Mr. Speaker, it is my privilege to stand today in the House to commence third reading of Bill , the historic Canada-Korea free trade agreement, which, as I have said in the House before, represents Canada's first free trade agreement in Asia. It is a free trade agreement with a partner country in Asia that represents the third-largest economy in Asia, and it is a country Canada has had a strong, and in fact, historic and deep relationship with for almost 70 years.
The Republic of South Korea represents a population of 50 million people and an economy of $1.3 trillion. It is the 15th largest economy in the world by GDP, and it is already Canada's seventh-largest trade partner in terms of two-way merchandise trade. It is a very exciting opportunity for us.
In my remarks I will also touch upon some of our strong ties. They make our agreement with Korea an important one, as our first in Asia, with an appropriate partner, given our shared history.
It is also strategically important, because in recent years, some of our friends and competitors in global commerce have reached agreements with South Korea. In 2011, the European Union reached a free trade agreement with South Korea. We have seen tariff rates drop for exporters in the EU countries. More critically, in 2012, the U.S. entered into a free trade agreement with South Korea. Months before we reached our final agreement, Australia reached an agreement in principle and a final agreement with South Korea for free trade.
That is critical, because these are some of our strongest friends and allies, but they are also our competitors. For some of our world-class exporters in industrial goods, agriculture, seafood, and forestry, which are some of the sectors that will have tremendous opportunities in Korea, their main competitors are in that market. It is critical for our country to take advantage of a free trade agreement that will get our exporting sectors, particularly some of our lead sectors, back on a level playing field with their international global competitors.
The review of this agreement and the opportunity it presents to Canadian exporters is tremendous. It is expected to increase trade by 32%, for a net impact of almost $2 billion on the Canadian GDP. It is historic.
As I have said in the House many times before, particularly to some of my friends in the opposition who forget this key statistic, one out of every five jobs in Canada is directly attributable to trade. Canada is a country of 33 or so million people. It is one of the best, brightest, and wealthiest countries in the world, with tremendous resources and tremendous people. It is a strong, diverse country, with an economy that reflects that.
However, in a global economy, we cannot survive by just selling to ourselves. I am proud to be part of a government that has put trade at the forefront of its economic strategy.
Another point I have raised in the House before is that it is actually Conservative governments that have secured almost all of our market access for exporters. Those one in five jobs are, in many ways, attributable to both the Progressive Conservative government of Brian Mulroney, with the historic U.S. free trade agreement and NAFTA, and, critically, this government and our and the . I work with them closely as the parliamentary secretary. They have secured 98% of market access for our exporters. That is truly an incredible statistic. It is virtually all their market access. In fact, many of the very few small free trade agreements the Liberal government of Prime Minister Chrétien was able to secure we are actually going back and enhancing and augmenting to make them better.
I am glad we are here at third reading, and I am glad the NDP has made a strong decision, for once, on trade and will actually support this agreement and our swift passage of this bill, Bill , because January 1 is a critical deadline for our exporters.
I said earlier in my remarks that our competitors in the EU and U.S. already had free-trade agreements. New tariff reductions will kick in on January 1 and if we do not have our agreement in place by January 1, yet another little delta, another little change between Canada and its competitors will come into place. That is something we just cannot afford to happen.
I would like to thank John Masswohl from the Canadian Cattlemen's Association who appeared before the Standing Committee on International Trade on this very point, saying that as of January 1, tariff rates would change for beef, a key sector for us in South Korea, and our American competitors in that space will leap ahead as that tariff rate ticks down. I think he said that there would be a point spread of 10.7% between our world-class beef and some of the American beef. This shows us that time is of the essence, and that is why I am glad we are here at third reading. It looks like we are on track to have this in law and able to take advantage by January 1 and not fall behind some of our key competitors.
In my speech at second reading, I took time to talk in-depth about the relationship between our countries and about the visit I had to South Korea several months ago to help secure passage of this deal through its national assembly. I spoke about how touched I was by the person-to-person ties that had been developed between our countries.
Indeed, South Korea represents one of our best friends as a nation and a key ally in Asia. It is an almost a 70-year relationship, starting with missionaries, many of whom were still remembered in Seoul when we were there. They were bringing faith and education, and enhancing education on the ground, ensuring it was accessible for more people.
We can see the tremendous progress that has taken place since then. A country that 60 years ago was one of the largest net recipients of food aid from around the world is now one of the largest contributors of money to the United Nations' food programs. It is a remarkable statistic accomplished in just two generations. Education, openness and an increasingly strong democracy in South Korea has been key to that achievement.
There are approximately 200,000 or so Korean Canadians who have also been key in building these bridges between our countries, and I spoke about several of them. I still speak with Mr. Ron Suh, who was on the ground in Seoul. He advises the government of South Korea as part of the National Unification Advisory Council. People around the globe with Korean lineage work with the country on the ultimate goal of having North Korea emerge from its decades of darkness and reunify the peninsula again. Mr. Ron Suh remains a strong component. He is an example of one of these 200,000 Canadians who have brought our countries closer together and who are very supportive of this deal.
For me, as someone who served in uniform for 12 formative years of my life, the highlight of my trip to South Korea was spending time with Minister Park, the minister for Patriots and Veterans Affairs in South Korea. I found that title unique and I asked him about it. When the people were under attack from the north and from Chinese forces, it was not just the military or nations like Canada that stood firm with them to try to preserve their country, but also members of their public. Everyday citizens were called into action, and they are referred to as the “patriots”. It was not just uniformed members of their military; indeed, it was everyone, men, women and children in some cases. They are the patriots in the department of patriots and veterans affairs.
Our delegation joined Minister Park at its national war memorial and war museum. We laid wreaths at the Hall of Honour, where the 516 Canadian names appear on the tablets, the ones from the almost 26,000 Canadians who responded 60 years ago to the United Nations call to respond to the conflict on the Korean Peninsula.
Staring at those names as a modern day veteran was moving, names from across the country, French and English. These were young people in their prime, many of whom had served just years earlier in World War II and served again. Without hesitation, the Korean people deeply respect that sacrifice and remember it to this day.
In my last speech in the House, I said that from school children to ministers of the government, everyone thanked our delegation for Canada's historic efforts to secure their democracy and the country that is South Korea today. That is moving when we see remembrance as a cornerstone of their civic duty and culture.
For me, I am also fortunate. A good friend from my riding who lives not far from me in Durham, Mr. Doug Finney, is the president of the Korea Veterans Association of Canada, working with veterans on remembrance, both here in Canada and in Korea.
Ted Zuber is a war artist. He is from the Royal Canadian Regiment. One of his stunning paintings fundraised by the Korea Veterans Association has a place of honour in their national war museum. It depicts some of the battles related to the Battle of Kapyong, in which the Princess Patricia’s Canadian Light Infantry demonstrated heroics, saving Korean, American and Australian lives with that tremendous battle, even calling in fire on Hill 677, their own position to hold that line.
To this day, the PPCLI remains one of the few world regiments that has the U.S. presidential citation that members wear on their uniforms. That is for the heroic deeds at Kapyong.
It was very important for me to write in the Book of Remembrance that I was visiting its museum in the centennial year for that regiment, a regiment that was founded in Ottawa 100 years ago last month.
We were fortunate just last month, September 20 and 21, to have a state visit from President Park from South Korea as part of our historic engagement on this free trade agreement. I was fortunate to join the , other members of the House and my friend Doug Finney on behalf of the Korea Veterans Association at a state dinner hosted by the Governor General.
It was clear, the affection between the countries, from all the remarks that evening. The Governor General himself reflected on his recent visit to South Korea, describing it as both a beautiful and flourishing country. What struck me in particular about his remarks was he said that he greatly admired its tenacity and creative spirit. I hope Canadians can see that we are indeed part of helping them establish the modern country they have today.
This agreement, in many ways, represents the next stage in our relationship as two countries. This will reduce tariff rates between our countries to allow us to trade under most favoured nation status. Most favoured nation should be the status between countries as close as ours.
I recited dozens of tariff lines in my speech at second reading. I certainly do not want to bore the House too much with the same tariff lines. Therefore, I will try, for a few moments, to talk about how these tariff lines, 4.7, 10.8 that seem like regulatory numbers lead to jobs. One in five Canadian jobs is attributable to trade, as I said at the outset. I will talk about a few strategic markets for that.
Seafood is a huge winner. Having lived in Atlantic Canada for many years, and having married into the Atlantic Canadian Grant family in Fall River, Nova Scotia, I know how proud Atlantic Canadians are of their seafood industry. Newfoundland, Prince Edward Island, New Brunswick, Nova Scotia have tremendous wins. Canada is recognized for seafood, and there are tariff rates of up to 47%.
At 47%, if they have to add that to their price, our exporters, our fisher processors and our fishermen will not have access to that market, lobster in particular. Atlantic lobster is the best in the world, bar none. It is already selling in to the market in South Korea. I said in my last speech how at Chuseok, the South Korean thanksgiving, lobster is considered a treat that South Koreans bring to their family to celebrate thanksgiving and their origins. It has a 20% tariff rate for live and processed lobster. Eliminating that at a time when we already have access to that market, even with the higher price because our lobster is better, just means huge opportunities for Atlantic Canada.
While in Halifax on a visit, I had the pleasure to meet with officials from Korean Airlines, which has already started direct cargo flights from Halifax of Atlantic lobster, primarily from New Brunswick and Nova Scotia, to take advantage of the market. As of January 1, once we get this through the House, the 20% tariff rate will come down, meaning huge opportunities for Atlantic Canada.
Regarding industrial goods, I am from Ontario and we are very proud of our manufacturing industrial sector. Ninety-five per cent of tariff lines will be eliminated when this agreement comes into force. Why is that so important? Increasingly, in our global economy there are global supply chains. Even if there is a manufacturing plant in a country in Asia, it may source supplies for its assembly from around the world. We are seeing that already. Great Canadian companies like Magna and others have already taken advantage of this in auto and elsewhere. This is an opportunity, with these tariff reductions, to have more of our companies compete for work in the supply chain. The South Korean conglomerates are well-known in trade around the world, and that is an opportunity for our employers.
In agriculture and agri-food, 85% of agricultural tariff lines come down as part of this agreement. There are huge wins for pork. I toured the facility in Brandon, Manitoba along with the MP for . There is huge opportunity in that industry.
For beef, grain and oil seeds, there are huge wins.
For fruits, such as blueberries from Atlantic Canada, there are tariff reductions on all of them. It means great opportunities as the people of the rising middle class in South Korea demand high-quality food from a safe, strong, healthy regulatory regime like Canada's. They will pay more already but with tariff lines coming down, it will be even more competitive.
David Lindsay from the Forest Products Association of Canada appeared before our committee. In regard to forestry products, there are tariff reductions in the range of 2.9% to 10% for wood and finished wood products. I toured with an employer who has assembly plants for value-added wood products in Ontario and in British Columbia. He predicted doubling his workforce based only on the South Korea market. He is certainly equally as optimistic about the European Union trade agreement and some of our other negotiations, but that is for this one country alone because of the burgeoning middle class in that country.
We are very proud of our auto industry in Ontario. As I said in my last speech on this issue, my dad is a GM retiree. I am proud of our roots in the Oshawa area for auto manufacturing. We have secured a deal that is equal to or even better than some of the outcomes the U.S. achieved for autos. What is critical here is entering into the supply chain and jobs in the auto supply and parts sector is as critical to the Ontario economy as it is to the big manufacturers. As I said in my remarks the first time, what many Canadians seem to forget is we are very proud of Ford, Chrysler and GM, and it came up in question period today. They are all subsidiaries. The senior management teams in each of those cities do not make the decision on what rolls off the production line. That decision is made in the United States, which already has a free trade agreement with South Korea.
Why, as responsible legislators, would we allow our auto sector in Ontario to have one less country it can access on the same terms as the U.S. plants? We know that in this global auto age, they compete against one another for jobs.
This is a huge win for Canada. It is up to a $2-billion hit to our GDP. I really hope that all members in the House vote in favour and that we have quick passage.
Mr. Speaker, it is a privilege to stand in the House to speak on behalf of the official opposition New Democratic Party on Bill , which is an act to implement the Canada-South Korea trade agreement. Once again, on behalf of the New Democrats, it is also a privilege to stand and support this agreement. There is no question that the overwhelming evidence is that this agreement is not just of net comprehensive benefit to Canada, but, in my opinion, it is of significant benefit to the Canadian economy, and that includes Canadian workers.
The Canada-Korea trade agreement is also a critical opportunity for the Canadian economy, which we simply cannot afford to miss. As has been pointed out in the House before at second reading, we do not negotiate in a vacuum. The Canada-South Korea negotiations for a trade agreement took place in the context of other trade agreements being negotiated, notably the United States and the European Union, both of which concluded trade agreements with South Korea before Canada did, in 2011 and 2012 respectively.
That means that businesses in the United States and the European Union both had access to reduced tariffs that Canadian businesses have not had. Since those agreements have been in place over the last two and three years respectively, Canadian businesses, sector after sector, have told our committee that they are losing market share in South Korea as a result.
It is our opinion that even if we wanted to oppose the agreement, the context is such that we could not, because Canadian businesses simply cannot compete in a world where their competitors are getting tariff reductions that they are not. I might also point out that Australia, which is a very direct competitor to Canadian producers in a number of areas, has also just concluded an agreement with South Korea.
I will be talking about this at the end, but I also want to point out that New Democrats have a coherent and well-thought-out lens through which we evaluate trade agreements. This is unlike the Conservative government, which seems to support trade agreements with anybody at any time, regardless of what is in them, or the Liberal Party, which opportunistically will support an agreement and then not talk about it.
We asked ourselves a number of important questions. New Democrats asked first of all what characterizes our proposed trade partner: Who is our proposed trade partner? Can it be said that they are a modern democracy with respect to the rule of law, democracy, and human rights? Or, if there are challenges in that regard, can it be said that they are on a positive trajectory?
Second, is the economy of strategic or significant value to Canada? The Conservative government has been a broken record in terms of bragging about the agreements it has signed over the last six years. However, most, if not all, of those agreements have been, with the greatest of respect, economies that have very little trade with Canada and do not have significant or strategic value to our economy. These are countries like Honduras, Panama, and Jordan. As important as these countries are, and as important as it is to have good relations with these countries, I do not think anyone is going to delude themselves into thinking that trade agreements with those countries are going to have a significant impact on the Canadian economy.
South Korea is different in that regard. South Korea is a member of the G20. It is the fifteenth-largest economy in the G20. It is a multi-party democracy with robust rule of law. It has the highest post-secondary participation rate of any country in the OECD. Canada and South Korea are complementary economies. That is an important point. In most respects our sectors are not in direct competition with each other, and our economies are mutually beneficial.
South Korea is also a world leader in green technology, in renewable energy and energy conservation.
I will repeat what I asked in my question for the hon. parliamentary secretary. South Korea has dedicated 2% of its GDP per year to the green technology sector. South Korea is a trillion-dollar economy annually. That translates into $20 billion a year that South Korea is investing in what is clearly an economic direction for the future.
One of the many reasons that New Democrats believe this agreement has the capacity to be very positive for our economy is because New Democrats believe that, wherever we can, the Canadian economy should be steered in a direction where we are replacing outmoded forms of energy, polluting forms of energy, with sustainable ones.
Canadians often see a lot of rancour, discussion, debate, and argument back and forth in this House. They often do not see when Parliament works in a positive way. This is one example where it has, with all parties on the trade committee participating in the deliberations of this important agreement.
Canadians may know that after second reading in this House, and after a vote, then legislation goes to a committee. In this case, this agreement went to the international trade committee where we debated the legislation. We importantly called and heard from witnesses about their points of view on this legislation. We also had an opportunity to propose amendments.
The New Democrats were the only party that proposed amendments at second reading. Neither the Liberals nor any other party proposed any amendments. I will be talking about that in a moment. I think those amendments would have strengthened this agreement.
MPs heard testimony during the committee that was very favourable to the agreement. In fairness, we heard some testimony that was not favourable. We also heard testimony prescribing next steps for the Canadian government and exporters, as we seek to realize the full potential created by this deal both for Canadian enterprises and workers.
On behalf of the New Democratic Party, I would like to thank the witnesses for their efforts in raising awareness about different components of the deal and its impact on their sectors. It added some very important information for us as parliamentarians, and I want to highlight some of that evidence.
The testimony that we heard essentially amounted to a strong exhortation that the federal government have this agreement in place before January 1. As I stated, the context in which we evaluated this deal is one where we have competitive agreements and competitors around the world who are beating us to the market because of the tariff reductions they are enjoying and that Canadian producers are not. We also heard from sectors that believe this agreement may present challenges for them.
In an effort to strengthen the deal for Canada, and consistent with some of those suggestions from witnesses, New Democrats moved a number of common sense amendments to address those concerns. We are somewhat disappointed that the Conservative government was unwilling to work with the opposition to strengthen the deal. They rejected all six of our amendments. Nevertheless, the NDP will continue to offer concrete proposals to ensure that the full potential of this deal is reached and that Canadian businesses and workers benefit.
Committee members were privileged to hear the testimony of the chief negotiator for Canada in these talks, Mr. Ian Burney, who very clearly and succinctly unpacked the many components of the trade deal and articulated their significance for the Canadian economy. Here are some highlights of his testimony.
|| The outcomes are particularly advantageous for Canada when you consider that Korean tariffs are on average three times higher than ours, 13.3% versus 4.3%. [...]
|| For example, in the sensitive fish and seafood sector, where Korean tariffs run as high as nearly 50%, we've obtained faster tariff elimination.... In agriculture, Korea's most heavily protected sector, with tariffs approaching 900%, we've achieved better outcomes than our competitors.... There will also be major benefits across industrial and manufacturing sectors in Canada, including aerospace, rail, information technology goods, chemicals, and pharmaceuticals to name a few, where Korean tariffs can run up to 13%.
Mr. Burney, primarily in answer to questions raised by the New Democrats, addressed concerns about the impact of the deal on Canada's auto sector. Here is some of his perspective on the matter. He pointed out the following:
||...most Canadian production, in fact, almost 90% last year, is exported and so will be unaffected by the increased competition in the Canadian market. Moreover, Korean-branded cars sold in Canada are, as you know, increasingly coming in from plants in the U.S. duty-free under NAFTA. That volume is already close to 50%, so the protection afforded by the tariff is declining in any event.
I would point out that we also have information that Hyundai is opening two auto plants in Mexico in the next two years, an assembly plant and a parts plant, which would be capable of producing several hundred thousand units a year. Therefore, that 50% vehicle entry into Canada from Korean manufacturers is no doubt going to go up.
Mr. Burney continued:
|| With respect to the Korean market, [where] it remains challenging, there is no doubt it is opening up. Imported auto sales in Korea have been growing at about 30% annually over the last four years. The import penetration rate has increased from about 3% when our negotiations started to over 12% today, meaning that nowadays one in eight cars sold in Korea is an imported vehicle.
New Democrats believe that trajectory has to be watched carefully so we can ensure that Canadian auto products do indeed have access to the Korean market, which up to now has been identified as one of the more closed markets in the world.
The NDP is also proud to join the United Food and Commercial Workers, Canada's largest private sector union, in supporting the Korea trade agreement and its positive potential for tens of thousands of unionized workers in Canada.
Here are some of the words of UFCW legislative director Bob Linton:
|| UFCW Canada believes that the Canada-Korea free trade agreement overall will be a good deal for Canadian workers.... Korea is heavily dependent on food imports with a demand exceeding $28 billion annually. Korea is Canada's fifth largest agricultural food export market. It has a population of 50 million relatively high-income citizens....
|| Furthermore, increasing trade with Korea and other similar countries is a crucial step [in] diversifying our export industries, reducing risks and dependence on the...U.S. economy.
He also said:
|| This agreement means that not only members at our locals in Quebec, such as Local 1991, and Ontario, Local 175, will benefit from this free trade agreement but locals in Alberta, such as Local 1118 and 401, and Saskatchewan, Local 1400, will also have the potential to benefit. This deal will not only help to protect the jobs of our members in these provinces but has the potential to increase employment with good union paying jobs that benefit the communities.
Committee members also heard testimony from business and community leaders in Canada's vibrant Korean-Canadian community. Two witnesses I was privileged to put on the list were from British Columbia, Mr. Mike Suk and Mr. David Lee, who described to committee the potential benefits that this deal could bring to the Korean-Canadian community.
Here is a highlight of the testimony by Mike Suk, president of the Korean Cultural Heritage Society:
|| In less than 60 years South Korea has made its mark on the world stage. Cutting-edge industries have developed in Korea. Korea has also emerged as an influential tastemaker in Asia. I believe companies in Canada, through joint ventures with South Korea, [businesses] will gain favourable access to other high-growth emerging markets in Asia.
I would point out that this is Canada's very first trade agreement with an Asian country. This is another salient factor that went into the New Democrats' decision to support the agreement. Not only does this represent the so-called Asian pivot, where it is important for Canada's economy to establish strong and deep and broad economic relations with Asian economies, but Korea also represents an important gateway opportunity. We will penetrate the Korean market that provides opportunities for us to access the broader Asian market as well.
I want to talk very briefly about the amendments that the New Democrats proposed, which we felt would strengthen the agreement.
Our first amendment would amend the bill to add a clear preservation of the right of Canadian governments to legislate and regulate in the public interest. By way of brief explanation, the New Democrats do not believe that investor state provisions ought to be put into free trade agreements.
In this case, if an investor state agreement is put into an agreement, then we would like a crystal clear and explicit statement in that agreement that nothing in that trade agreement, but nothing, would trump the sovereignty of the states involved to legislate or regulate in the public interest. That is not clearly set out in the bill, and we thought it ought to be.
The second amendment would amend the bill to explicitly prohibit the weakening of environmental standards in order to attract foreign investment.
In fairness to the agreement, it does have a significant amount of language on the environment. However, in our view, when it comes to the environment, we cannot be clear enough. No trade should be facilitated, ever, by a diminution or reduction in environmental standards, and Canada should say so directly in each and every trade agreement that it signs.
The third amendment amends the bill to repeal the investor state dispute settlement chapter from the agreement. As my hon. colleague, the parliamentary secretary stated, Korea and Canada both have robust, mature judicial systems. There is absolutely no rational basis for including an investor state provision in an agreement when investors have full protection and recourse to the judiciaries of both countries to protect their investments and business interests.
Our fourth amendment would amend the bill to require annual Canadian trade missions to Korea to monitor the elimination of discriminatory non-tariff barriers and the implementation of the agreement and report back to Parliament annually. Every single auto company has told us that South Korea has historically utilized a series of non-tariff measures. We could fail to experience any benefits of a trade agreement if a country does two things: if it implements non-tariff barriers and if it manipulates its currency. It could wipe out any potential benefits that a trade agreement would give us by tariff elimination.
The New Democrats, quite thoughtfully and reasonably, suggested that we go every year, at least upon implementation of this agreement, perhaps the first five years, and take representatives of all industries and labour with us and monitor the non-tariff barriers of South Korea to ensure that companies in our country do get the benefit of this agreement. Unfortunately, the Conservatives chose to vote against that thoughtful amendment.
Our fifth amendment would amend the bill to require the inclusion of a snap-back provision for Canadian auto and steel tariffs in the event of a surge in vehicle imports or steel imports from the Republic of Korea. We have heard different testimony on this. I remain of the opinion that we should get what the U.S. got in its agreement with South Korea, which was a snap-back provision. What that means is that if it was found over a period time South Korea market access was not being realized, or it was found there was a dumping of South Korean imports into, in that case, the United States, the tariffs would snap back to protect the domestic industry. We thought the Canadian steel and auto sector ought to have the same protection that their colleagues in the U.S. have.
The sixth amendment is the one that is specifically on steel. Unfortunately, the Conservatives voted down each one of those amendments. I am disappointed that they did.
At the same time, I want to mention that South Korea has been identified in the past as one of those jurisdictions that has been accused of intervening in its currency to artificially suppress its currency level as a means of boosting its exports. I make no such accusations in this regard, but that has been identified.
New Democrats, before committee, announced to Canada that we would be proposing the following motion at committee to address this major trade barrier, which is currency manipulation. It reads:
|| That, pursuant to Standing Order 108(2), the Committee undertake a study of the use of currency intervention by states throughout the world to create advantages in international trade, policy options available to address unfair currency interventions, and report its findings back to the House. The focus of this study should include:
||a) Investigating the challenges and opportunities in using trade and investment agreements to address currency intervention;
||b) examining the status of progress at multilateral bodies in developing fair international rules on currency intervention; and
||c) balancing respect for sovereign nations in the management of their monetary policy with the development of fair international rules to level the playing field for exporters in all countries.
People as diverse as the U.S. manufacturers association, the Canadian Council of Chief Executives, Ford Canada and any number of people involved in import and export understand the importance of currency in expanded trade opportunities. Regrettably, our motion will not be studied, at least now, before our committee. That is disappointing as well because we think that having a stable and fair currency trading system is key to establishing a smart trade policy for Canada.
Canada is a trading nation. We have always been a trading nation. We continue to be a trading nation. New Democrats will continue to suggest intelligent, thoughtful and prudent measures that will not only boost exports for Canadian champions around the world but also make sure that we can create those value-added, good-paying jobs here at home that are the hallmark of every modern industrial economy.
Mr. Speaker, I would like to begin by reiterating that the Liberal Party supports free trade, and we are pleased to support this deal.
This is just the third day the House has been sitting since the terrible events of last Wednesday. It is very appropriate and fitting that on this day we are debating a measure that has the support of the three main parties in the House and that in the discussion we have heard about the tremendously powerful impact Canada's diverse population brings to the country.
We have heard a lot of members speaking eloquently about Korean Canadians and how the connections they have with Korea have been so important in building this deal and in building connections with that country. This is a week when all members of the House should be talking in the most forceful possible terms about Canada's strength in our diversity and Canada's strength in our pluralism. I am pleased that this Korean free trade deal has given us an opportunity to do that.
Coming to the deal itself, I am going to speak about our position on free trade and why we believe that free trade is so important, particularly for Canada. I am going to talk about why we support this specific deal with Korea. I am also going to talk about our concerns and about what we feel has gone wrong and could have been done better. Then I am going to speak about what our trade agenda going forward should be.
I would like to start by talking about free trade and why it is so important for Canada and is such a centrepiece of the Liberal economic program.
We are living in a time when the middle class is hollowed out, when the middle-class is getting hammered. That is something the Liberals have recognized and have been talking about. There is a lot of resonance among Canadians when we raise those issues. One of the ironies of an age like our own, when the middle class is suffering, is that national support for free trade can weaken and we can have the rise of protectionist sentiment. I am therefore absolutely delighted to represent a party that is strongly in favour of free trade.
I am also really delighted to be standing in the House and talking about a free trade deal that has such cross-party support. To have national unity around free trade will be an essential strength of Canada going forward. If we can maintain that, it will provide a competitive advantage for the Canadian economy.
Why is trade so important? Why is it central to Canada's economic success in the 21st century?
Canada is geographically vast. It goes from coast to coast to coast. The reality is that by GDP, Canada has only the 11th largest economy in the world. We are just not big enough to exist, grow, and prosper without being maximally open to the world economy.
Exports to date account for 30% of our GDP, and one in five jobs are linked to exports. The only way the Canadian middle class can grow is for the Canadian economy to become ever more global, for more Canadian businesses to be more competitive and doing more business in the world economy.
That is particularly true when it comes to the emerging markets of Asia, Africa, and Latin America. These are places where the middle class is rising up out of poverty, where there is growing consumer demand, and where there are attractive demographics. As a country, Canada has to be poised to sell into those markets. If we fail to do that, our own middle class will be squeezed and will falter. For Canada, there can really be no economic policy more important than a strong, aggressive, forward-moving, forward-looking trade policy. I am sad to report that the reality is that when it comes to trade in the world economy, if we look past the government's rhetoric, Canada is falling behind.
I would like to draw the House's attention to an important and thorough report produced this year by the Canadian Chamber of Commerce, a business group to which we pay a lot of attention.
This is a group that has a network of over 450 chambers of commerce and boards of trade, and it represents 200,000 business of all sizes and sectors in the economy, in all regions of the country. These people are important. We need to listen to what they are saying about what is happening to the Canadian economy.
I am afraid that when it comes to trade, the Canadian Chamber of Commerce is very worried. The title of its report says it all. It is called “Turning it Around: How to Restore Canada's Trade Success”. Here is what the Chamber of Commerce has to say about how we are doing. It agrees with the Liberals. It says:
|| International trade is one of the fastest and most effective ways for Canadian businesses to grow.... However, the increase in exports and outward investment has been slow in recent years, and diversification to emerging economies has been limited.
As we have just been discussing, emerging economies are the essential places for us to be going.
Looking deeper into the report, the chamber did a very important calculation in talking about what is actually happening to Canadian trade. I would like to quote it. It said:
|| Despite more firms looking abroad, Canada is lagging its peers according to several measures.
Yes. That is right. We are, as the report says, falling behind when it comes to our international trading position. The report goes on to say:
|| Over the past decade, the value of exports has increased at only a modest pace.
What is really interesting about this report is that the authors backed out increased commodity prices when they took a look at Canada's trading position. When we do that calculation, we see a picture of how we are doing on trade that is not at all pretty. Here is what the chamber said about backing out the price premiums we had been experiencing in energy, mineral, and agricultural commodities:
|| If these price increases are excluded, the volume of merchandise exports shipped in 2012 was actually five per cent lower than in 2000 despite a 57 per cent increase in trade worldwide.
What has actually been happening is that the world gets that trade is important. Globalization is not just a trendy word; it is the world's economic reality, and the reality is that Canada is falling behind. This trend is reflected in the trade numbers. In August, economists were predicting a $1.6-billion trade surplus. Instead, Canada recorded a $610-million trade deficit. These are worrying numbers, and there needs to be a lot more urgency on this file.
I would also point to an issue we heard addressed in question period today, which is falling commodity prices. Warren Buffett, the renowned investor, likes to say that when the tide goes out, we see who is swimming without their trunks on. I am worried that high commodity prices for the Canadian economy have been like a high tide that has obscured a lot of problems, nowhere more so than in trade. As those commodity prices fall, we need to be really worried about what they are going to show is happening in trade.
Turning now to Korea, we agree with our colleagues from the government and the official opposition that this is an important deal, and we share their urgency about getting this finalized by or before January 1. It is important to Canadian businesses, it is important to Canadian exporters, it is important to the people who work in those industries, and it is therefore very important to the Liberal Party.
Korea is Canada's seventh-largest trade partner. In 2013, we did $10.8 billion of trade between us.
Korea is an attractive partner to us, because it is a democracy. This is a country that is a real technology leader, including, as we have heard, in green energy. It is a country that is very culturally innovative. I think we can learn a lot of lessons from Korea about being a global cultural leader, even if we are not one of the big powers. It is an economy that is very attractive to Canada's agri-food industry, to our aerospace industry, and to our spirits industry, so we are very much in favour of this deal.
Having said that, I would be remiss in my responsibilities if I did not point out some of the problems we have with it. The biggest concern we have with this Korea free trade deal is that it is late.
The United States economy, with which we are most closely connected, ratified its trade agreement with Korea in 2011, and the agreement went into effect in 2012. Korea's trade deal with the EU has been provisionally in force since July 2011.
This delay is not just about some kind of theoretical competition over whose date is first. The delay in getting the Korea deal done has had direct and meaningful impacts on Canadian exporters. The global economy is extremely competitive. Businesses know it. Canadian businesses are suffering, and they have been let down, when it comes to Korea trade, by the government. We have lost 30% market share in Korea, more than $1 billion, because we have been slower to come to a deal.
We heard the parliamentary secretary to the minister waxing lyrical about the Korean affection for Canadian lobster, and Koreans should indeed be enthusiastic about eating Canadian lobster. I know that everyone in the House is. However, the government should be apologizing to Canada's lobster industry for putting it at a disadvantage.
I want to read a quote, from The Globe and Mail, from Stewart Lamont, managing director of Nova Scotia's Tangier Lobster Co. Ltd. He said, “The Americans are two and a half years ahead of us, but better late than never.”
That is really the story of this agreement. We are supporting the deal. We are glad it is happening, but this is a story not of triumph but of better late than never.
I would like to point out that our negotiations with Korea began in 2005. The Americans started talking to the Koreans in 2006 and to the EU in 2007. Despite starting negotiations sooner, we have concluded the deal later, and that is something that has had a measurable impact on the bottom line of Canadian exporters.
We need to get this deal done by January 1, but everyone in the House should be aware that the slowness of getting a deal done means that Canadian companies have to run extra fast. They have to claw back that lost export position in the Korean market, and that is going to be very hard work for them.
What we hear when it comes to the reasons for Canada falling behind and this deal having been done behind the U.S. and behind the EU, despite the fact that negotiations began sooner, is that it had a lot to do with the top-down, hyper-controlled approach to issues we see from the government when it comes to the domestic agenda. The Korean deal is more evidence that this approach, which is rejected by so many Canadians now at home, also slows down our relationship with our international partners.
There is support from us. There is support from the official opposition for this deal. I am very pleased that there is that support. It is urgent that we lose no more time getting this deal finalized by or before January 1.
We would be derelict in our duty if we were not aware that this deal has come late. It is better late than never, but it would have been much better had it not been late to begin with.
This deal is particularly significant, because it is our first deal in Asia. It is really important, going forward, that we not allow the mistake of falling behind to happen in our future deals. I am going to talk in a moment about those other deals and the approach Canada needs to take.
However, before doing that, I would like to also urge the government to release a study the department did on the economic impact of the Canada-Korea free trade deal. This study has been requested by many stakeholders, and their access to information requests for this study were very keen, particularly given the fact that the deal is due, we hope, to be finally confirmed by the end of the year.
We call on the government to release this study of its economic impact. Now is the time for us to have that information and to talk about it. It should be made public. Given that the agreement is being supported by both the Liberals and the official opposition, I can really see no reason why the government is not coming out publicly with that more detailed information.
When it comes to the trade agenda going forward, the really big issue on the agenda and what we really need to focus on is TPP. This is an agreement which will touch on 40% of the world economy. In current economic conditions, when a lot of economists are concerned that we are suffering from secular stagnation, that the whole world economy has moved into a new low-growth paradigm, TPP could not be more essential. This could be one of the few levers that we have to get the global economy going. It is essential for Canada and it is essential for the world.
These comprehensive TPP talks started in 2008. Canada, I am sad to say, did not join until 2012. I am afraid we see the pattern with Korea being repeated here. We are slow to come to the table. We really have to focus. We are seeing something wonderful, a tremendous competitive advantage in our country, which is real support across the political spectrum for the Korea deal, for trade with Asia, for trade with the world. It is absolutely incumbent on the government to use that strong political support for free trade, to be an active and energetic partner in the TPP talks to get them going.
Negotiations actually are going on right now. They happened over the weekend in Australia on TPP. I urge the government to be a more active participant in those talks. I am sad to say that when we speak to our trading partners, our international partners, they say that something which we have seen in Canada's relationship in multilateral institutions around the world is, I am afraid, being repeated in TPP.
Canada used to have a reputation as one of the world's most effective multilateralists, as a country that was good at working in a group, at working with others, at getting deals done, at leading deals. However, when it comes to TPP, I am afraid that the reports we are hearing is that Canada is missing in action, Canada is not playing a leadership role and in fact that Canada is frustrating our trading partners.
That really cannot continue. This is an essential deal and we need Canada to be a leading voice. We cannot have a repeat of what we have seen with Korea, which is a policy that is widely supported across the House by so many people, yet actual delivery for the Canadian economy, for Canadian business has been delayed at a cost.
Again, I want to return to this number because it is not just about rhetoric. It has been at a cost of more than $1 billion. Let us think of how valuable those billion dollars could be if they were in the Canadian economy right now.
TPP is the big one. Even as we support the Korea deal and opening up of the Asian markets in this way, I want us to focus on that. I want us to be absolutely energetic, be leaders in those negotiations.
More general, it is absolutely essential that Canada be energetic, that Canada be in the lead when it comes to opening up those emerging markets about which the chamber of commerce spoke. I would like to pay particular attention to Africa.
Finally, yesterday was parliamentary elections in the Ukraine. The results look very promising for Ukrainian democracy and for Ukraine's move toward a pro-reform, pro-European attitude. We heard recently Ukrainian President Petro Poroshenko address the House and call for a free trade deal. Let us not be behind on that. Europe has already opened up its markets to Ukrainian goods. Let us do that, too.
Mr. Speaker, I am very pleased to join today in strong support of the .
As we have said regularly, our Conservative government is committed to protecting and strengthening the long-term financial security of hard-working Canadians. We understand that Canada's prosperity requires expansion beyond our borders into new markets for economic opportunities that serve to grow Canada's exports and investments. That is why we will continue to deliver pro-export leadership.
Since coming to office in 2006, we have reached free trade agreements with 38 countries. These countries make up more than half of the global economy and represent nearly one-quarter of the world's countries. When they were in power, the Liberals took Canada virtually out of the game of trade negotiations, putting Canadian workers and businesses at severe risk of failing and falling behind in this era of global markets. In fact, the last time the Liberals tried to talk seriously about trade, they campaigned to rip up the North American free trade agreement.
Before I continue any further, I will mention that I will be splitting my time with the member for .
Our government cares deeply about trade and our country's economic growth. Last fall the announced a historic agreement in principle with the 28-nation European Union that will give Canadian businesses preferred access to half a billion affluent customers.
I always go back to what my cattlemen said. They did not talk about the affluent customers but about the hungry customers, because they saw a tremendous opportunity for the cattle export business. Right in my own riding, people are seeing the enormous opportunities that this agreement would provide.
Our Conservative government recognizes that protectionist restrictions stifle our exporters and undermine Canada's competitiveness, which in turn adversely impacts Canadian families. That brings me to the issue at hand today, which is the Canada-Korea free trade agreement.
Implementing this free trade agreement is critical to maintaining Canada's competitive position in the global marketplace. It would restore a level playing field for Canadian companies in the South Korean market. Right now our competitors, including the U.S. and the EU, are already enjoying preferential access because of their respective FTAs with South Korea.
For Canada, the Canada-Korea free trade deal is a landmark agreement. It represents our first bilateral trade agreement in the Asia-Pacific region.
I heard the critic for the NDP talk earlier in terms of central Canada and eastern Canada, which tend to look to South America and Europe, but to our western provinces of British Columbia, Alberta, and Saskatchewan, the whole Asian-Pacific gateway is incredibly important. It really is a key to increasing our global competitiveness.
Of course, trade and investment represent the twin engines of growth for the global economy, and again I have to reflect on the anti-trade ideology of the NDP. Although the NDP may support the bill a little bit, it is a fact that it did try to sabotage this bill at the trade committee. Rather than thinking about what is best for all Canadians, the NDP tabled amendments to remove the investor protection provisions, cornerstones of a modern trade and investment agreement, in order to please a small group of its supporters and perhaps some supporters of the Green Party.
On this side of the House, we know that there is no better job creator or economic growth generator than freer and more open trade. Canadians are proud of our long history as a trading nation, and for good reason: one out of every five Canadian jobs is dependent on exports. In fact, trade drives 64% of all of Canada's economic activity every year. That is why we have embarked on a very ambitious pro-trade plan. I believe it is the most ambitious in Canadian history.
A diverse range of sectors would have increased trade opportunities because of this free trade agreement, including industrial goods, agri-food products, fish and seafood, and forestry products. Earlier I mentioned beef; another area that is relevant to my riding in British Columbia, Kamloops—Thompson—Cariboo is forestry. It is incredibly important to open that up, as it has gone through a little bit of a difficult time with the economic recession. There are huge opportunities.
Canada's world-class service sectors would also benefit from improved market access, including professional services and research and development services.
The Canada-Korea free trade agreement would create thousands of jobs for Canadians by increasing our exports to South Korea by 32% and boosting our economy by $1.7 billion. Over 88% of Canada's exports would be duty free upon entry into force, and over 99% would be once the deal was fully implemented. The huge amount of Canadian exports becoming duty free upon the coming into force of the agreement is important, given the urgency of restoring our competitive position in the South Korean market.
It is important to note that when embarking on trade deals with other countries, we do so bearing our responsibilities in mind. I am happy to say that while we are working hard to advance our trade agenda, our government is also ensuring that labour rights and obligations are respected. That is why the free trade agreement with Korea has a labour chapter that includes robust labour provisions.
Canada and Korea have committed to ensuring that their laws embody and provide protection for internationally recognized labour principles and rights, notably those included in the International Labour Organization's 1998 Declaration on Fundamental Principles and Rights at Work. For those who may not be aware, the declaration covers the right to the freedom of association, the right to collective bargaining, the abolition of child labour, the elimination of forced or compulsory labour, and the elimination of discrimination in the workplace. Through these provisions, we demonstrate our shared commitment to improving labour standards and protecting the rights of workers.
Both countries have also committed to ensuring acceptable protections concerning occupational health and safety, including compensation in cases of injuries or illness; employment standards, including minimum wage and overtime pay; and non-discrimination in respect of working conditions for migrant workers.
The labour provisions in this agreement stand out from the pack. For the first time, all obligations are now subject to a dispute settlement mechanism, which may apply financial penalties in the case of non-compliance. The labour provisions are comprehensive and enforceable. That speaks to the level of commitment from both countries to maintain high labour standards in this trading relationship.
Our relationship with South Korea is not new. Canada has long enjoyed positive relations with South Korea. In 2013, we marked our 50th anniversary of diplomatic relations. While the agreement would provide a modern and stable foundation to grow our bilateral relationship, it builds on a long history of political and economic co-operation. During the Korean War between 1950 and 1953, Canada contributed the third-largest contingent of troops to the United Nations Command. There were some 26,791 Canadian soldiers who served in Korea, of which 516 lost their lives. After the Korean War armistice, 7,000 Canadian soldiers served as peacekeepers between 1953 and 1957.
Significant trade and investment ties have further solidified our relationship. South Korea represents an important market for Canadian commodities and has proven to be a valued source of investment. Without question, the agreement will level the playing field for Canadian companies and enhance their ability to tap into global value chains, boosting their global competitiveness, profitability, and long-term sustainability.
The benefits of the Canada-Korea free trade agreement for our country are far too significant to overlook. Canadian stakeholders from across the country have repeatedly called for the agreement to enter into force immediately to secure Canada's competitive position in the South Korean market. Our government is equally keen to tap into the Asian market and create more jobs for hard-working Canadians. For these reasons, I call for the urgent passage of Bill and the rapid implementation of the Canada-Korea free trade agreement.
Mr. Speaker, it is a pleasure to rise today to speak to the Canada-Korea free trade agreement. When I think what this free trade agreement would mean to our riding of Huron—Bruce, it is very significant. There is no doubt about it. In Huron and in Bruce counties, agriculture, light manufacturing and tourism are really the key pillars. Energy as well is another huge contributor to our local economy.
When we think of agriculture, we produce everything that Korea wants and everything it needs. That is why it was so significant when the made his announcement in September that we were going to be able to move forward on the deal.
The Korean economy is the 15th largest in the world. It is the fourth largest in Asia. It has 50 million people who know and understand the quality products that are made right here in our country. Agricultural exports, just in Ontario alone at this juncture, are $68 million. Definitely, in no time at all we would see that grow and grow and quite likely double, triple and quadruple.
There are products grown right in the riding of Huron—Bruce that have tariffs on them today. Let us just pick off the easy ones. Pork and beef are pretty obvious ones. There are identity-preserved soybeans, white beans, adzuki beans, navy beans, kidney beans, and the list goes on and on. All together, the average tariff rate is 52.5%. Put in context in terms of what the Canadian dollar looked like two years ago, a year ago and what it is today, currency has very little impact. It does have some, but when we factor in some of the tariff rates on some of these products, it makes it terribly uncompetitive when dealing against the United States and the European Union. This is a great deal for producers from one coast to the other, but certainly in Huron—Bruce.
The market for pork in Korea is $1.1 billion annually. The market for beef in Korea is $1.3 billion annually. In the last number of years our market share has continued to decrease. We have a very small share of the market relative to the U.S. and the European Union. By putting this deal together, ratifying it and getting it moving, we would have the ability to change the momentum and start growing into that market, taking away some of the market share from both the EU and the American deal.
From 2010 to 2013, our pork market share went from 14% to a little under 9%, at 8.9%. That represented a $22 million decrease. In the same period of time, the U.S. and the EU market share increased 10% to over three-quarters of the market. The duties on pork, averaged out, on fresh, chilled and frozen, is 25%. Those would decrease over the next 13 years. As of January 1, that would allow our producers to trend with both the U.S. and EU. It is very important.
In Huron—Bruce and in Perth county, which is right beside Huron and into Wellington, there are a huge number of pork producers. They have experienced many difficult times. They are starting to recover and this year will be one of the better years they have had in a decade. A deal such as this helps to increase that momentum and helps to allow the economy to grow and expand in a riding such as mine.
Beef has seen the same trajectory as pork in the last number of years, going from $9.6 million to $6.7 million. Their duties are actually higher than pork. They are 40% to 72%. They would decrease over the next 15 years, which is important as well.
Beef producers in Huron, in Bruce, and in our neighbouring counties in both Wellington and Perth, have struggled, certainly with the price of land and other issues that contribute to the profitability of the beef market. They have had their struggles, but again, like pork, the last couple of years in the red meat sector they have had better years. The price of their fat cattle is if not at, then near all-time highs.
Deals such as this allow the red meat sector to continue to grow. If we look at the hundreds and thousands of acres of corn grown in Huron, Bruce, Perth, Middlesex and Wellington counties, the corn input has certainly provided a huge input into the beef and pork. It is vitally important and helps the agriculture economy grow.
Another one that people may not think about but where it certainly does have an impact is in the spirits industry. Spirits Canada President Jan Westcott has probably been quoted by many people in the House. There are smaller distilleries. There are certainly the large ones that Jan represents, but there are the smaller ones as well. Barry Stein and Barry Bernstein of Still Waters Distillery, one that I have toured in Concord, Ontario, have a 100% rye whiskey. The tariffs on that product are 20% if they want to sell it in the Korean market. That will be eliminated. The tariff will be at zero.
The beautiful thing about that is that small distilleries such as theirs, or even the large ones, can continue to work with Canadian rye growers. Whether it is in Alberta or southwestern Ontario, companies such as Still Waters Distillery, when they have those tariffs eliminated, can become competitive in a market such as Korea.
Since 2008, when the ratification of both the EU and the American deal came into place, the Canadian market share for spirits was cut in half. This is a chance for them to once again gain momentum. Like I said, when those distilleries can work with growers, it helps to diversify their economy. It helps to diversify their crop rotation. That is very exciting for farmers, as well.
Especially in Huron County and now getting into Bruce County as well, the specialization around identity-preserved beans is really becoming a science. It is really becoming perfected. Companies like Thompsons, P and H, Huron Commodities, and Snobelen, out of Lucknow, have really worked with growers to perfect this identity-preserved bean.
Koreans want this bean more than they want American beans. They know it is a higher quality. It is our climate and our soil. The premiums that farmers get, just the premium for growing it, forget the price, can be over $2 and in some cases as high as $3.50 a bushel. Some fields are 50 bushels to the acre, times 100 acres, that is a lot of premium. That is a lot of dollars in the pockets of farmers. That is a positive thing.
The tariff on those IP beans is almost 500%. Let us think of the impact when that tariff is reduced to zero. It is going to allow companies such as Huron Commodities to compete and succeed in this market. These are big deals.
Some of the beneficiaries of these deals are farmers, obviously. There will be higher prices for everything they grow and everything they sell. Farm machinery dealerships will benefit as farmers will have more dollars in their pockets to reinvest in their equipment and operations. Processors, such as Huron Commodities, will have a chance to grow, expand and develop, as well as all the companies that supply them.
Farmers will also have the profits to reinvest in R and D. Just one example is GPS systems in the tractors that work with planters and combines. These are all things that five or six years ago growers in my area did not have the ability to use, the technology or the profit.
In addition to that, here is something that over the last five years I did not think we would see. Pork producers are actually starting to build new barns again. This is good for cement companies, people who own gravel pits, builders, steel and so on. They are starting to have a rebirth of building pork barns, so that is important. Nuhn Industries in Sebringville in the member for 's riding has grown and doubled in size. Trucking companies, rail lines, ports and harbours will all benefit from this deal. It is very exciting.
I would be happy to take any questions.
Mr. Speaker, I am pleased to rise in the House to speak to Bill , which will implement the free trade agreement between Canada and the Republic of Korea. I am very pleased because, honestly, our position makes me smile and laugh. As deputy international trade critic, I am pleased to confirm what our senior international trade critic said, and that is that we are going to support this bill to implement the trade agreement at third reading.
This makes me smile because, unlike what our opponents, the government members, like to say, we are not a party that is against international trade. We are not anti-trade, quite the contrary. If members want to ask me questions about that, they should also speak to the member with whom I have been communicating over the past two, three or four years on economic issues. They will see that as an economist, I am in favour of the principles of trade agreements and that the value of each trade agreement that we sign or negotiate must be assessed based on the content and details of that agreement.
Furthermore, I think that we cannot repeat often enough the basis on which the NDP, the official opposition, assesses these trade agreements. We have three criteria. The first pertains to the notions of democracy, respect for human rights, and respect for environmental rights and working conditions. When we signed NAFTA, or even the initial agreement between Canada and the United States, there was an entire section regarding environmental issues and respecting environmental rights and working conditions. However, only side agreements were signed, and they were not as restrictive. We then saw that very few complaints were lodged about NAFTA. Complaints were made regarding working and environmental conditions, but they did not end in a court decision. The process clearly has no teeth.
What we on this side of the House want is for the negotiation of trade agreements to be used as leverage with the country we are negotiating with in order to raise that country's environmental and democratic standards, as well as its standards related to human rights and working conditions.
We think this first condition is essential, which is why we repeatedly said that we opposed the agreement with Honduras, because the agreement did nothing to raise these standards.
The second condition is the economic and strategic value of the agreement in question. There is no denying that South Korea is a significant trade partner. South Korea is Canada's seventh-largest trade partner and its third-largest in Asia. The standard of living, or more specifically, the per capita income in Korea, if we evaluate it based on purchasing power, is about 75% of that of Canada, and that is rather significant. From a strategic standpoint, therefore, no one can deny the importance of South Korea.
More specifically in terms of agri-food, and because the region I am honoured to represent relies on agri-food for 12% of its economy, it is important to point out that South Korea is our fifth-largest partner in this area. In terms of current global exports, South Korea is as important as Germany or France as a trading partner. Exports are currently worth over $3 billion.
In fact, this brings several questions to mind. As I said at second reading, an internal memo from the Department of Foreign Affairs and International Trade raised the problem that the government was squandering too many resources on issues that had less strategic value and that the resources were not available to negotiate and eventually conclude as agreement as important as the one with South Korea.
I think the government needs to seriously address this issue at some point, because putting these resources into an agreement with Honduras when our trade with that country is worth a little over $40 million and neglecting the negotiations for an agreement with a trade partner worth over $3 billion in exports is highly problematic in terms of the government's ability to effectively negotiate trade agreements. Thus, there can be no question about the economic and strategic value of the agreement.
This brings us to the third criterion we used to analyze the agreement: the actual terms. Obviously, the Standing Committee on International Trade did its job. I know that a number of members of the House also assessed the consequences of the agreement for our ridings and the economies of our regions. As with any trade agreement, certain sectors will benefit in the short and medium terms, while others will face economic challenges once this agreement is implemented.
I am going to talk about the advantages and disadvantages. As far as advantages are concerned, the beef industry will benefit rather quickly from the phasing out of the 40% tariffs imposed on that sector. Some members of the House have already mentioned that. The United States also opted to have this tariff phased out when it signed the agreement in 2012.
Our share of the beef market in South Korea has decreased tremendously because of our diminished competitiveness compared to the United States. Tariffs on the U.S. are currently 32% and are decreasing by 2.7% a year, while tariffs on our products are 40%. This is a real red flag. These market shares we are losing for our beef sector have to be recovered quickly.
In 2002, our beef exports to South Korea totalled $50 million. After the South Korean embargo was lifted in 2012 and the South Korean market was finally reopened, beef exports totalled $10 million. The following year, in 2013, these exports dropped to $7.5 million. The difference in tariffs has had a huge impact, and that is why we must use the agreement with South Korea to minimize and eventually compensate for and eliminate the competitive difference between Canadian and American exports.
The European Union and the United States signed agreements with South Korea in 2012 while our own negotiations lagged, mainly for lack of resources. This resulted in a 70% drop in our share of the agri-food market. However, it is an important sector of our trade with South Korea. It was quite irresponsible not to put enough resources into concluding an agreement with South Korea more quickly. It took 10 years to negotiate.
I was talking about the elimination of 40% tariffs on the beef industry. Tariffs of 18% on beef offal will eventually be eliminated. For pork, these tariffs can reach 25%, depending on the product. These tariffs will gradually decrease to allow our farmers to open up a market. This decrease will be welcomed in the pork industry in particular, since there is currently uncertainty in that sector as a result of our trade with Russia, which was a big consumer and importer of Canadian pork.
A number of areas stand to win, as pointed out by most of the people who came to the Standing Committee on International Trade. The aerospace sector the forestry sector, which is an important industry to my region and riding, stand to gain a lot. Furthermore, tariffs for various forestry products, which vary from 8% to 13%, will eventually be eliminated. Tariffs for other sectors, such as mining, transportation, fish and seafood, which could go as high as 50%, will also gradually be eliminated. Some sectors stand to benefit a lot. Furthermore, nearly 87% of all the tariff lines that imposed tariffs on our exports to South Korea will eventually be eliminated.
One of the reasons why we are supporting this agreement is that it is 100% reciprocal. Once again—and earlier I heard a speech that mentioned this—we need to consider South Korea's tariffs on Canadian products. They were much higher than Canada's tariffs on South Korean products. This will give our exporters access to a market that did not use to be as open to Canadians as the Canadian market was to South Koreans.
Obviously, if at some point we are unhappy with something in the agreement, if there are disputes about the effects of the agreement, there is always a way to renegotiate or revoke it. This, however, would take six months. Everything can be renegotiated.
We also raised concerns about the investor state dispute settlement mechanism, and I will come back to that. It is very important to have that six-month time period. It cannot be so long that it ties the hands of future governments—that is a fundamental principle of democracy—as is the case, for example, with the Canada-China foreign investment protection agreement, which is binding for 31 years.
In all of the trade agreements that we have signed in the past, that fundamental principle allowed us to renegotiate or open up the agreement to include or withdraw certain clauses, obviously with our partner's consent, over a six-month period or with six months' notice.
This new investor state dispute settlement mechanism contains more progressive transparency measures than previous incarnations. These measures are welcome. When it comes to the lack of transparency in the process, this is one element that really worries those who want to ensure that the recourse measures to ensure compliance with trade agreements are democratic and open.
The disadvantages have been talked about in committee and by the media. There are a number of risks related to the challenges facing the automobile and steel industries. A representative of Unifor, the main union representing auto workers, expressed his concerns about these agreements. This might come as a surprise, but the Canadian Council of Chief Executives had the same concerns. I should point out that we import around $3 billion worth of South Korean cars but export just $15 million worth of Canadian or Canadian-American cars.
This is a major concern for the union and the automobile industry. We had a 6.1% tariff on South Korean cars, but there was an 8% tariff on cars we exported to South Korea. The tariff was higher. That is not the only reason for the big difference, and people have pointed that out, but we still have to pay close attention to the auto sector and the impact of this agreement on it. As I said, the Canadian Council of Chief Executives has recognized this particular challenge. In committee, it suggested that we should develop a special strategy for the auto sector vis-à-vis the Korean market for automakers. Here is what it said:
||...that Canadian auto and auto parts manufacturers are positioned for success. Such a strategy could examine exports, two-way foreign direct investment, and non-tariff barriers as well as cooperation with other major auto and auto parts exporting nations that have free trade agreements with Korea, to ensure an open market for foreign products.
This specific problem for the auto industry was raised by the Canadian Council of Chief Executives, among others, and must be taken seriously. In fact, this was included in one of the amendments that we tried to propose. We proposed it at the Standing Committee on International Trade and it was rejected by the government members on the committee. We proposed five amendments and they were all rejected.
There is a lot of talk about the investor state dispute settlement mechanism, but that is not the only thing we proposed. The government could have accepted entirely reasonable aspects, such as sending a Canadian mission to South Korea to oversee the implementation of the agreement and report on the progress of that implementation. In fact, I asked the member for about that. This mission should report regularly, every year, until it is no longer necessary to do so.
The government members rejected this idea. Again, to reassure those who might be concerned about this, we proposed an amendment whereby no environmental law could be repealed or amended in order to increase investment. These are laws for the common good. These are the environmental protections the public called for and we recommended, not to put up an obstruction or a non-tariff barrier, but truly for the common good. The government refused.
The measures we proposed sought to respond to the concerns we on this side of the House are hearing. The last amendment we proposed responded precisely to the request by Unifor and the Canadian Council of Chief Executives; it was aimed at developing a strategy to help the auto industry and the steel industry meet the challenges that the implementation of this trade agreement will present.
In closing, I would like to speak to this issue of the investor state dispute settlement mechanism. I heard the parliamentary secretary say that this was the cornerstone of every trade agreement that has been and will be negotiated by Canada.
There is no international consensus. Many countries are asking questions about the validity, usefulness and relevance of this mechanism. The first time it was proposed in the context of trade negotiations was for NAFTA, in response to concerns that Canadian and American investors had regarding the strength and soundness of the Mexican legal system, in particular. That is where the idea of an external mechanism came from. No one said that this had to be done behind closed doors, but that is what happened. No one was supposed to say that the Canadian or American legal system had not been used. However, this agreement goes beyond Canadian and American legal powers. The fact remains that it was originally in response to the perceived lack of soundness of one of our trade partners, namely, Mexico in this case.
This issue can also come up in the negotiation of trade agreements that we, as a party, if we formed the government, might negotiate less aggressively than this government is doing. I am thinking of countries like Honduras and Panama and other countries we do business with that not only have serious problems when it comes to human rights, environmental rights and working conditions, but also have legal systems of dubious soundness and impartiality.
Is that the case with South Korea? I do not think so. Is that the case with the European Union? I do not think so. Should we automatically include an investor state dispute resolution mechanism in situations where our trading partners have respected, impartial systems that can serve as tribunals in the event of any investor complaints regarding what is perceived as an impediment to investments or profitability, which would ultimately be a non-tariff barrier?
This mechanism remains controversial and will continue to be debated. I categorically reject the government's contention that this is the cornerstone of the agreement. On the contrary, in the months and years to come, we will see more and more countries raising concerns and asking questions about the relevance of automatically having such mechanisms in every agreement. As I mentioned, the new president of the European Commission and countries such as Austria and Germany are beginning to publicly air their concerns.
Nevertheless, we support Bill at third reading stage. We support the principle of the agreement with South Korea, which may not be the agreement we would have negotiated but, for the time being, satisfies the three criteria we use to assess the relevance and desirability of a trade agreement. We will gladly vote for this bill.
Mr. Speaker, it is with great pleasure that I talk about the landmark Canada-South Korea free trade agreement.
I will be sharing my time with the .
The fact that even the NDP can see the benefits and support this deal is a testament to its importance to Canada and to my home province of British Columbia.
I would also like to take a brief moment to recognize the great work of the member for , who is to be commended for his ongoing efforts in this important area.
As a member of Parliament from British Columbia, I find the Canada-Korea free trade deal an easy one to support. That is because South Korea is an important market for British Columbia. In fact, 50% of all Canadian exports to South Korea are from British Columbia. South Korea is British Columbia's fourth-largest trading partner, with exports worth an annual average of $2.2 billion from 2011 to 2013.
Today I would like to take a few moments to explain why this particular deal is good for my riding of Okanagan—Coquihalla.
One of the many things that I love about Okanagan—Coquihalla is the vast diversity of this beautiful part of British Columbia. We are well known as an incredible wine region and as a popular tourist destination, but we are also so much more. Mining, forestry, ranching, farming, manufacturing, IT and technology services, retail, education, and even retirement are all industries that support jobs in my region.
I suspect it will not surprise any member of the House that many of these industries have customers that extend outside Canada. In fact, a growing number of these industries now have an increasing number of customers outside North America. That is very exciting. However, it is also a reality of today's global business environment.
Let us not forget also that mining, forestry, farming, manufacturing, IT and technology, and many other industries are not unique just to Okanagan—Coquihalla; many members of this place will also be familiar with these activities in their own ridings.
Let us also not forget that across the border is the United States. These activities not only exist there, but also compete against our Canadian interests. Let us not forget that the United States of America has enjoyed the opportunities of free trade access to the South Korean market since 2012. That provides a competitive edge for U.S. employers against whom our Canadian employers must then compete, because U.S. employers are not subject to the punitive tariffs and duties that increase the cost of Canadian-produced exports entering Korea.
I would like to take a moment to provide some local examples of how this trade deal would affect Okanagan—Coquihalla. Farming, as an example, remains a vibrant and important activity in Okanagan—Coquihalla. In particular, soft fruits such as apples, peaches, pears, grapes, and apricots are all things for which our region is well renowned.
One thing every farmer has in common is a tractor. In a discussion with one of our region's largest tractor dealers, it so happens that I discovered this dealer sells a tractor that is built in South Korea. As Canada has no free trade agreement with South Korea, that means two things for that dealer: he pays more to land a shipment of these tractors into Canada than do his competitors in the United States, and this in turn means that the farmers he sells to have to pay more for that very same tractor than their competitors do in Washington State. It also means that both are at a competitive disadvantage compared to the farmers just across the border in Washington State. This Canada-South Korea trade deal would help level the playing field to address that inequity.
I should also point out the benefits to British Columbia in other sectors, such as forestry and value-added wood products. Some of those products hail from the riding of the member of Parliament for .
Despite the pine beetle devastation of B.C. forests, our forest export lumber and value-added wood producers are still very important to our British Columbia economy. In 2012, this sector employed over 56,000 people. British Columbia exports of forestry and value-added wood products to South Korea averaged close to $330 million annually between 2011 and 2013. We can just imagine what will happen when 58% of tariffs on forestry and value-added wood products become duty free upon this agreement's implementation.
I am particularly excited about this point, because in the community of Okanagan Falls is Structurlam Products, which produces an extremely innovative, environmentally value-added wood product that utilizes cross-laminate construction. This is an innovative and emerging value-added wood technology with an exciting future in Okanagan—Coquihalla.
However, I would be remiss if I did not mention mining. In my region, we have mining in Logan Lake and Merritt. Princeton, in the riding of the member of Parliament for , has a mine as well that is adding to the local economy and helping people put food on the table. We also have an extensive mine service industry and equipment services in communities like Penticton and Okanagan Falls. These employers, as part of the B.C. mining industry, collectively employ 33,000 British Columbians and pay some of the highest wages, and these go to our local economies.
Let us not overlook the hard work of these 33,000 British Columbians in the mineral exploration and mining industry, which represents 5.8% of B.C.'s total gross domestic product. We can imagine what will happen when tariffs on 99% of the minerals Canada sells to South Korea are eliminated once this agreement comes into force.
Let us also not forget that trade is a two-way street. The Canada–Korea free trade agreement's investment chapter also means that Canadian investors in the metal and mineral sector would have non-discriminatory access to the South Korea mining sector. That is, of course, why this agreement is strongly endorsed by the Mining Association of Canada.
I, of course, have to mention another sector that would greatly benefit from a Canada–South Korea free trade deal, and that is Canada's outstanding wine production. This summer, during my listening tour, people at one winery mentioned that the domestic demand for icewine is on the decline. This deal would eliminate a 15% tariff on icewine in the large and lucrative market of South Korea, which would greatly benefit Okanagan icewine producers. People at another winery recently shared with me the outstanding success they had in achieving and signing a $1 million export deal. For a small family winery, these deals are huge. That is why opening more markets and eliminating trade barriers is critically important to them.
I must take a moment here and again lament, for the wine producers in Quebec, Nova Scotia, and British Columbia, that it will soon be easier to sell wine directly to Korea than to Ontario. On that note, I want to thank the member for for his work in promoting interprovincial trade.
I did not mention that there are a number of tariffs that would help many industries in British Columbia: cherries, blueberries, and agri-foods. This agreement would help provide jobs. It would help provide markets that would help keep farmers farming, help keep people working, and help put food on the table. This agreement means that all British Columbian Canadians could finally compete on a level playing field with other countries that have implemented free trade agreements with South Korea, including our friends and competitors, the United States and the European Union.
We have learned that when Canadians get out and compete internationally, we can succeed, because we have great products and we have great people. There is so much potential this country has. I am happy to support this bill moving forward. I would ask other members to consider supporting this and other vehicles as well.
Mr. Speaker, our government is focused on creating jobs and opportunities for hard-working Canadians in every corner of this country. That is why we have launched the most ambitious pro-trade plan in Canadian history. Canada's prosperity requires expansion beyond our borders into new markets for economic opportunities that serve to grow Canada's exports and investments.
In our volatile global economy, one of the greatest opportunities for our country to expand trade and create prosperity is in the fast-growing markets of the Asia-Pacific. The Canada-Korea free trade agreement is our first bilateral free trade agreement in the Asia-Pacific region. This landmark agreement would bring enormous benefits to both our countries. It would create thousands of good jobs for Canadians, boosting Canada's economy by an estimated $1.7 billion, and increasing Canadian exports to South Korea by an estimated 32%. It would lead to greater investment in both of our countries and would mean more choices and better prices for Canadian consumers.
South Korea is already Canada's seventh-largest merchandise trading partner. The movement of goods between our countries was nearly $11 billion in 2013. That number would only grow with this new agreement.
This agreement will cover all aspects of the Canada-South Korea trade relationship. It will eliminate many tariffs and other measures that hinder trade between our two countries, providing greater transparency and confidence for investors. Right now, some of the areas with the greatest potential for growth are Canada's minerals and metals, which includes oil and gas, forestry, and value-added wood product sectors.
With the entry into force of the Canada-Korea free trade agreement, the potential for even greater growth in trade of these commodities is huge. For example, South Korea imported an average of $2.8 billion of Canadian metal and mineral products per year between 2011 and 2013. South Korean tariffs on these goods can reach up to 8%. Once this agreement is in force, South Korea will immediately remove tariffs on iron, steel, nickel, and non-ferrous metals, and immediately eliminate tariffs on almost 100% of exports of aluminum, with all remaining duties eliminated within five years. South Korea will also immediately eliminate tariffs on nearly 100% of mineral product exports, again with all remaining tariffs being eliminated within five years.
South Korea relies chiefly on imports to meet most of its energy needs. Over the next five years, South Korea's demands for energy are expected to rise dramatically due to its growing industrial sector. Canada is in a good position to help meet that growing demand. Canada is a global leader when it comes to energy. We are the sixth-largest producer of oil, with the world's third-largest proven oil reserves. We are the fifth-largest producer of natural gas, and the second-largest producer of uranium, which is a critical resource for South Korea, one of the world's top generators of nuclear energy. Once this agreement is in force, South Korea will immediately remove tariffs on more than 88% of Canadian exports of petroleum products. The tariffs on the remaining petroleum products will be phased out within five years. Import duties on petroleum coke will be immediately eliminated. With respect to natural gas, South Korea's current duty of 3% will be eliminated upon entry into force of the agreement.
South Korean investors also have a keen interest in Canada's growing liquefied natural gas market and the potential for export of LNG. As you know, Canada has enormous natural gas reserves and the potential to become a major player in the global LNG market. The challenge has always been a lack of infrastructure in Canada to meet global demands. However, all of that is about to change. If the seven major LNG projects proposed for B.C. go ahead, they could generate more than $1 trillion in economic activity over the next 30 years. Over the next decade, hundreds of major resource projects, worth more than $675 billion, are planned or currently under way, so there is enormous economic potential. This agreement opens up the possibility for Canada to become the North American platform for LNG exports to Asia.
The Canada-Korea free trade agreement also builds on the positive relationship we have built with the Republic of Korea in the field of clean energy technology. Canada and South Korea have a long and fruitful research partnership in clean energy technology dating back decades. The South Korean market offers many opportunities for Canada in niche areas, such as smart grids, biomass energy and waste energy, all areas where Canada has strong expertise and proven technologies. We are working together with the goal of translating research into demonstration projects and commercial ventures in the field of renewable energy, including smart grids, and carbon capture and storage.
Beyond energy, the trade agreement also opens the door to strengthening trade ties with South Korea when it comes to forestry. South Korea is currently the fourth largest market for Canadian forest products, with exports averaging more than $597 million per year between 2011 and 2013, of which an average of $92 million per year is subject to tariffs up to 10%. Within 5 to 10 years of implementation of this agreement, South Korea will eliminate all tariffs on Canadian forest products.
Building on this agreement, the and President Park of the Republic of Korea recently witnessed the signing of a memorandum of understanding for co-operation in the field of forestry. It represents an important milestone for sustainable forest management in both our countries.
We stand with Canadians incredibly disappointed that the NDP members tried to completely gut the bill at the trade committee, where they tabled amendments to remove the investor protection provisions, which are cornerstones of modern trade and investment agreements. This is just as harmful as the neglect of international trade under the Liberals who took Canada virtually out of the game of trade negotiations, putting Canadian workers and businesses at severe risk of falling behind in this era of global markets.
In less than seven years, our government has reached free trade agreements with 38 countries, bringing Canada's total to 43 agreements. Thanks to these actions, under our government's free trade leadership, Canadian workers, businesses and exporters now have preferred access and a real competitive edge in more markets around the world than at any other time in our history.
In our global economy, free trade paves the way to prosperity. South Korea is not only a major economic player in its own right and a key market for Canada, it also serves as an important gateway for Canadian businesses to the dynamic Asia-Pacific market.
With this ground-breaking agreement with South Korea and the trade agreement our country recently negotiated with the European Union, Canada has now concluded free trade agreements with nearly one-quarter of the countries in the world. It means that Canada will now enjoy access to more than half of the global economy.
We know that as trade increases so does our nation's prosperity, which creates jobs and puts more money into the pockets of hard-working Canadians. By continuing to actively pursue broader market access and new investment opportunities, we are providing Canadian businesses and exporters with access on preferred terms to the largest, most dynamic and fastest-growing economies and regions around the world. To put it simply, this agreement is a game changer for our country.
Mr. Speaker, I am pleased to have this opportunity to speak to Bill .
I would like to reiterate my support for this bill and for the Canada-South Korea free trade agreement. I had the pleasure of serving on the Standing Committee on International Trade with the NDP's international trade critic. He is always very diligent and thorough when it comes to international trade issues. It was also a pleasure to work with my other colleagues on this committee.
When I sat on this committee, we also studied other bills such as the Canada-Honduras free trade agreement. Although I am proud to rise in the House today to support the free trade agreement with South Korea, I would also like to condemn the Conservative government's approach to free trade, an approach that is not critical of countries that do not respect democratic institutions. The government wants to negotiate free trade agreements with all countries, no matter how they govern their affairs, for example in terms of the environment or lack of respect for human rights.
The NDP has a balanced approach. We believe that a free trade agreement with South Korea would benefit Canada, and in particular certain sectors, such as aerospace, which is very important for the Montreal area.
The NDP also believes that we need to assess every free trade agreement on the basis of its merits. The free trade agreement must therefore benefit Canada and generate significant economic spinoffs for our economy and for Canadian industries. Free trade agreements must also be negotiated with countries that respect human rights, have fairly strict regulations regarding the environment and workers' rights, and have fairly high standards.
That is not the case in Honduras. In that country, journalists continue to be murdered. In committee, witnesses such as Bertha Oliva, an advocate for human rights in Honduras, spoke about the human rights situation there. She campaigned for justice for missing and murdered persons in Honduras. We also heard from witnesses, such as PEN International, who spoke about human rights. All of these witnesses agreed that the free trade agreement with Honduras would not improve the human rights situation there. In fact, it could even make an already horrendous situation worse. Witnesses from PEN International spoke about journalists in particular. Journalists are often in danger because of their profession. Those who write or speak about free trade agreements or the economy are often in even greater jeopardy.
These witnesses also said that the agreement would not benefit most Hondurans, a large percentage of whom live in poverty. Economists also told us that the Honduran economy was similar to that of the Ottawa-Gatineau region. Its economy is not huge. Few consumers will buy Canadian products because they simply do not have the means. These people live on very little money per month. This agreement will not have a huge benefit for Canadian industries.
I would also like to talk about the agreement with the European Union, which was also debated in the House. I will speak on behalf of the cheese producers in my riding and my region, since I have the pleasure and honour to represent a riding that is both urban and rural. Our community has a lot of farmers and cheese producers. They are wondering when they will hear from the Conservative government about the compensation they are supposed to receive as a result of the implementation of the free trade agreement with the European Union.
The member for moved a motion in the House that was debated and voted upon. Fortunately, the Conservatives voted in favour of this NDP motion to ensure that cheese producers will not be overly penalized by this free trade agreement with the European Union. The Conservative government just needs to put its words into action and give us some more specific information about how cheese producers will receive this compensation.
I look forward to continuing my speech the next time I have the opportunity to do so in this House.