:
I call the meeting to order.
We welcome all the international trade crew back to Canada.
We have a little bit of business, but we may try to do it at the end of today's meeting. It's nothing urgent. We'll leave it until Wednesday if we don't get through it. It's just some technical stuff to clean up.
There's also the report from the visit to the European Parliament and the European Union. I'd like to have the committee spend five or ten minutes to give some further direction to the analysts and the clerk on the preparation of that report. If we have time at the end of this meeting, we'll do that. I won't take any further time from our witnesses, who have been patiently standing by. I apologize for the slow start today.
We have with us Jamie Kneen, the communications coordinator for MiningWatch Canada.
Via video conference from Panama City, we have Donald-Fraser Clarke, general manager of Clarke Educational Services.
We'll proceed in the usual manner. I'll ask each witness to provide an opening statement to express their points of view. Something under 10 minutes would be useful for us. Then we'll open it up to questions and try to get a round of questions from our members following that brief introduction.
I'm going to ask MiningWatch Canada to start. We'll follow right away with Mr. Clarke. Then we'll proceed to questions.
With that brief introduction, I'll ask Mr. Kneen to start. You can introduce yourself further if you like.
Good afternoon, committee members. I'd like to thank you for this opportunity to share our observations on the free trade agreement between Canada and Panama. Since the invitation came very recently, I apologize that we have not had a chance to prepare a more detailed written brief or to submit it in advance for translation. I have provided an unfortunate stack of supporting documents that I've referred to in the brief and that members or researchers may find of use in their work.
MiningWatch Canada is a pan-Canadian coalition of environmental, aboriginal, social justice, development, and labour organizations that researches and advocates for responsible mining practices and policies in Canada and by Canadian companies abroad. We work with communities affected by Canadian-based mining activities in many parts of the world and with experts and organizations that are trying to ensure that mining investment is accountable to the affected communities and subject to international standards for environmental protection as well as protection of workers and the recognition of the rights of indigenous peoples. Canadian mining investment in Panama has been controversial since the 1990s, and MiningWatch has been monitoring it since our establishment in 1999.
Obviously our remit is not related to trade in nuts and bananas or financial services or many of the other areas covered by this free trade agreement. Many of the agreement’s measures sound positive to the untrained ear. However, there are potentially serious difficulties associated with the investment provisions of the agreement, specifically as they relate to environmental planning and protection. There is scant evidence that the environmental side agreement will have any meaningful effect in alleviating them.
In addition, the environmental impact of the agreement itself is impossible to gauge, given that the final environmental assessment has not been released, if it has even been completed. It was supposed to be released upon the conclusion of the negotiations on the FTA itself.
The report that is publicly available, which is on the initial environmental assessment, is almost completely devoid of meaningful content. While it acknowledges that the main effect of the FTA “is likely to be greater protection for existing Canadian investment in Panama”, it proceeds to completely ignore the environmental implications of such protection. Despite changes in commodity markets and investment patterns that were evident at the time, the report states that “large changes in investment patterns are not expected to result from the FTA. Therefore, it is concluded that the environmental effects of the Canada-Panama FTA will be minimal to non-existent.”
No evidence is provided for any of these statements, other than that changes had been minor since the 1998 Canada-Panama Foreign Investment Promotion and Protection Agreement.
Realistically, however, given increasing commodity prices, especially in metals, as well as growing interest and existing investment commitments, it is more reasonable to assume that the FTA could lead to increased Canadian mining investment in Panama, with major implications for the environment that should have been taken into consideration in the environmental assessment.
One current proposal, Inmet Mining’s Cobre Panamá open-pit copper project on the Petaquilla concession west of Panama City, is forecast to deforest some 5,900 hectares of mostly primary rainforest in the middle of the Mesoamerican biological corridor. This $4.3 billion project had been identified long before the FTA negotiations or the environmental assessment were concluded.
On the same concession, Canadian-based Petaquilla Minerals’ Molejón gold mine has been highly controversial, provoking divisions within the neighbouring communities, being repeatedly accused of deforestation and contaminating local rivers, and in fact being fined almost $2 million for environmental violations. The Petaquilla concession itself has also been controversial, as it grants its owners a series of legal and regulatory exemptions.
At the same time, another Canadian company, Corriente Resources, has been operating illegally in the Ngöbe-Buglé indigenous territory, trying to overcome community opposition to a huge open-pit copper mine project so that they can first obtain and then sell the property to a larger mining company for development.
There are a handful of other significant Canadian mining interests in Panama, far outweighing any other country’s, though only the Molejón mine is actually in production. This Canadian investment is not a problem in itself; the problems have to do with the conditions of investment and the probable effects of the FTA on those conditions. Environmental protection and legal enforcement and compliance in general in Panama are notoriously weak, even within the framework of existing laws and regulations. The Molejón and Corriente examples demonstrate this.
The danger is that the FTA's investment protections will end up protecting mining investments that are taking advantage of lax governance and the resulting low-cost operating environment, undertaking projects that would be extremely unlikely to be approved in Canada or any other country with more stringent controls, while the agreement on the environment provides no enhanced protection or recourse for affected communities or public interest organizations.
The present FTA provides ample cause for concern on both fronts. In terms of environmental protection and environmental planning, the agreement on the environment does provide some modest measures for environmental cooperation, while the FTA includes a non-derogation clause to protect environmental legislation. Non-derogation is good, but hardly sufficient in a case in which significant improvement is what is required.
At the same time, the agreement on the environment follows the recent model of the Colombia and Peru FTAs in omitting access to environmental dispute resolution by citizens and reducing the joint advisory panels and complaints mechanisms of earlier agreements, such as NAFTA or the Canada-Chile Free Trade Agreement, to a single coordinator with no independent powers or capacity and a review panel that can only be invoked by states, not citizens.
This is significant in the case of a country like Panama, where there are serious challenges in establishing the institutional and technical capacity to administer, monitor, and regulate activities like large-scale mining that have not previously existed in the country—activities that have demonstrated the political and technical limitations of state supervision in neighbouring countries such as Costa Rica, Honduras, and Guatemala.
There are also disturbing precedents in the abuse of investment protection measures contained in free trade agreements elsewhere in the region. These may simply involve threats, as in the case of Glencairn Gold, now Central Sun Mining, which threatened the Costa Rican government with legal action under the Canada-Costa Rica Free Trade Agreement if its Bellavista project was not exempted from a ban on open-pit mining. The mine's leach pad collapsed barely three years after it was inaugurated, and the mine has not been operational ever since.
They may also involve actual lawsuits, as in the current case of Pacific Rim Mining, a Canadian company using its U.S. subsidiary to sue the Government of El Salvador under the United States-Dominican Republic-Central America Free Trade Agreement for not issuing permits, and this despite the company's failure to complete the filings required to obtain such permits and inconsistencies in the information it did submit.
There are also numerous examples of successful and unsuccessful but nonetheless costly lawsuits under NAFTA.
The investment provisions in this FTA provide similar measures on regulatory expropriation in chapter 9, article 9.11, although they are limited by the exemptions under the corresponding annex 9.11 for “reasonable regulations” to protect the environment. These exemptions are welcome, but they have not been tested before the International Centre for Settlement of Investment Disputes or any other international trade tribunal. Given the strength of the expropriation protection, it is far from clear that the exemptions will be sufficient to allow Panama adequate space to effectively regulate in the public interest.
This applies not just to environmental protection but critically to any effort to change the regulatory environment to enable new measures to promote accountability and transparency or to generate new revenues from royalties or taxation in support of the state's legitimate efforts to finance its social development obligations.
The net effect is to impose barriers to the raising of these domestic standards. There is an emerging concern on the part of analysts and academics for “...the harm done to the public welfare by the international investment regime, as currently structured, especially its hampering of the ability of governments to act for their people in response to the concerns of human development and environmental sustainability”.
In conclusion, while the objectives of enhancing both investment stability and environmental protection are laudable, they are not well met by the present text, although determining the likely impacts of the agreement is made difficult by the absence of a serious environmental assessment, and there is no attempt to frame any aspect of the agreement in terms of sustainable development. The agreement, as negotiated, presents a very real risk of entrenching an ineffective and possibly irresponsible regulatory regime by protecting investments from tougher environmental or fiscal measures.
Thank you for your time. I'll answer questions when the time comes.
:
Good afternoon, Mr. Chairman. Thank you very much.
I'd like to begin by first explaining a little bit about our company. Clarke Educational Services is a first nations-based professional services firm that works with Canadian and Latin American indigenous communities, governments, and companies in developing inclusive businesses that promote the use of natural resources in a culturally appropriate and socially and environmentally responsible manner.
Our company has been working in Panama for approximately two and a half years and is made up of a skilled team of professionals who are working with the Ngöbe people, which is an indigenous group here, to advance the Cerro Colorado copper project in a socially inclusive and economically viable manner.
Our company is indigenous-rights focused. Under law 10, article 48 of Panamanian law, the Ngöbe people are to be informed and advised of, and are to participate in, all natural resource developments within the comarca territory. Cerro Colorado is a world-class copper project that has been identified on the traditional territory of the Ngöbe people.
The Ngöbe people represent approximately 10% of the Panamanian population, 160,000 of whom live within the comarca boundaries. The comarca itself is 650,000 hectares, and the Ngöbes in the comarca, according to the World Bank data, as well as our own observations, are among the poorest citizens of Panama. Some 90% lack basic necessities and are living on less than $2 per day.
Prior to our working and training in Ngöbe communities, our company conducted a series of meetings with communities located near the Cerro Colorado project area to determine whether or not the people would like to learn about responsible mining practices and the experiences of indigenous peoples from Canada with respect to mining and our relationships with Canada.
Also, our company studied the comarca law to ensure that our activities would be compliant with the national laws of Panama as well as the traditional customs of the Ngöbe people.
To date, we have worked and trained with approximately 2,000 Ngöbe people in the Cerro Colorado area. These are individual landowners and community people who live in the direct and indirect impact area of this potential copper mine development.
Our experience in Panama has given us insight into how business has been conducted in the comarca in the past. Usually business or development initiatives have been placed upon the people without their full consent, without being properly informed or advised, and without being integrated into these initiatives. It has always been our intention to respect local and national laws and to promote fair business practices and development in the region through informed and prior consent.
On the government side, there has been a long history of governments taking advantage of the lack of capacity that exists in the Ngöbe-Buglé comarca. In our opinion, creating additional and new trade with Panama through the FTA could lead to a lot of very positive perspectives. I have a list of some of the things that we believe would really assist here in terms of the way we see business being conducted.
Canadian business has a well-developed concept of CSR and of the implementation of high CSR standards, which could be introduced by Canadian companies doing business here in Panama, particularly in areas and regions where the concept is not practised or well developed. Of course, our experience has been in the Ngöbe-Buglé comarca, and we have seen that there has been very little CSR in different activities that have occurred there in the past. Cerra Colorado has a very long history. A number of Canadian companies in the past had worked there, but they really didn't involve the local people, nor did they keep the local people informed.
Canadian business, particularly in the resource sector, has a significant amount of experience in working with first nations people for common and mutual benefit. These experiences could be used as a competitive edge for Canadian companies interested in working with indigenous peoples here in Canada and throughout the region. Panama is also strategically located in the region, and with well-developed infrastructure, Panama is extremely business-friendly in comparison with a lot of its geographical neighbours. Panama could be a logical place for Canadian business wishing to engage in doing business regionally.
Canadian industry, in our experience, is generally well received by people in Panama, and particularly in the Ngöbe-Buglé comarca, and we believe this is the biggest case that supports the FTA. In the case of mining, this industry needs to be founded, established, and legitimized in Panama. For this, it's critical that we have examples of good company practices, strong institutions, and a culture of accountability. We believe there are a number of companies in Canada that are constantly striving towards these goals.
My colleague mentioned Inmet. Inmet has had some good experiences working with our first nations people in the province of Quebec. While I'm not totally familiar with everything Inmet does, I have followed them from time to time. We see them implementing a good level of CSR. We see them supporting communities. We see them informing the local population of their plans to advance their project. We believe we are doing exactly the same thing. Maybe we're doing a little more, because we are in the comarca, but we believe that we have been in compliance with the traditional as well as the national laws.
Thank you.
:
Thank you, Mr. Chair. Thank you, Mr. Clarke and Mr. Kneen.
Between the two of you, you've highlighted one of the best examples of the entire discussion about free trade, and that is whether you believe in the philosophy that free trade and increased engagement can be positive for the people in both countries involved, or whether you take a negative approach.
I have to say, Mr. Kneen, that I find the approach of Mr. Clarke and the work they're doing in Panama to be very positive in saying that this FTA would increase Canadian mining investment. Right off the bat, I think that's a really good thing, and I think that kind of investment can be even more positive for the residents of Panama.
Mr. Kneen, I want to ask you about understanding the concerns. This is not to take away from the legitimate concerns we all have about corporate social responsibility and environmental degradation. In the past, there has been significant abuse, and there may still be some, but in general, increased investment and engagement can help to build local capacity and increase awareness of the need for environmental protection.
We're trying to determine whether to approve this trade agreement. Do you believe that conditions for the people you've raised concerns about in Panama will be enhanced if Canada says no to this free trade agreement?
A voice: Good question.
:
I'm sorry, but we were disconnected.
Cerro Colorado is a very historical and important project to Panama. It goes way back to the 1970s, back to the Omar Torrijos days.
Our work in the comarca has been very simple. We have an agreement to do training. We've trained in responsible mining. My established colleague, Mr. Kneen, talked about IBAs. We do training on IBAs. We share a lot of different examples of the good, the bad, and the ugly in mining with the people, because at the end of the day, Cerro Colorado is going to be a 70-year project. And appreciate that it's surrounded 100% by Ngöbe people, 160,000 strong, and there is only one road in. So if the people feel they've been lied to or haven't been given the facts, or if they don't feel they're a part of or don't participate in this particular project, at any given time they can shut down the project. They're going to sit on the road, and that's something we've talked to them about.
We want to make sure, if it's a Canadian company that comes in as the developer, that they are a good corporate citizen, and we teach the people what to look for in Canadian mining companies.
We didn't just go in and say, we're going to develop this thing. First of all, we had to teach the people what this mining thing is, and not only teach them in Spanish but in their own traditional language. We have a huge population out there that can't even read and write, so we have to draw pictures, make diagrams. This has been two and a half years of training, week after week after week with people, making sure they have the right information and also informing them of what a failed project looks like, such as the Greenstone Resources project, and why the Greenstone project failed.
We've had our stakeholders go out to the Petaquilla gold mine. They've come back and they're very excited by what they've seen there.
So we've taught them what to look for in terms of bad projects, what to look for in terms of how to deal with large mining companies, and we believe that now we have an informed population.
We're hoping in the future that they will want to advance this project. But appreciate that they have a very powerful law that says they have to be informed, they have to be advised, and they have to participate. And they're pushing the Panamanian government right now to participate and they want a percentage of this concession.
As for the second part of the question, we've probably invested almost $1 million in training so far—only training.
:
I have some friends I heard from as well, and they told me the opposite.
Anyway, you talked about the provisions. You spoke to certain provisions—the current structure, you don't see the evidence, you don't have a problem with it; you said it's a question of what you believe ideologically or philosophically. I'm quoting you. Therefore, in my view, and I think in the view of any logical individual, no matter what the provisions, I would conclude that if you don't believe in it ideologically or philosophically, it doesn't matter. And it's my understanding, and correct me if I'm wrong, that your coalition doesn't believe in it.
So from one side you say that these provisions are welcome—that's what you said—but they have not been tested. What is this telling us? It's telling us two things, I think: they haven't been tested because maybe everything's okay, or two, we're condemning these without even having to actually access them.
Does that make sense?
And my last question, Mr. Chairman, is this. Is there an agreement anywhere that your coalition has supported? You come here, you say you don't support it, but you never really provide solutions or conditions whereby you would support an agreement if certain provisions were inserted.
So you've made a great statement, but you haven't given us any proposals.
:
Thank you very much, Mr. Chair and members of the committee.
My name is Joy Nott, and I'm the president of I.E.Canada, the Canadian Association of Importers and Exporters. With me today is Carol Osmond, our vice-president of policy. We'd like to thank you for the opportunity to appear here today to express our support for , the Canada-Panama free trade agreement.
With respect to who we are, I.E.Canada has been a leading voice in the trade community since 1932. Our members consist of small, medium, and large enterprises from across Canada. Our membership is made up of manufacturers, importers, exporters, wholesalers, distributors, and service providers to the trade community in a broad range of industry sectors, including professional services firms, such as legal and accounting firms, customs brokers, and transportation companies.
I.E.Canada was formed as the Canadian Importers and Traders Association, in 1932, in the face of a resurgence in tariff barriers and protectionism at that time. While a significant percentage of our members continue to describe themselves primarily as importers, an even larger percentage are both importers and exporters. Our current membership is reflective of today's reality.
Global business has become ever more integrated as companies around the world strive to remain competitive and productive. Traders at home and abroad are constantly seeking new, cost-effective sources of supply, whether it be finished goods for sale to consumers or parts and components for their manufacturing operations.
Canadian consumers benefit from greater choice of products and lower prices, while our manufacturers are able to remain competitive as they search for new and emerging markets for their products. As an association representing both importers and exporters, I.E.Canada is an advocate for liberalized trade as well as trade facilitation. We also aim to provide businesses with information and tools they need to remain competitive internationally.
I.E.Canada and its members support the Canada-Panama free trade agreement and the speedy passage of . While Panama is a relatively small market overall for Canadian exports, as others have testified before this committee, for individual companies or sectors, Panama is a significant market and promises to be an even more important one with the implementation of this free trade agreement.
Panama's economy is primarily service-driven. It is also one of the fastest growing economies in Latin America. As such, it presents opportunities for Canadian exporters. For example, with the current construction boom in Canada, the Canada Mortgage and Housing Corporation and Export Development Canada are both bullish about opportunities for Canadian suppliers of building products. Large infrastructure projects, such as the Panama Canal expansion project, investments in the Panama-Pacific special economic area at the former Howard air force base and in tourism projects, and the demand for residential housing, fueled by rising incomes, creates demand for a broad range of quality building products, most of which will be imported.
As you know, SNC Lavalin and its partners were recently awarded a major engineering contract by the Minera Panama S.A., a wholly owned subsidiary of Inmet Mining Corp. of Canada, for the development of a copper mining project in Panama. This project will also provide opportunities for Canadian exporters of building materials as well as mining equipment.
Of course, the Canada-Panama free trade agreement is but one element of a broader strategy to promote trade between Canada and Latin America and to diversify Canada's export markets. We were pleased to see, for example, the passage of legislation to implement the Canada-Peru Free Trade Agreement during the last session of Parliament and the Canada-Columbia Free Trade Agreement during this session. Given Panama's strategic location, it can serve as a jumping off point for Canadian companies wishing to access markets throughout Latin America.
Recent economic events in the United States have served to remind us, in a dramatic fashion, of the need to diversify our export markets in Latin America and elsewhere and that we need to reduce our economic dependence on our neighbour to the south. By implementing a free trade agreement with Panama in advance of the United States, we also have the opportunity to give Canadians a head start to possibly capture market share from their U.S. competitors. However, that window of opportunity may be closing. It was recently reported that the United States and Panama are about to sign a tax information exchange agreement that could pave the way for congressional approval for the U.S.-Panama free trade agreement in the United States.
The signing of a free trade agreement is not simply about reducing duties and lowering trade barriers. It immediately raises the profile of each party to the agreement of the other's country. It also fosters closer ties between the governments and between their respective business communities and citizens. At the same time, signing the agreement and passing the necessary implementing legislation by itself is not enough. To ensure that Canadians fully benefit from this and similar agreements, the government, working with the private sector, must promote opportunities to Canadian companies through information and outreach sessions, trade missions, and other similar activities. We view the recent opening of an office in Panama by Export Development Canada as an important step in that direction.
In summary, I.E.Canada and its members support the Canada-Panama free trade agreement, and we urge members of Parliament to proceed quickly with the passage of .
On behalf of the members of I.E. Canada, we would also like to thank you for the opportunity to appear here today, and we would be pleased to respond to your questions when appropriate.
Thank you.
:
I would say the graphs would be the most important thing, if one were to glance at it quickly, so I'll be referring to the graphs when I speak. The body of the text can be reviewed later.
With regard to the context for the agreement, we've been engaging in the process of trade diversification in this country, which is extremely important for Canada. The agreements we've signed have been an important step in accomplishing that.
Also at FOCAL we've recently engaged in some research on Jeff Rubin's thesis about the impact of the rise of oil prices on competitiveness. Working with the UN Economic Commission for Latin America and the Caribbean, we've essentially looked at what this sphere of rising oil prices means for the trade competitiveness of countries in Latin America versus countries in Asia. In essence, the research has proven Mr. Rubin's thesis, that rising oil prices will diminish the importance of globalization and increase the importance of regionalism. We'll be importing fewer goods from Asia and more goods from within this hemisphere. So getting ahead on treaties like Panama is fundamentally and crucially important for us as this new era of regionalism returns.
Another point about the agreement is that Panama, as has been mentioned, is a growing hub for services and finances in addition to trade. It's becoming, in essence, a Singapore or the Hong Kong of the hemisphere. This is a place where you're going to want a base business. This is a place where you're going to want to be deeply integrated if you're going to be doing more business in the hemisphere. In that regard, that is another reason the Panamanian agreement is important.
It's interesting. Last week, or the week before, in Ottawa we had Roger Noriega, former assistant secretary of state for western hemisphere affairs at the State Department. We asked him, given his insights about the change in Congress, what the trade agenda looked like and what he thought about Canada's work on the free trade agreements. He mentioned that they were worried about the Panamanian agreement because of what they had seen with the Colombian agreement. In essence, we had him here at Parliament, and at a speech in town he said that the U.S. stands to lose $2 billion worth of trade to Canada. And Panama is going to be more of the same.
It's actually kind of enjoyable to hear him say this, considering that Roger was the one, when he was a committee staffer in the Senate, who wrote Helms-Burton. So to have him back up here and to see him squirm about Canadian trade was quite enjoyable.
But let me offer another quote, from the U.S. Wheat Associates and the National Association of Wheat Growers in the United States. This is a statement from the U.S. Wheat Associates president and the National Association of Wheat Growers chief executive officer:
The Canadian parliament has ratified a bilateral free trade agreement...with Colombia that will, when implemented, allow Canadian wheat to enter that country duty free.
The agreement gives a major wheat-producing competitor an immediate price advantage in a market where U.S. wheat exports had earned a dominant market share. It means that U.S. wheat producers could lose sales worth $70 million today to Canada at a time when they can least afford it. In fact, U.S. farm families now face losing a substantial portion of agricultural exports to Colombia worth nearly $1.7 billion, including $330 million in wheat exports [alone].
In talking about Panama, we see more of the same. If you look at the brief, we've identified areas where Canada and the United States compete. And on the side of U.S. exports you can see several examples of places where we do very well in the region but where we currently do not do so well in Panama. There are opportunities there, and these are extremely important for us.
I would also note that the EU is working on an agreement with Panama. They signed one with Colombia.
Against the United States we have a price advantage based on tariffs. Against the EU we have an advantage based on distance and shipping costs. The advantage against the EU will increase and will be permanent. The one against the U.S. is temporary. So the importance of taking this window of opportunity while we have it is crucial.
As far as we can tell, we're looking at about four years until the U.S. gets its act together on the trade front.
If you remember, the Costa Rica and Chile agreements were passed, and there were lame-duck presidents after mid-term elections. We're probably looking at a similar scenario as the one time when the U.S. will be able to again look at movement on the free trade agenda.
Let me close with two notes.
The first is on Panama. It's a stable country that's well regarded and considered to be well governed. In the political risk reports, the human rights reports, or any sort of metric you want to look at for the country, it does fairly well. It's a good partner. It's a type of country with whom we want to do business, a country that is serious about trade.
These negotiations moved at record speed. I can't recall seeing another set of negotiations move so quickly. The Panamanians are serious partners, and they will remain serious partners as issues come up. They've proven this in their negotiations with us to this point. That's an important point.
But secondly, let me make a larger point about the trade agenda. We have a window where we enjoy an advantage vis-à-vis the United States, Panama, Colombia, and Peru. We've signed agreements up and down the Pacific coast. This is an agenda that will carry us through the near term. It's also an opportunity to think about the longer term. Where do we go from here with the free trade agenda?
The advantage with the U.S. is that it will be four years or so until the Americans come back in. We have a unique opportunity to look at the next big thing in trade. These are the trans-Pacific arrangements, the attempts to create a free trade agreement linking the countries that ring the Pacific.
There are three such agreements under way. Each one is stalled. The Asians have one, the Latin Americans have the Arco del Pacífico, and the Americans have the trans-Pacific partnership. The Americans are stalled for obvious reasons, given the Congress. The Latin American one is stalled temporarily because of intransigence on the part of Nicaragua and Ecuador. But believe me, the Latin Americans are looking to regroup and refocus. The Americans eventually will get their act together with this larger treaty.
But with each of the initiatives under way, we've been left out and marginalized on the sidelines. When these agreements start up again, we cannot afford to be left out again. Our moves in Colombia, in Peru, and in Panama have positioned us better than the Americans to take leadership and to move in this area.
When you think about the success of this agreement, you're looking at the largest trading block on the globe. You're looking at companies seeking to base firms in the new world, the Asian companies seeking to base themselves on this side of the ocean. Where are they going to base themselves? These are the types of jobs that we want to bring to this country.
McKinsey has done a report and some work on trade with Asia and the importance for Canada of going after this. If you look at transshipments, if you look at air travel, these are all areas where we really should have a distinct advantage. Our strength is that we are neither Asia nor Latin America. It's also our weakness. Only by taking advantage of these agreements, looking at a longer-term agenda, and making the types of investments we need in this country's institutional architecture can we be prepared for that.
With Panama, it's a great deal. It should be a no-brainer for this committee. But the question is really, where do we go next? How do we build upon success?
Thank you.
:
You talked about Asian companies, European companies, and U.S. companies. They're all lining up to get their share of the pie, as I've often said. If I may quote you, “We've been left out.” That's something that I think many members here on this committee—the opposition and government—are saying. We don't want to be left out. We want our share of the pie within the proper guidelines, as you probably heard if you were in the room earlier.
Mr. Dade, I was really pleased when you said that we've signed the Canada-Colombia Free Trade Agreement. Even though there are some obstacles and concerns, there have been provisions to address those. Our colleague, the former critic, Scott Brison, brought forth an amendment that I think was well received.
With all of the difficulties, you said that Panama is a country we want to do business with. You used the words “stable country”. I've never been there--unlike the previous gentleman, who was not really at the mine--but I have heard from some Canadian friends of mine that they're quite impressed with the infrastructure there. They're also saying that Panama is not perfect. But name me one country that's perfect today.
I just want to add those comments before I ask Ms. Nott the following. She talked about the U.S. moving forward to sign an agreement. I note this because one of the obstacles that's been put before our committee is the financial instability—I'm trying to find the right words here.
I was wondering, Ms. Nott, if you could elaborate on that, because I assume, from what you were saying, that once the Americans sign that agreement—and it looks like they're going to be signing it—the next step is that they're going to move forward with signing an FTA. Am I correct in assuming that? Unless we move as quickly as we possibly can, we might do what Mr. Dade talked about and miss the boat again. We lost out a bit on the Central America free trade agreement as well, which, hopefully, we'll come back to.
Can you please give us some more on that?
Relative to the Americans and the Panama situation, I was very recently in Detroit at a U.S. district council meeting, with approximately 500 U.S. companies in attendance.
Secretary Locke was there, and he made some comments relative to various free trade agreements and relative to various trade issues that they're currently looking at. In one of his comments, he in passing mentioned sitting down to talk about a free trade agreement with Panama, and the crowd erupted with applause, very much wanting and supporting that, which frankly took me by surprise. It's not a reaction I expected, personally, from the audience.
I can tell you that the role I was playing there that day was as a guest speaker. I was talking about Canada's negotiations, actually, with Europe. That's what I was asked to speak on. There were questions from the audience, and one of my co-presenters on the panel was asked about our current negotiations with Panama, which is what led Secretary Locke to make his comments about Panama.
The tension in the room that day I think was actually palpable, in that in the United States, at least, in that particular room on that day, there was definitely a feeling amongst the Americans that they have to hurry up because Canada is negotiating these deals and we're going to beat them to the punch.
I just want to say at the outset that it is the fourth time they've announced the tax information exchange agreement negotiations with the United States, as you well know, and it has now been eight years. Every time there is a little bit of pressure to get it through the U.S. Congress, the Panamanian government announces that they're negotiating another tax information exchange agreement. But for eight years, nothing—nothing—has resulted from those negotiations. So I think we should take that off the table as any sort of credible point made about negotiations on tax information.
I want to start with Ms. Nott and Ms. Osmond. I've been on the trade committee now, along with Mr. Cannis, for six years, and we often have people come forward, well-intentioned people, saying that signing these FTAs will lead to an increase in exports.
The problem is that when you actually look at the constant dollar value of our exports to those markets after we sign these FTAs, they actually decline, and they have in every single case.
In just one example, Costa Rica, there were $77 million in Canadian exports to the Costa Rican market before we signed the FTA. Last year, it was $73 million. So we went from $77 million to $73 million, in constant dollars, which is why the Minister of International Trade often will use current dollars to try to hide the fact that in real terms what's happened is a decrease in exports to those markets.
I'm wondering if either of you have any comments, because we have a pretty dysfunctional trade policy in that regard. What would you like to see our government doing to actually enhance the resources put in place to support our exporters.
I'll just give you another example. I was meeting with the trade commissioner in South America, who told me that they didn't even get the budget to buy a cup of coffee for potential clients. There's just no money available from this government. We spend about $13 million worldwide in Canadian product and service promotion. Australia spends half a billion. So there's a huge problem here. Would you like to see the Canadian government actually put its money where its mouth is and provide more support on the ground for Canadian exporters?
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Thank you. I'm sorry to cut you off, but I have only two minutes left.
I want to go to this other issue, concerning what the U.S. State Department has called Panama, which is:
a major logistics control and trans-shipments country for illegal drugs.... Major Colombian and Mexican drug cartels as well as Colombian illegal 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 projects and [more].
We've had, most recently, OECD criticisms of Panama, stating that it is even worse than the infamous Cayman Islands tax haven. There has also been testimony around the actual Panama trade pact, article 9.10 of which says:
Each party shall permit transfers relating to a covered investment to be made freely and without delay, into and out of its territory.
That would mean that the Government of Panama or any investor registered there could challenge Canadian anti–tax haven measures as a violation of those transfer guarantees under the trade deal.
I'm wondering--and this is for both organizations--are you saying to us today, “Full-speed ahead”, regardless of what the problems are with this deal and the fact that Panama hasn't met its obligations internationally? Or are you saying, “Hold on, there needs to be a tax information exchange agreement”? That is very important. That's certainly where most Canadians are, where Canadians' values are. They want to see companies and individuals paying their fair share of taxes. I think the vast majority of Canadians believe that. So are you saying to go full-speed ahead, or are you saying to hold on, that due diligence has to be done first, and let's have that tax information exchange agreement that's been promised, certainly for eight years in the United States, and that has been promised for some time in Canada?
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On the tax exchange information, I would just note that Switzerland has just signed an agreement. That's something that's been in the works probably for as long as the one with Panama, so I think globally we're starting to see movement on this issue. Countries that were intransigent in the past are beginning to change.
There is movement because of problems, especially in this hemisphere. You mentioned drugs. It's a hemispheric problem. You can start at Tierra del Fuego and work your way up. Canada is becoming a site for precursory drugs and for increased production in methamphetamines and synthetic drugs.
The drug issue and the issue of money that goes with it is hemispheric. It touches pretty much every country in this hemisphere, certainly the United States, Mexico, the Caribbean, Central America, and South America. I would not single out Panama in this regard.
Second, in terms of trade and how we do in trade—I'll get back to that question—it's very interesting. If you look at where we signed free trade agreements, you're looking only at trade in goods. If you look at services and foreign direct investment, the numbers for FDI stock, Canada does quite well. While we may lose some on the goods side, we tend to make it up on the services side and certainly with investments. These are harder to quantify and these are harder to track, but certainly the evidence from FDI stock indicates that we are doing well and making it up on the investment side.
I would urge you to bring in Professor Paul Haslam from the University of Ottawa and some others who have looked at this issue and can talk more about it.
We also do a good job in terms of promoting exports from these countries. Trade Facilitation Office Canada...this is something the Americans would never do: encourage small, medium, and non-traditional exporters, women's cooperatives, others, to take advantage of the agreements and export to Canada.
If you really believe in free trade, you believe in the Ricardian equivalence, about efficiencies being generated and efficiencies being good for both countries. We take that a step further in Canada and we do things to actually promote trade instead of aid. Trade is a supplement to aid.
I think we should really be proud of this. The question is, either you believe in trade or you don't. I think we've done a really good job of making it work.
I have a cornucopia of questions but a thimbleful of time. In all of this, perhaps I'll just ask a quick question to Ms. Nott and a quick question to Mr. Dade, and I'll just let them respond.
First, Mr. Dade, you talked about the multilateral situations. You mentioned the Trans-Pacific, TPP, the issues...I'll say Mercosur, the Latin American arrangements. I think we would like to see more multilaterals. We just came back from the European Union, and while that is technically a bilateral, in fact, with 27 member countries participating, that's as much a multilateral as I might imagine we will probably see in the foreseeable future, because we may have different views. But my view is that Doha is deader than Elvis right now. It strikes me that bilaterals are the way we go.
So my question to you is this. Knowing that we have struck five deals in Latin America, what is our opportunity? Could you imagine a Mercosur coming together? Or would we do those deals individually, as we have in the past?
I've learned this from Mr. Julian. Just ask a lot of questions and then see how the time works.
Ms. Nott, very briefly, you were very clear to Mr. Julian that in fact it wasn't an issue of how much more money promotionally.... It's to do with this deal and to get it going. I would ask you, what if we don't do this deal? That becomes my question to you.
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Given the prices of ores, mining and pressure mining are going to continue. If you look around the room, everything we use here, our cellphones, our watches...the demands are there and they will continue. It can be done in a way that's positive, that leads to economic growth, or attempts to lead to economic growth, or it can be done in ways that are more mercantilistic, that have no regard for the people involved.
You can believe that Canadian companies—your neighbours, your friends—in the mining industry are set on going to a place like Panama and trying to, pardon my French, bleep over the population, or you can believe that if given the resources and the opportunities to look at best practices in corporate social responsibility, in engagement, they'll do the right thing. I think what you see with Mr. Clarke is indicative of the positive aspects of the Canadian mining industry.
It's about working with the positive aspects. Yes, we need to punish those who harm people, and we'll be one of the first ones to march with MiningWatch when serious violations do occur. But companies that are trying to do things right, trying to make a difference....
And again, in this we compete with the Chinese. If you think you've seen a company that has really bleeped over the population, that has committed violations, serious violations, well, look to our competitors. You weaken us. You weaken companies that work with people like Clarke Educational Services. You stop them from going in. You create a competitive advantage for companies that don't.
So it's a heck of a chance to increase the bad and reduce the good. Or you can do the opposite and increase the good and reduce the bad. That's what this agreement will do, and that's what companies like Clarke Educational Services will do.