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 Coordinator.

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 proceed.

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 million.

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 three countries.

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, I can also provide a copy of that to the clerk, if necessary.

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 perspectives.

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 isolation.

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 there.

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 mine.

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 Development Agency.

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 companies.

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 farmers do.

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 into production.

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 developments.

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 heard.

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 citizens.

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 there?

Mr. Iliopoulos: What we operate in Canada is the head office of the corporation. We have approximately 250 employees. In Honduras, we employ over 24,000.

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 international annually?

Mr. Iliopoulos: We reported over $2 billion of revenue in the last fiscal year.

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 management issue.

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 facilities.

This is something that we deal with in a very proactive and constructive nature, and we maintain very positive dialogue with the various different organizations.

Senator Ataullahjan: Would you know what percentage of your workers are female, and how do you ensure that women's rights are upheld in these countries?

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 robustness.

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 positive.

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 worse since.

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 not.

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 seeing.

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 Honduras?

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 from?

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 this committee.

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 these efforts.

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 win.

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 and seafood.

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 into force.

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 are.

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 agreements.


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 Agreement?


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 outcomes.

Senator Ataullahjan: Thank you for being here, minister, to answer our questions.

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.

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 America?

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 senator.

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 being paid.

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 Canadian values.

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 rough.

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 words.

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 soon?

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 investments.

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 appropriate.

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 government?

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 do business.

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 stand postponed?

Hon. Senators: Agreed.

The Chair: Shall clause 1, which contains the short title, stand postponed?

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 sittings.

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 it tomorrow.

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.

(The committee adjourned.)