its ability to be a potential test market for the larger Asian region. Just this past May, Canadian clothing brand Joe Fresh announced that it would open its first store outside of North America in Seoul, Korea. The flagship store in Seoul is only the start of its investment in South Korea, as the company plans to open nine more retail outlets in the capital by the end of the year.
The sooner this agreement is implemented, the sooner Canadians will start benefiting from the outcomes I have just mentioned, and the sooner Canadian companies can leverage the new-found market access into economic success. Our Conservative government will be there to support them every step of the way.
In addition to securing unprecedented market access for our companies, we are also supporting Canadian companies through our suite of trade promotion tools, tools such as Canada's trade commissioner service and the export financing and insurance products delivered by Export Development Canada. They are tools such as the government to government contracting support provided by the Canadian Commercial Corporation. There are many other tools that we are providing, including trade missions, which our government and ministers lead all around the world.
In short, we will be there to support our small and medium-sized businesses as they explore new opportunities in South Korea.
This trade agreement is comprehensive. It is high quality. It will create new opportunities for Canadian companies and contribute to our long-term prosperity.
I would remind my hon. colleagues of the robust outcomes across the board that this agreement would deliver. We owe it to our companies and we owe it to Canadians to ratify this agreement as quickly as possible. Early implementation of this free trade agreement will ensure that Canadians can quickly begin to reap its economic benefits, providing more choice for Canadian consumers and more prosperity for our nation as a whole.
Don Davies NDP Vancouver Kingsway, BC
Mr. Speaker, I would first like to congratulate the minister on the conclusion of this important agreement.
It is, however, common ground that one of the weaknesses of this agreement is its impact on the Canadian auto sector, which is a key Canadian industry that adds billions of dollars to Canada's GDP. Industry players, such as Ford and Unifor, which represent most auto workers in Canada, are concerned that removing the 6.1% tariff on Korean products would damage domestic auto production and sales.
The U.S. negotiated a superior chapter on auto with Korea in its deal. There is a longer phasing period for tariff reduction and there is also a snap-back provision that protects U.S. auto production in case of a Korean auto product surge in that country which harms the U.S. auto sector. Canada did not get this measure.
Why did Canada not get as good a deal on the auto sector and the auto chapter as the U.S. did in its deal with Korea?
Canada-Korea Economic Growth and Prosperity ActGovernment Orders
September 24th, 2014 / 3:50 p.m.
Conservative
Ed Fast Conservative Abbotsford, BC
Mr. Speaker, I would remind the member that the premise of his question is quite incorrect. Canada secured a better outcome on autos than our competitors to the south.
I would remind him that the United States only received temporary accelerated dispute resolution. Canada was able to negotiate permanent accelerated dispute resolution mechanisms, which will clearly benefit our auto sector when it has disputes with the Korean government on non-tariff barriers.
I would also remind the member that on the safety standards relating to autos, we have been able to negotiate rules that allow Canada's manufacturers to build to EU standards and to U.S. standards, something again the U.S. was unable to secure.
I would also remind the member that the tariff phase-out on autos in the U.S. deal is five years. On the Canadian side, our exporters will have access to the Korean market immediately.
There are many other distinctions that make our agreement more valuable.
I would encourage that member and his party to stand in the House and support this agreement because it is in the interests of Canadians.
Kevin Lamoureux Liberal Winnipeg North, MB
Mr. Speaker, it is important we recognize that the government has not been overly proactive per se on the file. Chile, Singapore, the EU and the United States have already signed free trade agreements with Korea.
As a result of the government not doing its work, markets have been lost. I look at the pork industry in the province of Manitoba. It could have been doing much better had the government really been on the file in a more proactive fashion.
Does the minister believe the pork industry in Manitoba will be compensated for his slowness to achieve an agreement as a result of the U.S. market taking up some of that production and selling to Korea at the expense of many Manitoba pork producers?
Ed Fast Conservative Abbotsford, BC
Mr. Speaker, I want to assure the member that pork producers are strongly in favour of this agreement and have lauded us for getting this deal done.
I would remind the member that this negotiation started under a Liberal government and it never got it done. It took a Conservative government to conclude negotiations with Korea in a way that represented significant benefit to our economy.
I would also remind that Liberal member of the sorry history of the former Liberal government on trade. Over 13 long years, how many trade agreements did it get done? It was three.
This government in a short eight years has concluded free trade agreements with 38 different countries around the world, and there are more to come.
We will not take lessons from the Liberals on trade. We are the ones who have credibility on trade.
Bev Shipley Conservative Lambton—Kent—Middlesex, ON
Mr. Speaker, it was an honour and a pleasure for me to be on the international trade committee for two years while we were going through the negotiations.
Agriculture in Lambton—Kent—Middlesex is one of many small businesses in my riding, but it is the main industry. With respect to the trade agreements that have been made, I have always believed that agriculture forms the foundation because we want safe, secure food in our country and then we build on that.
Could the minister clarify the significance of what this trade agreement will mean to pork and beef producers in Lambton—Kent—Middlesex? They are some of the best in the country. We have the greatest around the world. What will the impact be on their industries as a result of this agreement?
Ed Fast Conservative Abbotsford, BC
Mr. Speaker, the member really put his finger on what this is all about. It is about improving opportunities for Canadians, for Canadian companies, for our agriculture sector, for processes across the country.
I can tell the member that the beef and pork industries, the cattle producers, are strongly in support of our efforts to conclude this agreement. I can also tell him that our goal was to achieve a balanced outcome to this agreement, one that represented a long-term benefit to Canadians.
Clearly, in the beef and pork sectors, as the U.S. and the EU were able to bring their agreements into force, it represented a tilting of the playing field against Canada. This agreement would, of course, rectify that situation.
I also want to highlight that Canada has a world advantage in a host of sectors. In agrifood and agriculture, we produce premium, high-quality products for which our trading partners are prepared to pay a premium price. That is the opportunity in South Korea. They want our products. We are now going to be able to make those products available to them.
Raymond Côté NDP Beauport—Limoilou, QC
Mr. Speaker, I thank the Minister of International Trade for his speech. I am also very pleased to hear him say that he was pressured by pork producers, among others. They have better things to do than to pressure the minister.
Considering how long it took for the minister to conclude this agreement—the government has been in power for almost nine years—why did he give priority to signing minor agreements with dictatorships and tax havens in Latin America rather than entering into an agreement with South Korea?
Ed Fast Conservative Abbotsford, BC
Mr. Speaker, I am not sure exactly where that question was directed, but I will try to understand.
The member refers to smaller economies around the world. Canada has, of course, negotiated trade agreements with countries such as Peru, Colombia, and Honduras.
Unlike the opposition, which believes that isolation is the way to treat countries that are emerging from a troubled history, this government believes that engagement is the way forward. When we engage, when we provide new opportunities for trade and new opportunities for these countries to develop their own prosperity and move more of their people into the middle class, we are also able to share with them our best practices in such things as human rights, the environment, labour, and democracy. That is where Canada's strength is. That is why we engage with those countries.
Elizabeth May Green Saanich—Gulf Islands, BC
Mr. Speaker, I reviewed the agreement with Korea, and unless I missed something, I do not see an investor state provision within this agreement.
Did Canada attempt to achieve that with Korea, and if not, why not? Did Korea reject our efforts?
Ed Fast Conservative Abbotsford, BC
Mr. Speaker, the hon. member should read her materials again.
I do not know if she was able to listen to my speech. I highlighted the fact that this agreement does actually include investor protections. Essentially what it does, just for her elucidation, is set out a clear set of rules that apply after an investment is made, such that if a Canadian company invests in the Korean marketplace, the Korean government cannot discriminate against that Canadian company and cannot treat it less beneficially than a Korean company. The same thing holds true for investments into Canada.
The other thing this investment chapter does is set out a clear set of rules under which investment disputes are resolved. Those disputes will be taken out of the domestic context into the international arbitration context, where unbiased, fair, broadly accepted rules will be applied by fair, independent, and impartial arbitrators.
The Acting Speaker Conservative Bruce Stanton
It is my duty, pursuant to Standing Order 38, to inform the House that the question to be raised tonight at the time of adjournment is as follows: the hon. member for Drummond, The Environment.
Don Davies NDP Vancouver Kingsway, BC
Mr. Speaker, as the official opposition critic for international trade, I am pleased to stand to speak on behalf of the New Democratic Party on Bill C-41, an act to implement the free trade agreement between Canada and the Republic of Korea.
By way of background, Canada and South Korea first discussed the possibility of a trade agreement in 2004, and negotiations for a trade agreement officially launched in July 2005. In a testament both to the challenges that such agreements pose and to less than satisfactory diligence on the part of various governments, it took some nine years to bring this agreement to completion.
Notably, several trade agreements have been concluded by Korea and other partners over the past 10 years. A trade agreement between Korea and the EU entered into force in 2011, and a Korea-U.S. agreement became operative in 2012. As well, Korea and Australia recently concluded negotiations.
As I will expand upon later, these nations' agreements have played a critical role in shaping Canada's bargaining position. As major competitors with Canada, their advantage in securing preferential first entry to the Korean market has done substantial damage to Canadian exporters in a myriad of sectors.
The Canada-Korea Free Trade Agreement was signed on March 11, 2014, and submitted to Parliament on June 12, 2014. Once in effect, the agreement will eliminate 98.2% of South Korea's tariff lines and 97.8% of Canada's tariffs. While many tariffs between our two countries are already quite low, there are a significant number of tariffs and other barriers to market that exist that will either be removed immediately upon this agreement's implementation or phased out over various periods of time.
The NDP uses three important criteria to assess trade agreements. First, is the proposed partner one that respects democracy, human rights, adequate environmental and labour standards, and Canadian values, and if there are challenges in these regards, is the partner on a positive trajectory toward these goals? Second, is the proposed partner's economy of significant and strategic value to Canada? Third, are the terms of the proposed agreement satisfactory?
New Democrats also evaluate trade agreements on a comprehensive basis to determine if they are of net benefit to Canada. In our estimation, we believe that the Korea trade agreement meets these tests.
I will deal with each in turn.
First, since emerging from authoritarian to civilian rule in 1987, South Korea has transitioned into a multi-party democracy with an active trade union movement, a diverse civil society, and freedom of expression. South Korea's so-called tiger economy has succeeded in rapidly industrializing the country and raising the welfare and incomes of the Korean people.
Today South Korea is a developed country, ranking 15th on the Human Development Index, the highest in East Asia. South Korea has developed social programs, sound rule of law, low levels of corruption, and high access to quality education, including having the highest level of post-secondary education participation in the OECD.
In recent years, South Korea has emerged as a global leader in environmental economics, investing billions in an ambitious green growth strategy aimed at improving energy efficiency while boosting renewables and green technology.
There is no doubt that South Korea is a democratic country that possesses admirable environmental and labour standards and shares important Canadian values, including respect for human rights.
Second, is the proposed partner's economy of significant and strategic value to Canada? South Korea is a G20 country with the 15th-largest GDP. It is the G20's eighth-largest importer. South Korea is Canada's seventh most important trading partner and our third largest in Asia, after the two larger economies of China and Japan.
In 2013, total bilateral trade between our two nations totalled nearly $11 billion. Canadian exports to South Korea totalled $3.4 billion, while Korean exports to Canada totalled $7.3 billion. In relative terms, Canada exports the same amount to South Korea as it exports to France and Germany. We import approximately the same amount as we do from the U.K.
South Korea is also a major part of the Asian global supply chain and is a gateway market for other Asian economies. As this is Canada's first trade agreement with an Asian country, it provides an important opportunity to gain advantages in the Pacific region and diversify Canada's export markets. Economic models predict that this deal is expected to increase Canadian exports to South Korea by 32% and expand our economy by $1.7 billion.
In addition, the Canadian and South Korean economies are largely complementary, meaning that most Canadian industries do not compete directly with Korean industries. As Korea has emerged as a world leader in renewable energy and green technology and needs energy and energy technology from Canada in return, we can increase our trade in these important sectors and, more importantly, build Canada's green technology sector.
Domestically, a trade agreement with Korea offers significant economic benefits to a broad cross-section of economic sectors in Canada that represent all regions of the country. In fact, this agreement is favoured by almost every industrial sector in Canada.
Sectors that support the Korea free trade agreement include manufacturing, heavy industry, aerospace and transportation, forestry and wood products, agriculture, beef and pork industries, agri-foods and food processing, energy and chemicals, fish and seafoods, financial services, and high technology.
In sum, South Korea is a large market that offers significant opportunities for Canadian business to gain a foothold in important Asian markets.
It is vital to note that Canadian exporters have lost some 30% of their market share in South Korea since 2012, when the EU and the U.S. implemented agreements and secured preferential access for their companies. These losses are estimated to total several hundreds of millions of dollars annually, and are mounting each year that U.S. and European competitors enjoy tariff advantages and increased market access to Korea.
The losses have been particularly heavy in the agri-food, seafood, and aerospace industries. These sectors sustain thousands of quality, family-supporting jobs with high rates of unionization. As an example, when Korea signed the FTAs with the United States and the European Union, Canadian aerospace exports to Korea dropped by 80%, from $180 million to roughly $35 million.
Yuen Pau Woo, former president and CEO of the Asia Pacific Foundation of Canada, and, in my estimation, Canada's leading expert on Asia-Pacific issues, said that Canada is:
....an outlier compared to most of our industrialized country competitors, certainly in the G-7 and the OECD, and that puts us at a competitive disadvantage vis-à-vis countries that do have trade agreements with Asian partners. The best example of this competitive disadvantage is in the case of Korea, where we have been negotiating—as you all know—coming to nine years now. In the meantime, we have been overtaken by the United States and more recently, by Australia. Both of those countries now have margins of preference, particularly in the cultural sector, that put our exporters at a disadvantage.
Canadian exporters need a level playing field to compete in Asia and to protect the jobs they provide here in Canada. In the view of New Democrats, this agreement is essential to do so.
This agreement offers the opportunity for Canadian producers and exporters to increase trade with a modern democratic country with a high-income complementary economy. It will allow Canadian producers in a wide variety of sectors to more effectively access an Asian gateway economy that plays a pivotal role in global supply chains and offers entry opportunities not only to Korea but to other Asian economies.
It will level the playing field for Canadian exporters, who can compete with the best in the world when given the opportunity to do so on equal terms. It will permit Canada to deepen our Asian presence and diversify our trade patterns beyond the North American and European markets. There is no doubt that Korea is both a significant and a strategic economic partner for Canada.
Third, are the terms of the proposed deal satisfactory?
This is not the precise agreement that New Democrats would have negotiated. This deal includes investor state dispute settlement, a provision that allows corporations to launch legal challenges to government measures that they believe violate the terms of the agreement. They are permitted to file their suits not in domestic courts but in international trade tribunals that lack certain fundamental attributes of judicial independence and the rule of law.
This is something the New Democrats would not include in any trade agreement we negotiate. We believe such provisions carry excessive risk and are unnecessary when dealing with nations with independent and well-functioning judiciaries, which both Canada and South Korea possess.
There are also legitimate and well-founded concerns about the possible impact of this agreement on the Canadian auto sector. Knowledgeable industry actors, such as Ford Motor Company and Unifor, which represents most auto workers in Canada, have both expressed the view that this agreement will reduce domestic auto production and sales, and that South Korea adopts policies that serve to impair access to its domestic market.
In our estimation, however, when viewed on a comprehensive basis, this agreement is of net benefit to Canada. It benefits the vast majority of Canadian export sectors, and we believe that its weaknesses can be dealt with by effective Canadian government policies.
An examination of a few key sectors bears this out. This agreement is not only good for Canadian agriculture and the agrifood industry, it is essential. The agrifood sector represents 8% of the Canadian economy and is said to sustain one in eight jobs, or over two million jobs.
As stated, Canada has suffered significant losses in market share for Canadian agricultural exports to Korea following implementation of the Korea-U.S. deal in 2012. For example, Canadian beef exports to South Korea shrank from $96 million in 2011 to $8 million in 2013. Canadian pork exporters went from first to fourth in the Korean market. Australia, a major competitor of Canada in many agricultural products, is poised to bring their own agreement with Korea into force. As well, January 1, 2015, will see the next reduction in tariffs for U.S. and EU products, further exacerbating the harm to Canadian sectors.
The Korea FTA will progressively eliminate 86.8% of agricultural tariff lines and allow Canadian exporters to compete on a level playing field and recapture these markets. There are also impressive opportunities for Canadian grains, pulses and oils.
In aerospace, the agreement will gradually eliminate 100% of industrial tariffs. As such, there is general support for the Korea FTA among manufacturing sectors in Canada, notably Bombardier and other Aerospace Industries Association members.
According to Jim Quick, the president of the Aerospace Industries Association of Canada, South Korea is an important market due to its proximity to other major economies, including Japan, China and Malaysia. He said in the next 20 years, airlines in the Asia-Pacific region would account for 37% of global aircraft demand, or 12,000 planes worth $1.9 trillion. At the same time, half of the world’s air traffic would be driven by travel to, from, and within the Pacific region.
Similar opportunities lie in light rail and transit infrastructure. Global Canadian champions like Bombardier see important opportunities in South Korea to position themselves to tap this growth.
Canadian seafood producers on both coasts stand to benefit from the Korea agreement. Pacific seafood and fish product exporters are being out-competed in Korea by their Alaskan competitors due to the fully implemented Korea-U.S. agreement.
Current seafood and fish product tariffs in Korea for Canadian exporters are up to 47%, and most of these tariffs lines will be eliminated. Lobster farmers see growth opportunities in the Korean market on the Atlantic coast.
Canada's forestry and wood products industry, including newsprint, wood pulp, wood panels and other value-added products, contribute over $20 billion to Canada's GDP and employs over 230,000 Canadians, many of them in high-skilled and unionized jobs. Canadian exporters to Korea are disadvantaged by tariff lines on Canadian wood products, which reach 10%. The Korea agreement will provide growth opportunities for value-added wood products. This will help develop good jobs in the vital Canadian value-added economy.
With respect to energy and green technology, New Democrats see sustainable technologies and renewable energy as key industries of the future. They are estimated to be a $3 trillion sector and we believe that Canada must position itself for this economic opportunity and environmental imperative. As stated, Korea is an emergent global leader in this area and encouraging sustainable trade and technology transfer is one of the most compelling parts of this agreement.
There are positive and negative aspects of this agreement in terms of the Canadian auto sector, and opinions on it are mixed. General Motors, Chrysler, Toyota and Honda all have automotive production facilities in Canada and support this agreement. Ford and Unifor are also significant stakeholders in Canada, but they do not. The Korea FTA will gradually eliminate Canada's 6.1% tariff on auto product imports from Korea over a three-year period. In turn, South Korea's 8% auto tariff will be eliminated immediately upon the Korea agreement's implementation.
Other positives include rules of origin provisions that recognize Canadian-U.S. integrated products without volume limits and an accelerated dispute mechanism that allows for monitoring of non-tariff barriers. This will permit disputes related to motor vehicle trade to be resolved in a timeline that is as fast or faster than the Korea-U.S. deal, and it could be used to obtain remedies to unfair trade barriers to Canadian auto exports into Korea. In addition, transitional safeguards exist in case of a surge in imports.
At the same time, there are legitimate concerns about the deal's impact on the Canadian auto sector. These concerns have validity, as more Korean imports will affect domestic auto sales to some degree, and South Korea has been cited for implementing non-tariff barriers that restrict access to its market.
It is also a fair criticism that this agreement does not go as far as the Korea-U.S. deal does in protecting domestic auto producers. Under that deal, U.S. tariffs are phased out over a longer period, five years, and there is a snap-back provision that permits the U.S. to impose duties if certain import and export numbers are exceeded. The Conservatives were unable to obtain these protections in this agreement.
What is without doubt is that the current 6% Canadian tariff on Korean-made automobiles is insufficient to meaningfully keep products out. Among other things, lower Korean labour costs and vertical integration savings substantial exceed the tariff. More compelling, Korean automakers service the Canadian market from U.S. plants, with more opening in Mexico within two years, and their products enter Canada tariff-free due to NAFTA in any event. Accordingly, between 40% and 50% of Korean auto products already enter the Canadian market tariff-free from the U.S., so the status quo is clearly insufficient to assist Canadian production.
It is clear that the Canadian auto industry faces a very competitive global environment. It is equally apparent that this requires more support form the federal government. In 2013, Canada failed to attract any of the $17.6 billion in auto investments that were made around the world, not a penny. Competing countries like China, Brazil and our North American trading partners are upping their games, subsidizing up to 60% of the capital investments required to establish auto plants.
New Democrats believe that more needs to be done to support auto manufacturing in Canada, to promote growth in the sector and to encourage the competitiveness of North American brands around the world.
Therefore, a New Democrat government would pursue strategies to strengthen the Canadian auto sector. These would include policies that would encourage Korean automakers to locate production facilities in Canada; assist Canadian automakers to better access Korean and other Asian markets; closely monitor non-tariff barriers and act quickly and effectively to resolve disputes; place substantial resources into trade offices and lead frequent trade missions to Korea; and work with industry and labour to create an effective auto innovation fund.
Both CETA and the China FIPA have provoked widespread public concern in Canada and New Democrat share those concerns.
Importantly, the Korea agreement differs substantially from those two agreements. Unlike the China FIPA, the terms of the Korea agreement are reciprocal. Unlike CETA, the Korea agreement does not apply to provincial, territorial or municipal procurement or Crown corporations, where most Canadian procurement is located. Unlike CETA, the Korea agreement does not apply or negatively affect supply-managed agricultural products. Unlike CETA, the Korea agreement does not contain any negative intellectual property provisions, for example, pharmaceutical patents or copyright.
Notably, intellectual property expert, Professor Michael Geist has pronounced positively on the IP terms of the Korea agreement, calling it an example of a good agreement in this important area. While the Korea FTA does have an ISDS provision, it contains transparency guarantees and is fully cancellable on six months' notice. This is contrasted with the China FIPA, which binds Canada to ISDS for 31 years, and CETA, which appears to do so for 20 years.
Unlike the Conservatives and Liberals, a New Democrat government would involve a full spectrum of Canadian stakeholders, including industry and labour leaders in monitoring and implementing this deal. Unlike those two parties, the New Democrats would work diligently to eliminate non-tariff barriers and scrutinize the use of the investor state provisions very closely. Unlike those two parties, a New Democrat government would not hesitate to renegotiate or terminate this deal if meaningful market access is not achieved or the ISDS provisions are abused.
Overarching all, New Democrats want to deepen Canada's trade linkages with the Asia-Pacific region, something we recognize as essential to maintaining Canadian prosperity in the 21st century. We support breaking down harmful trade barriers, but believe government should provide the support Canadian industry needs to remain competitive in a more open world economy. We agree with such diverse voices as the Canadian Chamber of Commerce and the Canadian Labour Congress that the government needs to do more than sign trade agreements. It must promote Canadian exports, develop sound Canadian industrial strategies, invest resources in trade commission services, and participate meaningfully in regional and international bodies of all types.
The Korea trade agreement presents a vital opportunity to diversify Canada's economy and promote good quality job creation in Canada. We cannot let this opportunity pass.
While certain terms of the agreement are not what an NDP government would have negotiated, on balance we believe that the benefits of the Canada-Korea trade agreement are significant for Canadians. We will be supporting the legislation accordingly.
Canada-Korea Economic Growth and Prosperity ActGovernment Orders
Durham Ontario
Conservative
Erin O'Toole ConservativeParliamentary Secretary to the Minister of International Trade
Mr. Speaker, I have only had the honour of being in the House for almost two years, but every once in a while a member of Parliament gets to witness history in this place. It is history because for the first time in the history of the CCF and the New Democratic Party of Canada it seems, from the very intelligent and informed speech from my colleague, that the NDP may stand in the House for the first time and support trade, so I applaud that.
I would note that his colleagues from Windsor West and Parkdale—High Park, a number of his colleagues, have been extremely critical of trade with South Korea, our important first free trade deal in Asia. In fact, the member for Parkdale—High Park has stood in the House saying that we need to get rid of the trade deal with South Korea.
I would ask the member this. GM, Ford, Chrysler, I live in a proud GM community. The decisions on making cars on those lines are made in the U.S., so would it not be in Canada's interests to ensure that the Canadian subsidiaries of these companies have the same market access as their American plants do? Is this not a win for automobile manufacturing in Ontario?
Don Davies NDP Vancouver Kingsway, BC
Mr. Speaker, I agree with my hon. colleague that history is made. It is the first time that a member of the Conservative government has called the New Democratic official opposition “intelligent and informed”. I would encourage a repetition of that astute observation.
The New Democrats' trade policy is one where we want to look at each trade deal on its own merits. We want to approach it from a rational, thoughtful and balanced point of view, and I have already pointed out the different criteria that we have. That has been typical of the New Democrats' trade policy for the last two years, and certainly this Parliament. Of course, my friend knows that this is not the first agreement that the New Democrats have supported. We supported the Canada-Jordan trade agreement, and we voted in favour of it.
In terms of the automotive sector, I wish it were that simple. We have a Canadian and American integrated auto sector, and I do believe that this agreement provides challenges and the auto sector has raised legitimate concerns. I would encourage the government to work with the auto sector, both industry and labour, to help improve the Canadian auto sector so that we can create good Canadian jobs and increase auto production in this country. Korea provides that opportunity to do so, but only if the government provides the policies that will assist the industry.
Scott Simms Liberal Bonavista—Gander—Grand Falls—Windsor, NL
Mr. Speaker, just for the record, this is the first free trade agreement the New Democrats actually stood and supported. The Jordan one, they did not stand to support. I guess it is complicit in what they were doing. Nevertheless, barring any confusion, yes, they are supporting it.
However, I want to get the member's impression on the shipbuilding industry. Some years ago, when there was first discussion about Korea, there was some concern about the shipbuilding industry itself. How does the member feel about that in this particular agreement? Is he okay with that? I will just leave it at that for now because I am sure there is a lot more to come.
Don Davies NDP Vancouver Kingsway, BC
Mr. Speaker, I appreciate the question from my hon. colleague from the Liberal Party because it gives me a chance to comment on the Liberal approach to trade. The Liberal trade critic said about CETA that the Liberals have been very happy to be supporting that agreement for all these years, and they look forward to the text being released so they can finally determine what it is they have been supporting. That is not a thoughtful approach to trade.
As well, I should correct my hon. friend. He knows full well that the New Democrats voted in favour of this, and often votes are taken in the House where some we stand for and some we do not, but we all know what the result of that is. The Liberal Party is an expert in opportunism so the Liberals should know what they are talking about.
In terms of shipbuilding, again I would encourage my hon. colleague and members of his party to read the agreement. They would know that shipbuilding is exempt from this agreement.