MASSE IN THE HOUSE: On Bill C-24, Canada-Panama Free Trade Agreement

MASSE IN THE HOUSE: On Bill C-24, Canada-Panama Free Trade Agreement

December 12, 2011

Mr. Brian Masse (Windsor West, NDP): Mr. Speaker, it is a pleasure to rise today to debate Bill C-24. I will build off of the last question to start with and then return to some comments later.

    It is important to note that New Democrats are in favour of trade. There is no doubt about it. None of us are against the movement of goods and services, but what we prefer is some balance in our trade agreements. The constant theme of trade is that when we give something, we get something back. Under previous administrations, Canada has slipped significantly. It has signed a series of bilateral agreements since NAFTA that have actually put us in a significant trade deficit, even with the United States. My community lost the Auto Pact in NAFTA and subsequently and eventually our auto manufacturing has gone from number two in the world to number eight.

    When we look at Bill C-24 and the repercussions it could create, there are significant aspects with the loss of trade. It does not automatically guarantee that we are going to be the winner in a trade deal and often Canada's bilateral agreements have been with smaller nation states that have advantages by lax environmental, labour and regulatory systems that allow their products to come into our markets, but it is difficult for our products to subsequently get into theirs.

    There are also issues related to non-tariff barriers, which I will touch on briefly. One country that has not come forward is Korea, where there are non-tariff barriers, but there are non-tariff barriers in the auto manufacturing sector. Therefore, hundreds of thousands of vehicles flood into Canada every year and we sell virtually no vehicles in Korea. When we do not have trade agreements, there is no balance.

    Another good example is Japan. I was told recently that the only Canadian vehicles sold in Japan were the ones sold to the Canadian embassy. It is a problem when hundreds of thousands of vehicles are pushed into our market and we do not have any reciprocity whatsoever.

    The issue of Panama is interesting. It has been put on the white list. There is a black list, a grey list and a white list and I will get into that a little later if I have time. The OECD categorized these lists, but there still is not an automatic assumption of all the characteristics of what a tax haven is. Second to that, there is still a process in place.

    The NDP's former international trade critic, the member for Burnaby—New Westminster, was very serious in trying to create an agreement that could be worked out with the government to deal with serious tax haven issues with Panama, as well as labour issues and a number of different things. Unfortunately, the government has not agreed to include that as part of its process. It has not been willing to compromise to a certain degree to ensure that tax havens are going to be taken care of.

    It is interesting because Panama has quite a significant history of money laundering and tax havens. It also has a history of flagging ships of convenience and basically throwing the seafarers out the window, so to speak, making them vulnerable for treatment that is part of the conduct of an international agreement. It has used that as a way to supplement income and attract corporations for its net benefit at the expense of others.

    Although it has been moved to this list, it does not mean that all the measures are being taken into account. It does not account for some of the internal taxation issues or even the current ones. Just because it is moved off a list does not necessarily merit no checks and balances. New Democrats were proposing some checks and balances to the system. There is a big difference between just having a blind faith bilateral agreement and seeing what happens later. It just has not been working for Canada in this case and has not been working in general.

    New Democrats want more specifics built on to the actual agreement with Panama and we are willing to do that. This bill will go to committee, which needs to hear from witnesses. I have some testimony that I will read into the record here today, but there needs to be testimony from individuals to look at whether there is actual movement.

 

    I know that the parliamentary secretary made a very important point about the Panama Canal opening up in 2014. It is very important. The Panama Canal is historic. My former legislative assistant, Mohammed Peer, actually did a documentary through PBS on the original Panama Canal. It is quite a significant achievement and a marvel, in many respects.

    The new Panama Canal will actually have 5% of the world trade going through it. I think that is part of the reason that there is a lot of pressure to move it onto the white list. I think that is one of the reasons there has been a lot of effort to move it along that way.

    However, that does not mean that it has actually moved that way. We need to have some testimony or have some checks and balances to ensure it does.

    This is a government that claims that it is tough on crime but, often, it has been very lax when it comes to organized crime or tackling some of the difficult challenges with our trade partners that relate to crime and also relate to how things are affected on our streets. I would look at my riding of Windsor West, for example, where 40% of Canada's daily trade goes to the United States, basically, along two miles of the Detroit River. It crosses on four crossings: the hazardous truck ferry; the Ambassador Bridge; the CP Rail Tunnel; and the Windsor-Detroit Tunnel. Despite having 40% of that trade, recently the government has cut back the customs facilities and branch there . Now decisions about stopping trucks and smugglers dealing with guns, drugs, and human trafficking are now made 400 kilometres away, in Niagara Falls. Despite having reports saying there should been a consolidation in Windsor, the government decided to move the headquarters and so forth to Niagara Falls. My point is that cuts have been made, ideological cuts, and that has actually opened up our exposure to these elements.

    With regard to Bill C-24 my worry is that we do not have any of the backstops that are necessary to look at the tax havens that are so important, and I do want to touch on the issue of the OECD here because I think it is important that people understand there is a black list that includes countries that do not live up to any expectations or standards. There are really no countries left on the black list that I am aware of. The grey list includes a number of countries that a do not follow some tax standards. Then there is the white list, to which Panama has been added. It has been moved to it recently. So, that is a benefit.

    However, at the same time, we still do not have the backstops that are necessary that the member for Burnaby—New Westminster proposed. One of his amendments, which was defeated by both the Liberals and the Conservatives, was a taxation agreement that would track legal income while the tax information exchange agreement would track all income, including that made through illegal means. Considering Panama's history and reputation on such matters, it would be clear that such an agreement is necessary before signing a trade deal.

    The member for Burnaby—New Westminster was attempting to ensure that there would be more information and a deeper tax scrutiny on Panama.That would be important because of the hundreds of thousands of corporations that are actually in Panama.

    There is some testimony from Todd Tucker of the Public Citizen's Global Trade Watch that was very important at committee. I want to read a little bit what he had to say. He said:

I have two central points. First, Panama is one of the world's worst tax havens. It is home to an estimated 400,000 corporations, including offshore corporations and multinational subsidies. This is almost four times the number of corporations registered in Canada. So, Panama is not just any developing country.

 

Let me elaborate on the first point.

 

What makes Panama a particularly attractive location for tax dodgers and offshore corporations?

 

Well, for decades, the Panamanian government has pursued an international tax haven strategy. It offers foreign banks and firms a special offshore licence to conduct business there. Not only are these businesses not taxed, they are subjected to little to no reporting requirements or regulations.

    That is important. Because when we want to get into a fair trade deal, we need to have access to the types of conditions and strategies that we are going to compete against. When we have these tax havens, it gives advantages on the trade arrangement that are not allowed, that do not favour Canadian exporters. That is why we have seen this trade surplus diminish under the current government and a trade deficit emerge on a continual basis. Our manufacturers, our labourers, abide by international standards and also by Canadian standards that make it uncompetitive for them when corporations are able to use those subsidies, being tax havens, to basically lower their services or their costs and the way that they are able to compete. So, it becomes naturally unfair and unfit for this relationship.

 

    I understand the pressure on the government with regard to increasing its access to markets.

    We have seen a couple of other issues emerge recently that are very interesting, and motivating the government, not only with Panama but also Jordan, to move toward some type of bilateral agreement. We recently saw our international trade committee go to Europe for the Central European agreement, CEFTA. That agreement is very important in many respects. It has a lot of conditions that are going to be very critical for our supply management and a series of different things.

    The interesting thing that took place while our trade group was in Europe was that the Conservatives signed a perimeter agreement with the United States for more harmonization on regulations and on different products and services, including food and, for example, automotive, which might actually limit our exporting capability into Europe because the content requirements are going to further rise between Canada and U.S. regulations and they will then also be negated for Europe.

    I can understand the overall strategy of the government in terms of trying to find other alternatives out there, but again, it cannot be done in the absence of labour and other types of laws that are important.

    Panama is one that we will offer some recommendations and amendments to try to move forward. However, we are disappointed with the government's lack of ability here to actually compromise and add those elements.

    I want to touch a bit on labour rights. Panama has a history of issues with labour rights. We do not have the type of scrutiny necessary to evaluate this. What the member for Burnaby--New Westminster is asking for is a commission to be set up that would look at labour rights and some type of mentorship, in a sense, so that there would be overview of this trade agreement and labour rights.

    When we look at some of the countries that we are trading with, their labour rights are lower. These are issues that emerge even in the larger context of trading partners. For example, there are child labour issues with India. These can present serious problems for us to compete.

    Panama, as we know, has flags of convenience, which is important to note, because that allows it to lower the labour standards, putting a whole bunch of people at risk, while prohibiting our capability to compete. It really is unfair.

    We saw the very high profile case of Paul Martin's Canada Steamship Lines using flags of convenience. There was quite the controversy in this country. It is really shocking that a prime minister's company would take advantage of this loophole for labour rights to be able to advance his own pocket book from Canada Steamship Lines. Flags of convenience is another situation that is not addressed in this agreement.

    Therefore, we are going to oppose the bill at this particular time. We feel that there should have been some greater compromise with this.

    Also, the member for Burnaby--Westminister proposed a review after a year into this deal to examine whether or not Panama has actually advanced on some of the tax haven issues. We would be open to those things as long as there was going to be some greater scrutiny and follow-up. That is the problem with just accepting the bill the way it is right now.

    As I conclude, I just want to say that for the record, as New Democrats, we are supportive of a trade agreement. There is no doubt about that. However, we want to see progressive trade as the difference. There has to be some balance with regard to our operations and our trade agreements.

    Right now we are continuing to gut the Canadian economy with some of our trade agreements. How they are working out has led to Canada having the lowest number of manufacturing jobs since we have been tracking them in the 1970s. This is a real problem, because we are losing the value added work that is necessary for this country to compete in the global economy. What we are witnessing is when we have opened up trade, sectors of the economy have actually lost some of their actual strength.

    We can look at the tool and dye and mould-making industry, for example. There has always been the argument that we have to go to high end, value added manufacturing and we will be okay, and that will be a way that we can actually evolve our economy. However, tool and dye and mould-making is the best in the world in Canada and we are struggling to maintain it because of tariff and non-tariff barriers and some of the things brought down in trade agreements. They have opened us up to competition that has lower standards for labour, lower environment rights, and less scrutiny. These are real problems.

    We have not addressed some of the serious issues. When we actually have some power and some capability, like in Panama, we should have some conditions built into the agreement for analysis and review to ensure that those things are measured and taken seriously. We would then be able to put pressure on Panama to comply.

 

The hon. parliamentary secretary said that if we do not do this we would be punishing them and they would go back to being a greater tax haven. First of all, we still do not know the evidence. President Sarkozy was very clear in his remarks. He was asked to apologize and refused, so he is very serious about the effects of the tax haven situation in Panama still. I do not know why we would not be measuring and analyzing that and also building into our base model for trade with Panama the ability to actually have influence to end that type of practice. If we do that, we would have a greater effect on the drug trade, on different types of organized crime, on corporate responsibility, and a series of different measures that will allow Canadians to actually compete but also would help with regard to these issues across the globe. Therefore, it is an opportunity for us to do it.

    We should not just let the OECD determine all of that for our relationship with another country. That is not the right thing to do. We should be putting our own standards some greater scrutiny in place because we know there are a lot of politics relating to the OECD. However, if we are serious, we have an opportunity for Canada to have a stronger relationship with Panama and within our areas we can actually then have some scrutiny over the conduct of this. Leaving it just to the OECD is not enough. Its members have disagreements on what a tax haven is. At the same time, it will still have members like President Sarkozy noting that the tax haven situation has not gone away. I think that evidence is strong enough that it merits us having some amendments like. We will look at that in committee.

    We are disappointed that the government would come back with the same bill. It was noted that it has been around a number of times, the first being August 11, 2009. Therefore, has been around, punted back and forth and subjected to electoral changes but, at the same time, the bill has not changed at all. That is a real problem for us. We would have thought that at some point in time the government would come back and introduce some of those measures that they heard concerns about so that it could move it through the House a lot quicker. There is no doubt that if there was that type of intent we would then see the opportunity to be able to move this legislation through the system a lot quicker.

    The member for Burnaby—New Westminster was very clear about our concerns with respect to the bill. We would take the same approach. We would go back to committee and examine it and hopeful have an opportunity to convince the government that these changes can be made and that if it is willing to make these changes then we would work with it to move the legislation through as long as it would ensure that the tax haven, human rights and labour issues would be addressed and that there would be an ability for us to follow through with the bill. If we just do it in blind faith we know what the results would be. We know the government's record.

    Canada has diminished its capability to trade, especially from the value-added aspect. We are more than just about oil, gas and natural resources in this country. The country was built successfully on value-added work, especially after the Second World War, where there was a real intent to make sure that would be an opportunity. Just opening up a market and reducing tariffs and trade does not guarantee that we would actually improve our quality of life.

     There is no doubt that we want greater access to these markets. As we look at Panama, we also look at Jordan and at CETA . Some policies that people have already invested in businesses and parts of the economy would be changing and would be affected. We need to identify those areas and ensure that Canadians can compete in a fair way. I know that the government is looking at putting supply management on the chopping block for a number of different agreements. If we implement those types of measures, to avoid damage to certain sectors of the economy there has to be a business case and a plan. Therefore, we will be proposing a series of amendments at committee to ensure that these issues would be taken care of.

    I appreciate the opportunity to be able to debate this. I think it is important for Canadians to understand where we are going with our economy. Our trade deficit has gone so dramatically high that it is a serious threat to our national economy and to our quality of life. It really shows the mismanagement of the government by just blindly thinking it can sign small bilateral agreements to solve the Canadian economy. We have to have a value-added economy. This agreement is a small part, but it actually has a big part to play with the tax haven issues.

    The reality that we all understand is that Panama, with the canal opening up, will have a lot of power. The question is what will we do right now to ensure there would be some fairness and reciprocity regarding the abuse of tax havens?

 

Mr. Brian Masse: Mr. Speaker, quite essentially when we look at some of these bilateral agreements that are taking place, we should be taking into account some environmental, labour and other issues related to human health. I will use India as an example right now, and yes we do want to trade more with an emerging economy like India, but we have to watch out on some of these aspects because we ship asbestos to India. We have pictures, documents and information showing children working with Canadian asbestos with no protection and we know India also has child labour issues. So we believe that some of these things should be written into the agreements in terms of advancing and benchmarking them so there is actually going to be progress.

    We are never going to compete if child labour is going to be used on the same product in terms of manufacturing, assembling and exporting. That is just never going to happen. First, it is not ethical to begin with and second, the conditions, wages and the whole series of how they even treat the workers are such a competitive advantage which is why they do it. They treat people inhumanely in different ways to be able to lower the cost of the product and that is just wrong. So we believe those things should be addressed, benchmarked and worked on.

 

    Mr. Brian Masse: Mr. Speaker, the reason I delved a bit into the European trade agreement that we are looking at right now is because at the time we had our committee in Brussels and Paris they were actively pursuing policies here in Canada and North America that would erode our capability to actually take advantage of that agreement if it goes forward. That is the reality because some of the standards that we would adopt under the Canada–U.S. perimeter security agreement would eliminate products and services that we can now enter into Europe because of content provisions and laws in that agreement that is being worked out right now. So this is the challenge we are faced with as these two things are happening at once.

    I want to return to the OECD question from the parliamentary secretary. I just do not think it is right for us, when we know the significant tax haven and drug running and money laundering situation in the history of Panama, that we just turn a blind eye to it and say that the OECD has let us out of this one. They have let us out so we know the political pressure that is going on because it wants to ship through Panama. That is the big stick that Panama has, the canal opening up. At the same time, we are suggesting that the OECD standards should not just be a whitewash for us. We should use this as an opportunity to at least do some follow-up with regard to the money laundering situation and the crime and organized efforts that have been in Panama in the past.

Mr. Brian Masse: Mr. Speaker, I would like to thank my colleague for the question, a very important, good question because Chapter 11 has made corporations' power over that of public policy a very significant issue.

    It can involve everything from milk, with regard to chemicals it could be chemicals that go on property, it can involve water quality, there is a whole series of things that become issues that we should not have to give up.

    With regard to NAFTA, one of the interesting things about NAFTA is that Canada is the only country that gave up its natural resources control in the entire world. We gave that up with NAFTA. It is incredible. Not even Mexico gave that up. They kept that protection element for themselves on public policy.

    We are the only country in the world that has given up that crucial element. That is why we have to go on bent knees to the United States all the time, because we have given up our number one tactical advantage to be able to trade with the rest of the world.

 

    Mr. Brian Masse: Mr. Speaker, I would like to thank the member for Dartmouth—Cole Harbour, who most ably had this file prior to his leadership campaign which required him to take another route, for the question. He took a very balanced approach to trade file.

    I think it is important to recognize that we want to see some balance with regard to these trade agreements. He is rightly talking about the examination of the winners and losers in trade agreements. When businesses emerge out of our Canadian economy, and then all of a sudden the government changes the atmosphere of where they can operate, how they can operate, who is going to be competition and they are going to be their competitor, then there needs to be an examination of those things to ameliorate or at least provide an opportunity to adjust or change to meet the new environment.

    The government is changing the whole field for these corporations and companies, whether it be the auto sector or the supply management for dairy and ag sectors. A series of different problems can emerge.

    What we are asking for is the examination and identification of vulnerabilities, and then to have a business plan in place so that those organizations know what they are getting into, know what the new world environment is going to be for them to be able to successful as a business, and that they are going to be able to at least have some time to adjust.

    A good example that we never took advantage of is we had a chance to buttress the time for trade on textiles with China, and we refused. The United States took advantage of it. We did not do it. It killed some of our textile industry off a lot quicker than was necessary. That is a good example of us not even taking advantage of what was available to us, and I think it bypassed us while even our own North American competitors took that up and protected their industries. As a result, we have lost our textile industry, quite significantly and a lot quicker than it had to be.

 

    Mr. Brian Masse (Windsor West, NDP): Mr. Speaker, I would like to thank my colleague for his speech in the House.

    Although we might have some differences with the bill, the one thing that we seem to have in common is with regard to the tax haven even though Panama has been moved on the list to the white list.

    Would the member be open to an amendment to this bill that would analyze the changes in Panama, and then one year later having some consequences if they have not abided by those changes, or they continue to be a tax haven and continue to be an area for money laundering, drug laundering, and where corporations can use tax haven loopholes to their benefit against Canadian corporations and others?