Mr. Speaker, I rise here today to speak to Bill C-24 regarding the free trade agreement between Canada and the Republic of Panama.
I am very pleased to speak on behalf of the interests of the people of my riding, La Pointe-de-l'Île, I would like to thank them once again for placing their trust in me on May 2. I continue to work hard every day on their behalf.
It is important to mention that the NDP does not oppose free trade agreements, despite what the Liberals and Conservatives often like to say. They say that the NDP has always been against free trade and that our party opposes all free trade agreements. That is false. We do not oppose free trade agreements; we are simply saying that Canadians must benefit from them.
I would like to commend the important work done by our former international trade critic, the hon. member for Burnaby—New Westminster. Most free trade agreements do not benefit Canadians and we can see the result of that. Every time Canada has adopted a free trade agreement, our exports have declined and our trade balance has become increasingly negative. For instance, since the Conservatives came to power in 2006, the trade deficit has gone from about $16 million to $81 million. This proves that free trade does not create jobs in Canada; instead, jobs go elsewhere, to other countries.
That was my introduction.
By way of context, since the failure of the Doha round on freer trade, the Government of Canada, in all its wisdom, has decided to negotiate a great number and variety of free trade agreements, especially bilateral agreements, without any clear strategy and without taking into consideration the possible consequences for Canadian workers of adopting multiple free trade agreements. It has not taken into account the consequences that freer international trade would have on Canada's domestic markets.
We often hear the parliamentary secretary say that one job in five relies on trade, but there are still four jobs out of five that do not and therefore rely on commerce within Canada. Those are the jobs we are talking about here.
The government is trying to copy the strategy of the United States because to this government, any American idea is a good one. It seems that the government did not take certain essential factors, such as resources, into consideration. In the same breath as the government is making cuts to the public service, it is asking the departments of Foreign Affairs and International Trade to simultaneously negotiate 14 different agreements, with Morocco, the European Union, the Caribbean common market, Ukraine, India, Singapore, Guatemala, El Salvador, Honduras, Nicaragua, Korea and the Dominican Republic. Exploratory talks are also under way with Japan and Turkey.
In terms of the negotiations under way with the European Union alone, a number of stakeholders are saying there is a major risk for Canada because we are in the process of negotiating an agreement that will have a direct, major impact on businesses here. No serious impact assessment has been made by the government or, if it has, the government certainly does not want to share the results with us. While the government is struggling to create jobs in Canada, it wants to export jobs abroad. That is irresponsible.
We might also talk about the trade balance, as I mentioned earlier. It is further proof of this government's inadequacy and of the Conservatives' failure to do a satisfactory job. In 2008, we had a positive trade balance of $50 billion. Since 2009, we have had a negative trade balance of approximately $5 billion.
The government should think seriously about creating jobs here before negotiating free trade agreements that, as we know, do not promote job creation in the Canadian marketplace.
The lack of a strategy is not this government's only shortcoming. A denial of the democratic process also seems to be this government's wont. The entire negotiation process is but a farce. It makes a mockery of the democratic process if the content of what is being negotiated is, quite simply, unknown. Everything is shrouded in great secrecy and the government’s true intentions are kept secret from Canadians. We find out the details once the treaty is being ratified.
How do we expect members—who are supposed to represent the interests of their constituents—to do their job if the government keeps everything from them? There are no studies, no consulting of members, no opportunity for members to simply get information on the key negotiating points of the treaty. No information is provided. It is almost as if members had to go and ask members of the European Parliament, for example, for information on the negotiations. The government refuses to give members this information. It makes no sense whatsoever.
I am afraid that this will be a recipe for disaster and that the final product will reflect the interests of the major lobbyists, the multinationals and, of course, that small segment of the population, the top 1%. We are quite familiar with that concept.
Once again, it will be the workers who pay the price for this government's policies; they will have to pick up the tab for the caviar and champagne that the CEOs crack open when it comes time to celebrate the ratification of these free trade agreements. These individuals will in no way whatsoever take into consideration the thousands of people who will lose their jobs.
A report published by the Canadian Centre for Policy Alternatives, the CCPA, says that the treaty between Canada and the European Union will lead to a deepening of the Canadian trade deficit and massive job losses.
Economist Jim Stanford modelled three scenarios in order to study the socio-economic repercussions of such an agreement. In each of the scenarios considered, the model indicated a worsening of the current situation. It is important to understand that Canada already has a large trade deficit with the European Union of approximately $20 billion, of which $15 billion involves trade in goods and approximately $4 billion, trade in services.He estimates that this deficit already amounts to approximately 70,000 jobs that have relocated to Europe.
Based on the scenarios reviewed, a free trade agreement between the two regions could lead to the additional loss of somewhere between 28,000 and 150,000 jobs. According to Jim Stanford, this deterioration is due to the fact that Canadian tariffs are currently higher than European tariffs. This means that an agreement would first adversely affect Canadian products.
Is there a plan to correct this discrepancy, yes or no? The government refuses to tell us. Personally, I do not think there is one.
Unfortunately, the government does not stop there. The House is currently dealing with Bill C-24 on the implementation of the free trade agreement between Canada and the Republic of Panama.
Again, not only is the government not creating jobs, but it is sending our money to a tax haven. Could it be that tax havens serve the middle class? Tax evasion is not something to be taken lightly.
Panama is a tax haven, and not just any tax haven: it is one of the most active, one of the least co-operative and of the most integrated with organized crime. When large corporations and rich people transfer their assets to tax havens, it means that huge tax revenues are lost for Canadian taxpayers. None of this will benefit workers, whether they are from Panama or Canada.
Let me summarize. Our jobs are being transferred to Europe, our revenues are going into Panamanian banks, corporations are not paying taxes, billions of dollars that should be reinvested in education, health and infrastructure are lost, and I see no plan to help Canadian families make ends meet, and no plan to help the Canadian economy improve.
A fair tax system is based on everyone paying a fair share of taxes. The Government of Canada is losing $9 billion annually because of these tax havens. Does this mean that, in order to make up for this shortfall, it will have to increase the tax share paid by citizens and by small and medium size businesses? Or will it have to reduce the tax rates for big companies even more, to induce them to continue doing business in Canada? This will not change anything at all. They will continue to send their money to tax havens.
The government would have us believe that cutting taxes for big corporations will stop them from putting their money in Panamanian banks, which costs Canadian taxpayers billions of dollars, but that is not true. How can this government claim that the economy is its priority? Its real priority is exporting our jobs and our money and raising individual and small business taxes.
At the same time, the government is cutting services. Take, for example, Service Canada and employment insurance, a vital service that helps people who have lost their jobs put food on the table. One of my constituents lost her house because she waited three months for her first cheque even though claims are supposed to be processed within 28 days.
The government says that this agreement is good because Panama is an established market for Canadian exports and because there is significant potential for long-term growth in bilateral trade and investment. Some large Canadian companies have sensed good business deals in the making and believe that an agreement will facilitate trade with Panama, which has a dubious tax reputation. But what will be the cost to Canadians? That is the real issue the government should keep in mind during negotiations, not the interests of its big business buddies.
There are no restrictions on capital entering or exiting Panama. Transactions are protected by banking secrecy, and financial activity is not monitored. The Organisation for Economic Co-operation and Development—the OECD—which is nevertheless fairly accommodating when it comes to evaluating how co-operative tax havens are, did not remove Panama from its grey list until July 2011. The grey list includes countries that have not signed a series of agreements to comply with international standards. The OECD Secretary-General, Angel Gurría, stated, “Panama has worked hard to achieve this milestone and has made remarkable strides toward complying with the international standards in a very short time.” However, he cautioned that the global forum must still evaluate whether Panama's domestic laws will allow for effective availability, access to and exchange of information. He said, “The global forum will follow up to make sure they work as intended. It is important that Panama continues to work to fully implement the standards.”
Panama is one of the world's worst tax havens. It is home to an estimated 400,000 corporations, including offshore corporations and multinational subsidiaries. This is almost four times the number of corporations registered in Canada. So Panama is not just any developing country. It offers foreign banks and firms a special offshore licence to conduct business there. Not only are these businesses not taxed, but they are subject to little or no reporting requirements or regulations.
The Canada-Panama trade deal would only make the tax haven problem worse. As the OECD has said, having a trade agreement without first tackling Panama's financial secrecy practices could incentivize even more offshore tax dodging.
As the member for Windsor West, the critic for international trade, has said, when we want to get into a fair trade deal, we need to have access to the same types of conditions and strategies as our competitors. These tax havens give advantages on trade arrangements that do not favour Canadian exporters, and that is why we have seen the trade surplus diminish under the current government and a trade deficit emerge and become the norm.
Our manufacturers and our workers abide by international and Canadian standards that prevent them from competing with corporations that are able to use subsidies or tax havens to reduce their costs and become more competitive, and so the relationship becomes unfair and unequal. The trade deal will not only increase tax haven abuses but will also make fighting them that much harder.
The NDP is calling for an agreement with Panama to transfer tax information. The United Kingdom, the United States, France, Italy and the Netherlands have already signed such an agreement. How can the government not respond to this demand? If the government really had the interests of Canadians and the people of Panama—who gain nothing at all from this transaction—at heart, it would stand up today and tell this House that it commits to requesting that an agreement to transfer tax information be included in the Canada-Panama free trade agreement.
In 2007, the Auditor General of Canada mentioned that she had expressed concerns about the fiscal arrangements for foreign subsidiaries on several occasions in the past. The June 2008 study by the Université du Québec à Montréal concluded that the five Canadian banks avoided paying $16 billion in federal and provincial taxes by means of their offshore subsidiaries between 1992 and 2007. I would call that a hemorrhage of tax dollars.
Statistics Canada reported that $88 billion in assets of Canadian corporations were transferred offshore, that is to tax havens, in 2003. The secrecy of financial transactions in Panama makes it a major site for money laundering. According to the U.S. State Department, major Colombian and Mexican drug cartels, as well as illegal Colombian armed groups, use Panama for drug trafficking and money laundering purposes. The funds generated from illegal activity are susceptible to being laundered through Panamanian banks, real estate developments, and more.
Because money laundering consists of using illegal investments to covering up the use of money obtained through crime, the Canada-Panama free trade agreement will promote, in Canada, the illegal transfers of these black market funds. Conversely, the Colombian and Mexican mafias, which are very active in Canada, will view the agreement as a series of formalities facilitating the reverse transfer of proceeds of crime.
The Canada-Panama agreement will foster illicit activities in that country and increase tolerance for such activities. Although the importance of dealing with problems caused by tax havens was highlighted at the 2009 G20 meeting in London, Canada is moving in the opposite direction and is creating a new means of facilitating the flight of capital. This type of strategy is irresponsible. Do we really want to foster money laundering and drug trafficking? The Conservatives, who like to pass repressive bills, should be outraged.
Let us be clear. The government is negotiating an agreement at the expense of Canadian workers. This agreement will lead to the loss of millions of dollars in tax revenues. This proves that a small country like Panama can dictate Canada's policy on tax evasion. If the Government of Canada cannot stand up to Panama, how will it defend our country's interests when negotiating with the United States or the European Union?
