Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 14 - Evidence - Meeting of June 12, 2014
OTTAWA, Thursday, June 12, 2014
The Standing Senate Committee on Foreign Affairs and International Trade,
to which was referred Bill C-20, An Act to implement the Free Trade
Agreement between Canada and the Republic of Honduras, the Agreement on
Environmental Cooperation between Canada and the Republic of Honduras and
the Agreement on Labour Cooperation between Canada and the Republic of
Honduras, met this day, at 6:03 p.m., to give consideration to the bill.
Senator A. Raynell Andreychuk (Chair) in the chair.
The Chair: Honourable senators, we are here with Bill C-20, An Act
to implement the Free Trade Agreement between Canada and the Republic of
Honduras, the Agreement on Environmental Cooperation between Canada and the
Republic of Honduras and the Agreement on Labour Cooperation between Canada
and the Republic of Honduras.
Minister Fast was to appear as our first witness. He is detained and will
be here before seven o'clock, I trust. In the meantime, we can go to our
next panel of witnesses. We're going to express our gratitude that you were
able to come earlier and to participate in our debate.
Senators, we received notice earlier of some witnesses that were not able
to come, but in consultation with the clerk, they have provided their
background and asked us to refer to their testimony in the House of Commons.
I assured everyone we have been following this bill and are aware of their
comments in the other place.
At the table, we have Mr. Peter Iliopoulos, Senior Vice-President, Public
and Corporate Affairs, Head Office, Gildan Activewear Inc.; from Aura
Minerals Inc., Mr. James Bannantine, President and Chief Executive Officer;
and from Mining Watch Canada, Ms. Jennifer Moore, Latin America Program
I'm sure all of you have testified before. Our process is to have opening
statements with respect to the bill, after which senators will have
questions. I will take you in the order introduced. Mr. Iliopoulos, please
Peter Iliopoulos, Senior Vice-President, Public and Corporate Affairs,
Head Office, Gildan Activewear Inc.: Thank you, Madam Chair. I will
begin by expressing my sincere gratitude for the invitation to appear today.
We have tremendous respect for the work of your committee; in particular we
are excited to contribute to your examination of the Canada—Honduras
economic growth and prosperity act.
My name is Peter Iliopoulos, and I am the Senior Vice-President of Public
and Corporate Affairs at Gildan.
I would like to start by giving you a brief overview of Gildan's
operations. Gildan was founded in 1984 by the Chamandy family and is
publicly traded on both the Toronto and New York stock exchanges with its
headquarters based in Montreal, Quebec. The company employs over 34,000
people worldwide and distributes its products in over 30 countries. We pride
ourselves in our ability to deliver a high-value, quality products to our
customers leveraged against our leading social and environmental practices
and Canadian corporate governance profile.
We are a vertically integrated apparel manufacturer with our
manufacturing headquarters located in Honduras. Our manufacturing operations
include facilities in Honduras, the Dominican Republic and Nicaragua. We
recently acquired a small vertically integrated manufacturing facility in
Bangladesh. As part of our vertical integration business model, we also
conduct yarn-spinning operations in the United States.
We distribute our products in two primary markets, namely the wholesale
channel in Canada, the United States and other international markets, and
more recently the retail channel in the United States. We sell T-shirts,
sports shirts and fleece products in the wholesale distribution channel. For
the retail channel, we expanded our product line to include socks and
underwear in order to provide a full product line offering.
With respect to our operations in Honduras, which first started in 2001
and which represent the most significant piece of our overall manufacturing
production, we operate four textile manufacturing facilities, two integrated
sock manufacturing facilities, four sewing facilities and a screen-printing
facility responsible for producing our activewear, hosiery and underwear
products. In total, this represents a capital investment of over $700
We have over 24,000 employees in the country, which makes us the largest
and most important private sector employer in the region. We established our
manufacturing operations in Honduras given its strategic location in
servicing our primary market in the United States. Our experience has shown
that there is a very skilled workforce in Honduras, resulting in the
development of a strong decentralized local management team to run our
operations in the country.
In Honduras, we can also leverage the CAFTA-DR free trade agreement,
which provides goods manufactured in Honduras and the Dominican Republic
duty free access into the U.S. market.
The negotiations for the Canada-Honduras free trade agreement were
completed in the summer of 2011 and the subsequent signing of the agreement
occurred in November 2013. Accordingly, we are now looking forward to the
upcoming ratification of the agreement which, once implemented, will allow
us to effectively service the Canadian retail market, particularly against
competing Asian imports.
Our corporate social responsibility program, the Gildan Genuine
Stewardship commitment, which has been evolving for over a decade, is based
on four core pillars: people, environment, community and product. CSR
represents a key component of our overall business values and strategy, and
we believe our practices position us as a leader in the apparel industry.
Our social compliance program includes a strict code of conduct and ethics
based on internationally recognized standards and encompasses a thorough
audit process which includes the conducting of both independent and third-party
audits at each of our facilities on a regular basis.
In 2007, Gildan became the first vertically integrated apparel
manufacturer to be accredited by the Fair Labor Association, which was a
stepping stone to what is now our comprehensive and robust corporate social
responsibility program. In addition, each of our sewing facilities has been
certified by the Worldwide Responsible Accredited Production program.
Since 2009, Gildan has been annually recognized by Jantzi-Macleans as one
of the Canada's 50 best corporate citizens. Furthermore, in 2013, Gildan was
included in the Dow Jones Sustainability World Index and is one of only two
North American companies as well as the only Canadian company named to DJSI
World under the textiles, apparel and luxury goods sector. The annual DJSI
review is based on a thorough analysis of corporate economic environmental
and social performance which covers issues such as supply chain standards
and labour practices, environmental policy management systems, corporate
governance and risk management. Specifically in Honduras, Gildan was awarded
for six consecutive years the seal of the Foundation for Corporate Social
Responsibility, which recognizes our high standards and strong commitment to
CSR in the country.
The working conditions we offer our employees at our worldwide locations
include competitive compensation significantly above the industry minimum
wage; 24-hour access to on-site medical clinics, staffed with a team of 22
doctors and 37 nurses; free transportation to and from work for our
employees; and subsidized meals. We are also currently in the process of
implementing a best-in-class ergonomics program in collaboration with the
Ergonomics Center of North Carolina, which we expect to complete in Honduras
by the end of 2014 and subsequently at each of our other locations. Most
recently we inaugurated three schools for back health in Honduras, which was
a first for our industry in the country.
Overall, the working conditions that we offer our employees, who
represent our greatest asset and success factor, are of paramount importance
to us. After almost 15 years in the region, we have undertaken numerous
initiatives in order to contribute in a meaningful manner to our employees'
and the community's well-being. To give you a few examples, since 2003,
Gildan has partnered with the Honduran ministry of education and the U.S.
Agency for International Development to offer primary and secondary
education to underprivileged regions in Honduras, which has also benefited
900 of our employees. In 2010, Gildan facilitated in the opening of a drug
store adjacent to our on-site medical clinics at our facilities in Honduras,
which in 2013 alone provided medicine to fill more than 57,000 prescriptions
issued by our on-site doctors. In 2011, one of the nurses at our on-site
medical clinics developed a workshop to benefit all pregnant employees and
close to 500 employees have participated.
From an environmental perspective, we have a strict environmental policy,
an environmental code of practice and an environmental management system.
Similar to our labour compliance program, we conduct regular environmental
audits at each of our facilities. We also operate highly efficient
biological waste water treatment as well as biomass steam generation
facilities to produce energy, resulting in a significant reduction of our
greenhouse gas emissions.
From a community perspective, our emphasis has been on partnering in the
communities in which we operate, with a focus on youth education and
humanitarian aid. As one example, in 2005 we spearheaded the development of
an industry-wide initiative for the creation of a technical school in
Honduras. To date this represents an investment of over $1.6 million and has
resulted in 7,000 students graduating from the school.
With respect to product sustainability, all Gildan-branded products are
OEKO-TEX Standard 100 certified, thus assuring consumers our products are
safe and that no harmful chemicals or materials are found in their
composition. Unfortunately, due to our time constraints, I can only provide
a brief summary of Gildan and our CSR practices.
I would like to conclude by addressing the importance of the
Canada-Honduras free trade agreement to Gildan and its operations in Canada.
Once implemented, we, as a Canadian company, will be able to compete on a
more level playing field in our home country, in particular against
competing Asian imports, some of which already enjoy duty- free access into
the Canadian market. More specifically, this agreement will provide us with
the opportunity to seek entry into the Canadian retail market, which we have
not penetrated up to this point. Today our sales into Canada account for
only 3 per cent of our total consolidated sales.
Our entry into the Canadian retail market will also benefit Canadian
consumers by providing them with a more competitive pricing option for
apparel, hosiery and underwear products. More importantly, the presence of
our products in the Canadian retail marketplace will provide Canadian
consumers with the option for a competitively priced, high-quality product
which will be manufactured based on leading recognized standards in the area
of corporate social responsibility and Canadian values.
In closing, we look forward to the ratification of this agreement and its
subsequent implementation. We have been waiting for free trade between these
two countries for over a decade, and accordingly we hope to see a rapid
implementation. I would like to thank the committee for this invitation and
I look forward to your questions.
The Chair: Thank you.
I'll turn now to Mr. Bannantine, President and Chief Executive Officer of
Aura Minerals Inc.
James Bannantine, President and Chief Executive Officer, Aura Minerals
Inc.: Thank you, Madam Chair.
Aura Minerals is a Toronto Stock Exchange listed copper and gold mining
company. We have about 2,300 employees divided between Canada, Mexico,
Honduras and Brazil. We have four producing mines divided between copper and
gold. Last year, we produced 200,000 ounces of gold and 14 million pounds of
copper. Our revenues last year were approximately $350 million, so we are a
small- to mid-sized mining company based in Canada with operations in those
We are a big believer and practitioner of corporate social responsibility
which encompasses community relations, environmental best practices and
labour best practices. You can see our current version of our annual
sustainability report that we publish every year on our website,
auraminerals.com. I can also provide a copy of that to the clerk, if
Drilling down into Honduras, of our $350 million revenue, about $100
million of that revenue came from Honduras last year. We produced about
65,000 ounces of gold in Honduras.
We believe that the best hope for Honduras and Central America as a
region is integration into the economies in North America, basically Canada
and the United States. We believe this will be good for the region,
including Canada, from security, human rights, environmental and democracy
Where we operate, we can see production moving from Asia back to Central
America and Mexico because of inflation in China, competitiveness of supply
chains and integration between engineering design and marketing in the
hemisphere between Central and North America. We can see that providing jobs
is the best defence against narco- trafficking. The best defence against
narco-trafficking in Mexico and Honduras is jobs because the unemployed
youth are the people who become the soldiers in the drug wars.
From a more specific impact perspective about Honduras, mining and what
it means to us, Aura Minerals has provided between 12 and 25 jobs split
between Ontario, B.C. and Quebec over the last eight years, on an average
basis. The average is in the high teens. Our monthly payroll in Canada is
$400,000. Our Canadian supplied services, which are mainly engineering and
consultancy services, have been about $10 million over the last 2.5 years
split between our operations in Honduras, Brazil and Mexico.
In the places we operate, but especially in Honduras, we project our
values on environmental, human rights and what we call the "equator
principles" in all those areas, not just to our mine. Our mine has 800
employees in Honduras. Our mine sits in the middle of three villages; that's
about 5,000 people. We operate within the country standards on labour,
environment and community relations, but we also set the standard, so we
raise the bar, if you will, in the areas we operate, particularly Honduras.
Just for reference, Honduras had a democratic presidential election last
November with a very high turnout, tightly contested between three parties.
We can't take democracy for granted in the places we operate. If we look at
Venezuela, Bolivia, Argentina, Cuba and Nicaragua, those are not shining
examples of democracy; Honduras is. Honduras has a long way to go in many
areas, but we believe the best practice is engagement as opposed to
In economic terms, we believe and we can see that the two countries'
economies are complementary. Honduras is focused on tropical products such
as coffee, fruit and textiles, and Honduras benefits from Canadian services
such as technology, manufacturing and engineering services.
Aura Minerals: Our company in Honduras is called MINOSA, which is
Minerales de Occidente. We are a $100 million company in Honduras. In
Honduran terms it is a huge company; we are one of the bigger companies in
Honduras. We are one of two scale operating mines in Honduras, and mining
varies between the fourth and fifth industrial sector in the country. On the
scale of things, we have a great impact in Honduras in what we do. We do, as
I say, wave the sustainability and corporate social responsibility flag
The backbone of the mountains between North and South America runs
through Honduras and there is great geological potential, which means great
mining potential, which means good potential for Canadian companies in
Honduras. There are only two mines; there should be twenty.
Honduras passed a new mining law last year. It's quite a step forward
from the old mining laws; it was well debated in their legislature. They
took a lot of commentary from international mining companies and from other
governments. There is still room for improvement, but this could be a much
larger sector by orders of magnitude than it is today. If that were to be
the case, we would then live and work in the mining capital of the world. We
think there will be other opportunities there, not only opportunities for
business, but also opportunities to project our corporate social
responsibility values into a country that's open or is kind of a clean slate
ready for riding upon.
Specifically, with the free trade agreement, the largest single provision
that helps us is the investment protection provision. A mine is a 100-plus
million dollar investment. The investment protection provision in the free
trade agreement is important to us and would be important to other Canadian
companies that would want to build a new mine in Honduras.
Thank you very much. I also look forward to questions.
The Chair: You mentioned there were two mines. You were one, and
who is the other?
Mr. Bannantine: The other mine is called El Mochito. It's owned by
a Belgian company called Nyrstar. It's a lead zinc mine. Ours is a gold
The Chair: Now we'll turn to Jennifer Moore, Latin America Program
Coordinator for MiningWatch Canada.
Jennifer Moore, Latin America Program Coordinator, MiningWatch Canada:
Thank you for the opportunity to share my testimony again before this
committee. I appreciate this second chance, given the very dismissive,
stigmatizing and even abusive way that my — and others' — original testimony
was treated by the majority of MPs on the parliamentary committee that also
looked at this act a couple of months ago.
I think this is important to underscore because I think it suggests that
the hearings in that committee were not given the legitimate, serious
attention they merit and that there are some important considerations that
have been sidelined or simply ignored.
Very briefly, MiningWatch Canada is a pan-Canada initiative supported by
labour, social justice, environmental and indigenous organizations from
across the country. We work for environmental protection and the respect for
the rights of mining-affected communities here and abroad in the face of
unjust policies and practices in the mining sector.
I believe that by voting into effect the Canadian-Honduras free trade
agreement that the Canadian government will be reinforcing tremendous
asymmetries between the nearly negligible possibility that mining-affected
communities have to ensure their rights are respected today in contrast to
the highly privileged access that will be afforded Canadian companies like
Aura Minerals and other investors registered here to possibly the most
powerful binding arbitration tool in the world today.
We have been observing cases of international arbitration suits against
El Salvador, Costa Rica, Peru and elsewhere that allow corporations to
launch costly lawsuits or to threaten costly lawsuits against governments
when they, their people or even their courts make decisions that they simply
don't like. Even if a corporation loses, the initial stages in such a
process can cost both parties millions of dollars that would be much better
spent. Meanwhile, countries also pay a high price in terms of the cost to
local democracy and respect for collective rights.
At the same time, this unjust framework for the assertion of investor
interests has been installed while Honduras, in particular, has become the
most dangerous country in the hemisphere to be fighting for community rights
or to work as a journalist or human rights advocate. Just this year, the
organization Global Witness published a new report called "Deadly
Environment," in which they documented 109 land and environmental advocates
who have been killed in Honduras since 2002. One hundred of them have been
killed since the military-backed coup in June 2009. There is also a 98 per
cent level of impunity in that country, and I will not have time to go into
the details of the uselessness, the corruption and the inefficacy of the
current judicial system and security system in Honduras to ensure that
communities have a chance at fighting for their rights.
I do want to go into some detail about the very unjust operating
environment in which mining companies are operating today in Honduras, that
this investor protection agreement will reinforce and that Canada has had a
hand in creating.
I'm going to focus on one piece of legislation, the new Canadian-backed
mining law passed in January 2013, passed and developed with strong
diplomatic support from the Canadian embassy and economic contributions from
the Department of Foreign Affairs and the former Canadian International
It is important, however, to note that in the last few years and
especially the last few months of the outgoing government's administration
of former President Lobo that was marked by ramming through literally
hundreds of legislative reforms that have been highly contested by many
environmental human rights and community-based groups in Honduras. In fact,
when one of them contested the model cities law that was considered
unconstitutional by the highest court in Honduras, the now president of
Honduras basically committed a coup against the very constitutional court
and ousted all of the magistrates of that court and replaced them with
magistrates loyal to his authority.
To get into the mining law a little bit, the Canadian government and
mining industry, along with the industrial mining association in Honduras,
pushed for the new mining law principally to lift a moratorium that had been
in place in Honduras on new mining concessions and new mining projects since
at least 2006. That moratorium put in place by ousted President Mel Zelaya
under pressure from Honduran civil society, who had been fighting for
legislative reforms for years as a result of the weaknesses in the legal
framework to respond to the impacts on their water and health that, in
particular, communities in the Siria Valley around Goldcorp's San Martin
mine were experiencing.
We can also safely assume, I believe, that the Canadian government and
industry leaders undertook this process in the context of the highly
repressive and violent post-coup environment from 2010 to 2013 in order to
ensure that the mining law would not end up looking like the proposed mining
bill that had been ready for debate just before the military-backed coup of
June 2009. The 2009 bill, which was killed with the coup, included key civil
society proposals, including a ban on open-pit mining, a ban on the use of
cyanide and mercury in mineral processing, and a requirement for community
approval before mining concessions could be granted.
The new mining law, to the contrary, leaves the door open to open-pit
mining. Water sources, except for those that have been declared and
registered, which are a minority, are left unprotected. Mining is not
explicitly prohibited in populated areas, meaning that forced expropriation
and displacement of entire communities can take place. Community
consultation is to take place, but only after an exploration concession has
already been granted and a contract has been established with mining
This is a very late stage in the mining process to undertake consultation
and means that while a community could presumably state its position at this
stage, the government would face a high probability of being sued by any
company with a subsidiary in the country with whom they have a free trade
agreement, such as the one we are discussing today.
There is also a new 6 per cent royalty that this law divvies up on
mineral sales from metal mining projects in a few different pots, including
a third of this for security forces, which I will touch on in my remarks but
which I think is particularly problematic.
Overall, the coup and this law, amongst others, have laid the conditions
for a lot of conflict, which has already been emerging. It's also important
to note that communities in Honduras are strongly opposed to open-pit
mining, very much as a result of impacts that have been seen and experienced
with Goldcorp's San Martin mine, which is now closed.
I will just say that one public opinion survey, carried out by the
Research Centre for Democracy in 2011, found that some 90 per cent of
Hondurans are opposed to open-pit mining. The National Coalition of
Environmental and Social Networks has already noted, since the passage of
the Canadian-backed mining bill in 2013, that over a dozen mining conflicts
have emerged across the country.
Second, when you have communities that are fighting to protect water
sources or to stay on their land, this law enables companies to monopolize
local water sources for industrial mining operations and could lead to the
displacement of entire communities, putting at grave risk their survival and
economic sustenance, especially when they rely on the land, such as peasant
This was one of the impacts that was seen of Goldcorp's San Martin mine,
where there was a loss of some 18 local water supplies, the displacement of
a community and long-term risk to environment and public health as a result
of acid mine drainage that was observed mere years after putting the mining
Finally, the security tax on mining production, particularly in the
context of a highly corrupt police force, a police force that is working
ever more in coordination with military forces, provides a direct incentive
to them to protect mining installations, I believe, to protect mining
interests over the safety and well-being of the people, who may very much be
questioning the impacts of or even be against the implementation of these
I'm not going to go into great detail on the variety of examples of
conflicts that have emerged around the country, except to mention that they
have been highly disturbing in terms of the nature of the brutal violence
against land and environmental advocates and repeated threats against key
leaders in those communities.
I do want to come back to the point that Mr. Bannantine was mentioning in
terms of being the most important thing for the mining industry, which is
the installation and the provision of this investor protection mechanism. I
fear that this mechanism could be very much used against Honduras should
they be able to make a shift in their policy framework at a future point in
time. If the situation shifted in the Honduran government and there were
once again efforts — through legislation, through a moratorium or other
measures that we have seen in the past in the country — to respect the will
of communities and to better protect water supplies, the environment and the
right to decide over what development is good for them.
We have a very poignant example in the case of El Salvador right now,
where Vancouver-based mining company Pacific Rim Mining, which is now owned
by OceanaGold, is suing the state of El Salvador for more than $301 million
after failing to obtain the social and environmental licence needed to
develop a gold mine in the department of Cabañas, where it encountered first
local, and then nationwide, opposition to metal mining in that country,
which is a small country largely dependent on one watershed.
Notably, Pacific Rim did not meet regulatory requirements necessary to
obtain a mining permit in El Salvador and instead relied on high-level
political lobbying; nor did Pacific Rim undertake adequate studies to
understand, much less mitigate, potential adverse impacts from their
project, especially on water supplies, which were of particular concern to
the local agricultural communities.
Whether this company ultimately wins or loses its arbitration in
Washington, which is coming up for hearings this September, El Salvador has
already spent $5 million fighting this suit. I'm not sure that those $5
million couldn't have been better spent. That's enough money to provide one
year of adult literacy classes for 140,000 people. At the same time, and
during this time when the companies brought a suit against the country, we
have seen some four environmental activists killed, and others repeatedly
threatened, while policy development in this area has stagnated.
Were a future government in Honduras to come along that would stand up
for what Honduran communities have been calling for, for many years, in
terms of respect for their right to decide, to adequately protect their
water supplies and the environment, they would likely be slapped with a
similar sort of suit.
In the meantime, companies that invest in Honduras under current
conditions have things stacked in their favour, even more so if this free
trade agreement is passed, while communities are likely to keep paying with
their water, their lands, their existing livelihoods and even their lives.
The Chair: Thank you. I do have a long list of senators, and I
will start with Senator Dawson.
Senator Dawson: Ms. Moore, we did insist on having some people
invited who are clearly opposed to the bill. We are sorry about the short
delay and the short time we will be giving it, but the chair and the
steering committee felt it was important that we give an opportunity to be
That being said, as I gave the speech as the representative of the
opposition on it this afternoon, with all its flaws and with all the flaws
that this government might have on other issues, and with all the flaws you
can give to the Honduras government, we think that, in the scale of
important things for Canada, because of companies like Gildan and companies
that are investing in Honduras and helping the Honduran economy — and
helping the Canadian economy at the same time — we decided that we are
supporting this bill.
That being said, I appreciate your comments. I don't want to give the
impression that because we support the bill, we support the Honduran
government or the way the Hondurans are doing. But as a country, we take
small steps in improving our participation around the world. Canada is a
good example. We try to encourage them to be good citizens. We ask people
who come to work in Canada, as I said in the speech this afternoon, to be
good citizens when they come to work here; and we do appreciate, when our
Canadian foreign workers go into foreign countries, that they are also good
That being said, Mr. Iliopoulos, could you give us a comparison of the
number of workers you have in Canada versus the number of workers you have
Mr. Iliopoulos: What we operate in Canada is the head office of
the corporation. We have approximately 250 employees. In Honduras, we employ
Senator Dawson: And in other countries?
Mr. Iliopoulos: Globally, we employ over 34,000 people worldwide.
Senator Dawson: Mostly for importing back to Canada or exporting
to the rest of the world?
Mr. Iliopoulos: Our supply chain is based on western hemisphere
manufacturing. We manufacture our products in Central America and the
Caribbean Basin, and we distribute that product globally. Our largest market
is the United States. About 90 per cent of our sales are in the United
States, but we do distribute our product in over 30 countries globally.
Senator Dawson: Mr. Bannantine, on a totally different subject:
The Extractive Industries Transparency Initiative that is being signed by
many countries and being implemented in many countries, the Hondurans are
not a member of that initiative right now. Do you think you would encourage
that kind of international supervision of what is being done in the mining
industry in Honduras?
Mr. Bannantine: Yes, senator. Yes, we would. This last
year, for the mine in Honduras, we got the international cyanide code
certification for the mine in Honduras. We basically transferred the
technology of environmental and corporate social responsibility technology
into the country through our mine, and that will become a standard for the
other mines in Honduras in the future.
They won't all be Canadian. There are some Chinese mines and there are
what I would call lower standard operators, and it's better for the
standards to be high. We being, if you want to call it, early miners or
early participants, will have a better effect. We have a good ear from the
Honduran regulators for things like that. Honduras again is very low
intensity and not well mined. There are not a lot of mines in Honduras. We
are still at the early stages. There should be wide open ground for that.
Senator Housakos: Mr. Iliopoulos, welcome to our committee.
Gildan's head office is in Montreal. What are the total revenues for Gildan
Mr. Iliopoulos: We reported over $2 billion of revenue in the last
Senator Housakos: That would make you one of the largest head
offices in Montreal.
Mr. Iliopoulos: We are one of the few publicly traded companies
headquartered in Montreal.
Senator Housakos: Can you repeat for the committee how many
employees Gildan has in Honduras right now?
Mr. Iliopoulos: We employ over 24,000 people in the country, which
makes us the largest private sector employer in Honduras.
Senator Housakos: Is there any policy that you have vis-à-vis your
employees in terms of social benefits and health care coverage? What kind of
benefits do you offer your employees and how would those compare to the
other local employers in the Honduras economy?
Mr. Iliopoulos: Over time, we have implemented a very robust
corporate responsibility program. We offer extensive benefits. To highlight
some of the benefits we offer our employees, we have 24 hours a day, 7 days
a week medical clinics on site on our facilities, staffed with doctors and
nurses to service our employees, their needs, et cetera. We provide free
transportation for our employees to and from work. We provide subsidized
meals in the cafeterias for our employees. We also offer our employees
extensive training to provide them with the opportunity to advance within
the company and within our operations.
Most recently, we have been working on implementing a robust world-class
ergonomics program. We've been working with the Ergonomics Centre of North
Carolina to develop a world-class program. We expect that to be implemented
in Honduras by the end of 2014. These are some examples of what we do in
terms of offering benefits to our employees.
Senator Housakos: Mr. Bannantine, can you also tell us the number
of employees you have in Honduras?
Mr. Bannantine: We have about 800 employees in Honduras. Of those,
they are equally split between contractors and direct employees.
Senator Housakos: What kind of social programs do you have for the
employees in your company?
Mr. Bannantine: First, our average salary wage is about three
times the national average. We provide health care not only for our
employees, which are those 800 people; we provide school and health care for
the 5,000 people who live around the mine.
Senator Fortin-Duplessis: My first two questions are mainly for
Mr. Iliopoulos and Mr. Bannantine.
This agreement with Honduras is accompanied by a labour cooperation
agreement. Is it important for you to have an agreement to ensure the basic
rights of workers in the countries you do business in?
Mr. Iliopoulos: I can tell you that something like that is
important for sure, to answer your question. Over and above, as I mentioned
to the previous senator, what we do from a corporate social responsibility
perspective is a very important part of the overall business strategy for
our organization. We have made a significant investment in terms of effort,
time and resources to ensure that we have a world-class program, which is
why we believe that we are leaders in our industry in terms of the benefits
we offer our employees, the working conditions that we create for our
employees to operate in, and the different programs that we have in place,
not only from an employee perspective but also with respect to the
communities in which we operate. Part of our business strategy is to partner
in the communities where we have our operations and have a positive impact
in terms of the lives and well-being of these individuals.
Senator Fortin-Duplessis: What about you, Mr. Bannantine? Do you
think it is important to have an agreement to ensure the fundamental rights
of workers in the countries where you do business? The main agreement with
Honduras contains a part that provides for an agreement on labour
cooperation. I am asking you the same question as Mr. Iliopoulos.
Mr. Bannantine: In our case, we are already probably above and
beyond the requirements on the labour side, the provision in the agreement.
We do have a very independent and active labour union in our mine in
Honduras. They defend their rights very well. Like I say, the employee
salaries, wages and benefits are many times the country's average. I would
say that the most valuable thing that we bring to our labour force in
Honduras is safety. Our safety standards are way above the safety standards
in the country. The most important thing to a worker is to have a safe place
to work, where we are working. I think that will benefit multiple
industries. In our case, we hold to a very high standard on our own.
Senator Fortin-Duplessis: Transparency International ranks
Honduras 144th out of 177 countries in its corruption perceptions index. Is
that a concern for you in terms of conducting business in that country?
Mr. Iliopoulos: From Gildan's perspective, we are a publicly
traded company. Corporate governance and corporate ethics are of paramount
importance to us and that's how we've always conducted operations
notwithstanding where we operate. Irrespective of Honduras, Nicaragua,
Canada, United States, we always operate our company based on the highest
standards in terms of corporate governance and corporate ethics. That is of
paramount importance to us and that's how we conduct our operations. We've
been in Honduras for 15 years now and we've had a positive experience in the
country. We conduct our operations based on our standards and how we operate
our operations globally.
Mr. Bannantine: On our side, we operate up and down Latin America.
If you look at our website, in our corporation we are all Spanish and
Portuguese speakers. We've all lived and worked in the places where our
mines are. It's an issue everywhere we work, honestly. We go in waving our
flag and we make our managers sign certifications that they get briefed
periodically. We have no mercy if somebody does participate in something. We
have an independent whistle- blower policy to my board of directors. I
personally go in. I will see the minister. I may even see the president and
say, "We are a Canadian company and these are our policies and practices."
It's basically the implementation of the anti- corruption, foreign corrupt
practices law. It is something that we keep an eye on and it's definitely a
We don't do it. Nobody in our chain of command does it. We have to try to
enforce that amongst all of our suppliers, the whole ecosystem in which we
operate, basically. To be honest with you, it's something that we have to
watch and that we keep a constant eye on all the way to my level.
Senator Ataullahjan: Thank you for being here this evening.
Have you received any criticism in the past regarding workers' rights?
Can you explain?
Mr. Iliopoulos: We have a very robust code of conduct in terms of
how we conduct our operations, and freedom of association is one of the
underlying principles of our code of conduct. We respect our employees'
right to freedom of association. That's a choice that they have.
With regard to how we conduct our operations, we have a very positive,
constructive, proactive dialogue that we conduct with various NGOs, both
international NGOs and NGOs based in the various different countries in
which we operate. We maintain positive, constructive dialogue with unions as
well. In fact, at two of our facilities in Central America we have
collective bargaining agreements governing the employees of those
This is something that we deal with in a very proactive and constructive
nature, and we maintain very positive dialogue with the various different
Senator Ataullahjan: Would you know what percentage of your
workers are female, and how do you ensure that women's rights are upheld in
Mr. Iliopoulos: I don't have the statistics in front of me, but I
think it's in the range of a 50-50 per cent split. I can verify that and get
back to the committee with something more exact.
As part of our code of conduct and code of ethics, which we've
implemented over many years now, women's rights and freedom of association
are all fundamental principles that we apply for our employees. These are
all underlying fundamental principles, and this is a very important aspect
of our overall business strategy and our corporate social responsibility
program, which has been recognized in many organizations in terms of its
Senator D. Smith: Thank you all for coming and speaking.
Generally speaking, I'm sympathetic to more free trade. Senator Dawson
has indicated our caucus is sympathetic to this, and even though there have
been some instances where we would enter into one and our numbers actually
went down a bit rather than go up; it's not automatic.
I want to touch on the point that Senator Fortin-Duplessis raised. I've
done a fair bit of work on and off over the years with the World Bank and
the IMF, and when they are dealing in countries where there is a fair bit of
corruption, bribes and payoffs, the view is that you have to at least
keeping raising it and asking whether you are making progress. Because if
you don't raise it, it's almost interpreted as that's the norm and you just
roll with it.
Both of you have indicated that your companies are not into this stuff,
but I don't believe it doesn't exist there. What I'm trying to get a feel
for is this: Is the Honduras government trying to stop it? Are they making
progress or is it taken as a given in certain indications?
I certainly want to hear from Ms. Moore because she did make reference to
it. You may have different views, but I think we should hear both sides.
Mr. Iliopoulos: From my perspective, I can talk about our
practices in the country. This is something that we hold in very high regard
in terms of how we conduct our operations from a very ethical manner and the
highest level of corporate governance. Our experience in the country in
Honduras in terms of conducting operations over the last 15 years has been
Senator D. Smith: Do you hear stories on the grapevine that are
not good stories?
Mr. Iliopoulos: What I can comment on is something that we're
directly involved in in terms of conducting our operations, and that's been
a positive experience for us.
Mr. Bannantine: I go back to my previous testimony on kind of the
same issue. It is definitely an issue in the country. It's an issue in every
country in Latin America, and it varies in scale relative to the size of the
economy or the size of the country in question.
Because of that, it's something that we have to be vigilant on, and we
are quite vigilant on it. We're vigilant on it in Honduras. I believe that
the best approach in that respect both in terms of transparency, human
rights, democracy and security is engagement, not isolation. At a high
level, the free trade agreement engages Honduras and gives us a very big
seat at the table to say you can't do this or this is how you should do it
and with legitimate voice.
Senator D. Smith: Is the Honduran government trying to stop it?
Mr. Bannantine: Yes, they are. Again, 140 out of 175 countries is
probably not far off, to be honest with you. Obviously, the poorer the
country, the bigger the problem it is.
In the mining industry, per se, it's us or the Chinese. Which would you
rather have a seat at the table? Who would you rather have trying to raise
the bar, trying raise standards? Honduras is so poor that they've got to
have jobs and they have to have industry; they should have responsible
mining in the future as well.
Ms. Moore: Thank you very much for the question.
I think there are tremendous concerns about corruption. It is considered
to be a highly corrupt judicial and political system, police agency, and I
think this started to be a problem even before the coup and has gotten a lot
Just to give an example of how this has played out for a mining-affected
community, in 2007 there was a recognized public health crisis in the Siria
Valley as a result of the environmental contamination and the health
problems that were affecting the local residents living around Goldcorp's
San Martin mine. The public health ministry took blood tests of the local
population and found high levels of lead in the blood of a significant
number of them. Instead of immediately acting on those results and following
up with further investigation to find the source of problem, the health
ministry sat on those results for four years.
It was not until 2011 that those local residents received the results of
those exams, since which time the commission that had been established to
try to deal with this has basically been dissolved. There has been no
further movement on it, and the communities have gone from having some
judicial proceedings in the country they had seen move ahead a certain
distance to now being shelved. Some of the very people that were in power
over the natural resources ministry at the time are now adjunct to the
general attorney's office, and there is deep concern that this is basically
going to negate any access they have to justice in their own country.
There is the example of the current president of Honduras when he was
president of the congress, under the past administration, basically ousting
all of the magistrates of the superior court and replacing them with members
loyal to him, and now his government administration is highly problematic.
We are dealing with a very corrupt system, and the way Canada has been
involved in the last few years in dealing with first the de facto regime
following the coup up until today is troubling. The last elections were not
democratic. There were multiple political murders, particularly of the
opposition party in the lead-up to those elections. I think it's highly
irresponsible to give such short shrift to the testimonies.
In response to your question, I want to comment on what Senator Dawson
said. I think it's very unfortunate that you have made a decision even
before you have these hearings, and that you are having such short hearings
when there is a crisis in Honduras that is only going to be aggravated.
And what community advocates and what human rights and environmental
organizations are saying about Honduras getting involved in the extractive
industries transparency initiative is that it is a joke compared to the
level and the depth of corruption that is rampant throughout the system in
Honduras; and this is just going to liberalize that even more. I don't know
what other type — what you think you might be deciding, but this is a
demonstration of support for the Honduran government, whether you like it or
I think the situation is very serious, and I think it is also worth
questioning the economic benefits of this. If you look back at Pablo
Heidrich's testimony from the parliamentary hearings, he argued that there
will be negligible economic impact from this free trade agreement.
Senator Oh: My question is for Ms. Moore. You are watching over
all these mining company activities in Honduras. Can you provide the
committee with a list of the companies that your organization thinks are in
violation of security, environmental and human rights?
Ms. Moore: I want to state first that we don't pretend to cover
off all of the companies working in Honduras or throughout the region; it's
absolutely impossible. We don't have the capacity to do that. We advocate
that Canada adopt corporate accountability mechanisms that would ensure
adequate oversight, but in Honduras, we've spent the most time working with
the environmental committee in Siria Valley where Goldcorp operated its San
Martin mine until 2008, which has been in the process of closure ever since.
We also have grave concern over the fact that there has been a real
explosion of mining conflicts in the country since 2013 and the passage of
the mining law.
Some of the companies and corporate actors in those cases are hard to
identify. In the north of the country, some are linked to the elite families
in the country, the family of Miguel Facusee and others, where we've seen
some of the more extraordinary violence. In one case even some human rights
accompaniment advocates from France — and I can't think of the second one —
were abducted by armed guards last July for a period of time. They were
there because responding to threats that the local community members were
Just a couple of weeks ago, in connection with what could be related to
some of the emergence of narco-mining and narco-trafficking entering into
the mining sector as well, we saw a community advocate killed with his
tongue cut out, and the community has been absolutely terrorized. It's not
clear who the corporate owners or backers of that project are at the moment.
There is a lack of clarity of who is behind the new mining investments in
the country. Mr. Bannantine mentioned there are only two operating mines
right now, Aura Minerals mine and El Mochito, which is a Nyrstar operation.
Our work on those has been limited. I have been concerned when I have asked
about things in the northwest of the country, where Aura Minerals is
operating, that there is quite a bit of fear about speaking out about
things; there have been journalists and others who have received threats.
Senator Oh: Any idea how many mining companies operate in
Ms. Moore: I can tell you more on the lines that the national
network of environmental networks is currently talking about 96 newly
approved mining concessions. Of course, those don't all indicate new
projects and I can't give you a number on how many independent companies
that indicates because there is not a lot of information right now.
The Chair: Just as clarification, you said there were some threats
in the area where Aura Minerals is. Do you know where those threats came
Ms. Moore: I don't know the source of those threats.
The Chair: We're not sure if they are government or other sources.
Ms. Moore: No.
The Chair: Just a clarification on your organization, I know
you've testified before us before. You're interested in continuing mining
but with responsible mining, or are you indicating that there are countries
where there should be no mining?
Ms. Moore: We don't advocate what other communities or populations
should do, but we think the claims of communities, and in some cases entire
populations, to designate areas free of mining is a legitimate stance. We
have worked with communities that have both agreed to mining on their lands
and others that are opposed to it. We advocate strongly for respect of
community consultation and consent prior to mining projects being developed
and think there should be consent around legislation that is also developed.
It's really looking at respect for community rights prior to mining
developments, during the course of mining, as well as adequate and
sufficient environmental protections. I think that's consistent across our
work in Canada as well as internationally.
The Chair: We've run out of time. On behalf of the committee, I
want to thank the three of you for coming to put your positions on the
record. This committee has been following this bill so, as was indicated, we
will take into account. We have yet to come to the point of voting on the
bill, so I trust that your comments will resonate with senators here; I'm
sure they will.
We look forward to your input because the issue of international trade is
before this committee. We take it into account and as we opened we said we
wanted to hear those who are for this agreement and those who may not be for
this agreement. We appreciate your point of view. We are being televised so
your points of view will reach Canadians.
Senators, we will continue with our study of Bill C-20, An Act to
implement the Free Trade Agreement between Canada and the Republic of
Honduras, the Agreement on Environmental Cooperation between Canada and the
Republic of Honduras and the Agreement on Labour Cooperation between Canada
and the Republic of Honduras.
Minister, in these last days when we're all having our schedules changed
constantly in the House of Commons and here, I'm pleased that you were able
to readjust to be here this evening rather than as was planned on an earlier
date. I am not going to do any more introduction other than introduce you as
the Minister of International Trade. I know you have with you Mr. Henri-Paul
Normandin, Director General, Latin America and Caribbean Bureau; Mr. Cameron
MacKay, Director General, Trade Negotiations; and a few others behind you
who may be of assistance to you.
We have had, and I must say an appreciated, a technical briefing to all
senators who were available and their staff, and that was extremely helpful
to the committee. With those very few opening remarks, minister, I turn the
floor over to you for your opening comments and welcome your first time to
Hon. Ed Fast, P.C., M.P., Minister of International Trade: I
already feel welcome. Thank you, Madam Chair, for inviting me to speak to
you about this important agreement, the Canada—Honduras economic growth and
prosperity act. I know senators here have taken a keen interest in what we
are doing on the trade side within Canada. I think all of you understand
that trade has long been a powerful engine for Canada's economy.
At no time in Canada's history has our country been more committed to
using trade and investment to drive economic growth, job creation and the
prosperity of our Canadian families. Deepening Canada's trading
relationships and dynamic in fast-growing markets around the world is key to
Since 2006, Canada has concluded negotiations on free trade agreements
with 38 different countries, and there are many more to come. Indeed, our
government has undertaken the most ambitious trade and investment strategy
in Canada's history. I'll just give you a little context before I get into
the Canada—Honduras free trade agreement.
Perhaps most notable in our recent trade agenda has been, of course, the
agreement in principle reached between Canada and the European Union on a
comprehensive economic and trade agreement, and that was followed this past
March with our announcement that Canada and South Korea had concluded
negotiations on a free trade agreement. By the way, that agreement with
South Korea is Canada's first in Asia and provides our Canadian companies
with the platform into the broader Asian region.
Canada is also actively pursuing an agreement with 11 other Asia-Pacific
countries through the Trans-Pacific Partnership, which represents a market
of almost 800 million people, as well as economies representing $28 trillion
worth of annual economic activity. We are also negotiating trade agreements
with countries like Japan and India, and our government also continues to
update existing agreements, for example, the Canada-Israel Free Trade
Agreement, and we do so to maximize benefits for Canadian exporters,
consumers, manufacturers and investors as well.
Madam Chair, the Canada—Honduras free trade agreement is yet another step
we're taking to support Canadians as they compete in a fiercely competitive
global marketplace. It's a concrete demonstration of the government's
commitment to an ambitious pro-trade plan, as well as part of our strategy
for engagement within the Americas.
There is no question that the markets of Latin America offer great
potential. Total merchandise trade between these countries and Canada, which
is valued at somewhere in the order of $57 billion a year, has increased by
34 per cent since Prime Minister Harper first made the Americas a foreign
policy priority in 2007. Canadian direct investment in that very same
region, valued at somewhere around $169 billion in 2012, has increased by
almost 60 per cent since 2007. Much of that, of course, is in the resource
and extractive sector.
Our bilateral trade with Honduras itself continues to grow. From 2009 to
2013, our two-way merchandise trade with Honduras grew 59 per cent from $176
million to $280 million. Just over the last year alone, Canada's exports to
Honduras grew by somewhere in the order of 17 per cent.
But Canadians companies do not face a level playing field in Honduras.
Honduras already has free trade agreements in force with eight partners,
including our major competitors — the U.S. and the European Union. Gildan
would have likely shared that information with you. This gives their
businesses a measurable competitive advantage over ours.
Once our free trade agreement enters into force, Canadian exporters will
be able to compete head to head in Honduras, and I know they can and will
win regularly. Why do I know that? Because Canadian companies do so every
day all around the world. Canada is home to some of the best, most
competitive, most innovative knowledge-based companies in the world, and we
know that they regularly compete in that fierce global marketplace, and they
By agreeing to quickly implement this free trade agreement between Canada
and Honduras, you will be helping Canadian companies take advantage of
Honduras's growing economy by immediately eliminating duties on almost 70
per cent of Honduran tariffs with most of the remaining tariffs being phased
out over a period of five to fifteen years. The range of products that would
benefit include agriculture and agri-food products, forestry products,
plastics, chemicals, vehicles and auto parts, industrial machinery, and fish
With the Honduran approval last fall of Canada's beef and pork inspection
systems, Canadian producers and exporters of those products can take
advantage of tariff elimination immediately upon this trade agreement coming
Canada's service sector also stands to benefit. It may surprise you to
know that some of the greatest value being added to our economies is in the
service sector, especially when it comes to the services that we trade
around the world. For example, Canada is the world's fourth-largest exporter
of engineering services. We are only 35 million people in a world of 7
billion people, and yet we are the fourth-largest exporter of engineering
services. Why? Because we are a knowledge-based country. We are highly
innovative. We have some of the best in the world when it comes to
engineering, geology and many of those other disciplines.
Of course, Canadian investors will also benefit from a secure and
equitable treatment of their investments in Honduras. This trade agreement
includes robust provisions designed to protect bilateral investment through
legally binding obligations to ensure that investors will be treated in a
non-discriminatory manner. Our investors will also have access to
transparent, impartial and binding dispute settlement mechanisms within the
international arbitration arena.
This free trade agreement contains strong provisions on government
procurement, providing Canadian companies with preferential access to
government contracts within Honduras.
Of course, you earlier mentioned, Madam Chair, the parallel agreements on
environmental and labour cooperation. Like others that Canada has signed,
they commit both Canada and Honduras to effectively enforce our respective
environmental and labour laws and to ensure that we do not undermine or
weaken those laws in order to promote trade or investment.
Madam Chair, Canadian companies that do business abroad simply ask for
fair, transparent, predictable and non- discriminatory trade rules. With
those rules in place, they will compete with the very best in the world and
win. But as is the case in all of the agreements that Canadian signs, trade
must be a two-way street. It must be a win-win for both parties. My remarks
so far have focused on the benefits to Canada.
What I did want to highlight is that we know that Honduras faces daunting
economic challenges. They face daunting security and social challenges. I
can tell you that by providing Hondurans with new opportunities to trade
with Canada and to benefit from Canadian investment, we provide them with an
opportunity to move out of poverty and we give them hope for the future. At
the same time, our engagement with Honduras allows us to share our Canadian
values and our best practices in areas such as freedom, democracy, human
rights and, of course, the environment. As I have often said publicly, when
trade is done right, it's a solution, not a problem.
For all of these reasons, I trust that this committee will support and
expedite the passage of the Canada—Honduras free trade agreement.
Thank you for your kind attention, Madam Chair and members of the
committee. I would be pleased to take some questions from you.
Senator Dawson: Mr. Minister, thank you for your presence. I
started looking at the clock at 7:05 or 7:10 and was going to come back and
quote the former leader of the Conservatives in the chamber and say, "No
minister, no bill." We were hoping that you would be here. We are glad you
As I mentioned in the speech this afternoon, we, as independent Liberals,
have decided that we are supporting it. It's important to say, for obvious
reasons, that these trade agreements cannot be amended by a vote in the
house or in the chamber. They are agreements. They are signed government to
government. They are either accepted or rejected. We would probably have
some amendments we would like, but Mr. MacKay had to negotiate some of these
agreements. You give and take, and, in the end, you sign the agreement for
the benefit of Canadians and, I think, also for the benefit of Hondurans.
This agreement will benefit everyone.
My colleague Senator Downe, the deputy chair, would talk about how many
potatoes from P.E.I. are being exported and would quantify that. I certainly
understand, as a Quebecer, that Senator Housakos talked about the importance
of Gildan and Montreal. The pork producers are strong supporters of this
agreement. That is more of a comment than a question. What do you think?
That way it's a question.
Mr. Fast: That's a very open question.
Thank you for highlighting Quebec because Quebec has special expertise in
a number of areas. Quebec is actually Canada's leading exporter of pork
products. We have certainly taken notice of that in all of our trade
negotiations, and that particular commodity is very important and plays a
very significant role.
Of course, we shouldn't forget Quebec's expertise in engineering. It is a
world leader in that area. It has a number of world leading firms in that
area. We want to make sure that we provide the opportunities for every
region of the country, not only Quebec but also every region of the country,
to benefit from the agreements that we sign.
When we were negotiating with the European Union, occasionally people in
British Columbia would say, "We're really only interested in the
Asia-Pacific. I don't know about CETA." We would mention to them, "Listen,
CETA is just one part of a much larger picture we are hoping to paint. It's
a picture of prosperity and opportunity for Canadians from one end of the
country to the other." I reminded them that if we couldn't get an agreement
with the EU done, we would likely never get one done with South Korea or
many of the key economies around the world.
Honduras, even though it's a small economy, when you factor it into the
larger Latin American region and our engagement there, it's pretty
significant. As you know, Honduras is only one of a group of countries like
Costa Rica, Panama, Chile, Peru and Colombia who are our closest allies in
that area when it comes to economic partnerships. They are like minded. They
believe in free markets. They believe in protecting investment. These are
the kinds of partners we negotiate these agreements with because we both
understand what's at stake and the benefits that will flow from these
Senator Fortin-Duplessis: Minister, welcome to our committee. I
have a very short question for you. The explanatory notes to the agreement
state that Canadian provinces were consulted. You actually went over that
quickly in your answer to Senator Dawson. Can you tell us whether that
consultation was as extensive as the one you held on the negotiations
related to the Canada-European Union Comprehensive Economic and Trade
Mr. Fast: Thank you for that question.
I think what we should be careful of is comparing our negotiations with
the European Union with any other negotiation that we've engaged in. The
European Union was the first time that Canada's provinces actually had a
seat at the negotiating table when it came to areas of their own exclusive
or partial jurisdiction. The reason we brought them to the table is that,
between the European Union and us, we quickly concluded that we had the
ability to negotiate the world's most comprehensive and ambitious agreement.
In fact, we were able to do so. It took four and a half years, but we've
been able to actually achieve outcomes within that agreement that extend
beyond the federal realm to the provincial and municipal realms. That's why
the rest of the world is now going to see this as the standard they are
going to have to meet, and I would suggest to you that they will have great
difficulty in meeting it because it is so comprehensive. It is so bold. I
would suggest that even the United States, as they're negotiating with the
EU, will probably not have the same kind of flexibility to have that kind of
a comprehensive outcome.
All of our other negotiations involve robust consultations with the
provinces and the territories, but they don't involve having the provinces
and territories at the negotiating table themselves. Most of the provinces
and territories actually have civil servants and negotiators who are
designated to the various negotiations that Canada federally undertakes. We
are in touch with them on a regular basis, especially where we're
negotiating specific commodities that may be of special interest to certain
provinces. I think Mr. MacKay would support my contention that we regularly
engage with those particular provinces to make sure that, as we negotiate,
their positions and concerns inform the process so we get an outcome they
can support. We have had significant success in achieving those kinds of
Senator Ataullahjan: Thank you for being here, minister, to answer
When we speak of trade with Honduras, invariably the issue of human
rights comes up. I wanted to ask you about the impact of this agreement on
the Honduran people, given the human rights situation in the country. What
kind of influence will this agreement have on human rights and democracy?
How do we expect its benefits to filter down and enhance the well-being of
the Honduran people?
Mr. Fast: Thank you for that excellent question. It's a question
that has been asked of me many times within the context of Honduras, but I
should add that it's also been asked of us in the context of our
negotiations for free trade agreements with Colombia and Peru. Even back in
1997, it was an issue that was raised when we negotiated with Chile. Let me
explain why we believe this is so important, not only to Canada but also to
Honduras is coming out of a troubled history. It's a history of security
challenges, violence and significant human rights challenges as well. The
question we as Canadians have to face is that if a country like Honduras,
which has these overwhelming, daunting challenges, expresses a sincere
desire to move out of that toxic environment and create hope for their
people, how does Canada respond? That's the question for us.
We decided long ago that when there is a genuine desire in countries like
Honduras, Colombia, Peru and formerly Chile to escape a troubled past, we
want to engage with them rather than isolate them. There are two ways of
doing this. You could say, "Listen, you're far from perfect; we're going to
isolate you." We have concluded as a government that that will not move
countries like Honduras forward. When we expand our trade relationship, we
give new opportunities to a country like Honduras to develop more
prosperity. If they have more opportunity to sell their products in Canada,
clearly that's an opportunity for them to grow their prosperity. If they
protect Canadian investment, which this agreement will, they encourage more
Canadians to invest in Honduras. They send a very clear signal to Canadian
companies that they will protect our investment; our environment for
investment is one conducive to you being successful. As we make those
investments, of course, we are able to parlay that through our development
initiatives into even greater value.
The Canada brand is one where we have a very clear expectation of our
Canadian companies that they will do business in an ethical way, that they
will achieve the highest level of corporate social responsibility, and when
they do business in another marketplace, they will reinvest in the
communities in which they do business. So you can see how this picture, we
believe, will develop as we move forward.
We believe Honduras can benefit from Canada's experience. As we engage
with them more and more on the trade side, we also get to share our best
practices and all those areas I mentioned earlier, such as human rights,
freedom, democracy and the environment.
Let me finish with the example of Chile. In 1997, Chile was coming out of
the Pinochet years, where human rights were regularly, flagrantly violated.
It was a violent society where many people went missing forever, presumably
tortured and executed. We had a choice to make as a country: Should we
engage with Chile? We did. We negotiated a free trade agreement with Chile,
and it was their first trade agreement.
Today, Chile has more trade agreements than any other country in the
world. Perhaps more importantly, today Chile has strong democratic
institutions; it respects human rights and it is perhaps the most prosperous
country in South America.
Is that the outcome we are looking for with countries like Peru and
Colombia, which are making progress? Is that the kind of outcome we want to
see with Honduras? Absolutely. That is the Canadian way. That's why I'm so
pleased that we sense clear support, even at this table, for moving this
agreement forward and getting it passed.
Senator Oh: Thank you for being here, Mr. Minister. My question
touches a little bit on what you just said.
Can you give us more information about how a free trade agreement with
Honduras fits into the government's engagement on strategy with South
Mr. Fast: I mentioned in my opening remarks that in 2007 our
government established a formal America strategy. I will say up front that
there is still a lot of work to do.
Yes, engaging with Honduras on a free trade agreement is one of the steps
we're taking to deepen our engagement and our partnerships within the
Americas. We do so at many levels. Trade is only one of those levels.
Investment is only one of those levels.
We also engage on the development front. Canada invests heavily in terms
of development programming and humanitarian aid. Honduras happens to be one
of the most impoverished countries in the Americas. It's one of the most
violent; in fact, maybe the most violent in the world. We believe we can
help. That's why even in Honduras, we are not only engaging in trade, but we
have actually made investments in Honduras on the security side, on training
and on democratic capacity.
We are doing the same thing in many other countries within the Americas,
countries like Haiti, which is also a deeply impoverished country that
Canada has taken a special interest in for a number of different reasons. As
we do so, we can actually deploy our resources as a country, and we can
deploy our businesses in a manner that when you blend those, we leverage
that involvement to even greater value, not only to ourselves economically,
but to actually allow these countries to emerge from very difficult
situations and provide hope to their citizens.
Senator Oh: Do they have an embassy here in Ottawa?
Mr. Fast: Yes, Honduras has an embassy here in Ottawa.
Senator Demers: Minister, thank you so much for being here. I had
a question on rights; you touched on that, so I don't want to go back to
that. The question from Senator Ataullahjan was very good.
With respect to corruption, obviously, as you mentioned, this will have a
huge impact on Canada but will also eventually have an impact on Honduras.
The people who run the situation there, how can they get away from the
corruption that filters down? You could eliminate some, but it's always
there. These people could work and be paid a salary, according to what is to
be paid over there. How does that work? Do you have any control over that as
you negotiate those situations, to give people the freedom to work, not to
be involved in corruption and to be free to progress? These agreements have
been unbelievable for Canada for the five years since I have become a
Mr. Fast: You are absolutely right, senator. I can tell you that
corruption is one of the major obstacles to countries improving their
productivity and competitiveness.
In our trade agreements, we don't directly address the issue of
corruption. We certainly put in place mechanisms such as joint councils,
working groups and committees that address the various aspects of these
agreements. Of course, within those structures, we have opportunities to
communicate our concerns about corruption.
One of the most effective tools we have in Canada is to deploy Canadian
businesses and have them do business there. I already mentioned the high
level of corporate social responsibility that we expect of our Canadian
companies, and we continue to develop our expectations.
For example, right now, there is a very robust dialogue with our
extractive sector in Canada for us to adopt a mandatory reporting regime for
payments made to governments. When a Canadian company goes to Honduras and
makes a payment to a government or a government official at any level, they
will actually have to disclose that to us in Canada so we can determine
whether those payments are legitimate or whether they are bribes that are
Canada's involvement there, beyond just the transparency of payments, we
also hold them to a very high level of responsibility when it comes to the
payment of bribes. We have prohibitions within our Criminal Code that
Canadian companies have actually been prosecuted successfully for because
they have undertaken payments that are illegal and inconsistent with
The more our Canadian companies do business there, we know that the large
majority of them do so ethically. The more they get engaged there, the more
others will see you can do business in an ethical manner. That's how they
can change these countries.
Senator D. Smith: Minister, you articulated very encouraging
prospects, and I really hope you're right. I like the phrase wherein you
describe Honduras as a country that wants to escape a troubled past. We
heard about some of the troubled past, and it's not all past. On the human
rights issue, we had a witness, Jennifer Moore, the Latin American Program
Coordinator for MiningWatch Canada, and mining issues are particularly
On the corruption list, Honduras is near the top. They are 140 out of
170, I think. They need to do a lot better. Actions always speak louder than
I hope you're correct. We did hear from two companies that do business
there and they more or less swore under oath that they do everything
properly, by the book.
I'm curious whether this will trigger off a few more in Latin America. I
kind of made my point on those issues; I don't need to cross-examine you on
that, but will there be others triggered off that we'll be dealing with
Mr. Fast: We are always exploring opportunities to engage with new
trade partners when it comes to trade negotiations. It's not only on the
trade front; we also are negotiating foreign investment promotion and
protection agreements all around the world, especially in Africa. Our
interests in Africa are primarily focused on investment in areas such as
mining, oil and gas, infrastructure, energy and even education. We want to
ensure that when Canadians are looking around the world in places that have
not in the past been stable for investment, that we can protect those
Yes, we expect to do more within the Americas to engage and perhaps
negotiate these kinds of agreements in the broader Latin American context.
Here is a story I think you'll find intriguing. I won't identify the
individual, but I recently had a chat with one of our colleagues in the
House of Commons who is from the opposition. He shared with me a recent trip
he had made to Peru. He had seen first-hand what Canadian companies are
doing on the ground, building the economy but also contributing back to the
communities in which they are doing business. He said, "Quite honestly, if
I'd known back when the Peru free trade agreement was being negotiated what
I know today, I would have supported it."
I think you will see that on a regular basis, whether it is Chile, Peru,
Colombia — which is making great strides but still has challenges — or even
with a country like Honduras. The more Canada engages, the more it
capitalizes on the Canada brand and shares those overarching values that all
of us hold in common, the more you will see those societies progress, move
into greater prosperity and hopefully rigorously adopt the values that we
promote all around the world.
Senator D. Smith: I agree with that.
I mentioned to the earlier witnesses that I've done a fair bit of work
with the World Bank and IMF. The whole corruption issue is very delicate,
but the view is you can't stop talking about it because if you do, some
people think you just accept it as a given. And we can never accept it as a
given. Are you making progress on it? Don't tell us it doesn't exist, but
are you making progress? That's a message that's good to convey wherever
Mr. Fast: I strongly agree with you.
Senator Verner: I have a question that follows up on the one asked
by Senator Demers. You said that Canadian companies have to disclose to you
any payments they make to a government or a government official, at your
request. Is that indeed what you said?
Mr. Fast: By the way, that legislation is not yet in place. This
is a consultation that has been undertaken with the extractive sector, and
we've made excellent progress in moving forward with that. I'm hopeful we
will have some legislation in place soon.
Senator Verner: Okay. But so far, are they doing that?
Mr. Fast: Actually, it is my understanding that many companies
will already disclose that voluntarily, but we'd like to see consistency
across the corporate sector. When they are doing business abroad, they're
making payments to other governments. It would be nice to know that those
payments are all legitimate.
Senator Verner: I am wondering what some of the countries'
reactions to this are. As you said, certain countries have a long way to go
in terms of corruption and governance. How have they been reacting?
It is a good idea to establish a Canadian standard whereby companies that
invest abroad must make disclosures. At the same time, the other party may
not be open to that idea. In other words, the recipient country may not
agree with that approach. I assume that you discuss this issue with those
countries when free trade agreements are negotiated. You explain to them
clearly that here, in Canada, companies are asked to disclose, in one way or
another, any payments made to various governments. I do not know what their
reaction is, but I assume that the pill must be hard to swallow for some of
them. Am I right?
Mr. Fast: First, let me emphasize something you yourself
acknowledged: The reporting of the payments that would be made under this
kind of legislation would be made by the companies themselves, not by the
countries in which they are doing business.
Understand that we're not the first in the world to adopt a transparency
reporting regime when it comes to payments to governments. The United
States, for example, has some requirements already. I believe the EU does as
well, but I could be wrong about that.
We want to be a world leader in this. I've had a chance to travel all
around the world. In fact, it's exhausting, but I've had a chance to meet
with government officials virtually everywhere. The Canada brand is so
well-known around the world as being trusted. When they see the Canada
brand, people understand that we do business the right way. Even if in that
country there may be a culture that is somewhat corrupt, when they see that
we're going to do business this way, they understand that it actually
improves their competitiveness. If developed or Western countries share
these common values, that opposes corruption.
If we continue to drive home the message this is the only real way to do
business and bring your economies forward, eventually we believe the rest of
the world will follow. We make no apologies for pursuing this legislation.
I'm hopeful we will have something to introduce shortly.
I reflect on the fact that this is about the Canada brand, and an
overwhelming number of Canadian companies support us going down this road
because they want to do things right.
The Chair: Having some knowledge of old DFAIT and some of DFATD
now, before you go into a trade negotiation and certainly during that, am I
correct that you will have sought the advice of the department on the
political issues and done an assessment on the government structures, the
history of the country, as I think you've pointed out? More particularly, I
want to know whether you received advice that this was a government that you
should deal with. You said it's heading in the right direction and that it's
trying to leave its past. Is there a joint discussion between yourself and
the Minister of Foreign Affairs to determine when to move ahead with a
Mr. Fast: Yes, we do broad consultations. DFATD is very much
engaged in providing us with the due diligence that's required before we
ever embark upon trade negotiations. Political decisions are made by
politicians, and we do not expect that our officials within Foreign Affairs,
Trade and Development make political decisions. That is not their role. But
they do provide us with very honest, frank advice on any market we are
interested in engaging with in a deeper way. Honduras is no different.
In some cases, we actually undertake a scoping exercise where we ask
experts to undertake an economic study in which they identify what the
opportunities are. By the way, these are usually done bilaterally — both
trading partners get involved in having their respective experts come up
with a report that identifies the opportunities to grow their trade
relationships through a formalized framework agreement.
I can tell you that we do a lot of due diligence. Of course, things on
the ground change. Many of these negotiations take years. The European Union
took four and half years. Our recent trade agreement with South Korea took
close to nine years to negotiate. Our Foreign Investment, Promotion and
Protection Agreement with China took 18 years. Over that period of time, the
ground can shift in the other economies. We certainly keep a keen eye on
that and constantly get updated reports on what's happening there. If there
is a clear desire for those countries to engage with us and to learn from
Canada and if there is a case to be made on the economic side, we will move
forward with those trade negotiations.
The Chair: As you look for the desire for the economic, there is a
continual monitoring to see if they are moving in the direction that they
indicate they want to go on the political and human rights fronts — all the
other pillars of foreign policy.
Mr. Fast: Absolutely. Under DFATD you have all of those
disciplines represented. We can get on-the-ground assessments on the
political and economic situations. Of course, we can also ask for advice
from other government departments, and we regularly do, with respect to
security on the ground.
So far looking at Canada's record going back to when we first negotiated
the Canada-U.S. Free Trade Agreement, I believe we have a pretty good record
of engaging with countries, driving economic benefits here at home and
driving economic, social and security benefits in the countries in which we
The Chair: Minister, thank you for coming forward and answering
the questions. We believe that we've received the information we need from
you. We appreciate that you have been very open and have covered quite a bit
of area, which is helpful on not only this trade agreement but also future
trade agreements. We look forward to seeing where Canada is going on the
trade issue. We monitor regularly and from time to time we even give you
advice as to where your policy direction should be. This is one piece of our
ongoing responsibility. We appreciate your input this evening on this bill.
I remind senators that in light of the time that we received the bill, we
also received some written submissions of people who could not be here.
Those have been circulated to you. I trust those are being taken into
account, as well as our ongoing study from the house.
Honourable senators, is it agreed that the committee move to
clause-by-clause consideration of Bill C-20, the Canada—Honduras economic
growth and prosperity act?
Hon. Senators: Agreed.
The Chair: Shall the title stand postponed?
Senator Dawson: As I mentioned before on these free trade
agreements, we will be supporting the bill but not because we think it's
perfect. The reality is that we can't amend a trade agreement by amending a
bill. You either kill it or you don't. I want people who are listening to
know that although we'll be going over the amendments quickly, we consider
them important. However, the reality is that it's the big decision that
counts. With all its flaws, this is an agreement that, as far as the
opposition is concerned, deserves to be supported.
The Chair: That's a very good point and one to continue to
reinforce for the public about ourselves, namely, that it's an executive act
that negotiates agreements and then they are brought to us to accept. I have
been involved in these in another capacity and may have wanted to negotiate
or renegotiate clauses, but you're absolutely right that we can, in a
general way, accept or reject them. Our job is to study them and to look at
the policies, the consequences and then, as a committee, to continue to
follow this bill to see whether the expectations set by the government are
being met. We do have a general term of reference where we bring ministers
in. We ask for updates on the agreements to determine whether they are, as
they said they would be, in the best interests of both Honduras and Canada
and particularly the people of the two countries.
If I can proceed, then, with that very good intervention, shall the title
Hon. Senators: Agreed.
The Chair: Shall clause 1, which contains the short title, stand
Hon. Senators: Agreed.
The Chair: Is it agreed that I group the clauses?
Hon. Senators: Agreed.
The Chair: Shall clauses 2 to 10 carry?
Hon. Senators: Agreed.
The Chair: Carried.
Shall clauses 11 to 20 carry?
Hon. Senators: Agreed.
The Chair: Carried.
Shall clauses 21 to 30 carry?
Hon. Senators: Agreed.
The Chair: Agreed.
Shall clauses 31 to 40 carry?
Hon. Senators: Agreed.
The Chair: Carried.
Shall clauses 41 to 50 carry?
Hon. Senators: Agreed.
The Chair: Shall clauses 51 to 53 carry?
Hon. Senators: Agreed.
The Chair: Shall schedule 1 carry?
Hon. Senators: Agreed.
The Chair: Shall schedule 2 carry?
Hon. Senators: Agreed.
The Chair: Carried.
Shall clause 1, which contains the short title, carry?
Hon. Senators: Agreed.
The Chair: Carried.
Shall the title carry?
Hon. Senators: Agreed.
The Chair: Shall the bill carry?
Hon. Senators: Agreed.
The Chair: Is it agreed that I report this bill to the Senate?
Hon. Senators: Agreed.
The Chair: We will prepare the documentation and be in a position
to file the report in the Senate tomorrow, at the commencement of the
Senator D. Smith: Don't work past midnight, though.
Senator Dawson: Is there agreement on final adoption? Is there
agreement that it will be done tomorrow?
The Chair: No, I'm just talking about the committee's
responsibilities. My responsibility is to file. If both the proponent of the
bill and the critic could go to your final comments, I could approach the
leadership to see whether they would provide leave to continue and complete
Senator Dawson: We will talk to our leadership.
The Chair: Yes. Thank you.
Senators, thank you for your cooperation and for readjusting your
schedules so that we could sit. We had anticipated we could do it earlier in
the day, within our normal slot, but I think we've accomplished the process
by sitting this evening, so I appreciate it.