Mr. Speaker, it is a privilege to stand in the House to speak on behalf of the official opposition New Democratic Party on Bill C-41, 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; andc) 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.