Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 12 - Evidence - June 10, 2009
OTTAWA, Wednesday, June 10, 2009
The Standing Senate Committee on Foreign Affairs and International Trade, to which was referred Bill C-24, An Act to implement the Free Trade Agreement between Canada and the Republic of Peru, the Agreement on the Environment between Canada and the Republic of Peru and the Agreement on Labour Cooperation between Canada and the Republic of Peru, met this day at 4:27 p.m. to give consideration to the bill.
Senator Consiglio Di Nino (Chair) in the chair.
[English]
The Chair: Welcome to this meeting of the Standing Senate Committee on Foreign Affairs and International Trade. Today the committee will be considering Bill C-24, the Canada-Peru Free Trade Agreement Implementation Act.
Appearing before the committee is the Honourable Stockwell Day, Minister of International Trade. He is accompanied by Carol Nelder-Corvari, Director, International Trade Policy and Chief Negotiator (Peru and Colombia FTAs), Finance Canada. As well, coming soon to the table will be Matthew Kronby, Director General, Trade Law Bureau, Department of Foreign Affairs and International Trade; Heidi Kutz, Director, Inter-American Relations and Regional Policy, Department of Foreign Affairs and International Trade; and Dean Beyea, Senior Chief, International Trade Policy, Finance Canada.
Minister, I understand you will make some brief comments, and we will then have an opportunity to ask some questions.
[Translation]
Hon. Stockwell Day, P.C., M.P., Minister of International Trade: It is an honour to appear before your committee. I appreciate your interest in free trade, particularly at a time of global economic turmoil. We think it is very important to open doors for our workers, our investors and our businesses. That is one reason why we are going forward with agreements with countries that want to do the same.
[English]
We are, of course, still embracing the World Trade Organization. We want to see the Doha round come to a conclusion. We are very ambitious on that.
Meanwhile, it is also very important, in our view, to pursue bilateral free trade agreements. This particular agreement, related to Peru, is very positive. It has been received well on most sides, certainly between Canada and Peru.
For 2008, we saw the bilateral trade between our two countries at something like $2.3 billion, and similar amounts related to bilateral, two-way foreign direct investment. This particular agreement is the first one that we have signed in the Americas since 2001, and we see great opportunities for workers, producers and investors on both sides.
The fact that about 97 per cent of all the tariffs that we impose on Peruvian goods coming into Canada will be immediately removed is very positive. In an economy like Peru's, where its workers and manufacturers are trying to raise their own levels of prosperity, when we take the tariffs off of those products and services that they want to sell to Canada, it helps them to do that. It makes them more competitive.
The remaining approximately 3 per cent of those tariffs will be eliminated over the next three to seven years, and this will be a positive thing. The removal of tariffs on our side will help our producers, investors and workers to sell products in a competitive way into Peru.
For all of these reasons, especially in a time of fiscal downturn, we believe that a free trade agreement like this, in and of itself, is positive. It also sends a signal to people in our own country and people around the world that if you really want to protect workers and industries, you do that by opening up the doors of opportunity, not closing them. That is what these agreements are all about.
I am glad you are interested in them and I look forward to your questions — and maybe even your advice. Thank you.
[Translation]
Senator Fortin-Duplessis: Welcome, Mr. Minister. It is always a pleasure to have you with us.
Mr. Minister, on June 8, 2009, some 30 demonstrators who belonged to Amazonian tribes were killed during confrontations with police, and 22 police officers also lost their lives. Tens of thousands of aboriginals are opposed to giving concessions to mining companies and others engaged in oil exploration in the tropical forest.
Mr. Minister, would chapter 8, which deals with investment, of the Canada-Peru Free Trade Agreement not negate the benefits of the side agreements between Canada and the Republic of Peru on the environment and labour? Because that chapter essentially re-creates the same controversial model of chapter 11 of the North American Free Trade Agreement. You know how opposed environmentalists and labour representatives are to chapter 11 of NAFTA.
Mr. Day: Let me say one thing. First, it was with much regret that we heard about the violence that occurred in Peru, and I think that it will be the Peruvian people and Peru's members of Parliament who find the solutions to these problems. It is a shame that such a violent situation occurred. You are right. Twenty-two police officers were killed, and according to news reports, I believe that 28 or so other individuals were killed, and that is tragic.
Senator Fortin-Duplessis: Could that hinder the agreement?
Mr. Day: Yes, but that situation was not the result of our agreement.
Senator Fortin-Duplessis: No, I know.
Mr. Day: Unfortunately, violence does occur from time to time all over the world. I understand that Peru's lawmakers are going to amend some provisions in their legislation with respect to issues that affect the mining sector. But it is for them to decide.
Our agreement with Peru contains provisions governing labour and environmental laws. They are not just guidelines, they are regulations that will force Peru as well as Canada to respect the standards set by international labour organizations. In addition, under the environmental regulations, both Canada and Peru have to respect the United Nations regulations on biodiversity. They are rigorous regulations that include sanctions for violations by either side.
That is why I am confident about the agreement. It will force both sides to adhere to very clear regulations.
Canada will continue moving in that direction, and I hope that Peru's government will find a solution to the problems with its indigenous people.
[English]
Senator Segal: Mr. Minister, thank you for taking the time to help us today. I want to put the labour agreement and the environmental agreement that is an integral part of this legislation to you with this question: Is it now federal government policy that trade agreements that we negotiate with all countries will have these elements as part of it? Is that our going-in position, for example, in our negotiations that are beginning in earnest with the Europeans with respect to a European-Canada trade agreement?
If so, are you happy that the labour side provides sufficient openness for the free movement of people and capital, as well as goods, between Canada and the target country — in this case, our partners in Peru?
Mr. Day: I could just say very briefly, in answer to all of the questions you have posited, yes, yes and yes.
Senator Segal: Are you happy that this agreement will remove any difficulties that might now exist with respect to Canadian professionals seeking opportunities within the Peruvian marketplace? Are you happy that there will be no further substantive barriers to the free movement of goods, capital and people once this agreement is approved and ratified?
Mr. Day: It will certainly improve the situation. Even with an agreement as open as we have with the United States, there are still challenges and difficulties on the professional, business and occupation sides. It will vastly improve the situation.
Senator Segal: Your colleague, the Minister for International Development, recently indicated a reorientation of our foreign aid priorities to take greater interest in our own hemisphere, which is a policy the Prime Minister, to his credit, has enunciated.
Do you see any constructive linkage between this free trade agreement with Peru and our development activities in Peru? I ask that question in terms of investment on the development side. Do you see the two as quite separate?
Mr. Day: History shows, senator, that when you engage in trade and you do that in an elevated way and open up doors to trade, you are not just opening the doors. You are openings the eyes of everyone on both sides. Development will still be a key focus as we see the need and if there can be ways in which we can assist.
Last year, CIDA aid into Peru was about $11 million. You will see resources continue. We are able to do that in some ways that can be measured. For instance, if we look at the CIDA aid that went into some of the poorer urban areas, where we were addressing things like freshwater and sewage problems, we can measure that. We can look at the urban area that received assistance, and just by a census, we know that last 760,000 people had improved water capabilities.
With respect to the CIDA investment related to assisting with the rates that children were finishing primary school, we can measure that also: In 2003, it was a little over 60 per cent; last year it was over 80 per cent.
The senator shared some concerns related to the extractive sectors. Through CIDA, we have directed funds into Peru to assist the government on the regulatory side when it comes to the extractive sector. We have helped in monitoring and in the protection of the environment. We are pleased with what we have invested so far into Peru. We can measure the results, and that will continue.
A free trade agreement raises the levels of prosperity that takes place over time. Some of the challenges will still be there, and it is still our intention, as their government allows us, to work with them.
Senator Downe: The United States-Peru Trade Promotion Agreement contains a separate chapter on intellectual property rights. It requires that the two countries ratify a number of international agreements and includes detailed provisions related to digital products such as software, music, domain names on the Internet, copyright, patents, trademarks and enforcement. None of these protections were negotiated under this deal. I am wondering why we failed to obtain the same benefits for Canada.
Mr. Day: Again, that goes both ways. Peru was seeking development in those particular areas. You are probably aware that previously we had tabled Bill C-61, which had to do with many of the questions relative to intellectual property rights. That bill will be reintroduced, but I cannot say exactly when. The house leader has his order in terms of when.
We hear from the international community, quite frankly, that we can improve in that area. We have done a number of things to show that we are concerned. As you are aware, last year, resources and regulations were put in place to deal with counterfeiting and piracy, especially those related to the movie industry and CDs. We have taken that step.
We will continue, but we could not put that into the agreement at this point when we have not fully developed and had our legislation on those specifics passed in our own house.
We have sent the signals clearly that we are marching down that road. It is interesting that you mentioned that because in a meeting today with one of the EU commissioners related to our pursuit of a broader economic agreement with the EU, that subject also came up. They wanted some assurance that we are working diligently down that road, and we are. As we do that, these are things that may be added to an agreement like Peru's or any other country. That is where we are right now.
Progress is taking place, and we need to put in our own domestic legislation before we try to introduce that as something that can be enforceable in a free trade deal.
Senator Downe: Is there a provision to modify the agreement with Peru to add that provision?
Mr. Day: In any agreement, agreement on both sides can bring about modifications or improvements to a free trade agreement. That example could well be one of them.
Senator Downe: That is assuming Peru agrees.
Mr. Day: Exactly.
Senator Downe: Minister, on the potato industry, tariffs are eliminated under the Peru-United States agreement right away for the Americans. With the exception of seed potatoes, Canadians have to wait 10 years to obtain the same benefit. Why did we not get the same benefit the United States received?
Mr. Day: We keep an eye on other countries and what they are doing. We always do agreements based on our own interest.
As I indicated earlier, in some areas can you take the full tariff off immediately; 97 per cent of those will come off right away. In others, to get agreement from a particular sector, you have to do it over a period of time.
If you recall, even before NAFTA, in the Canada-U.S. Free Trade Agreement, some of the areas of removal were as long as 17 years. When that was implemented, even then Canadians were saying that 17 years was forever. Of course, 17 years have come and gone, and the tariffs have gone also. It is simply a matter of what you can achieve; what is realistic; and sometimes it takes time to have a particular sector or particular industry buy in, due to their sensitivities, and how vulnerable they think they are.
As another example, in our trade agreement with the EFTA region, the European Free Trade Area comprising Switzerland, Norway, Iceland and Liechtenstein, for tariff removals related to some aspects of the shipping industry, we had to sign for a 15-year period, and it will be three years before some of that will kick in.
You do what is doable. Over all, as I said, the majority of tariffs are off quickly, and there is trading that goes on — hence the word "trade" — and you get the best deal you can, and that is how this one materialized.
Senator Downe: Under Peru's free trade agreement with the United States, pork producers receive a five-year tariff phase-out period. In the Canadian deal, it is 17 years. Why were we not able to negotiate a better deal for Canada?
Mr. Day: Again, there are certain sensitivities. We can talk about pork particularly, but let us say any particular area of production or manufacture, in a trade deal, as negotiated or working through it, one of the countries might be much more mature in the development of that particular industry, or of that particular product. Another country may be emerging in that area, and, therefore, very concerned that because the industry has emerged so maturely and is so strong in the competing country with which you are signing a deal, it does not want to be totally overwhelmed. The country registers its sensitivities in that regard.
You drive the best bargain you can, and some areas would be the ones that do not comprise the 97 per cent of all tariffs that will be removed immediately. You get the best deal you can. You consult with your industries to make sure there are not major problems, and you move on. That is what we have done.
Senator Downe: I quoted Senator LeBreton yesterday in the chamber, "No minister, no bill," and I appreciate the minister being here today on short notice.
Minister Day, Canadian negotiators also failed to obtain a clause similar to that of the United States trade agreement allowing American agricultural exporters to Peru to benefit from any further trade negotiations entered into by Peru. In other words, if Peru negotiates a better deal with another country, the U.S. automatically gets that deal. We do not have that provision. Why did we not obtain that provision?
Mr. Day: For some of our trade agreements we do and some we do not. I appreciate that some people look at situations as a glass half full and some half empty. I appreciate you taking the half empty point of view.
We were able to achieve a deal because we were willing to show accommodation. You mentioned pork, for instance. Much of our pork will have full access in the free trade deal, but when it hits a certain quantity — and we do not know when it will hit that, because it is a bit of an untried market — then that tariff will cut in. Therefore, you need to look at and reflect on what did get access, as much of our pork did. When it hits that certain level, then there will be a tariff that will kick in.
I could tell you that we sometimes win with different countries that we are negotiating with right now when we say, "Anything the U.S. gets, we get." There have been times when the U.S. has said, "Anything Canada gets, we want." They may not get it. Therefore, you put the cards on the table; you look at the areas that matter most to you and the best interests of your country, workers and producers, and sometimes can you get a clause that says, "Whatever the U.S. gets. . . ." Sometimes you cannot. It happens to them, also.
Senator Downe: This time we did not get it.
The Chair: Is that a question?
Senator Downe: No, it is a comment.
Senator Andreychuk: I will yield to Senator Downe.
Senator Dawson: Are you calling me Senator Downe?
Senator Andreychuk: I am preoccupied.
[Translation]
Senator Dawson: I want to come back to the comments of my colleague. I know that at this stage in free trade agreement negotiations, the possibility of a Senate committee making any changes is pretty slim. Nevertheless, I want to say that I agree with my colleague regarding the updating of our agreements. As Peru negotiates agreements with other countries, our agreements should be the same as those with the United States. When the U.S. signs an agreement, they say: if Peru signs a good agreement with another country, we want access to that same privilege.
I just want to say that it is a provision that I am going to support. It would be easier to say: whatever is good for the United States is good for Canada.
My colleague from Prince Edward Island mentioned potatoes. I am going to talk about pork. The agreement between the U.S. and Peru on pork and beef is necessarily more beneficial to American producers of pork and beef. I would have liked to receive the same level of cooperation from our partner Peru that the Americans did.
It seems obvious that there is a tendency in negotiations to apply pressure. I believe that in the next few weeks, we are likely to have another agreement with respect to Colombia. I want to be sure that we are able to put pressure on the government to ensure that these agreements will be ratified. We would like the government to be more in line with the U.S. regarding negotiations with other countries. I do not see why we should get any less than they do.
Those are more comments than questions. I just wanted to assure you, Mr. Minister, that I understand full well the process by which the agreement was reached, and it was not simple. It is important for us to say that even though we are going to approve this as a committee, that does not mean that we reached the level of negotiations we could have.
Mr. Day: I am always interested when I hear a comment about the Americans. It is an interesting approach, especially if we consider our agricultural sectors. We have a unique position in the world in terms of the sectors we indicated must remain protected.
As you know, they are known as the supply managed areas. Americans do not have such considerations. I think there are people in the United States who are very envious of Canada because we maintained our position on protected sectors. That is why it is hard to draw a comparison that is truly fair. We achieved something that was impossible for the Americans. We have to compare apples with apples.
Senator Dawson: Like my colleague, I fall into the glass is half-empty category. I think we could do better. I said from the beginning that I understand the constraints you are under. I understand that market control was to Canada's advantage. But I want to be able to tell you that we expect a lot from you, as minister, and that we will have a chance to debate the issue in the future. The way I see it, the glass is half empty, and the way you see it, the glass is half full. There will always be a disagreement. It may take a bigger glass, I don't know.
Mr. Day: If the glass is smaller, we can say that it has a lot of water. I appreciate your opinion, but I am convinced we have an agreement that has a lot of advantages for Canada's workers, producers and investors, and for the Peruvian people, as well.
Let us consider another sector where I think we are more advanced than the Americans, the mining sector. We also have another position, another policy. We have produced guidelines for the mining sector on corporate responsibility. We have set up a centre of excellence. We now have an advisor for the mining sector. That benefits us, but also and more importantly, the people of Peru.
We could be here for days making comparisons with the United States, but I still think that we now have an agreement that provides many benefits to Canadians. Those benefits did not exist a year ago, but they will be around for a long time to come.
Of course, there will be differing views, but we have a situation, an agreement that will improve our trading positions. I appreciate your point of view.
[English]
The Chair: Senator Andreychuk, I will give you the last question for the minister. The officials will remain. As a matter of fact, the two gentlemen in the back are anxious to come and give us a little more wisdom.
Senator Andreychuk: I think the minister has addressed my interest. I was quite interested to hear my colleagues want to be just like the Americans because I think, when I was sitting in the opposition, they were telling us how they were not just like the Americans. I think it is an interesting debate.
I looked into the agreement and it will be of benefit in some of the areas that I have worked on in agriculture; certainly, wheat, barley and pulse crops are a huge issue and it will be a huge market for us. On the one hand, there are some restrictions on beans, and I wondered why. On the other hand, we are not into that area in any significant way. The areas of concern to us seem to have been covered.
That leads me to my point. The stakeholders who are interested in trading and working in Peru were consulted. As we know in the previous agreement a significant sector of shipbuilders that had concerns, and we had to slow down a process for them for over 10 years and then there were barriers left for them.
In our trade agreement with Peru, there were obviously consultations. Where was a significant difficulty, and with whom? Alternatively, was this an agreement where the relationship and consultation addressed their issues?
Mr. Day: We tried to do both simultaneously. I can give credit to our agricultural sectors and producers. When we are involved in free trade discussions, and Peru is no exception, they are right at our elbow making sure that their interests are protected. When we go into these free trade agreements, it is safe to say that anything to do with agriculture is highly sensitive and requires much consultation before we go ahead and stake out a position to ensure that we are accommodating our own producers and growers. That would be an area of very high and key interest.
With respect to areas like machinery, we wanted to ensure and our producers wanted to be sure that in the manufacture of machinery, here is an area where the labour side of the accord is important. For instance, the manufacturer of heavy machinery in Canada is highly specialized, as is understandable, and highly paid; you do not want to be competing with a country that has no such regulations, especially on their workforce.
That was an area of sensitivity that the labour side of the accord helped to allay and put to rest. We know that a worker in Peru will not necessarily be getting the same wage as a worker in Canada. However, in Peruvian labour laws, they are subject to all of the things our labour laws are subject to, whether it is child labour, the number of hours worked or safety and occupational issues. That was another area of sensitivity where we drove hard to ensure that we had something we could hold another country to.
The same goes for the environmental side of the accord. If there is a particular industry that has some effect in their production process in terms of emissions and we have certain emission rules in Canada, we want to ensure that our industries will not be at a significant disadvantage because there is no such sensitivity or concern on the Peruvian side. That is why they signed on to the environmental side of the accord, which ties into the UN regulations on biological diversity. We had the usual array of sensitivities from those areas, and we believe we largely addressed them. That is why we were able to move ahead with the deal.
You mentioned shipbuilding. You are quite right; it is simply a fact that there are some industries, in either country, where if the industry had their way, there would not be an agreement. They like their protective status. We work with them to say we cannot preserve that forever, but we will take the time to help you adjust. You are quite right; in the shipbuilding side of the agreement, which we achieved with the European countries, there are two classifications of vessels, one in which you will see all of the tariffs coming off in about 10 years and others in about 15 years. Even within a category you have to make allowances. It all spells progress and leads to an improved situation. We will see heightened levels of prosperity in both of our countries because of a freer trade agreement, and that is was our goal. I believe we largely achieved that goal.
Senator Andreychuk: Some years ago, this committee looked at the issue of WTO. We said that was preferred; if we could get an international structure, that is where we would go. We obviously ran up against Europeans and Americans on agriculture and our differences there and it stalled.
What we said in our report was that if we cannot do it internationally, we would try it regionally or bilaterally. As I recall, the underlying premise was that our negotiating strategy, however, would remain somewhat the same, that we do not change our philosophies from one to the other.
In this case, WTO has not moved as quickly as we wanted it to, and we are doing a bilateral agreement. Are we still employing the same kind of principles and, therefore, we will not have to change direction on our WTO negotiations? In other words, are they in line?
Mr. Day: Largely, they are. You can take some comfort that the recommendations from this august body, the Senate, which you referred to some years ago, said the WTO is very important; if you cannot get agreements there, then go bilateral. It is just another example of how closely we listen to Senate recommendations, because indeed that is what we have done.
We want to see the successful completion of the so-called Doha Round with the World Trade Organization. We are slightly more optimistic. Recently, we have received dates where all ministers will be getting together.
Out of respect, as I know Senator Dawson and Senator Downe are concerned, with respect to the Americans, they are still a bit in the learning curve when it comes to WTO with their new administration. They are one of the reasons it has slowed down somewhat. We know that India has had some concerns. Their recent election will require their new trade people to get up to speed, so there could be some delay.
We are ambitious on the Doha Round. We want to see this completed. You are right; we cannot wait. Producers, workers and investors in Canada cannot wait. If there are opportunities on a one-on-one deal with another country or even a multilateral deal with a small group of countries, we are pursuing those deals. It is with the same principle so that when you get the WTO deal, you do not have to crater all these other ones you have worked hard to get.
The Chair: We will continue with the officials. I want to thank Minister Day for appearing, particularly on such short notice. We appreciate it. You have always been forthcoming, and we look forward to the next time.
Mr. Day: Thank you for your ongoing interest and your usual good questions.
The Chair: We have been joined at the table by Mr. Kronby, Mr. Beyea and Ms. Kutz, who are prepared to answer any and all questions.
[Translation]
Senator Fortin-Duplessis: Thank you very much, Mr. Chair. I would have liked to address my question to the minister, but I am sure that the witnesses are just as capable of answering.
Like Senator Downe, intellectual property was an area of concern for me. The U.S. provisions on intellectual property in the United States-Peru agreement are very strict.
Even if the bill does not pass — I do not know if it was reintroduced, I know that it died on the order paper when the government was almost defeated — does Canada have reason to worry that those provisions will give American investors an advantage over Canadian investors in Peru?
[English]
Carol Nelder-Corvari, Director, International Trade Policy and Chief Negotiator (Peru and Colombia FTAs), Department of Finance Canada: This agreement reinforces that we will abide by our WTO obligations. That continues, and we are pursuing this multilaterally in this context. As the minister said, though, we leave open the chance of further refining in the area of intellectual property.
I do not think it places us at a disadvantage, because our WTO disciplines are still there. Also, it is not only our domestic law that is evolving. In Peru, as well, a key issue was intellectual property and traditional knowledge in the area of biodiversity. Canada and Peru are working together on this under the international Convention on Biological Diversity. That is why the environment agreement stresses that part.
There were intensive discussions about intellectual property both in areas where Peru had an interest and areas where Canada had an interest. At this point, it was felt best to reinforce our WTO rules as we are evolving, but we leave open the opportunity, as we did with Chile, where we added procurement and financial services later.
This is a comprehensive agreement as it stands, but it is not static. Both parties have indicated in their provisions the opportunity for further negotiations or discussions.
Senator Downe: On that point, it is static unless the Peruvians agree to open the agreement. In the Canada-Peru Free Trade Agreement, we have only reaffirmed our commitment to the WTO Trade-Related Aspects of Intellectual Property Rights agreement, which establishes minimum standards of protection, unlike what the U.S. was able to negotiate, which is far superior. I did not want any confusion on that. We accepted the minimum under the WTO. The Americans have a superior package.
Ms. Nelder-Corvari: I think the minister answered clearly that we are in the process of refining our laws. In fact, some of what was agreed to the between the U.S. and Peru could not have been agreed to by Canada at this point.
Senator Mahovlich: Canada is known around the world for mining. I did not know that there was a security problem in Peru. How is this agreement going to stabilize security for Canadian mining companies?
Ms. Nelder-Corvari: Corporate social responsibility was an important topic in these discussions. You will see in this agreement, for the first time, provisions on corporate social responsibility. They occur in the general commitments in the beginning of the agreement, they occur in the investment chapter, and they occur in the environment chapter.
These discussions were initiated by Canada in recognition of the fact that we had ongoing cooperative efforts underway in Peru at the time. We initiated these discussions because we wanted to deepen cooperation and promotion in this area. Mining in Peru is a large area for investment from Canada. We have over $2.3 billion in investment in Peru, which compares to about $800 million in India.
Senator Mahovlich: How many mining companies do we have in Peru?
Ms. Nelder-Corvari: That is hard for me to say off the top of my head. We have several exploratory oil and gas operations as well as ongoing operations. Key operations are Barrick Gold Corp., Teck Cominco Ltd. and Talisman (Peru) Ltd.
The current ongoing dispute was a long time in coming. There were protesters blocking the highway, and the government took action. The positive steps that the government is taking include involving the church and the Peruvian ombudsman in mediating the dispute. Canada, along with a few other countries, was instrumental in development of the Peruvian ombudsman's office, and we provide ongoing funding for this office to help mediate this problem.
You talk about corporate social responsibility, and this is in fact that. It is their brand that is at risk. Many of our companies are leaders in this area and have put into effect the practices they have in Canada. In fact, Natural Resources Canada, our embassy in Peru and the Government of Peru have developed what is called the Mining Toolkit. The toolkit mirrors some of the domestic lessons we have learned. It tries to share those lessons with Peru in terms of transparency and consultation with local communities to ensure that local communities can exercise control in decision making to maximize the benefits of these operations.
Senator Mahovlich: Our mining companies cooperate with and support the communities.
Ms. Nelder-Corvari: Absolutely. We are leaders in some of these areas in some of our operations.
Senator Downe: I agree with your analysis of what Canadian mining companies are doing in Peru. They have a very good program. The problem is what happened 20 years and 25 years ago. At that time, the waste and pollution of the mining industry was left for these villages, many of which are isolated, to clean up.
I am surprised that CIDA can no longer help in that area because of the reallocation of their funding. CIDA investment in Peru in this area would be of assistance with the Canadian mess that was left many years ago.
My question is about the side deals we signed — and I wish the minister had stayed longer so that he could address this issue— on the Canada-Peru Agreement on Labour Cooperation and the Canada-Peru Agreement on the Environment. They are not integrated into the related provisions in the main agreement to ensure that they are subject to the main dispute resolution process.
When he appeared before the House of Commons Standing Committee on International Trade, Mr. Mark Rowlinson, representing the United Steelworkers, said:
In respect of the enforcement of labour rights, there's no question that I believe the Canadian government has negotiated an agreement that is inferior to the one negotiated by the U.S. government.
This is the fifth or sixth example from a host of sources that the United States was able to negotiate a better deal in many areas that are important to Canadians.
I accept the minister's comments that there are many good things in the bill, but it is of great concern that this is the best deal we could negotiate with a developing country.
What will happen when Canada negotiates with the EU? If this is an example of our negotiating abilities, we may be in serious trouble.
I would like to propose that working with Senator Dawson and Senator Mahovlich, we come up with some recommendations on the bill. We could work on them overnight and would have to get them translated. We could send them to members of the committee on Friday or Monday for consideration at our next meeting, hopefully on Tuesday.
The Chair: I think we should give our witnesses an opportunity to respond to your comment.
Senator Downe: The question is directed to the minister. In his absence, I do not want to put the officials on the spot.
The Chair: It is important that they put the position of the government on the record, particularly when the minister indicated to us that in a number of areas we were obviously successful in negotiating something much better than the Americans. This is a question of balance. Would any of our witnesses like to comment?
Senator Segal: Could the officials also comment on the general premise that in our negotiations with other countries, we would expect a country with an economy 10 times our size would have no better leverage in their negotiations than we might have?
It strikes me that while the proposition on the table is interesting, I am not sure it is based on the hard economic reality of trading relationships, but I leave that to the experts.
Senator Downe: Senator Segal makes an excellent point because the U.S. is stronger. However, Peru is traveling the world negotiating trade agreements with everyone they can — Singapore, China, EU, Chile and Canada. They are receptive to making a deal. If this is the best deal we could get with a developing country, then there is a tremendous concern about what we will be able to negotiate with the EU.
Senator Segal: I do not see a contagion affect with one or the other.
The Chair: Let us not have a debate.
Ms. Nelder-Corvari: There is a lot of debate about what the best model is. It reflects Canada's approach to a number of foreign policy issues, not only trade issues. We take a cooperative approach.
In the case of Peru, it is true that the obligations are not directly integrated into the dispute settlement process. There is a dispute settlement process in the labour side agreement, which focuses on cooperation. If there is a problem, it can go before an independent panel. Monetary penalties can be applied up to $15 million annually that goes to a cooperative fund to help address the ongoing problem.
The American approach is to use trade retaliation. There is a pragmatic issue for Canada. If you go beyond North America, our trade influence shrinks dramatically. Beyond North America, we have marginal trade with many different countries. For example, only about 2 per cent to 3 per cent of our exports go to the U.K. Peru is substantially smaller than that.
When you talk about being influential and using trade retaliation to pressure countries on labour rights, we felt it was more effective to go with monetary penalties than to take market action that makes the situation unpredictable for both our exporters and theirs. It would also have little probable influence on the outcome.
We have a stronger model for the objectives we are seeking. My labour negotiator is not here, but others argue that our labour side agreement is stronger than the U.S. agreement. It requires Peru to implement ILO principles not only to enforce their own laws, but to ensure that their laws reflect ILO principles. There is also a dispute settlement process to address that.
Maybe the proof is in the pudding in how this will be implemented. Canada has taken a different approach. That approach is also respectful of provincial jurisdictions that are different for environment and labour jurisdictions in Canada than in the United States.
The Chair: I have to make everyone aware that the Senate is ringing its bells and there is a vote at 5:48 p.m. We could go on for another five minutes.
For the record, should we come back after the vote?
Senator Dawson: I have a Transport Committee meeting in which we are adopting a bill tonight. Other meetings are also being held. We already made the comment that we would like to annex some comments to the bill. I think the steering committee could have a conference call to convene a meeting for next Tuesday to adopt this report.
The Chair: Are you talking about an amendment?
Senator Dawson: No, I am talking about observations for consideration.
The Chair: Would you be prepared to pass the bill now, in effect, with the understanding that there will be observations.
Senator Dawson: I do not think so. We cannot do it in English and French now. We can have a steering committee meeting and pass it on Tuesday or Wednesday, should we agree. If we want to pass it, we have to adjourn anyway. I cannot come back later. We do not know if we will vote for an hour or an hour and a half.
The Chair: If everyone agrees that the bill can be passed without amendment, we can do it very quickly with the understanding that there will be observations appended to the bill to be discussed by the steering committee for approval.
Senator Downe: The intent is to present them for consideration of the committee to reflect upon and decide, in their wisdom, if they want to pass them. The immediate concern I have is that deputy chair of this committee had to be away today. This committee was not originally scheduled to meet today. I think we should wait until next week when the deputy chair is present.
The Chair: I have to correct your comment. We reserved yesterday and today in our calendar to meet specifically on this bill. We said that we would be meeting. We were not sure that the bill would come to us on time. However, the steering committee decided that yesterday and today would be set aside to deal with this bill. Obviously, we cannot fail to deal with the issues that the committee is charged with because one of our members is not here.
It would simplify things if we agree that we could pass the bill without amendment subject to the committee approving observations that I believe three of our members would like to make. If we can do that, we could accomplish it all.
Senator Dawson: I do not mind.
You give a lot of wisdom to the steering committee, which is me, you and the deputy chair. I certainly trust myself and I trust you. I hope we can trust our deputy chair that we will adopt on behalf of the committee the comments discussed.
The Chair: We would share the observations with all the members for their consideration as well.
Senator Downe: It would not be presented to the Senate until the observations were attached to it. Is that correct?
Senator Andreychuk: I think that is all right. I am in the hands of your steering committee. Pass the bill. I am sure there will be due diligence by the steering committee on the observations so it embraces all of us.
The Chair: Can we agree then that the observations will be dealt with on Tuesday morning through some teleconference and the steering committee would be given the authority to approve them?
Senator Segal: When will we do clause-by-clause consideration?
The Chair: Now.
Senator Downe: I have to get them translated.
The Chair: We can have them done today and tomorrow. It will de done.
Senator Segal: Is the vote at 5:50 p.m.?
The Chair: It is at 5:48 p.m. We have five minutes to do clause by clause.
There is a consensus.
Shall the title stand postponed?
Hon. Senators: Agreed.
The Chair: Shall clause one, the short title, stand postponed?
Hon. Senators: Agreed.
The Chair: Shall clause 2 to clause 57 carry?
Hon. Senators: Agreed.
The Chair: Shall schedules 1 to 7 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 1, the short title, carry?
Hon. Senators: Agreed.
The Chair: Shall the title carry?
Hon. Senators: Agreed.
The Chair: Is it agreed that the bill be adopted without amendment?
Hon. Senators: Agreed.
The Chair: Is it agreed that I report the bill without amendment, but with observations attached, on Tuesday next?
Hon. Senators: Agreed.
The Chair: Thank you. We look forward to your observations, which form part of the report, as you know. However, they are not necessarily part of the bill. We can do this.
Senator Downe: They will be advice to the government. Hopefully, they will be able to negotiate better bills in the future.
The Chair: Witnesses and colleagues, thank you for your cooperation.
(The committee adjourned.)