Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 19 - Evidence - Meeting of December 5, 2012
OTTAWA, Wednesday, December 5, 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 4:18 p.m. to give consideration to the bill.
Senator A. Raynell Andreychuk (Chair) in the chair.
[English]
The Chair: Honourable senators, 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 proposed Canada-Panama Growth and Prosperity Act. In this session we are pleased to welcome His Excellency Jorge H. Miranda, Ambassador of Canada to Panama.
We welcome you to deliver your opening remarks with your perspectives on Bill C-24 from your government. Welcome to the Standing Senate Committee on Foreign Affairs and International Trade.
His Excellency Jorge H. Miranda Corona, Ambassador, Embassy of Panama: Good afternoon, distinguished members of the Senate. Before we get started, I would like to thank you all for the opportunity you have given me to appear before you today at the Committee of Foreign Affairs and International Trade to offer my testimony in relation to 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 our countries.
I would like to highlight that the free trade agreement between Canada and Panama was approved under Panamanian law on October 26, 2012, as well as the two corporation agreements previously mentioned.
Panama is a service-oriented economy with a vastly developed service sector that accounts for approximately 77 per cent of its GDP. Approximately 63 per cent of employment is linked to service provisions.
Panama's trade balance in Canada shows a surplus in 2011, with exports reaching $121 million U.S. and imports recorded at a value of $86 million. In 2011, Panamanian exports to Canada were second in the ranking of importance to a destination, after the United States. Activities related to the Panama Canal expansion projects are expected to further increase opportunities for Canadian investors, particularly in the areas of infrastructure and construction.
Before signing the free trade agreement with Canada, Panama approved law number 39 of November 14, 1997, which contains the agreement between our two countries for the promotion and protection of investment. Its name is BIT. The BIT will be effective for a period of 15 years once the FTA is ratified — a milestone we have awaited since 2010.
It is important to note that the free trade agreement with the U.S. came into effect in October of this year, which means American exporters are now profiting from the advantage the agreement offers, while Canadian exporters continue to pay the MFN duties.
For Canada, the free trade agreement between our countries would improve market access opportunities for Canadian farmers and food processors by eliminating a range of tariffs on key agricultural exports. This agreement also includes ``zero for zero'' immediate duty free access for products such as lentils, peas, beans, frozen potatoes, pig tails, boneless turkey meat, maple syrup, non-tropical fruit and some processed vegetables, and will immediately eliminate tariffs on industrial exports such as iron and steel products, aircraft and parts, some plastic and wood products, including plywood, motor vehicles, electrical machinery, fish and seafood products, glass and glassware, construction equipment, information technology products and medical and scientific equipment. This represents new opportunities for Canadian workers and manufacturers.
This treaty will contribute to lower prices and improve customer choices for both countries. We will have enhanced market access for both Canadian and Panamanian service providers in financial sectors, construction services, energy, environmental and mining sectors. Furthermore, government procurement is estimated to be between $2 billion and $3 billion, not counting the multi-million dollar expansion of the Panama Canal. Canadian companies will immediately benefit with provisions set out in the treaty related to this matter.
Right now, Inmet Mining Corporation, a Canadian company, through its subsidy Minera Panama, is in the process of building the Cobre Panama mining project at an estimated capital cost of $6.2 billion. The project's scope, social and economic impact is similar to the Trans-Isthmian Railroad of 1855 and the Panama Canal in 1914. This Canadian investment that is taking place right now is the largest private investment in Panama's history. At the peak of construction, the project will employ 10,000 workers and professionals, most of them local Panamanians. During operations the mine will have 2,500 permanent employees. With the free trade agreement, Canadian investments in our country, such as Inmet's, will have enhanced protection, ensuring both our governments maintain the current regulations.
While there are many benefits to the free trade agreement between our countries, some have strong concerns about the corporation system we have in Panama. Nonetheless, our country has the responsibility to protect our service infrastructure, keeping competitive but, at the same time, avoiding possible offenders using the system as a vehicle to support their criminal activities.
In this light, we have established a high level presidential commission to look after the activities of the international and financial services in Panama, and to adopt policy measures to promote negotiations, signing and implementation of treaties to avoid double taxation that have information exchange mechanisms.
To this date, and following this policy that I just mentioned, we have successfully concluded negotiation for the signing and implementation of treaties to avoid double taxation with Italy, the United Kingdom, France, Belgium, Mexico, Holland, Luxemburg, Portugal, Qatar, Barbados, South Korea, Singapore, Ireland and the Czech Republic. I wish to note that 12 treaties is the minimum required by the OECD to remove a country from the list of fiscal paradise and we in Panama have 14.
In relation to these 14 treaties, we have successfully negotiated 11 more additional treaties with 11 other countries, which are now in the translation and legal revision phase. These additional treaties are with the United Arab Emirates, Bahrain, Canada, Hungary, Denmark, Norway, Sweden, Finland, the Faroe Islands, Iceland and Greenland. Our government is expecting to 25 valid agreements in effect in 2013, many more than the 12 required by the OECD.
Panama has in its regulatory financial framework a set of laws and regulations directed specifically at avoiding money laundering and the financing of terrorist activities. In spite of all this, Panama had been unjustly included in a grey list of countries by the OECD despite not having scandalous cases of money laundering, having the best mechanism of control to avoid it, and being a Latin American pioneer in the creation of a financial analysis unit or FAU, recommended by the FATF. Finally, regarding this issue, I would like to make clear that Panama believes in the freedom of all nations to choose their own tax system and in the principle of fair competition in a global economy.
I would like to finish by pointing out that the ratification of the free trade agreement between our countries will further solidify our relationship, which is already very closely knit and harmonized by four crucial similarities our countries share: first, Canada and Panama both rely heavily on trade; second, we both have social models based on multiculturalism; third, we share a unique regional space in the inter-American system, in a community that promotes democracy, human rights and security as core values; fourth, and most recently, we have both joined as observers in the Pacific Alliance, where hopefully both of our countries will soon participate as members.
Thank you all very much for your time and I am open for your questions.
The Chair: Thank you, Your Excellency. Thank you for the outline and your willingness to answer questions. I do have a list, starting with Senator Finley.
Senator Finley: Thank you, chair.
First, thank you, ambassador, for appearing before us and for your frank and exhaustive overlook.
I would also tell you with some remorse that I understand your fine country's soccer team beat the hell out of Canada's a few weeks ago, 5-0 or 6-0. It was pretty bad. I thought it was Americans who were playing, not Canadians.
I used to have a particular interest in the aerospace industry. I spent quite some time working with COPA, the national carrier for Panama. Where are COPA at the moment in terms of fleet refurbishment? What sort of plans do they have? Are there growth opportunities in this particular marketplace that could benefit Canada and Canadian aircraft subcontractors? Do you see opportunity here?
Mr. Miranda: Thank you very much for the question.
One year and a half ago COPA opened a direct flight from Panama to Toronto. It is a flight that is benefiting Inmet Mining Corporation; it is like a commuting flight for them. COPA is looking to open more frequent flights to Canada, too. They are pursuing this. The Government of Panama is pursuing, along with COPA, an opportunity to increase the frequency of flights with Panama as well.
COPA is, as you mentioned, a Panamanian company that has expanded greatly and is serving 28 countries right now. We expect that the relation between Canada and Panama will increase.
Senator Finley: Does that expansion reflect where Panama is looking in terms of trade and partnership operations, like, for example into other Central or South American countries or the Middle East? Is that where the focus of COPA's expansion and presumably Panama's trade expansion is? Is that what you are looking at in Central and Latin America?
Mr. Miranda: I do not really know very well what COPA is looking for, but COPA is more dedicated to this hemisphere and the Caribbean. They have more competitors in the region, but their flights are much more into this hemisphere.
Senator Finley: Could you tell me a bit about doing business in Panama? In many of the places I have gone to with Canadian companies in the past, it was a de rigueur situation that we had to have partners from the country in question. Is that similar in Panama or is it more prevalent in Panama? What are the rules governing Canadians opening up either existing or new businesses vis-à-vis relationship with the Panamanian partners?
Mr. Miranda: Panama is very open to foreign investment and with Canada, which wants to strengthen the relations. I did not mention that we passed a law, too, that Canadians could benefit in opening their processes in a more flexible manner when they establish themselves in Panama.
Before I came to Canada, I visited some little boutique beach hotels on the coast in Panama. You can see Canadian flags waving around. There are Canadian entrepreneurs regarding this free trade agreement. I am in charge also of consular matters. Every day we receive 10 or so emails asking about the conditions. They want to travel. There is a trend that we are looking to. It is the Canadian approach, in my perspective.
Senator Finley: One of the problems — and Senator Downe has eloquently and frequently pointed out — is that occasionally free trade agreements have a kind of reverse impact on what we would anticipate them having; i.e., the balance of trade dips. Obviously, Canadians have to do more to follow up on these and have a better plan, probably, and work harder at it. Is there anything within the Panamanian government structure that would encourage Canadians? I am talking here with Panamanians as opposed to Canadians who are in Panama. Is there something that may encourage us to do or to explore with any particular Panamanian enterprise or government arm or whatever that could help Canada continue to expand in Panama?
Mr. Miranda: Certainly, if this treaty is ratified by your Senate, it will be a benefit because Canadians will gain space in a more sustained manner. Thinking about an institution in Panama or in a private enterprise, I have to mention that COPA is one of the companies that you could strengthen relations with, now that you mention you are related to the aerospace industry. There are several, but I do not have one in particular that probably you are looking for.
However, the relations will strengthen institutionally. I think that, for instance, we could benefit from the know-how of Transport Canada in terms of security, transportation of hazardous materials and other activities. For instance, institutions of the Organization of American States could benefit from Transport Canada through seminars perhaps directed to the Panama Canal Authority or other institutions in Panama.
There are ways to engage us, not only through investment but through institutional relations that we could strengthen.
Senator Downe: Senator Finley asked an excellent question. I am interested in the other side of the equation as well. Are you aware of any initiatives of your government to prepare your citizens and business communities for trade deals to take advantage of opportunities?
Mr. Miranda: We are expecting first the free trade agreement to be ratified. We have been preparing ourselves since it became law. Recently, Minister Diane Ablonczy came to Panama with a trade mission and, if this treaty is ratified, I expect that perhaps we could do the reverse, a trade mission of Panamanians to Canada, because there are Panamanian companies that could benefit from the treaty. I am thinking about companies that sell seafood and related products of the sea that could benefit from this treaty.
We could engage in a trade mission in the coming months. I do not know-how long it would take for the measure to come into force if it is ratified, but we are expecting this to happen, to prepare ourselves in an engagement that the government and the private sector can participate in and distribute the benefit of the treaty.
[Translation]
Senator Fortin-Duplessis: Thank you very much, Madam Chair. It is a pleasure to have you with us today. Welcome. I managed to have a short conversation with you earlier. I have two questions. Here is the first one. How do the market access provisions set out in the Canada-Panama Free Trade Agreement compare to those in the agreement you signed with the United States in October 2012? If there are many differences, what are they?
[English]
Mr. Miranda: I happened to be here recently at the other hearing you had with Minister Ed Fast, and I heard some of the comments made by the former ambassador to Costa Rica Cameron MacKay. He was a negotiator of the free trade agreement with Panama on behalf of Canada. I remember talking about the technical expertise that he does have, that they feel comfortable with the treaty that Canada signed with Panama, and the provisions were even more complex in terms of what was gained in the negotiation. That is what I have in my mind. I am not a technical expert in free trade agreements, but I do remember his remarks during the last hearing that I happened to be a witness to.
[Translation]
Senator Fortin-Duplessis: So you cannot tell us whether there are differences between the free trade agreement you signed with the United States and the one you signed with Canada, which you ratified in your Parliament and which we will soon ratify. Can you not tell us what the differences are?
[English]
Mr. Miranda: No, because I do not really know the free trade agreement. I know there is a free trade agreement in force with the United States, but I do remember the remarks made by former ambassador Cameron MacKay to this committee.
[Translation]
Senator Fortin-Duplessis: Here is my second question. The free trade agreement we are signing with you also aims to increase knowledge sharing. In which sector will our respective expertise be shared? You did not talk about that in your statement.
[English]
Mr. Miranda: Canada has a lot of know-how in infrastructure projects and also education and other areas, but mostly infrastructure. I see the benefits more in infrastructure and construction. Talking about, for instance, the multi- billion dollar project we are doing currently in the canal, Canadian companies will benefit from that because, once the treaty is ratified, you will gain, as I mentioned earlier, a space into Panama. You have a lot of expertise, particularly in those areas, infrastructure and construction, and that will benefit those Canadian sectors rapidly.
[Translation]
Senator Fortin-Duplessis: Thank you very much, Your Excellency.
[English]
Senator Wallin: I want to follow up on the remarks of my colleague Senator Finley. When Canada talks about these free trade agreements and the importance of them, we talk about our Global Commerce Strategy and why we need to be in the area, and we talk about why it is important for us to engage with smaller countries rather than isolate. I want to turn it around a little bit. You have touched on some of these things with Senator Finley. You are exceeding your own goals of signing 12 treaties and to garner acceptance in the OECD. You have put in a regulatory financial framework to try to prevent money laundering and terrorist fundraising, et cetera. However, reputations die hard. How important is a deal like this with Canada to helping you come into the 21st century and address your own real issues and sometimes simply reputational issues?
Mr. Miranda: As I said, we look for support but we are also trying to protect our system of services. Right now, with Canada, for instance, we have to think that Scotiabank is already in Panama. When I am thinking about Scotiabank being in Panama, I am trying to say that if Scotiabank is over there right now, there is less concern about it, at least from my point of view, but we are certainly looking for strengthening the relations to avoid the issues you mentioned in your remarks.
Senator Wallin: You feel that Panama, as a country, has a handle on this issue. What you need is the evidence. As you say, if a Scotiabank is there, it must be an okay place to do business, or at least there is a window for us into the operations.
Mr. Miranda: There is a window.
Senator Wallin: Do you feel you have appropriate and enough regulation in place?
Mr. Miranda: Yes, we do. We are exceeding even the requirements that the OECD put on us. Actually, we are just out of that famously. The government of Panama is taking this seriously, as well as the private sector, because we are attracting investment from many countries, from Korea, from many places abroad.
Senator Wallin: Your own private sector is demanding that as well?
Mr. Miranda: Our own private sector is taking care and respecting our services, because we provide services. Our country, as your country, relies heavily upon trade and services. It is challenging.
Senator Wallin: Yes, for sure. Thank you.
The Chair: Following up, Your Excellency, on that point, you have had several democratic elections. You have the structures in place for rule of law, judiciary, et cetera. Are you asked the question of whether there can be a reversal of that process now in place? That is often the question asked of countries that have stabilized into democracies: Is this going to last? We know recently there have been certain issues around governance, but we all have them. The question is: How do you reassure investors and other governments about the stability of the governance structures, the parliaments, the presidency, et cetera?
Mr. Miranda: I have a personal perspective about this. During the 1980s, I was a student at the University of Panama, and there was a dictatorship in my country during that time. I was a human rights activist. When the U.S. invaded Panama in 1989 and the government of Guillermo Endara took place, the first thing that the government did was to enforce the electoral tribunal. Since 1990, we have had free elections and change of power in a regular manner and that continues to be the case. I expect that the electoral tribunal will continue to be independent and produce services to continue to be a representative democracy, which we are. That is what I expect to happen in the coming election in a year and a half from now.
The Chair: You are a full member of the OAS and the Inter-American Court; is that correct?
Mr. Miranda: Yes. We belong to the OAS, and we also recognize the jurisdiction of the Inter-American Court of Human Rights and the Inter-American Commission on Human Rights. Until this past February, I was a representative of the General Secretariat of the OAS in Honduras for four years, so I know well the system that yiou mention.
The Chair: Just a little bit about the region. Are you looking to accelerate any other trade initiatives in Central America and how do you intend to do that?
Mr. Miranda: We are negotiating other free trade agreements with other countries in the region. We recently concluded a negotiation with Peru for a free trade agreement and we are in negotiation with CARICOM. We are also exploring possibilities of commercial treaties with South Korea, Israeli, Mercosur, New Zealand, and some countries of the Persian Gulf. This is what is happening right now in terms of the negotiations we are dealing with but Peru happens to be in the region.
Senator Finley: You mentioned that you are pursuing free trade deals, and you named each country. However, when you came to the Persian Gulf, you just said with ``some Persian Gulf'' countries. Could you identify those countries?
Mr. Miranda: It does not say in my information, but I could send that to you later. I assume that Qatar is one of them. Qatar has opened an embassy in Panama and we also opened an embassy in Qatar.
Senator Finley: I am sure it is perfectly docile. I was interested in which other countries because we have been in the process of negotiating in the Middle East as well with, for example, Jordan. I wondered what the other countries were. By all means, if you could pass that through the clerk, I would be happy.
Mr. Miranda: I will certainly send the list of the countries.
Senator Mahovlich: Do Panamanians find Canada an attractive place to visit, and what do you have to offer to Canadians? I have a friend, the Honourable Peter Stollery. He used to be a birdwatcher and he found Panama very attractive.
Mr. Miranda: Because of the location of the country.
Senator Mahovlich: Yes.
Mr. Miranda: Transat often travels to Panama. Panama offers security.
Senator Mahovlich: It has a good reputation?
Mr. Miranda: We provide security. You can walk the streets in Panama. I have been living in other countries in the region, and I feel more secure, not because I am Panamanian but because it is really the truth. Canadians are living over there. The U.S. has had a presence for 80 years. I mention the U.S. because there are similarities between your culture and the American culture. We are used to the American presence, so it is the same case with Canadians. A lot of Panamanians speak English, at least, though not French, and we have bilingual schools, even on the beach, even in Coronado. Many Canadians are establishing themselves in Panama, not only for a second home but also for retirement. I am amazed and glad that this is happening because, when you go to Panama, you feel comfortable enough to stay.
Senator Mahovlich: I should take a look at it because I am thinking of retiring.
Mr. Miranda: Okay.
The Chair: It is called forced retirement around the Senate. Do you want to expand on that? I know a lot of people from Saskatchewan who have looked to buy their vacation homes in Panama. Are there any restrictions on purchases or any development restrictions that we should be aware of?
Mr. Miranda: Not that I know of. The system is very open to attract investment. Property in Panama right now is mushrooming.
The Chair: Yes.
Mr. Miranda: It is developing greatly. There are several projects along the Pacific coast and in the Caribbean, and some projects have been developed by Canadians, little communities and such. It is interesting what is happening in Panama.
Senator Housakos: Thank you, ambassador. You outlined some of the sectors in the economy that would be of interest for Canadian development and sectors in the Canadian economy that would be of interest to Panama. Of course, Canada is well known for being a big exporter of resources and agricultural goods and all of that, but we have, over the last few decades, also developed great strength and know-how in technology, infrastructure, communication, environmental technology, waste management and water treatment. We have had a lot of success in exporting that technology around the world. What are some of the possibilities for us in Panama and the surrounding areas of South and Central America? How can Canadian industry in those sectors be able to catch up to the stronghold that American companies have because of agreements that are somewhat older than ours and a relationship in Central and South America that is deeper than ours? We have the capacity to compete with American know-how. The question is: Will we have an even playing field, given the fact that the U.S. has established relationships with your country, amongst others?
Mr. Miranda: Let me say this very frankly. Canada is a robust economy. You are in a good moment. You have muscle to show. It is a country with a future. Canada is in the right moment to go abroad more aggressively, in a good manner. What could benefit Canadian companies is the fact that Panama is a hub for many companies. Many companies have established themselves in Panama in the past few years. Panama is the centre for many companies and it is the same for the United Nations. The United Nations has their hub in Panama to attend disasters in the region, as do other aid agencies. They are the same as the private companies who are establishing themselves in Panama because of the connections. Once you have a foot in Panama, you have a connection to the region. It is a good place to start and to stay.
I congratulate your country on your present situation. I say to all of you that this is a great country. I am talking frankly: You are doing extremely well. You have an opportunity with this treaty and what is happening in Panama to have a strengthened relationship.
Senator Finley: If we want to win, we have to play the game, and we have to be in a free-trade agreement.
The Chair: I think I heard you say, if we want to win, we have to play the game; is that correct?
Senator Finley: We have to join in a free-trade agreement.
The Chair: Your Excellency, thank you for your presence here, your enthusiasm about the work you do on behalf of your country, your expression of support for the agreement between the two countries and your perspective on it.
Honourable senators, for this second session we welcome Mr. Jean-Michel Laurin, Vice President, Global Business Policy, Canadian Manufacturers and Exporters; and Ms. Joy Nott, President, I.E. Canada.
Welcome to the committee. We will hear from both of you. Then we would appreciate the opportunity to ask questions.
[Translation]
Jean-Michel Laurin, Vice President, Global Business Policy, Canadian Manufacturers and Exporters: Thank you, Madam Chair. Good evening, everyone. Thank you for your invitation to appear before the committee today, this time as part of your consultations on Bill C-24, the Free Trade Agreement between Canada and the Republic of Panama.
Before I talk about our position regarding the bill, I would like to take this opportunity to say a few words about the association I am representing here today, Canadian Manufacturers and Exporters. Ours is the leading trade and industry association in Canada, and the voice of Canadian manufacturing and exporting businesses.
This association uses its many initiatives — such as our Canadian Manufacturing Coalition, which brings together some 50 industry associations — to represent over 10,000 businesses across the country involved in manufacturing, international trade and service-related industries.
[English]
More than 85 per cent of our members are small and medium-sized companies, representing every industrial sector and every export sector of the Canadian economy. I would like to remind people that manufacturing is the single largest business sector in Canada. Globally, Canadian manufacturing sales totalled $571 billion last year. Companies that make things in Canada account for 13 per cent of our economic output and employ over 1.7 million Canadians directly in jobs that are highly productive and high paying. Their contribution is critical to the wealth generation that sustains the standard of living each of us enjoys in Canada. However, I remind you also that the business of manufacturing includes more than those companies that are making things.
Manufacturing is a very export intensive business. More than half of our industrial production is exported directly to other countries and manufacturers are responsible for 63 per cent — almost two thirds — of Canada's merchandise exports. Eighty-eight per cent of our exports to Panama are goods that are manufactured in Canada.
It is increasingly critical for our members to succeed in global markets. In fact, as manufacturers invest in innovation, become more agile and more specialized and better able to serve niche markets, the more they need to find customers, suppliers and business partners globally.
A growing share of our members is looking to take advantage of new and emerging opportunities in markets such as Panama. By ``opportunities'' we mean finding customers in those markets but also looking at attracting potential investors to Canada, looking at investment opportunities in foreign markets and being able to source goods and services from all over the world and also find qualified personnel. It is not only about trading goods it is also about investment and a lot of other things.
Our priority, when it comes to government's trade policy agenda, as well as specific trade agreements such as the one before us today, is to ensure that it enhances the ability of manufacturers and exporters to compete and win in domestic and global markets. In other words, our priority is to ensure that trade agreements put us in a position to grow and strengthen Canada's manufacturing base and, by extension, to grow Canada's exports of goods and services around the world.
We believe this agreement with Panama puts Canadian manufacturers and exporters in a better position to compete. We have been on the record several times saying this agreement would improve market access for Canadian goods, services and investment at a critical time.
Moreover, we urge the committee and the Senate to ensure Bill C-24 is implemented promptly. The bill was tabled before the house over a year ago, on November 15 of last year, and the United States has since ratified its agreement with Panama and has seen its agreement come into force on October 31. Given the ambitious trade agenda that the Canadian government is currently pursuing, we are expecting more trade deals to be tabled before the House of Commons and the Senate. Given that our trading partners are also aggressively pursuing bilateral and regional trade agreements, it is important that we review those agreements in a timely fashion. At best, this may give us a competitive advantage in a given market; at worst, there is a risk that it could put us at a competitive disadvantage if we wait too long.
One of the major advantages of this agreement is that it will eliminate most tariffs affecting trade between Canada and Panama. In the case of industrial goods, the tariffs applied by Panama average 6.4 per cent and 95 per cent of those tariffs will be eliminated once the agreement comes into force. In the agricultural sector the tariffs average 13.6 per cent and 78 per cent, so more than three fourths will be eliminated as a result of this agreement.
For some of those tariffs, for example, Panama applies double-digit tariff rates on some of our key exports such as vehicles, aircraft, pork and french fries. Those double-digit tariff rates are significant barriers to exports. This agreement will not only benefit current Canadian exporters in those sectors already doing business in Panama but it will also benefit companies that have not necessarily looked at that market yet because of those barriers. They may now be interested in pursuing this market more aggressively.
Finally, the agreement would also help companies from Panama look at the Canadian market and access Canadian supply chains in the Canadian market.
Again, our membership is very supportive of this legislation and other such trade agreements that expand market access on a reciprocal access and will deliver a net benefit to Canadian industry.
[Translation]
Mr. Laurin: Thank you for your attention. I would be pleased to answer your questions.
[English]
Joy Nott, President, I.E. Canada: Thank you, Madam Chair, and members of the committee. My name is Joy Nott and I am the President and CEO of the Canadian Association of Importers and Exporters, also known as I.E. Canada. Traditionally, we work very closely with the Canadian Manufacturers & Exporters association. We are pleased to appear before you to express our overall support of Bill C-24, the Canada-Panama economic growth and prosperity bill.
I.E. Canada has been in the trade community since 1932. We serve small-, medium- and large-sized companies across Canada. Our membership is truly diverse and dynamic in that we not only represent importers and exporters but manufacturers, wholesalers, distributors, transportation companies, law firms, customs brokers, all sorts of companies who have any sort of vested interest in importing or exporting, whether directly or indirectly.
We were founded in 1932 in the face of a resurgence of tariff barriers and protectionism at that time. While a significant percentage of our members still refer to themselves as importers, a larger percentage are now defining themselves as both importers and exporters.
Our current membership reflects the realities of today's global supply chains. Global business has never been more integrated as companies around the world strive to remain competitive and productive. Traders at home and abroad are constantly seeking new cost sources of supply, whether finished products for sale to consumers, or parts and components for their manufacturing operations.
Canadian consumers benefit from a greater choice of products and lower prices, while manufacturers are able to remain competitive as they search for global and new emerging markets for their products.
As an association representing both importers and exporters, I.E. Canada is an advocate for liberalized trade as well as trade facilitation. We also aim to provide businesses with the information and tools they need to remain competitive.
I.E. Canada and its members strongly support the Canada-Panama economic growth and prosperity bill and speedy passage of Bill C-24. While Panama is a relatively small market overall for Canadian exports, as others have testified before this committee today and in the past, for individual companies and sectors Panama is a significant market and promises to be an even more important one with the implementation of this bill.
Panama's economy is primarily service-driven. It is also one of the fastest growing economies in Latin America and as such it represents a fantastic opportunity for Canadian exporters.
Panama's increased demand for residential housing, fuelled by rising incomes, create demand for a broad range of quality building products, most of which need to be imported into Panama.
Another example of Panama's need for major infrastructure upgrades is a recent announcement about a week ago by President Ricardo Martinelli to proceed with a major project to bury all overhead cables in Panama City and eventually move that project across all of Panama.
As you also may know, SNC-Lavalin and its partners was recently awarded a major engineering contract by Minera Panama, S.A., a wholly-owned subsidiary of Inmet Mining Corporation of Canada, to proceed with detailed engineering procurement and construction of a process plant at the Cobre Panama project in Panama. That project will provide opportunities for Canadian exporters of building materials as well as mining equipment.
The Panama-Canada economic growth and prosperity bill is but one element of a broader trade strategy between Canada and Latin America and Canada's need to diversify its export markets. We are pleased to see, for example, the continuing negotiation between Canada and the EU, as well as India and Japan, but given Panama's strategic location and the expansion of the Panama Canal, Panama can serve as jumping-off point and a hub location for Canadian companies wishing to access markets throughout Latin America and the rest of world.
Recent economic events in the United States and the EU serve to remind us that we need to diversify our exporting markets in Latin America and elsewhere and reduce our economic dependence on our neighbour to the south. That being said, the United States will always likely be, because of our geographic proximity to the United States, our largest trading partner. That said, it does not mean we should not be looking at diversifying.
As Mr. Laurin alluded to, Canada lost the potential advantage we had when Canada stood to have a free trade agreement with Panama in advance of the Americans. That opportunity has passed, but encouraging economic growth and prosperity at this point in time and passing this bill as quickly as possible will serve to level the playing field for Canadians who are trying to do business in Latin America and specifically Panama.
In reading previous testimony before coming here today and in preparing for today's testimony, some of the comments I read from previous people who had testified questioned why free trade agreements and bills such as these are not immediately embraced by Canadian companies and why they cannot jump on them and start taking advantage of them from day one.
In signing a bill such as this, it is more than a free trade agreement and reducing tariff rates and whatever else for market access. There is a closer tie that is fostered between governments, citizens and business when a bill like this is signed. When private companies look to trade internationally, they develop integrated supply chain strategies and they do not look at importing and exporting as discrete processes. It is one continuous flow. They look at the end results for what it is they are trying to achieve from a business perspective and they structure their supply chain accordingly.
They do not think discretely in importer-exporter terms. As the supply chains in business are so tightly integrated, as I said earlier, they are viewed by business as one continuous flow. Traditional government policy, however, does not match the business reality. Imports and exports are generally viewed by government policy as two discrete operations where, generally speaking, imports are viewed as bad for the economy and exports are viewed as good for the economy.
The actual business reality of today is that it is one continuous stream, that a Canadian exporter is primarily a Canadian importer as well, and in fact EDC in a white paper released in 2010 stated that the import content overall of Canadian exports is 28 per cent while the import content of Canadian manufactured goods is 40 per cent. Therefore, a Canadian exporter is hard-pressed to export without having to import.
Viewing imports and exports as opposing and discrete processes actually does not benefit Canadian business. In Canada, in fact, imports and exports are governed by two separate ministries. Exports are governed by the Department of Foreign Affairs and International Trade with Minister Fast and imports by the Department of Public Safety and its Border Services Agency with Minister Vic Toews.
Canada overall would be well served with not only government policy looking at imports and exports as one continuous stream but also by some sort of oversight body that is tasked with ensuring that our strategies and policies, when it comes to decisions such as we are here today to discuss and signing a free trade agreement, are not solely export focused but that we also consider what Canada's strategic import focus should be in light of such agreements.
Overall, and in summary, I.E. Canada and its members strongly support the Panama-Canada free trade agreement and the economic growth and prosperity bill and urge the Senate to proceed quickly with the passage of Bill C-24.
On behalf of I.E. Canada, thank you for allowing me to be here today and I welcome any questions.
The Chair: Thank you, Ms. Nott. I do have a list of questioners for both witnesses.
Senator Wallin: My question is pretty straightforward. We have been talking with many witnesses about this. Are either one of you worried in any way about doing business in or with Panama when it comes to the financial or investment climate or, second, the ability to seek legal protections and/or recourse in terms of doing business?
Mr. Laurin: Personally, I am not doing business in Panama but some of our members are. For that matter, we are quite knowledgeable about the United States market, but it is a high risk business environment. If you are a company looking at doing business in Panama or many other countries, one of the first things companies are usually trying to find out is: What are the risks and how do we manage them?
It depends on who you talk to. Some companies that may not be knowledgeable about the culture, the language and the business practices might find that market a bit risky, but that could be said of almost any market in the world, including parts of the Canadian market.
For those companies looking to do business in that kind of environment, the framework this trade agreement provides is more certainty, stronger rules and more transparent process for enforcing those rules.
In that sense, it gives business people looking at a market like Panama more confidence because the rules governing trade between the two nations are more robust. Actually, the rules that are included in this trade agreement are not all that different from the rules we have in other trade agreements. For a Canadian company that is somewhat familiar with the way Canadians engage in trade agreements and investment agreements and so on, these tend to mirror each other across markets.
Yes, there is risk anywhere in the world where you do business, but having an agreement like this actually provides more certainty and transparency and allows companies to manage that risk somewhat better.
Ms. Nott: I would concur with what Mr. Laurin said and would add one additional thought. Given what is happening right now economically throughout most of the Western world, even Europe today can be seen as a risky market to go into, given some of the challenges they are facing. While Canadians overall might feel more historically comfortable dealing with Europe because of our close ties and history and whatever else, I think one of the best kept secrets the Canadian government has is our Trade Commissioner Service. The Trade Commissioner Service in conjunction with a free trade agreement such as what is on the table today go a long way in helping companies — to Mr. Laurin's point — that may have some uncertainty because Panama may be an unknown animal to them. The Canadian government has the tools in place. Unfortunately, in my experience dealing with a lot of mid-sized companies and even larger companies, there is a total lack of awareness that the Canadian Trade Commissioner Service exists, let alone what it actually does. One of the challenges the Canadian government has is promoting the services that it does have for these traders and the services and resources that are there to help companies to overcome some of these market questions and potential fears they might have.
Senator Wallin: As someone who is doing business in the United States in a different way, waking up the morning after 9/11 with a free trade agreement in place was good for both of our countries, because we could have both been in serious trouble. Thank you for your brief and direct comments.
Senator Downe: I am not familiar with I.E. Canada. I assume you are funded by members who pay the cost of your association?
Ms. Nott: That is correct.
Senator Downe: You do not receive any government funding?
Ms. Nott: None at all.
Senator Downe: In your comments earlier, you indicated that Canada lost the potential advantage we had when we stood to have a free trade agreement with Panama in place prior to the Americans in 2010. I assume you are aware that the reason the Americans did not enter into the agreement is that they wanted to have a tax enforcement exchange agreement in place ahead of time. The U.S. trade rep Ron Kirk was quoted as saying, ``We will not be left behind as other open markets take our market share, but we will not sign agreements for agreement sake. They must be enforceable in the highest standards in the interests of our workers, farmers and business.'' That is why they would not agree to do a deal with Panama. My question is, do you have a concern that Canada signed a trade agreement before they signed the tax agreement?
Ms. Nott: No, I do not have a similar concern. When you look back in time, there was a point when Canada was actually ahead of the curve of the Americans in this particular agreement. To your point, senator, there was a concern about the tax treatment between the two countries. I am doing this by memory so forgive me if I make a mistake, but I believe the tax agreement between the United States and Panama was signed on October 10 or 11, 2011, and within 10 days, I believe it was October 21 or maybe 31, I cannot remember exactly the date, the free trade agreement was ratified.
Senator Downe: That is right, but they refused to enter into the trade agreement until they had the tax agreement. Canada signed the trade agreement, and we are now trying to negotiate the tax agreement. The concern, of course, is that Panama is well known as a tax haven. Are you or any of your members concerned about corruption in Panama and doing business there?
Ms. Nott: Quite frankly, no. As an international trader, even though I am Canadian, I am pretty familiar with FCPA, the Foreign Corrupt Practises Act, of the United States. I am familiar with that because despite the fact that I am Canadian, corruption is something that is prevalent in many areas of the world, not just Panama. Any company that does business internationally at some level or another has to have a policy or a process in place to deal with corruption. They actually investigate and walk into any market with their eyes wide open. The same can be said of many Asian markets at the moment — Southeast Asian markets, Middle Eastern markets. In answer to Panama specifically, we are no more concerned about Panama than any other country.
Mr. Laurin: I have not heard any concerns from our members in that regard concerning the fact that Canada does not have a tax agreement with Panama. If our members collected tax dollars, perhaps they would have a different opinion. Maybe it is an issue for the government but, in terms of the private sector, I have not heard any concerns.
Senator Downe: Your members are not concerned that it is a well-known location for international tax evasion of money from drug laundering? None of that concerns your members?
Mr. Laurin: There might be concerns with respect to those practices generally but, in the context of Panama, as Ms. Nott was explaining, companies that are used to doing business internationally usually have a code of conduct in terms of dealing with corruption in such matters, to my knowledge.
Senator Downe: Are your members concerned about the code of conduct? We heard from the Canadian Council for the Americas. Mr. Michael Harvey testified before this committee that there is corruption in the judges, the judiciary, in Panama. How do you enforce your rules?
Mr. Laurin: That is a good question. Again, I have not heard any concerns from our members that are operating in that market. I could inquire further to see if this is an issue that they would like to raise through us. From a company perspective, they rarely like to raise those matters directly for obvious reasons, but it might be something they could raise through us. We have got around to our membership and have not heard any concerns in that regard. That does not mean there is not an issue, just that maybe they have not raised it with us.
Senator Downe: Is part of the problem, when everyone hears we want a free trade agreement, it sounds wonderful? It is like apple pie. It means more prosperity and job growth. You may not be going in with your eyes wide open because of the history of this country, how they set up their financial planning system and the conduct of the government in enforcing the financial rules. Look at some of the other countries we entered into trade agreements with. You mentioned in your comments we do not benefit right away, but look at Israel. It was 1997, and the trade balance went from a 26.9 billion deficit to 582, and it goes on and on. What is happening? Why are we not getting better results in the short term and the long term with some of these agreements?
Mr. Laurin: For many different reasons, trade agreements tend to get a lot of public attention. Sometimes it is a good reason. There are some good benefits to that in the sense that, in the case of our trade negotiations with the European Union, there is so much talk around it that all of a sudden there are companies that might not have been looking at that market that will pay attention to it as a result of the trade deal. A free trade agreement is no silver bullet. In the case of what I will consider a fairly standard trade agreement with Panama, it is not as comprehensive as what we are negotiating with Europe right now or what we have with some other countries, certainly not as comprehensive as what we are trying to do in TPP.
Many of our members view the agreement as tariff elimination, which is where a lot of the benefits are. Tariffs are a tax on imports. If both governments agree that they will no longer tax imports, then that is a good thing for business. Does it mean that all of a sudden companies will be growing significantly the business they are doing in a specific country? We hope it does, but there are instances where, market forces being what they are, it does not necessarily mean that we will see a boom in trade between the two countries.
My point is, it does address a barrier to doing business between the two countries, but it does not mean that because you remove that barrier, all of a sudden companies will be able to take advantage of that new opportunity that was created.
Senator Downe: What advice would you have for this committee? What can the government do to help businesses and individuals take advantage of these agreements that we are not doing now?
Mr. Laurin: I think one of the things that could be done, and I am hoping that probably could be done more going forward, and some of it is done already, but ensuring that as our trade negotiators are engaged in trade negotiations, that your concerns as senators are being heard and taken advantage of. I know in the United States there is an ongoing process whenever they are involved in negotiations whereby Congress is consulted, both Senate and the relevant House committee, because they do not want to end up in a situation where the trade agreement does not get passed. We would want to be in the same position in Canada. By having collaboration, once the agreement is finalized we will be able to implement it more quickly.
Senator Downe: Your recommendation would be to have more transparency. I understand the United States shares documents with Congress. Any senator or congressman can see the documents as they are being negotiated and they have stakeholder meetings throughout the U.S.A., as they are doing in the Trans-Pacific.
Mr. Laurin: In the U.S., I believe they have about a dozen advisory groups that are sworn to secrecy and have access to the documents. Any negotiating proposal that the U.S. administration would table with its trading partners will be reviewed by key industry stakeholders in the United States.
In terms of what the consultation process is with senators, my understanding is it is not necessarily automatic. Basically, there is an office within the U.S. trade representative's office whose entire job is to deal with Congress.
Senator Downe: My understanding is the same as yours. I have a document from the United States indicating that congressmen and senators can look at the documents in confidence, including all the agreements and all the negotiations. That is obviously not available in Canada.
Mr. Laurin: The use of the word ``transparency'' raises some concerns. We obviously do not want to be completely transparent. That runs counter to your objectives when you are in negotiation, but to the extent that consultations could be done with you, and with key stakeholders such as us and some of our members, we are certainly supportive of that.
Senator Downe: Thank you.
[Translation]
Senator Fortin-Duplessis: Good afternoon. Welcome. Mr. Laurin, you mentioned that your association represents 10,000 businesses — which generate over $71 billion — that you employ over 7 million Canadians and that you want to invest. You want your exporters to be able to compete with other markets and to have access to other markets. In addition, you mentioned that you wanted the agreement to be signed as quickly as possible. I really appreciate you saying so because that is a very positive comment. However, I would like to know whether your exporters are comfortable with the part of the agreement on the environment.
Mr. Laurin: I just want to state the figures. Actually, the manufacturing sector as a whole represents 1.7 million jobs. We would like that figure to be higher, but for the time being, it is 1.7 million. As for manufacturing industry sales, we are talking about $571 billion, which was the sales total of all manufacturing businesses in Canada last year.
As for the part of the agreement on the environment, our members have grown accustomed over various agreements that Canada has negotiated since NAFTA — if my memory serves me right — to chapters or parallel agreements on the environment and labour, on worker protection. To my knowledge, when it comes to the existing rules in free trade agreements that have been negotiated, our members are relatively comfortable with the basic notion of ensuring that the two countries will not engage in unfair competition by reducing or alleviating the impact of their environmental protection rules, or ensuring that workers have the right to unionization and representation.
Historically speaking, I would not say that we do not agree. However, this is a type of rule governments negotiate between themselves and, to my knowledge, our members are comfortable with those rules. I would even say that, generally speaking, the more clear and transparent governments are on those types of issues, the more our members support those kinds of governmental measures. Historically speaking, we were not the ones who asked for those chapters to be included in the agreements. However, their presence certainly has no negative effect — to my knowledge — but rather positive effects, especially in the case of the agreement with Colombia. The way our agreement was negotiated — with the parallel chapter on the environment and especially on workers — led to criticism to ensure that the bill to implement the agreement is passed before the House of Commons. Therefore, I would say, as long as these measures help ensure the required political support for implementing those agreements, we certainly support their inclusion.
Senator Fortin-Duplessis: Thank you very much for the clarification. That was my only question.
Mr. Laurin: It was a pleasure.
[English]
Senator D. Smith: Mr. Laurin, you represent manufacturers and exporters but not importers, I suppose. Ms. Nott, you are the President of the Canadian Association of Importers and Exporters. I have a question for each but I will ask them at once.
Mr. Laurin, you sounded almost euphoric and gung-ho. Is there any type or category of free trade agreement that you do not like, seeing as you represent manufacturers and exporters, or is your association's view more or less the more the better?
Ms. Nott, you wound up saying ``the sooner the better'' but you were a little more cautious. Are there any aspects of some free trade agreements that sometimes make you nervous? Are there any in this particular agreement that are in that category or do you just think it is fine and dandy?
Mr. Laurin: I have not been called euphoric in a long time.
Senator D. Smith: It is a compliment.
Mr. Laurin: There are certainly parts of trade agreements that we may not have liked in the past. When we are looking at the trade agreements that we are currently negotiating or looking to negotiate, there could potentially be things in them that we would not like. Hypothetically, there could be such a thing as a free trade agreement we would not like.
Senator D. Smith: Have you seen one yet?
Mr. Laurin: No, but in the case of NAFTA or the Canada-U.S. Free Trade Agreement there are certainly parts we did not like and we never tried to say we did not like those, but at the same time we do not want to throw out the baby with the bathwater. We think the agreement overall might do some good things even though there are some parts that could have been negotiated better. We want to make sure a trade agreement provides reciprocal benefits and allows our members to grow their manufacturing base in Canada and export more products from Canada.
In the case of the trade agreement we are negotiating with Europe, we think it could potentially have very significant benefits to the Canadian economy. However, if we do not negotiate it properly and some of our members' key concerns and issues are not being addressed in the agreement, if we end up with a deal that is less ambitious than what both governments have been working towards, we could end up in such a situation.
Senator D. Smith: It is quid pro quo.
Mr. Laurin: We will see. Until now, we have been supportive of the trade agreements that have been negotiated. Some of them have been very divisive in our membership and usually that is what happens with a highly ambitious agreement. I was not around at the time of the Canada-U.S. Free Trade Agreement, but I hear from my colleagues that it was very divisive within Canadian industry. However, nowadays there is strong consensus that it has been good for Canadian business.
I hope that answers your question.
Ms. Nott: In answer to your question to me about whether I have any specific hesitations about this particular agreement, no, I do not. If you heard any hesitancy or any sort of caution in my comments, it goes more towards the way free trade agreements actually come to fruition. Overall, are our members in favour of free trade? Yes, absolutely. We are free traders. Is there such a thing as a free trade agreement that we have ever seen that we did not like? I will echo exactly what Mr. Laurin said and not take up any more time. However, to give an example of when the rubber hits the road, so to speak, how a free trade agreement actually ends up materializing versus how it was negotiated, I said in my comments that business views importing and exporting as one continuous flow, yet government has two separate ministries, one that oversees imports and another that oversees exports. Then putting aside other industries that have an indirect impact on importing and exporting — the Ministry of Health, for example — could potentially have some sort of stake in Canadian imports or exports.
What ends up happening sometimes is that while, in theory, and what has been negotiated, duty rates have been eliminated, non-tariff trade barriers have been torn down, as time progresses, either of the two countries starts acting, maybe even unconsciously, in a protectionist way, where other government agencies will, for example, put in domestic regulations that suddenly make free trading with its partners a little bit more difficult. Sometimes I am sure it is unintentional, and at other times I am sure that there is, quite bluntly, politics behind it.
That is the caution that you would hear in my voice. I am coming at it from the perspective of business. If it could all just stay pure, and what was negotiated could stay pure, we are fully in favour of free trade. NAFTA is a perfect example. NAFTA is a complex piece of legislation. As the years have gone by, many a lawyer has made many a dollar advising on NAFTA.
Senator D. Smith: I am a lawyer.
Senator Wallace: Mr. Laurin, my first question is for you. I was interested to hear that 85 per cent of your membership is made up of small- and medium-sized firms. With any free trade agreement and any trading opportunities there are for Canada, I find myself thinking immediately: What can that mean for the businesses that are in the area that I am from, which is Atlantic Canada? Most of the businesses, with a few exceptions, would be small- and medium-sized.
I am wondering what you might say, from your membership's perspective, about the degree of awareness they would have of Panama today, the opportunities that are there, and how, if at all, you would see that changing if this agreement is implemented. What does it mean now and what can it mean in terms of real business opportunities going forward?
Mr. Laurin: The level of awareness right now — not to criticize my members — I would say it is fairly low, in part because, in the grand scheme of things, Panama is certainly not Brazil or the United States. If you are a company that is doing business exclusively in Canada or North America, Panama might not be the first place you would look to expand, but it could be for some companies.
The potential is there. We do not export that much; I think $111 million in exports last year. However, it is a market that is growing rapidly. Ms. Nott mentioned the significant infrastructure investments that are going on there. I know there are SMEs in Atlantic Canada in a wide range of sectors. We often think of food products, but there are high-tech companies and companies in the ICT sector. If you look at the Halifax region, there is a strong cluster of companies in marine and defence-related technologies. A lot of those companies could look at Panama as an interesting market.
Is this trade agreement going to remove all the barriers? No. Were the tariff rates or the non-tariff barriers an issue for some of them potentially? I know one of the largest companies in Atlantic Canada has been growing its business in Panama, but mostly from its U.S.-based operations, because Canada is facing a 20 per cent tariff for their type of product in Panama. Therefore, it is getting that 20 per cent tariff to drop. I think the tariff the U.S. was facing going to Panama was 10 per cent. They were producing in the U.S. and shipping to Panama because they were facing lower tariffs.
Now that both countries have free trade agreements, they are looking at potentially repatriating some of that production back to Canada. That would be great, because it is a food company that employs a lot of folks back east. However, a lot of farmers also supply that company. That is a potential impact that could be very positive, not just to one large company but many of their suppliers, which, for the most part, are small- and medium-sized companies across the region.
Senator Wallace: When you say that, you think of what opportunities could be in a country like Panama, which is smaller, and maybe niche market opportunities for some of our small- and mid-sized companies. For the larger firms, such as SNC-Lavalin and Inmet, it does not matter where in the world those opportunities are. If they are resource driven, they will find them. They are there. They have the resources to find those opportunities.
It seems to me that when you say that, it is stating the obvious. However, what goes hand in glove with these free trade agreements is that we have to have a process of creating awareness so that our smaller companies will know an opportunity is there and they can at least be aware of it, whether or not they decide to pursue it.
Mr. Laurin: I could not agree more.
Ms. Nott: Again, I echo what Mr. Laurin was saying. However, the few comments that we received about Panama and the opportunities in Panama, with the widening of the Panama Canal, it will allow the larger ships to transit through the Panama Canal.
To step back for a second, unlike CME, 85 per cent of I.E. Canada's members tend to be larger companies. My members employ 1.6 million Canadians, but I have far fewer members than Mr. Laurin. The makeup of our members is different. They look at the opportunity to potentially move operations that are currently sitting in Miami, with Miami being the generally accepted hub for South America, and moving that into Panama. Then suddenly it is not only a launching point for South America; it is a launching point to the world because of its geographical location and the widening of the canal, which will allow for different ships, et cetera.
I wanted to throw that in as an opportunity. It is not necessarily the exact type of opportunity you would normally identify in a free trade agreement, but that is a real potential cost saving for Canadian and other businesses that potentially locate their distribution hubs there.
Senator Wallace: Another thing comes to mind. Aside from exporting goods, it opens up the opportunity to provide Canadian services to Panama and vice versa. You mentioned in your presentation that within your organization you have accounting and legal firms. Of course, Canadian accounting and legal firms have gone from regional to national and they are now international. Do you see opportunities in Panama for Canadian international professional firms — in particular, legal and accounting — to find opportunities in Panama?
Ms. Nott: I will be honest. We have not particularly asked that question of the subset of our members. However, I worked for public accounting firms for over 12 years. I can say that there would be an opportunity for public accounting firms. I cannot specifically comment on law firms, but I will extrapolate to say that it is likely the same type of opportunity. By that I mean there is the potential that many Canadian businesses would look to create a footprint in that market and vice versa; Panamanian companies would potentially look to create a Canadian footprint. That, in and of itself, lends itself to professional advisory services and all sorts of ad hoc consulting services that go with that, let alone potentially creating new taxpayers and that sort of thing when the nexus is met.
Senator Wallace: With your past years in the accounting field, and Deloitte & Touche in particular, you would know how all of that works.
Ms. Nott: Yes, I do.
Senator Wallace: Ms. Nott, one final question. I was interested in your comments about how business views the import/export business as one supply chain but does not necessarily seem to be reflected in government policy where they are treated as two separate chains and the suggestion that that works to our detriment.
Ms. Nott: Yes.
Senator Wallace: I would gather to our businesses' detriment?
Ms. Nott: Yes.
Senator Wallace: Could you expand upon that and compare us to the United States? Does government policy in the U.S. take the same approach as we would here?
Ms. Nott: Thank you for asking that question, because I think it is a really important topic. I will be very brief and give an example of what it is that I am talking about in Canada and then I will reference the United States.
I.E. Canada holds a lot of events for our members. We hold seminars and conferences where the speakers are, more often than not, public officials at different levels within government to come and help Canadian traders understand what the particular intricacies are to a particular piece of legislation or regulation, whatever the case may be.
The specific example I will give you is that we had the President of the Canada Border Services Agency and the President of the Canadian Food Inspection Agency; we literally introduced them to each other on a particular topic and actually helped those two agencies to realize, with regard to some of the food protection regulations that are taking up headlines these days in the mainstream media, what some of the actual process implications were going to be on the border and actually continuing to keep goods moving, keep the trucks moving. If you have to do this, how will you keep things moving? It was commented to us that ``It is a good thing you brought us together.''
That is an example of what I mean when I say ``silos,'' and businesses often caught between the government silos of having to try to satisfy more than one master and not having the government realize what it is doing as it is tripping over its own shoelaces. No offence.
When it comes to the United States, I will say that, luckily, Canada is not as complex as the United States. However, in the United States, I think it is maybe the American culture versus the Canadian culture. American business screams a lot more at their senators and their senators end up taking a lot more action. The exports in the United States are controlled by the Department of Commerce and the imports by Customs. They often have been brought into the same room at the same time and it is generally because business has screamed for it to happen. I do not think Canadian business screams as much in Canada, which is why it has not happened as much up here.
Senator Wallace: Maybe they scream at the elected leaders.
Ms. Nott: Exactly. I do not know. Screaming is not as effective in Canada.
[Translation]
Senator Robichaud: This bill also includes an agreement on labour co-operation. Can you compare the situation of workers in Panama with that of workers in Canada, in terms of minimum wage, working conditions, and so on?
Mr. Laurin: No, not really. I assume that those who negotiated this agreement assessed that situation. I have no data about that, but I could inquire, if you wish, and try to obtain some more information. I know that we have some members who do business over there, especially in the areas of processing, mining and infrastructure. Therefore, I could inquire to get some idea of the situation, but I have no information with me.
[English]
Ms. Nott: Unfortunately, I do not have any specific information, either, but I can go back to my membership and try to get that.
My general impression would be that, if anything, Canada might have a slight advantage over Panama in that some of the larger infrastructure projects and some of the larger challenges that Panama is currently facing relative to its rapid growth of residential housing and such might lend itself to a lot of Canadians with a lot of expertise looking to outsource their services. To Senator Wallace's point earlier, we might be able to provide services to a new market. In that particular case, I see it potentially as an advantage.
[Translation]
Senator Robichaud: I asked the question because my understanding was that you fully supported this bill and I thought that, at some point, you may have had an opportunity to compare working conditions here and there. Thank you.
[English]
The Chair: I think we have exhausted our questions.
I want to thank you for coming before us and giving your perspectives on Bill C-24, and your broader perspectives on trade agreements, et cetera. Thank you again on behalf of the committee.
Honourable senators, we have a session tomorrow. We will also be looking at our budget for our study. Therefore, beyond Bill C-24, we do have another issue for tomorrow's agenda.
Senator Downe: Chair, at a previous meeting, we were going to have some information sent to us by officials of the government; I wonder if we have received that?
Adam Thompson, Clerk of the Committee: I have not. I understand it is just awaiting approval from the minister. I will follow up and see if I can get that.
Senator Downe: Thank you.
The Chair: The meeting is adjourned.
(The committee adjourned.)