Mr. Speaker, I am very pleased to rise today in the House to support Bill C-41.
Considering that it has taken approximately 10 years to get to this point, the NDP is proud of this agreement, which is the first free trade agreement that Canada has signed with an Asian economic partner. The terms of the agreement are largely satisfactory, with the exception of a few concerns that I will address later on.
Negotiations for this agreement officially began in 2005. The agreement, as it now stands, was signed on March 11, 2014, and was presented in the House on March 12, 2014. It was about time, because it had been nearly 11 years.
I would like to tell my colleagues about the criteria that the NDP uses to evaluate free trade agreements. To begin, the proposed partner must share basic Canadian values, such as respect for democracy and human rights, and it must have adequate environmental and labour standards. That goes without saying. When we negotiate a free trade agreement, we want to be sure that the other party shares the same values and applies the same industry standards that Canada does.
Then, we look at the proposed partner's economic situation. It must be of significant or strategic value to Canada. Finally, the terms of the agreement must be satisfactory. We believe that South Korea meets our criteria. Consequently, the NDP is supporting the bill. We have some reservations, but I will come back to them.
I would like to talk a bit about South Korea. Since the dictatorship collapsed about 30 years ago, the international community has watched the country transition to a modern democracy with high standards with respect to human rights, labour rights and environmental protection.
It is the only country in Asia to have been ranked 15th on the human development index. That accomplishment is due in part to the numerous social programs implemented by the government, the prevalence of the rule of law, low levels of corruption and access to quality education.
South Korea also launched an ambitious green strategy to improve its energy efficiency. It is abundantly clear that the country has great respect for the environment and that the government is making serious commitments in that regard. South Korea is a candidate that shares Canadian values around human rights, democracy and the environment. That is an extremely important aspect of an intelligent and balanced approach to a free trade agreement.
In addition, South Korea is of significant strategic value to Canada, which has been at a disadvantage ever since the United States and the European Union both signed free trade agreements with South Korea. That created an economic imbalance and affected a number of industries in Canada.
Preliminary estimates show that the agreement would eliminate almost 98% of tariffs for both parties. Also, Canadian exports to South Korea are expected to rise by 32%, which is worth about $1.7 billion. Let us not forget that South Korea can serve as a gateway to other Asian markets because of its position in the Asian supply chain.
Complementary aspects of the two economies redefine the success of the agreement because Canada and South Korea will not necessarily be in direct competition in their shared markets.
However, Canada would do well to support our automotive industry and create programs to encourage the Korean automotive industry to come set up shop here. I will come back to this later.
The biggest winners among Canadian industries are the heavy industry, agriculture—our pork and beef farmers have suffered greatly from the lack of agreement for many years—the forestry industry, the aerospace industry and the fisheries. A number of associations have expressed support for this free trade agreement.
I will start with the agricultural sector, which is vital to our economy. It accounts for about 8% of Canada's overall economy and provides nearly 2.1 million jobs. The two agreements signed by the United States and the European Union unfortunately affected our economic balance in the agricultural sector. For example, the Canadian beef industry saw its exports to South Korea drop from $96 million in 2011 to just $8 million in 2013. The same was true for pork exports. These two industries suffered a lot because we did not have a free trade agreement. The ratification of the free trade agreement with South Korea is an opportunity to turn things around for these disadvantaged industries, by eliminating 86.8% of the tariffs on those industries.
In the aerospace, seafood, forestry and food sectors, the situation is very similar. These sectors will significantly benefit due to the abolishment of export tariffs and increased market share in South Korea and the Asia-Pacific region in general. Jayson Myers, president and CEO of the Canadian Manufacturers & Exporters, says “Asia’s rich markets are the next frontier for Canada” in our desire to abolish all kinds of obstacles to ensure the expansion of trade investments.
While the agreement is superior to the one with China and the EU, we expressed a few concerns about this FTA. As I mentioned previously in my speech, there are some issues for the auto industry.
First of all, the NDP is calling on the government to do more to support the auto industry in Canada and is eager to propose solid, effective policy measures to strengthen the Canadian auto sector. The government can and should encourage Korean auto production in Canada and assist Canadian automakers to penetrate the Korean market.
The government continues to fail the auto sector, and I think it is time for it to take a more comprehensive approach. Our auto sector has suffered continuously from the lack of propositions by the government. The most positive features of the Korean FTA are the rules of origin provisions that favour Canadian-U.S. integrated products and the accelerated dispute resolution mechanism that allows for the monitoring of non-tariff barriers.
At the same time, our party has expressed some legitimate concerns about the Korea FTA regarding the Canadian auto sector. Unifor and Ford Canada's opposition is sensible as the FTA Korean imports will negatively affect domestic auto sales. As well, Canadian auto exports will suffer from Korean non-tariff barriers. Additionally, Korean producers seem to penetrate the domestic market through other NAFTA countries. For example, 50% of Korean auto products enter the Canadian market tariff free through the U.S.
In closing, I would like to talk about the many potential problems with the investor dispute settlement provisions. As we know, the German government said that it was not necessarily ready to ratify the Canada-European Union free trade agreement because Canada had insisted on including investor state dispute resolution provisions. We know what kind of adverse effect this type of mechanism can have on the sovereignty of governments and on their ability to adopt environmental or economic regulations that favour industry in Canada.
The NDP is asking that free trade agreements not include this type of mechanism. As I already said, this could have an adverse effect on the sovereignty of governments.