Mr. Speaker, I am tremendously pleased to rise this morning to express my point of view on the free trade agreement with South Korea. I very humbly but very fervently hope to dispel or shatter the false impression that the New Democratic Party is a party opposed to free trade agreements.
Unlike the other opposition party, the NDP understands that people think we should take the time to thoroughly analyze an agreement before deciding where we stand on it. That way, we can provide crystal clear explanations of why we support it, what its weak points are and what can be improved.
We take this thorough approach to studying these files and figuring out the real benefit to Canadians, whether they are workers or business people, because of the analytical ability and experience of our leader, the member for Outremont. He is very capable of sharing his analytical ability and his experience with the whole caucus, and I believe that makes us all better analysts.
Getting back to the free trade agreement with South Korea, one of the key principles around trade policy is the diversification of export markets. The slowdown in demand from the United States in 2008 made each and every one of us realize the risks involved in concentrating all of our exports and investments in just one market.
The vagaries of current economic conditions are pushing us to gradually reduce our trade dependence on the United States. Supporting the measures set out in Bill C-41 is therefore crucial. However, we must not forget to use our critical thinking skills when it comes to certain controversial measures in the bill, notably the investor state dispute settlement mechanism.
It is important to bear in mind that NDP support for free trade agreements depends as much on democratic criteria as it does on criteria related to Canada's economic interests.
In fact, those criteria must be analyzed together when we assess the social and economic effectiveness of a free trade agreement. It would be completely absurd and counterproductive, for instance, to sacrifice respect for labour and environmental standards on the altar of economic effectiveness.
Accordingly, we support the implementation of this free trade agreement, especially given that South Korea represents a successful model, both politically and economically. Moving from a dictatorship to civilian rule, the Korean political system has proven its openness to civil society by allowing freedom of expression and promoting a multi-party system. The Korean political system rests on a vibrant trade union movement that is working to provide social protection for workers by guaranteeing labour standards comparable to ours here in Canada and offering relatively high wages.
The South Korean government's budget for 2014 includes a significant increase in spending on improving that country's social safety net and support for local communities. In economic terms, South Korea has a diverse industrial base, bolstered by high public spending on research and development, to the tune of 4% of GDP. Canada can learn something from the Koreans in that regard, since Canada is far less involved in research and development. A top-notch education system supports the efforts by the government to strengthen the industrial fabric.
These criteria are vitally important. Other countries offer attractive economic opportunities for Canada, but the absence of democracy, minimal social protection and transparency makes their political system completely unpredictable and therefore naturally detrimental to trade and investment. Accordingly, having South Korea as a preferred trade partner is a good choice on many levels.
South Korea is Canada's seventh-largest trade partner, with Canadian exports to South Korea worth $3.7 billion.
It is interesting to see that the Canadian and Korean sectors that will benefit from this free trade agreement are complementary markets rather than competing markets. There is a high demand for raw materials in South Korea, while Canada has a limited ability to export its energy resources. The free trade agreement will create a market for Canada's energy resources, thereby creating jobs in the energy sector in Canada. This is an important part of the NDP's analysis of each free trade agreement: looking at how it will improve the everyday lives of Canadians, no matter which province they live in.
What is more, with regard to Korea's social and environmental standards, Canada's economic sectors will not fall prey to social and fiscal dumping measures, and neither will the social safety net that our workforce enjoys.
Korea has also worked on improving its corporate governance. Some groups broke up or restructured in the wake of the Asian crisis in order to rebuild on a more solid financial and management foundation. Korea has an economic profile that is highly favourable to us. Rating agencies have assigned Korea an A2 risk rating. In other words, its political, social and economic situation is conducive to business and long-term investment.
Of course, Bill C-41 will allow us to win back the market shares lost to our American and European competitors, whose countries have already ratified free trade agreements with Korea. This has had a negative impact on the Canadian aerospace industry, whose exports to Korea have dropped by 80%.
I would also like to point out that free trade agreements rarely obtain the consensus and support of all of the economic sectors involved. I am thinking here of the Canadian automobile industry's concerns about this free trade agreement. In reality, it is up to the government to support the automobile industry's growth. The evolution of this industry strongly depends on the growth recorded in countries such as China and Korea. The same could be said for the forestry industry, which specifically affects Quebec and the riding and region that I have the pleasure of representing.
However, Bill C-41 provides for a dispute resolution mechanism that promotes the export of Canadian automobiles to Korea, and includes transitional safeguards if there is a sudden increase in imports affecting the Canadian automobile industry.
Finally, let us look at the unfortunate investor state dispute settlement mechanism included in this bill. It is a regressive and undemocratic measure. Under this mechanism, private companies could take legal action against the Canadian government if the government were to pass legislation that would reduce the future profits of those private companies or investors.
With such a mechanism in place, private companies would have the ability to undermine Canadian health policies, social policies and financial regulation policies by suing for damages in courts outside Canada's jurisdiction. What is more, the investor state case law shows that the courts more often find in favour of investors, calling into question the sovereignty of states over their own jurisdictions. An NDP government would repeal this provision, which is opposed by the main opposition party in South Korea. We have found some kindred spirits there.
The free trade agreement between Canada and Korea provides a momentous opportunity to diversify the Canadian economy and promote the creation of quality jobs in Canada. Some of the terms of the agreement are not what an NDP government would have negotiated. However, a cost-benefit analysis shows that the advantages outweigh the risks involved.
A critical examination of free trade agreements can be vital since such agreements can undermine local producers and entire sectors of the economy that were once thriving. Nevertheless, it will allow Canada to gain market shares in an area of the world where economic growth has not yet reached its full potential.