Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 18 - Evidence - Meeting of November 29, 2012
OTTAWA, Thursday, November 29, 2012
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 Panama, the Agreement on the Environment between Canada and the Republic of Panama and the Agreement on Labour Cooperation between Canada and the Republic of Panama, met this day at 11:30 a.m. to give consideration to the bill.
Senator A. Raynell Andreychuk (Chair) in the chair.
[English]
The Chair: Honourable senators, today the Standing Senate Committee on Foreign Affairs and International Trade is continuing its examination of Bill C-24, An Act to implement the Free Trade Agreement between Canada and the Republic of Panama, the Agreement on the Environment between Canada and the Republic of Panama and the Agreement on Labour Cooperation between Canada and the Republic of Panama, also known as the Canada-Panama Economic Growth and Prosperity Act.
After our officials and the minister testified yesterday, we are pleased to have before us today Michael Harvey, President of the Canadian Council for the Americas; and Martin Charron, Vice President, Market Access and Trade Development, Canada Pork International.
We want to hear from you in your opening statements and then the senators will have questions. Welcome to the committee.
[Translation]
Martin Charron, Vice President, Market Access and Trade Development, Canada Pork International: Good morning, Madam Chair. My name is Martin Charron and I am the Vice-President, Market Access and Trade Development, at Canada Pork International. Canada Pork International is the export promotion agency of the Canadian pork industry. It is a joint initiative of the Canadian Pork Council, which is the national hog producer organization, and of the Canadian Meat Council, representing the pork packers and trade companies.
[English]
Our membership is made up of both packers and trading houses. Together, our members are responsible for about 99 per cent of Canada's pork exports. One of the main duties of CPI is to collaborate with the Canadian government to ensure that access to Canadian pork by foreign markets remains free and fair. CPI often acts as a liaison agent between the government and the industry in matters related to market access.
The Canadian pork industry is a very important element contributing to the Canadian agriculture trade. Canada is the third largest exporter of pork in the world after the European Union and the United States. We export pork to more than 100 countries around the world.
[Translation]
In 2011 Canada exported 1.15 million tonnes of pork for a value of $3.2 billion. That is approximately two thirds of our total production. Due to the nature of the product, pork exports mostly contribute to growth in rural regions and small towns throughout Canada.
[English]
As mentioned earlier, Canada exports pork to more than 100 countries around the world. A very important fact distinguishing the pork industry from many other Canadian industries is that only approximately 30 per cent of our exports go to the United States. This makes gaining, securing and maintaining access to foreign markets primordial to the Canadian pork industry.
Exports play a key role in ensuring the prosperity of the Canadian pork industry. Exports contribute in two ways to generate income for the industry. First, the volume exported helps to generate economies of scale for producers and packers. Also, the demand for some markets is for cuts and offal for which limited demand exists in Canada. Having a market for these products helps increase the value of each head produced in Canada and provides an increased return to producers.
[Translation]
The Canadian pork industry is in favour of a free trade agreement between Canada and Panama. In 2011, Canada exported approximately 4.545 tonnes of pork to Panama for a value of $8.4 million. Panama imported a variety of meat cuts for processing, less expensive cuts and offal. Access to this market gives the pork industry greater flexibility to sell certain products there that are more difficult to sell in Canada.
[English]
The information we have on the proposed agreement with Panama indicates that Canada would benefit from a tariff rate quota, a TRQ, of 200 tonnes for higher value fresh and chilled pork as well as sausages. This TRQ would grow at an annual rate of 2 per cent.
There are also provisions for the establishment of a TRQ of 450 tonnes for frozen pork. This quota would be deducted from the quota agreed to by Panama as a condition of its accession to the World Trade Organization. Having quotas dedicated exclusively to Canada would not prevent the Canadian industry access to the Panamanian market outside these quotas. Such quotas would, however, increase the visibility enjoyed by Canada as a supplier.
[Translation]
There are also provisions in the proposed agreement that would mean that import permits for products from Canada would not be issued as part of the BAISA system, which oversees the issuing of import permits by Panama. This would give the Canadian industry greater flexibility. Our members have told us they would be in favour of such an agreement.
Michael Harvey, President, Canadian Council for the Americas: I will give my presentation in English but I will answer questions in the language of your choice.
[English]
The Canadian Council for the Americas is an organization that strives to be a hub of thinking and events in the field of relations between Canada and the Americas. We are member based and do not have any political affiliation.
The CCA supports a policy of increasing our trade and investment ties with the countries of the Americas. In this context, we think that free trade agreements send a positive signal to Canadian companies that there is a legal stability to our ties with other countries that will not be reversed on a whim.
In the specific case of Panama, we think an agreement is positive for a number of reasons. First, Panama's location is very strategic, connecting Central and South America.
Second, the importance of the Panama Canal also makes it very strategic for Canada to enjoy good relations with Panama.
Third, basically everyone else is signing free trade agreements with Panama: the U.S., the EU, the Pacific alliance countries of Chile, Colombia, Mexico, Costa Rica and Peru. Canada should not allow itself to be left behind. Doing so would be interpreted as a lack of interest on our part.
Fourth, there are important Canadian business interests to protect in Panama. You just heard about pork. I think immediately of companies like Scotiabank, Bombardier, SNC-Lavalin or Inmet Mining, which you may have seen was the top story in Report on Business in The Globe and Mail this morning, and there are many more.
Fifth, Panama is a country that has made great strides since the much darker days of the dictatorships of Omar Torrijos or Manuel Noriega.
Sixth, the country is much more democratic and respectful of human rights than it was in the past.
Seventh, the judicial system is more and more independent, much more than it was in the past.
To sum up, we at the CCA think this agreement can lead to deepening relations with Panama and with the Americas in general.
I will leave it there and allow honourable senators ask any questions.
The Chair: Thank you. Both of you have been efficient with your time.
Senator Lang: Welcome to both of you this morning. My question is for Mr. Charron.
It is interesting to examine our free trade agreement to see what effects it could have for Canadians who benefit from it. You gave a good description of the trade that has already gone on and the potential for further trade with the signing of this agreement over a period of time.
You said in your comments that currently Panama imports about 4,500 tonnes of pork from Canada and that with this agreement they could conceivably import 200 tonnes of chilled pork, was it?
Mr. Charron: At the moment, despite the absence of a free trade agreement, we have been able to sell pork to Panama. However, it is a very competitive market. Other suppliers are pushing at the door of Panama. What we understand is currently in the agreement would provide a small quota dedicated to the import of pork and pork products exclusively from Canada. The quota is much smaller than what we sell at the moment, but we are confident that we would still be able to do a fairly sizable volume of trade with Panama. Last year Panama was our twentieth largest market, despite its fairly small size. At the moment we are the largest foreign supplier of pork to Panama.
Having two separate quotas dedicated to Canada would guarantee access to the market and would enable us to use that as a basis to establish a presence and a visibility in that market. Panama is a very strategic location. It is a gateway for export to other markets in Central America.
Senator Lang: If I understand what you just said, one benefit is that it will provide what you have referred to as a gateway for the pork industry to move further down into Central America for exporting?
Mr. Charron: It is our hope that we could build on that, yes.
Senator Lang: This agreement will provide the legal framework for protection for Canadian producers. How much is 200 tonnes or 450 tonnes of pork worth?
Mr. Charron: One tonne of pork is worth $2,000 to $3,000, depending on the cut and quality of the meat or offal.
Senator Lang: I understand that this is higher quality pork.
Mr. Charron: The 200 tonnes would be higher quality. We are trying to gain access to this market around the world in order to distinguish Canadian pork as a higher quality product and to extract better value. We are conscious, however, that the demand that currently exists in Panama is for middle- and lower-end priced product. However, if we were able to establish a niche market in the upper end, that would be beneficial to the entire industry. It would help us to position Canadian pork as a high-quality product, which would be very good for us.
Senator Lang: We currently export the lower quality or the lower cuts with no agreement. Will you be able to continue to do that?
Mr. Charron: We expect to continue to do it while it is beneficial to the Canadian industry. If you look at the pig from the Canadian perspective, we consume cuts from the middle part of the pig. Panama has been a market for internal organs, feet, tails and heads. Having access to a market like this increases the value of each pig that we send to the slaughterhouse. Maintaining access to a wide variety of markets is very important because they can vary rapidly from year to year.
[Translation]
Senator Fortin-Duplessis: Mr. Charron, we are told that eliminating tariffs with the Canada-Panama free trade agreement will provide more trade opportunities and in particular, bring down tariffs. I have read that on average tariffs on agricultural goods are in the 13.4 per cent range, and this number can reach as high as 260 per cent for certain products.
Has Canadian pork been subject to high tariffs in the past, and did this hurt pork exports to Panama?
Mr. Harvey: Unfortunately I do not have the applicable tariff rates for pork imports to Panama right now. However, the world meat market is extremely competitive. Our biggest competitors in Central and Latin America are the United States and Brazil. Just 1 per cent can make the difference between being able to sell or not.
Senator Fortin-Duplessis: Really.
Mr. Charron: There is not a doubt in our minds that eliminating tariffs would be beneficial for our industry.
Senator Fortin-Duplessis: You spoke about lower quality pork cuts that are exported. Do you export to Panama what is known as Nagano pork, that is leaner meat that has no marbling?
Mr. Charron: No, that is too much of a high-end product. That is a product that was designed to meet the demand in the Japanese market. We have only recently begun introducing it into Canada. Given the nature of the market in Panama and their price range, we do not believe that their market is ready for such a high-value product.
Senator Fortin-Duplessis: Can pork exporters use international arbitration? One of the advantages of a free trade agreement between Canada and Panama would be the ability to use such arbitration to settle disputes.
Mr. Charron: For trade disputes, yes.
Senator Fortin-Duplessis: Does this provide a certain safeguard?
Mr. Charron: It would provide a process to settle trade disputes.
Senator De Bané: Mr. Harvey, tell us about the Canadian Council for the Americas. Who are your members? What industries are represented? Aside from Panama, with which other countries in South America should the Canadian government establish free trade agreements? What other countries are of particular interest to the members of the Canadian Council for the Americas?
Mr. Harvey: First of all, our members are mostly individuals and we are based in Toronto. We organize our events in Toronto's financial core and our members tend to be people who can easily attend these events. Our members can attend these events at a discounted rate. We attract many people who work nearby and who can attend our meetings. A number of companies support us financially.
Our three biggest supporters right now are Barrick Gold, Scotia Bank and KPMG. Many other companies support us occasionally depending on the events.
In terms of free trade agreements, we have pretty much covered the continent. The government has been very active in this area and now we have Mexico, Panama and Costa Rica on board. Negotiations are currently underway with Honduras and the Dominican Republic. We also have agreements with Colombia, Peru and Chile.
The remaining big ones are the Mercosur countries: Brazil, Argentina, Uruguay, Paraguay and recently Venezuela. It would be good to come to an agreement with them but it is not an easy thing to do. Brazil in particular has negotiated very few free trade agreements with other countries. We know that only preliminary discussions are underway with Mercosur. An agreement would be positive, but it is not easy to do given Brazil's economy and their policy of tariff barriers which are quite high. There is also Argentina in Mercosur which has the same policy, and an even more aggressive one, than Brazil. Venezuela is a new member of Mercosur which only exports oil for the most part. Oil exports can benefit from a world free trade agreement because no one who imports from the east levies tariff barriers on oil. The Venezuelan government is not interested in free trade agreements, at least not for the time being. There are not many countries left in the region with whom to negotiate free trade agreements.
[English]
Senator Mahovlich: The Canada-Panama free trade agreement also includes agricultural safeguard measures that could limit Canadian exports of pork products to Panama. What does that mean, ``agricultural safeguards''? I visited some of the plants a couple of weeks ago out West. They are taking every precaution for the meat to be a good product and well packaged.
Mr. Charron: When we refer to safeguards, it is a measure taken by a foreign country to limit the import of product when they grow too rapidly and the volume of imported product is such that it has a negative impact on the local production. When we refer to safeguards, we are not talking about health measures. Every plant exporting pork from Canada to any country around the world is approved and inspected by the Canadian Food Inspection Agency. Any plant must meet the highest standards. When we refer to safeguards, it is a commercial measure to control the volume of imports into a country.
Senator Mahovlich: Do the Panamanians come up here and check our plants that are packaging this pork?
Mr. Charron: An inspection team came here many years ago to see how Canada regulates and inspects plants exporting pork overseas.
Senator Mahovlich: In the case of frozen pork products, if total imports were to exceed 585 tonnes in a calendar year, and then they put an article in there, 218, Panama would have the right to increase its tariffs up to the applied MFN tariff rate on above-quota imports. Do you think it is fair to increase, not decrease? If there is more demand, you think it would be a bargain for us.
Mr. Charron: We are all in favour of getting free access to all markets around the world. We have to appreciate that when the Canadian government is negotiating greater access to agricultural products with a foreign country, including meat, the foreign country will often seek ways to protect its local producers against a blow from a sudden increase in imports.
At this time Panama is offering us access at a certain level for frozen products. At the beginning it is 450 tonnes per year. Over a period of 19 years, they will decrease the tariff currently applicable on frozen pork. This tariff is currently at 70 per cent, so this is a great advantage for us to get access, for the first time, free of tariff for small quantities. It allows us to establish a strong presence there, and then see over a period of time a decrease in tariff, thus making Canadian pork more and more competitive not only with pork produced in Panama but also with pork produced in other countries exporting to Panama. From the perspective of the Canadian pork industry, we must always pay close attention to the access our competitors enjoy in other countries.
Senator Mahovlich: Who are our main competitors?
Mr. Charron: In Panama it is the U.S. and Brazil.
Senator Mahovlich: Mainly because of location, I guess; they are closer to them.
Mr. Charron: As far as location, Brazil is competing with us in very far-away countries as well. Costs of production, access to feed and open space are all the important factors in pork production.
Senator Downe: Did Canada Pork International lobby the government on this specific agreement? When I look at your exports around the world, after the top five, it drops off dramatically. As you indicated, Panama is 20 or 22 on your list, with a value of roughly $4 million. There are a host of countries — Russia, Hong Kong, and so on — with which we do not have free trade agreements. Were they a higher priority for your association than this country?
Mr. Charron: I would say yes, they are. I repeat, however, that every market is important to us. It is important to have the flexibility for our members to be able to export to different countries to be able to meet the changing situation in a third country.
Senator Downe: For example, in Russia, you sent roughly $275 million last year; in Hong Kong you were at $34 million. What do you tell the government should be done to improve exports in those markets, where we are already well established?
Mr. Charron: In the case of Hong Kong, the situation was that a lot if not the majority of pork sent was rerouted to mainland China. Hong Kong has no import tariff on meat and has a very clear system of inspection. The rules are clear, and we do not experience problems accessing the Hong Kong market. This year we are witnessing a decrease of our exports to Hong Kong, but that is compensated by an increase of our exports going directly into mainland China.
In the case of Russia, it is a very important market. It is growing rapidly for us. Over the first half of 2012, our exports to Russia have increased by about 50 per cent. What is key for us in Russia is the fact that the Russian authorities at times will implement or are unclear about the rules of access, mainly on sanitary issues, and the presence of residue of some feed additives that are allowed in Canada. It is key for us to maintain that access.
We closely follow the conditions of access to most markets. We are in very close contact with our friends at the Department of Foreign Affairs for the market access people there, as well as the people at Agriculture and Agri-Food Canada and the Canadian Food Inspection Agency. One of the main roles that CPI plays is to be the liaison officer between those various government agencies and the industry with regard to international trade.
Senator Downe: Mr. Harvey, did your association lobby the government for this specific trade agreement, and did any of your members indicate that they would not be investing in Panama because there was no free trade agreement?
Mr. Harvey: No. First, we do not lobby. I came as a witness to the house committee as well to express the same points, but no, we do not really lobby the government. Our members see a free trade agreement as something that is positive because it gives them better stability. Not having the free trade agreement could be a factor in investing, but it is far from being the only factor. It is just an additional element that helps, I think is the best way to say it.
Senator Downe: Have any of your members indicated that they were holding back investments because of the absence of a deal?
Mr. Harvey: No.
Senator Downe: I am wondering if you could speak, Mr. Harvey, about the banking, taxation, money laundering concern we hear about Panama. What is your group's position on that problem?
Mr. Harvey: We think it has been improving a lot. Panama has had that reputation, but they have been working with the OECD. The OECD has a committee on financial transactions that has a certain number of standards and criteria to determine whether or not a country is in the good books or the bad books, and Panama has made all the moves to move into the good books over the last few years. It has been moving forward very positively.
Senator Downe: What about the issue of corruption?
Mr. Harvey: Again, moving very positively. Panama had some horrible dictatorships a couple of decades ago, and they are far beyond that. There have been several free elections in a row, and no doubt the next elections will be free as well. The judicial system is much more independent than it was in the past. Everything is in the right direction in Panama.
Senator Downe: A Canadian might argue that everything is in the right direction, depending where you are coming from. The current standards would not be acceptable for Canadians. Particularly in the judiciary, I understand there is corruption as well.
Mr. Harvey: Yes.
Senator Downe: Does your association have a view on that?
Mr. Harvey: We think it is going in the right direction. I think the most important thing is that the country is making improvements.
Senator Downe: If it is going in the right direction, it still means, according to what you are telling us — and you share the view of others — that there is currently corruption with judges in Panama. How will Canadian businesses be protected if they are in a conflict, if there is this corruption?
Mr. Harvey: Things like free trade agreements are part of the context that improves situations like corruption. A free trade agreement is another legal argument you have that can help you. It is part of what opens the country up to the world in such a way that makes its standards more and more international. It is part of what anchors the country in the international community in such a way that it takes these sorts of concerns more seriously. We think that a free trade agreement is a positive element of improving any situation like that.
Senator Downe: You indicated earlier to Senator De Bané that one of the contributors to your group is Scotiabank.
Mr. Harvey: That is right. It is one of our most important sponsors.
Senator Downe: When the French bank BNP, for example, left Panama in 2009 because they did not want to operate in a country with rules like Panama has, Scotiabank purchased that bank. Do you have any concerns that our banking system is entwined in any way with some of these problems we are hearing about in Panama?
Mr. Harvey: I think our banking system has very good protections. I am not deep enough into Scotiabank's internal business to be able to talk about specific protections, et cetera, but I think the Canadian banking system is one that has better internal protections than almost any in the world, and it would not be a good business decision for Scotiabank to get involved if they were going to get into that sort of mess. Scotiabank does not need that.
Senator Wallace: This FTA would obviously open up markets and new opportunities for Canadian suppliers of services and goods, and increase the opportunities in that market. As you point out, many of the significant larger corporate interests in Canada are well aware of Panama and seem to be very supportive of this agreement: the banking interests, mining companies in the mining field. It is fine to open up and create the opportunity. However, at the level below that, in the small- and medium-sized companies, I find — and I guess we would all find — that doing business away from their home territory becomes less and perhaps the scene is more difficult, so those opportunities are not pursued.
What does your organization do to promote and create the awareness for smaller and mid-sized Canadian companies to let them know that there is a new opportunity in Panama? What would you do to promote that? What opportunities do you see for these smaller and mid-sized Canadian corporations to make new sales, whether it is services or goods?
Mr. Harvey: We do not get much into the field of the different chambers of commerce that exist in Canada, which do a lot of trade missions and do that work directly. We are more an information clearing house and a place where we do events and try to influence public opinion more on a macro level than on the micro level of specific business opportunities.
I attend a lot of events that are organized by the chambers of commerce or by the government, where small- and medium-sized enterprises have these opportunities a bit more in detail. I am often brought in as an external speaker to talk about the macro situation in these countries.
Anyone can go to our events, where we try to increase awareness about economic interests in the region, again more in a macro sense. We do events with, say, economists from other countries who talk about what is the economic situation overall, political analysts who talk about the political situation overall, and maybe ministers or other high- level figures from other countries who talk about the political environment. In that sense, basically anyone can come to our events, and we welcome small- and medium-sized enterprises.
I think it is obvious that it is more difficult for small- and medium-sized enterprises to do business abroad. In Latin America, which is our specialty, the business culture is one that is not very short term. You generally have to get to know your business partners on a personal level. You are expected to spend time with people's families. Often, from a Canadian perspective, people spend quite a bit of time getting to know each other before getting down to business, whereas Canadians can be a bit more transactional.
That is the type of thing we try to get across to people in our events, that if you are going to a country like Panama, today's country, and you want to do business in Panama, you want to take the time to get into the local culture enough so that you will be able to do business well. If you plan on flying down, selling today, and flying out tomorrow, I do not think you will get that far, in general.
Senator Wallace: As you touch upon, we know that in business it is all about relationships, contacts and linkage. For many Canadian companies, they need those initial contacts. Maybe I misunderstood what your organization was about, but I thought perhaps you were an organization that would have some contacts in these foreign countries and that could act as a basis for creating the arrangements, the relationships with our own Canadian companies. However, I am not getting that sense. You are more at a macro level.
Mr. Harvey: Not like a chamber of commerce, but we can open up some doors, especially at a political level.
Senator Finley: Senator Wallace basically covered some of the area that I was planning to cover. It would appear that both of our witnesses today are in favour of this free trade agreement. I think that is quite clear.
Adding to what Senator Wallace and Mr. Harvey talked about, I wonder about the post-free trade agreement situation. It has been pointed out to us — I have not checked the numbers myself — that often the result of a free trade agreement is a negative or a decreased balance of trade for Canada.
What, if anything, could the Canadian government do or participate in to improve the follow-up once the free trade agreement has been signed? I understand chambers of commerce and various trade missions, but is there something fundamental, something basic or systemic that we might be able to do to help this become top of mind and to encapsulate and support activities to improve trade? For example, in pork, is there something that we might be doing to help this process?
Mr. Charron: In general, it is not limited to the post-free trade agreement environment with Panama. At Canada Pork International, one of our roles is to manage on behalf of Agriculture and Agri-food Canada the International Pork Marketing Fund, which was an envelope that amounted to $17 million over a four-year period. It is coming to an end on March 31, 2013, which allows Canada Pork International to organize various kinds of activities overseas, develop promotional material, as well as bring our members to those markets where they get to meet the people and establish solid relationships with them. From those experiences, trade will result.
At the moment, we are seeing that the provision of funding by the Canadian government has been key in giving us the tools in establishing presence, being seen, being understood and having our product appreciated all around the world. That has been key in terms of developing a market once we get access to it.
Senator Finley: Within the pork industry particularly, or within industry in general, once a free trade agreement or an opportunity has developed out of a free trade agreement, is there some coordinating point or something where, to use a business term, we can sell up, go from one product to another?
I understand that we have with this free trade agreement a non-tariff agreement to sell frozen french fries. That is wonderful. Is there one to import poutine sauce — you know, french fries, poutine? Do we have that kind of ability to work off one end to other markets?
Mr. Charron: In the case of the agreement with Panama for pork, one of the key elements is to provide us with secure access for a small but growing market for fresh products that are the higher value products, bringing greater benefit to the Canadian pork industry. We are also looking at some processed food, for example, sausages. We are moving and increasing our access for value-added products, which is very important for us, so a deal like the Panamanian one meets those conditions that we are building up from a market where most of our products were lower value products to getting a foothold into the market for higher value products. At the beginning, it is a small quota for Canada, but it is growing.
In combination with that, the tariff applicable on those higher value products will decrease and make the Canadian product increasingly competitive in that market. This is a perfect case of a deal that allows us to build up our presence to a higher value environment.
Mr. Harvey: I will add to that. Now is a very good time to do it. Panama, like most of Latin America, has seen a big move of people from the lower classes to the middle classes over the last few years. The macro-economic situation is very good. Many people who were subsistence before are moving into the middle classes. They will want that sort of product, and for the first time they will be able to buy it. Now is the time to get in.
Senator Finley: Is that a natural evolution to middle class from subsistence, or has it been artificially propelled a little bit, as in Brazil, with a type of minimum wage or living wage for everybody, which I think probably helped that to happen there? In Panama's case, has this happened as a natural economic consequence, or was it stimulated in some way?
Mr. Harvey: There have been different elements. In the Panamanian economy, a huge element is the canal. It is so different from a country like Canada, but this canal is so big in a country that size. Panamanians run the canal very well. An awful lot of wealth stays in the country, and that has been a big driver in their growth.
Another one is the commodities boom that has helped so many parts of the world. I will go back to the top story in the Report on Business in The Globe and Mail today, which is about Inmet's operations in Panama. They have one of the world's biggest copper mines, and with the price of copper high, it is a lot of money for the people of Panama to move up.
Senator Finley: How would you describe the Panamanian commercial culture? Are they spenders or savers? Would you describe it as heading towards being a consumer-type society as opposed to the opposite?
Mr. Harvey: It is not Chinese levels of saving for sure. It is Latin American with strong influence from North America levels of saving. Check out Panama City sometime. There is consumption. It is a nice town.
Senator Finley: I have one last question, and it is something that I have asked at a number of these discussions. Could you comment on the levels of education in the education system as it exists? This may be a better question for Mr. Harvey, perhaps, than Mr. Charron. Can you comment on the state of development of the education system in Panama?
Mr. Harvey: I would say it is improving. They started from a fairly low basis for the lower classes. It is getting a lot better, and also as part of the natural progression of moving to the middle classes, people are having better opportunities in private education.
From a Canadian economic perspective, it is the first time that the lower middle classes of Latin America, including Panama, have enough money to send their kids, for example, to study English in Canada for months and maybe go to a technical school in Canada. That is a huge difference in the standard of living of people at the lower levels of the economic ladder.
Senator Finley: Would you categorize education services and the education industry in general as being of some potential for Canada in Panama?
Mr. Harvey: In Panama and all over Latin America, yes.
The Chair: There were, certainly, initiatives and attempts to try to do a free trade agreement with more than one Central American country, and for the various political developments, I think in those countries it has not gone through.
Will Panama, in your opinion, be the driver into Central America, with Costa Rica, obviously, being there already? Will it be a situation that each country will develop differently and, therefore, the initiatives will have to be different for each one of these countries? Is Panama a gateway into these markets, and will there be impediments if we do not have free trade agreements with some of them?
Mr. Harvey: The countries of Central America definitely go at different speeds, and some are more interested and some are less interested. I think what the government has decided to do, as have other governments in the world, is go with the countries that want to make a deal right now.
Is Panama a gateway? It is definitely a hub. The airport in Panama is of huge importance in the region; Copa Airlines, which is very well known, has flights constantly to all of the other cities in the region. The canal is a huge hub, and there is a big free trade zone around the canal and around the airport, which all are good ways into Central America and into the north of South America as well.
[Translation]
Senator Fortin-Duplessis: I have a question for Mr. Harvey. Yesterday we met with senior officials from different departments who came to talk to us about the benefits of a Canada-Panama free trade agreement. They mentioned that there are Canadian companies that import unprocessed gold from Panama. On two occasions you yourself mentioned gold importing companies.
I do not know if you will be able to answer my very specific question. Does unprocessed gold mean gold with its arsenic?
You know that operating a gold mine releases a large quantity of arsenic. While keeping the environment in mind, I would like to know where this arsenic is released if the gold contains all these components. Where in Canada is this taking place and by which means?
Mr. Harvey: Unfortunately, I am not familiar enough with the industry to answer that specific question. The mine I mentioned is a copper mine owned by the Canadian company Inmet. I do not even know exactly where the cooper goes, but I know that they extract copper.
Senator Fortin-Duplessis: Copper does not release the same elements. You talked about Barrick Gold. In response to one of Senator Wallace's questions, you mentioned another gold importing company.
Mr. Harvey: I mentioned Barrick Gold, which is one of the companies that supports us financially. I do not think that Barrick has interests in Panama.
Senator Fortin-Duplessis: Perhaps another witness could answer my question. Thank you.
[English]
The Chair: Mr. Charron and Mr. Harvey, you can see that there is interest in both the pork industry in Canada and in the work that you do on the council. Your testimony has been helpful not only to our study of Bill C-24 but also to our broader reflections on international trade and political developments in Central America. Thank you for coming and putting your evidence before the committee today.
(The committee adjourned.)