Mr. Speaker, I wonder why today we are debating a free trade agreement between Panama and Canada. I wish I were standing here debating Bill S-4, the safer railways act, for example. That is a high priority for me.
The bill we are discussing would allow the Conservatives to be soft on crime and on criminals. How would the bill allow the Conservatives to do that? It would allow criminals to hide money obtained through illegal means in the tax haven of Panama. In fact, the Conservatives do not really want to track this money from illegal activities. They have no problem doing a trade deal with Panama even though Panama refused to sign the tax information exchange agreement which would disallow criminals from hiding their money in that country.
Right now there is absolutely no transparency. In a small country like Panama, there are 400,000 corporations, many of which are there just to hide their illegal funds. One might ask what kind of illegal activities those corporations in Panama are involved in. The country is used to launder drug money. It is used to divert aid. It is used to bribe the government. It is used to fund paramilitary groups. It is used to defraud shareholders. It is used to embezzle public funds. It is used for human trafficking. It is used to trade in illegal arms. Those criminal activities are intolerable and the people involved in them should be punished.
However, this trade deal would allow criminals not only to avoid taxes, but to also launder money and hide their funds. In fact, Panama is known as a major financial conduit for Mexican and Colombian traffickers' money laundering activities according to the U.S. Department of Justice and other entities. Let me read a memo from the U.S. Embassy in Panama that was revealed by WikiLeaks:
Along with its sophisticated banking services, Panama remains an environment conducive to laundering the proceeds from criminal activity and creates a vulnerability to terrorist financing.
These are the words of the U.S. Embassy, not of the NDP. The memo indicates:
The money laundering process of: placement (putting money into a legitimate financial institution), layering (distancing the money from its origin) and integration (causing the money to re-enter the economy in legitimate-looking form) is perfectly replicated in Panama.
My gosh. Placement, layering and integration; this is how criminals hide their money in Panama. Not just in that memo from 2006, but in 2009 a U.S. Embassy cable on Panama reported Panama's failure to report Colombian kingpin David Murcia Guzman's laundering of drug money. It is incredible. These criminals are using the drug money they have made from selling drugs and wrecking people's lives. They are able to take the money made from doing drug deals and hide it in Panama.
The Conservatives have said that is okay. They are going to turn a blind eye to it and will not even ask about who is behind the corporations. They do not want to know what kind of people are hiding money. They do not want to know about the illegal activities. They do not think it is up to them. They will see no evil and speak no evil, because it is another country. They are going to wash their hands of it and allow the criminals to continue their activities. That is inexcusable.
How would the trade deal make it even worse? The Canada-Panama trade deal would worsen the tax haven problems. As the OECD has noted, having a trade agreement without first tackling Panama's financial secrecy practices would encourage this secrecy and allow even more offshore tax dodging.
There is reason to believe that the trade deal would not only increase tax haven abuses, but it would also make fighting them that much harder. How would that happen? For example, even if we could persuade the government to put in place legislation giving Panama a deadline to clean up its act or face sanctions, and we tell the Canadian banks that they are restricted from transferring money to their affiliates, article 9.10 of this trade deal says that each party shall permit transfers relating to a covered investment to be made freely and without delay into and out of its territory.
What does that mean? It means speeding up the transfer of illegal funds. It means giving criminals more freedom to cheat. It means making sure that they can hide their funds without any barriers. Moreover, chapter 9 and chapter 12 of the FTA have non-discriminatory clauses that protect Panama's registered investors. That means protecting criminals from Canadians or anyone going after them.
Article 12.06 states that Canada will always allow Canadians to purchase financial services from banks operating in Panama.
This is the kind of deal that we are debating.
What is a tax haven? It means people do not have to pay any tax or very little tax on relevant income. They do not have to provide information about their income. There is a lack of transparency. There is no substantial activity by the taxpayers in that jurisdiction. That is the OECD's definition of a tax haven. Panama fits the criteria of this definition to a t. That is what it is known for.
Why are we doing a trade deal with that country? I looked at how much trade Panama is doing with Canada. I noticed that it is less than 1%. It is not a major trading partner for Canada.
Two-way merchandising trade between the two countries reached only $149 million in 2008 and is less than 1%. Therefore, why this rush for trade with Panama? I would understand if we wanted to discuss trade with China. There is a big market there. It is not as if Panama is a big country. It is well known as a tax haven.
This trade deal is being negotiated in record time without any consultations. Perhaps one of the reasons is that the government does not want people to rise up and say that to shelter criminals and be soft on crime is not the way to go. Perhaps that is why we are debating this bill.
Panama is well known for allowing people who are close to bankruptcy to take their cash and assets to an anonymous offshore company so that they do not have to pay their creditors. They rack up a big bill and owe a lot of people a lot of money, so they take their assets and hide it in a corporation in Panama. No wonder they have tens of thousands of these corporations functioning very well.
Panama is also known for allowing people to transfer profit to these offshore centres. In fact, in 2008, Goldman Sachs paid a federal tax rate of 1%. This was before it collapsed. It would have paid 35% in the U.S., but it only ended up paying 1% because it was able to move a lot of its money to Panama.
Global Financial Integrity estimates that there is $1.2 trillion in tax havens in secret jurisdictions around the world. One-third of that money, 33%, is money that comes from the proceeds of crime. As well, 3% of that money comes from corruption. That is $335 billion of criminal funds hiding in tax havens around the world. Because of these tax havens, one might ask how much tax is not being paid to governments such as the Canadian government. In total, governments around the world are losing $165 billion worth of taxes, which could go to AIDS, helping people in poverty, providing drugs for kids in Africa, providing education for women, creating jobs or building infrastructure around the world, but is not because of many tax havens, such as the ones in Panama.
Panama is also famous for the registration of ships. It is number one for flags of convenience. They could be Canadian ships. Some of us may recall that we have a famous person who has these ships that do not fly Canadian flags. Rather, they fly flags of convenience.
Do members know how many ships are registered in Panama? Eight thousand ships are registered there so they do not have to pay much tax. I would rather see some of these ships, those that are owned by Canadians and registered in Canada, pay Canadian taxes so we could take some of that money and provide health care for seniors, for example. There are lots of ways one could use the funds from tax avoiders.
Some of the 8,000 ships that are registered there, just registered but not really there, just fly the flag of convenience. Some of these ships do have crew members from Panama. What kind of people are they? Forty per cent of them are migrant Chinese workers who earn less than $3,000 per year. As a result of registration in Panama, illegal fishing vessels can avoid fisheries regulations and controls. Some of these fishing vessels can fish illegally using methods that are prohibited by international laws. Since they hide in Panama and fly flags of convenience, they do not have to be regulated. I focus mostly on these illegal activities.
French president Nicolas Sarkozy, in a speech made at the end of the G20 conference in Switzerland in November of last year, named Panama as one of the countries with serious problems. He said that countries that remain tax havens would be shunned by the international community.
Shunned by the international community, except Canada perhaps, because the Canadian Conservative government wants to be good friends with Panama. It does not want to curb these illegal activities. It does not want to understand or learn about the illegal arms groups that use Panama for drug trafficking. The government does not want to learn about the funds generated from illegal activities that are being laundered through banks, real estate developments and various corporations.
Panama is a country of extremes. It is a country of about 3.4 million people and yet 40% of the people living in Panama are poor and 27% of those folks, close to three out of ten, are extremely poor. The rate of extreme poverty is particularly acute in the indigenous population. Even though the country has endured extensive structural adjustments, liberalization and privatization in recent years, this has not translated into economic benefits for the population. I have no doubt that when this trade deal passes through the House of Commons it will not help four out of ten people in Panama and lift them out of poverty. It will help criminals, drug dealers, arms traders, people involved in extreme illegal activities and fraudsters.
