Debates of the Senate (Hansard)
1st Session, 41st Parliament,
Wednesday, November 21, 2012

Bill C-24 : Canada—Panama Economic Growth and Prosperity Bill
Second Reading

Hon. Percy E. Downe: Honourable senators, I wish to join the debate on Bill C-24. After a speech in which Senator Finley attacked the NDP, quoted Prime Minister Laurier and noted the trade statistics between Prince Edward Island and Panama, there is not much more to say, but I will try my best.

More than two years ago, and after a year and a half of negotiations, the Government of Canada and the Republic of Panama signed the agreement we have before us today. This agreement, like so many before, promises great things for Canada. I look forward to its study in committee, where we will hear about these promises and what various groups and individuals think of them.

Honourable senators, trade is the root cause of our prosperity, and international trade is a vital element of our economy. According to Statistics Canada, exports account for 31 per cent of this country's GDP, with a heavy emphasis on commodities.

Think of that: Almost a third of our economy is directly dependent on what we sell abroad. One job in five in this country is directly or indirectly dependent upon exports. With figures like that, it is merely stating the obvious to say that, all things being equal, more trade is better than less. However, let us make sure things are equal. Let it not be more free trade agreements regardless of the cost.

Will this free trade agreement, reached without improvements in other areas, entrench problems into our relationship with Panama and expose Canada to liabilities in the future?

My remarks today will be of a more general nature. Any specific concerns that arise can be discussed in committee, where we will get down to the nuts and bolts of this agreement and hear from all those who have a stake in whether this deal goes forward.

Today, then, I would like to reflect upon Canada's recent experiences with free trade agreements and discuss what lessons we might learn from them.

This is a government that likes spinning the news, and so it is that once again, as was the case this past June, we find before us another growth and prosperity act, and once again it involves a country no one would describe as a key trading partner.

In June we were discussing trade with Jordan, our eighty-eighth most important export market. Panama is our seventy-fifth. While Jordan is our one hundred and twelfth most important source of imports, Panama ranks number 89. If our exports to Panama were to triple overnight, it would make that country as important a market for Canada as Vietnam.

This government continues to try again and again in the hope that this will be the free trade deal that actually does lead to a prosperous future. It is indeed understandable that they would focus on the future, for the experience of the past is not particularly encouraging.

Honourable senators, balance of trade statistics from Industry Canada indicate that in 1996, the year before our free trade agreement with Israel, we had a trade deficit of just under $27 million. Last year, our trade deficit with Israel grew to over $580 million. Our trade with Chile, with whom we began a free trade agreement in 1997, went from a surplus of $73 million in 1996 to a deficit of over $1 billion in 2011. It goes on and on.

The year free trade with Costa Rica began — 2003 — our trade deficit was almost $226 million. Last year it was over $315 million. In the two years since we entered into free trade with Peru, our trade deficit went from under $2.5 billion to almost $3.9 billion.

Honourable senators, the numbers speak for themselves, and what they say is not a ringing endorsement of our current globe-trotting pursuit of free trade agreements.

If trade balances were not important, we would not have to negotiate trade deals. We could simply open up our markets to imports of all kinds and from all places, without demanding anything in return. Of course, we do not do that. What makes these agreements free trade "deals" is reciprocity. We may have achieved market access through these agreements — otherwise what was their purpose?

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It is part of a disturbing trend. This government has presided over a 7.5 per cent decline in the values of goods and services exported to other countries, while our trade deficit increased from $37.8 billion in 2006 to $143.8 billion in 2011.

Exports as a proportion of the GDP now hover around 30 per cent. When this government came to power it was 38 per cent. As we have seen, Canada's exports to countries with which we have free trade agreements have grown more slowly than our exports to other nations, and, on average, our balance of trade with those countries has actually declined. This is surely not the desired effect.

Perhaps, honourable senators, that is what we should be examining: Why have Canadian businesses, not to mention Canadians in general, not benefited more from these agreements?

There have been individual success stories, but the overall numbers suggest that we are missing something. Maybe it is that too many people regard these free trade agreements as an end in themselves rather than as only one part of our trading relationship. To put it another way, using the words "growth and prosperity" does not automatically make it so.

If we are going to open our borders to another country's products, the least we can do is make sure that our own businesses have all the assistance and support they need from the Government of Canada to take advantage of the trade and investment opportunities the other country has offered in return. We need to be constantly examining the evidence and always be willing to look at new approaches, because whatever this government has been trying has not been working.

The problem with this current approach is summed up in what Carleton University professor and former Canadian trade official Michael Hart writes:

Free trade agreements with minor trading partners . . . are marginal in their economic and commercial impact but large in their ability to gobble up political and financial resources.

The issue is one of focus. Honourable senators, put simply, the world is big and our international trade department is small. The resources of our Department of Foreign Affairs and International Trade are not unlimited, and when they are working on agreements like this they are not working on others.

It does not help matters that, as this government announced this past spring, 35 commerce officers — public servants specifically tasked with trade promotion — were eliminated and almost half of the associated trade offices were cut nationally.

To cut back on trade promotion is to cut back on the ability for business to do trade abroad, and it is a short-sighted measure, to say the least. I am concerned that this government is placing undue emphasis on free trade agreements with minor trading partners at a time when the attention and resources of our national government should be directed toward our priority markets.

Any discussion of priority markets must begin with our neighbour and our great friend to the south, the destination of 74 per cent of our exports, the United States of America. Trade with the United States will continue to be the dominant factor in our international trade. Why does this government keep closing consular and trade offices in the U.S. — five this year alone? It serves no purpose and lacks focus.

To ignore the reality of the United States as our number one trading partner is off the focus of what we should be doing. To put it another way, if we are to diversify away from our number one market, let us at least focus on the top 20, not on number 75.

In recent years the Standing Senate Committee on Foreign Affairs and International Trade conducted a three-year study of our current and potential trade with the BRIC countries: Brazil, Russia, India and China.

These four countries, which constitute over 40 per cent of the world's population and a quarter of its GDP, represent important future markets for Canada. Combined with Europe and our major trading partner, the United States, they will dominate our trading relationships for decades to come. Not even the most enthusiastic supporter of trade with Panama is going to suggest that this agreement will change that fact.

Perhaps, honourable senators, rather than focusing on each individual free trade agreement that comes down the pike, the Senate should look at the concept of free trade agreements and see if they do indeed live up to their reputation, and also what assistance Canadian businesses need to take advantage of the new opportunities.

In the meantime, let us look at this deal with Panama, examine the details, hear the testimony and judge for ourselves whether it is in the best interests of this country. Naturally, if we can offer advice on how to improve it, by all means let us do so. I look forward to a thorough study.

The Hon. the Speaker pro tempore: Further debate? Are honourable senators ready for the question?

Hon. Senators: Question.

The Hon. the Speaker pro tempore: Is it your pleasure, honourable senators, to adopt the motion?

Hon. Senators: Agreed.

(Motion agreed to and bill read second time.)

Referred to Committee

The Hon. the Speaker pro tempore: Honourable senators, when this shall bill be read the third time?

(On motion of Senator Carignan, bill referred to the Standing Senate Committee on Foreign Affairs and International Trade.)