I was going to raise a bit of a point of order on this matter too, Mr. Chairman. Picking up on Mr. Easter's point, it was my expectation, based on our motion last week, that we'd have the department officials for the first meeting, and I would have expected we'd have the department officials for one meeting.
As it stands now, given the time and because of the election of the chairs, we're going to have them for less than one hour. To have 45 minutes with the department officials for a trade agreement with Panama, I would argue, is not sufficient. The ministry officials play a very important role because they have access to information that other witnesses don't have, so it is my suggestion that we have the ministry officials for one meeting.
I also understand that we're going to have voting bells at 5:15, so we have a shortened meeting at the beginning and a shortened meeting at the end, and we have put the ministry officials and two other witnesses into what is essentially 90 minutes. That is not sufficient for us to get adequate information from the ministry about this important trade deal.
Second, I'm going to pick up on the issue of there being no notice of witnesses. I found out late this morning, on the day of the meeting, who the witnesses are going to be. The clerk advised me that he had no instructions from the chair to tell us who those witnesses were going to be. Obviously the committee knows, because the witnesses are here. The witnesses knew they were coming, but the official opposition and the Liberal Party didn't know. It seems we are the only parties in the room who don't know who the witnesses are going to be until hours before the meeting.
I would say the same thing for my colleagues on the opposite side. It is most helpful, and in fact I would argue it is essential, for us as parliamentarians to know who the witnesses are going to be instead of finding out who they are as we sit here at the meeting. How can we prepare proper questions for witnesses when we don't even know who is going to appear, particularly in a short meeting?
Therefore, I am going to move that today we deal with the ministry officials only. As it stands, we won't even have them for a full meeting. They are here, so we can get as much information as we can and reschedule the other witnesses so that we have some notice and can actually prepare. That is out of respect for these witnesses and what they are about to say and so that we will have done a little research about their organizations and their perspectives.
Thank you, Mr. Chair, for this opportunity to appear before the committee and speak to Bill .
My name is Cameron MacKay, and I was the chief negotiator for the free trade agreement, or FTA, in 2008-09. I am currently the director general of the China Trade Policy Bureau of the Department of Foreign Affairs and International Trade. I am joined today by a few colleagues.
John O'Neill is director of the investment trade policy division, and Jeff Marder,
also from Foreign Affairs and International Trade Canada.
Jeff is director of the bilateral relations division with respect to Panama and Central America.
Also with me is Pierre Bouchard, from Human Resources and Skills Development Canada, as well as Alain Castonguay, from Finance Canada.
The Canada-Panama free trade agreement is a concrete demonstration of the government's commitment to an ambitious bilateral and regional pro-trade plan, consistent with both the global commerce strategy and the Americas strategy. To compete and succeed in international markets in this hemisphere and beyond, Canadian companies need a level playing field with respect to tariffs and market access. The Canada-Panama FTA achieves that goal.
Panama's economy is small, but by virtue of its geographic location, it occupies a strategic position in the global trading system, with approximately 5% of global trade transiting via the Panama Canal. That is why Panama is often referred to as the gateway to Latin America, and represents an entry point and logistics hub for the broader Latin American market.
Panama is also a high-growth emerging market. According to the World Bank, Panama's GDP growth rate over the past five years, from 2007 to 2011, was 10.6%. The IMF forecast for 2012 is 7.5% growth. That means Panama is the fastest-growing economy in Latin America, and, according to the IMF, is expected to grow by over 6% per year during the next five years. Clearly there are opportunities there for Canadian businesses.
But Canadian companies face some stiff competition in this dynamic market. Like Canada, Panama is a strong proponent of open and free markets, and has an active and ambitious free trade agenda. Late last year, President Obama signed the United States-Panama FTA into law, and that agreement could enter into force as early as this October.
Panama has also concluded FTA negotiations with the European Union, and is negotiating an FTA with the European Free Trade Association.
In fact, Canadian companies are already well aware of Panama's potential and are increasingly active there. In 2011, two-way trade in merchandise between Canada and Panama totalled $235 million. Canadian merchandise exports were valued at $111 million, while merchandise imports were valued at $124 million. Canada's two-way merchandise trade with Panama has grown by 78% over the last two years.
Key Canadian exports driving our merchandise trade with Panama include machinery, precious stones and metals, meat, aerospace products, mineral fuels and oils, fruits and vegetables, and electrical and electronic equipment. While the overall size of our trading relationship may not be large when compared with other partners, it is important to recall that Panama's robust economic growth bodes well for expansion.
It was against this backdrop that Canada sought and obtained a high-quality, comprehensive FTA with Panama. Both parties were highly motivated to conclude an ambitious deal. Negotiations were launched in 2008 and concluded a year later in 2009.
If Parliament agrees to implement this FTA, it will help Canadian companies take advantage of the opportunities offered by Panama's growing economy by immediately eliminating Panamanian tariffs on 95% of recent non-agricultural imports from Canada and 78% of agricultural imports. Tariffs on most other products will be eliminated over time, although both countries agreed to exclude a small number of goods, such as Canada's over-quota tariffs for dairy, poultry, and egg products.
This agreement will produce benefits for all parts of Canada, including pork producers in Quebec, frozen French fry producers in New Brunswick and Prince Edward Island, as well as pulse and cereal producers in Manitoba and Saskatchewan.
Canadian investors would also benefit from the FTA's implementation. Panama is already a popular destination for Canadian commercial interests, particularly in such areas as banking and financial services, consulting services, construction, and mining. Some of the Canadian companies with an existing presence in this market include McCain Foods, Scotiabank, Inmet Mining, SNC-Lavalin, and Golder Associates, an Ontario company providing consulting, design, and construction services.
The FTA will establish a stable legal framework to support Canadian investments in Panama, including guaranteeing the transfer of investment capital and protecting investors against expropriation. Investors will also have access to transparent and impartial dispute settlement procedures.
The number of Canadian companies active in the country is also expected to grow in the years ahead, in part owing to the many infrastructure projects planned by the Panamanian government and the private sector.
You may know that Panama's $5.3-billion canal expansion project is expected to be completed by 2014 and is projected to boost cargo flow by roughly 35% through 2025. With the Panamanian government investing in its country's growth and strategic importance, procurement opportunities are another key driver for the negotiation of a free trade agreement with Panama.
I am pleased to say that the government procurement provisions in the Canada-Panama Free Trade Agreement guarantee that Canadian suppliers have non-discriminatory access to a broad range of government procurement opportunities, including those under the responsibility of the Panama Canal Authority. Ongoing operation and maintenance of the canal is expected to generate ongoing opportunities for Canadian companies.
Along with the canal expansion, the Panamanian government has a five-year, $13.6 billion strategic investment plan, including $9.6 billion that will be allocated to infrastructure investments. As we know, Canadian companies are proven world leaders in infrastructure development projects. The FTA will help Canadian investors and service providers to compete for these opportunities on a level playing field against their competitors.
As I mentioned earlier, Canada's service sector also stands to benefit from a free trade agreement with Panama. In 2009, the last year statistics were available, Canadian commercial service exports were approximately $48 million a year, with room to grow. This figure is likely to be propelled by Canadian financial, engineering, professional, and information and communications technology service providers. The FTA will provide service providers like these with a secure, transparent, and rules-based trading environment.
Finally, in keeping with Canada's approach to free trade agreements, Canada negotiated side agreements on labour and the environment. These agreements will help ensure that neither side will weaken existing commitments on the environment or labour in order to gain a competitive advantage with regard to international trade.
Mr. Chair, Canadian companies that do business abroad rely on fair, transparent, predictable and non-discriminatory trade rules. In the case of Panama, Canadian companies have indicated that they want to increase their activity in that market. With the Canada-Panama Free Trade Agreement, we are looking to provide the rules they need so they can compete and succeed abroad, while building a stronger economy here at home.
Thank you, Mr. Chair. My team and I would be pleased to take your questions.
Mr. Chair, I am going to make my statement in my mother tongue, English. But I will answer any questions from members in the language of their choice.
I was here when Mr. Davies was talking about the problem of not having enough time to prepare for my presentation, and I'd just like to say that I'm totally available to come back, although I might do it by video conference the next time. I only found out myself on Friday afternoon and actually asked to have until Monday to make up my mind because I'd had a long week, so I only told the chair on Monday morning that I was coming.
I'd like to read a brief statement and then I'll answer your questions.
The Canadian Council for the Americas is an organization that strives to be a hub of thinking and events in the field of relations between Canada and the Americas. We are member-based and do not have any political affiliation.
The CCA supports a policy of increasing our trade and investment ties with the countries of the Americas. In this context, free trade agreements send a positive signal to Canadian companies that there is legal stability to the ties between our countries that will not be reversed on a whim.
In the specific case of Panama, we think an agreement is positive for a number of reasons. First, Panama's location is very strategic, connecting Central and South America. Second, the importance of the Panama Canal makes it very strategic for Canada to enjoy good relations with Panama.
Third, basically everybody else is signing free trade agreements with Panama—the U.S.A., the EU, the Pacific Alliance countries of Chile, Colombia, Mexico, Costa Rica, Peru. Canada should not allow itself to be left behind. Doing so could be interpreted as a lack of interest on our part.
Fourth, there are important Canadian business interests to protect in Panama. I think immediately of companies like Scotiabank, Bombardier, SNC-Lavalin, or Inmet Mining, but there are many more.
Fifth, Panama is a country that has made great strides since the much darker days of the dictatorships of Omar Torrijos or Manuel Noriega.
Sixth, the country is much more democratic and respectful of human rights than it was in the past.
Seventh, the judicial system is more and more independent than it was in the past.
To sum up, at the CCA we think this agreement can lead to deepening relations with Panama and with the Americas in general.
I will leave it there and let members ask any questions they want to.
My name is Jochen Tilk. I'm a citizen of Canada. I'm the CEO and president of Inmet Mining. I've been with the company for 23 years.
We've been involved in Panama for 20 years, essentially since 1990. I've been personally involved in Panama for much of that time, but quite significantly in the last 10 years. We're pursuing a very large development project in the resources sector, in mining. To be specific, it's a copper mine, and the investment is $6.2 billion, which is about a fifth of Panama's current GDP.
The commitment we have made—and this is really in conjunction with the Panamanian government—is to adhere to the IFC performance standards. Those are standards in the extractive industry that are set out by the World Bank and the IFC. We've adhered to what we call “free, prior and informed consent” with communities, which means asking communities to provide their consent and endorse the development in the extractive industry.
We've been working with the Panamanian government in capacity-building to ensure that as a regulator and governing institution, they have the capacity. We did receive the approval of an environmental and social impact assessment as a result of that interaction.
We've also moved forward on financing of that $6.2 billion, which involves a number of parties, including some other Canadian companies. To name one, Franco-Nevada is one of the Canadian royalty companies that provides financing and intends to provide $1 billion of that $6.2 billion as financing.
We also work very closely with Canadian contractors, as this project is now in construction. Construction commenced in earnest in May of this year. SNC-Lavalin, just named by my predecessor, is one of the leading contractors in the country.
We do have a partnership with some of the financial institutions. We do have one with the EDC in the area of sustainability.
We support the proposed act for a number of reasons. Number one is the significant investment that we are making; Inmet, as a Canadian public company, certainly has a vested interest in this act's going ahead. I concur with the conclusion that many improvements have been made in our 20 years of involvement, including capacity-building in the country, adherence to standards and to the highest environmental standards. We believe that all of that is beneficial both for Panama and certainly for Canada.
I'd like to thank our guests for participating in this discussion today to help us understand better their perspective on Canada-Panama free trade.
Everything old is new again in that this is now the third time we have tackled this important arrangement.
I want to come back to something that my colleague from the Liberal Party made reference to before—
A voice: He left.
Mr. Ed Holder: That's good, because there won't be as much of a retort.
It strikes me that when he talked about the size of this deal and came back and talked about the importance of the arrangement with the United States, it is rather interesting that around this table we all accept that our relationship with the United States is important, but I don't think everything is mutually exclusive. That is to say, Mr. Harvey, that when I think of your organization, the Canadian Council for the Americas, it is related not strictly to our dealings with Panama, but, quite frankly, to those throughout the Americas.
Is it fair to say that we as a country can multi-task and that we can do business both with the United States and with other countries simultaneously and that we can put in free trade agreements while we try to continue to improve that relationship with the United States?