Mr. Kevin Lamoureux (Winnipeg North, Lib.):
Mr. Speaker, it is with pleasure that I rise today to speak to a bill dealing with free trade. The Liberal Party, traditionally through decades, has been fairly clear in terms of recognizing the value of world trade. The Liberal Party does not fear having trade agreements. In fact, we have been advocating and are very supportive of the movement toward additional agreements. We see the value in the sense that Canada is very much a trading nation. We are very dependent on trade. Trade equals jobs here in Canada. It is important to our lifestyle. The way we live here is dramatically affected by the amount of trade that we have throughout the world.
Liberal governments in the past have demonstrated very clearly that we understand the trade file. In fact, going back to the Jean Chrétien and Paul Martin era, we find that we consistently had trade surpluses. This is something that is highly achievable if the government understands the complexities of the whole file of trade. This is something that the current government has been somewhat challenged on. Yes, the Conservatives talk about free trade agreements and they have entered into some free trade agreements, but where they have been found wanting is in the area of overall trade. When it comes to overall trade, we will find that since this Prime Minister has become Prime Minister, we have been going down from the original high of billions of dollars in trade surplus to where we have seen billions of dollars in trade deficit.
That is important because at the end of the day a healthy trade surplus means more jobs for Canadians. It means that our middle class is going to be doing that much better economically. On the one hand, we recognize the value of entering into free trade agreements, but on the other hand we want to emphasize to the Conservatives that they are not doing their jobs when it comes to overall trade for our country. This is where the government really needs to improve. Regarding our manufacturing industry, one only needs to look at the devastation in Ontario in terms of our manufacturing jobs. Tens of thousands of jobs have been lost because the current government has been asleep at the switch and not addressing the needs of our manufacturing industry, not only in the province of Ontario but in other areas also.
Today, we talk about the free trade agreement with Korea. The Conservatives like to pat themselves on the back, saying how wonderful they are for getting this free trade agreement with Korea. The reality is that Korea has been attempting to get free trade agreements with countries around the world since about 2003. Shortly after the Koreans initiated that bold initiative of wanting more free trade agreements, Paul Martin expressed an interest in Canada being a part of that free trade initiative by Korea. In 2004, the negotiations actually began. Looking at what Korea has been able to accomplish, we see it has agreements in place with several nations, including the European Union, the United States and smaller nations like Chile, and I believe, Peru, a number of nations.
Canada, on the other hand has been asleep again at the switch and there has been a significant cost. I have referred to it in the past and I will reinforce it this morning. The pork industry in the province of Manitoba could have had more pork sales to Korea had the government acted in a more prompt fashion, or had it followed the lead of Paul Martin in 2003-04.
At the end of the day, that is just one industry, albeit an industry I am very proud of in Manitoba because of the jobs that have been generated, whether in Brandon, Winnipeg, or rural communities, through pork production. Some of the huge pork farms that are out there contribute good, strong, valuable jobs to our economy. There is no doubt this free trade agreement would enhance certain industries in Canada, and Liberals look forward to that. However, there should be no doubt that the government was not doing its job by allowing other countries to move forward, and in essence, take a bit of the share away from what Canada could have had if the government had been a little more aggressive on this file.
The government talks a lot about the European Union agreement. The Liberal Party was again supportive of going forward with a trade agreement with the European Union.
It was interesting that when the president of Ukraine addressed the House of Commons, one of the things he made reference to was the need to have a free trade agreement with Ukraine. When one thinks about it, Ukraine is moving rapidly toward freer trade association with the European Union, yet Canada seems to be putting that issue on a back burner. Liberals would ultimately argue that there is merit for us to be looking at a free trade agreement with Ukraine.
What about other Asian countries? A few years ago, I would have been standing in my place and talking about the Philippines. The Philippines is a beautiful, wonderful country. Today, we continue to be very dependent on the Philippines for immigration. Tens of thousands of people come to Canada from the Philippines every year and we have benefited immensely, economically, socially and more, because of immigration from the Philippines.
Why not take advantage of this relationship with the Philippines and look at other ways, outside of immigration, to expand relations between the Philippines and Canada? We should look at trade. There is so much more that we could be doing on the trade file and again we see the government falling short on a number of occasions.
I was on a panel with the New Democrats and Conservatives and we were talking about trade. The NDP seemed to be of the opinion that they have supported trade agreements in the past. The reality is that the New Democratic Party is very different when it comes to world trade. It seems to be willing nowadays to change. For the first time, it appears it might vote in favour of this legislation.
I have challenged New Democrats in the past and I will do it again because they still like to say that they supported other free trade agreements, in particular the Canada-Jordan Free Trade Agreement. New Democrats should review some of the comments they made about the Canada-Jordan Free Trade Agreement.
It is fair to say that there has not been a day inside the House of Commons where New Democrats have stood in their places and voted for a free trade agreement. If I am wrong, I challenge any New Democrat to stand in his or her place when it is time to ask questions and tell me the date so that we can look up in Hansard when New Democrats voted in favour of a trade agreement. There is always hope. This could be the first agreement that they vote in favour of.
The point is that we in the Liberal Party have recognized the value of free trade. We hear lots of words from the Conservatives, but they suffer in terms of tangible action. Yes, agreements have been signed, but let us recognize the fact that they have not been all that timely in terms of their announcements, and so forth. Many of the agreements we have today are there because they were initiated by the former Liberal government.
There is lots of room of improvement, both for the Conservatives and I would even suggest for the New Democrats, on this particular file.
Hon. Ron Cannan (Kelowna—Lake Country, CPC):
Mr. Speaker, it is always a privilege and honour to rise in the House. This morning I rise to speak on this historic free trade agreement between Canada and Korea.
I am delighted to be sharing my time with my hon. colleague, the Parliamentary Secretary to the Minister of National Revenue and for the Atlantic Canada Opportunities Agency, and member for South Shore—St. Margaret's, with whom I have had the opportunity to be on the trade committee for the last eight and a half years. He used to be the parliamentary secretary to the trade committee as well, and so we have a good working relationship. He also has a thorough understanding of the importance of this agreement for not only his constituents but all Canadians.
I want to touch on some of the aspects of this free trade agreement and how it would strengthen our trade and investment ties across the Pacific.
This agreement would increase the prosperity of both countries and result in job creation and enhanced opportunities for Canadian and Korean businesses, particularly small and medium-sized enterprises, as well as investors, workers, and consumers.
I do not think members will find any government or any prime minister in Canadian history who better understands the importance of trade to our economy. Trade represents one in five jobs and accounts for approximately 60% of our country's annual income. We also understand that Canada's prosperity requires expansion beyond our borders into new markets for economic opportunities that serve to grow Canada's exports and investments.
As I said, no government in Canada's history has been more committed to the creation of new jobs and prosperity for Canadian businesses, workers, and their families. Deepening Canada's trading relationships in dynamic and high-growth markets around the world is key to these efforts.
I would also like to thank the opposition parties for their understanding and support of why it is important to ratify this agreement quickly and have it implemented by January 1, 2015.
I worked together with my honourable colleague across the aisle, the member for Vancouver Kingsway and the NDP official trade critic, who stated last week in this House that:
|| This agreement offers the opportunity for Canadian producers and exporters to increase trade with a modern democratic country with a high-income complementary economy.
He went on to say that:
|| It will level the playing field for Canadian exporters, who can compete with the best in the world....
Finally, he said:
|| There is no doubt that Korea is both a significant and a strategic economic partner for Canada.
I could not agree more, and in that regard I would like to highlight the key elements of our trade strategy for Asia and South Korea.
The economic potential of Asia is immense, with a constantly evolving political transformation and a monumental demographic shift. Asia is important to Canada because it offers new opportunities to expand Canada's economic prosperity.
The importance of this agreement is that it would be the gateway to the Asia-Pacific, which has a population of 50 million-plus. This agreement would open the doors. That is why our government has taken such a rigorous and strategic approach to trade with Asia.
My hon. colleague, the Minister of International Trade, has travelled numerous times to various parts of Asia, including the conclusion of this agreement with South Korea and the pursuit of agreements with India and Japan. He will be leading a delegation to India next month. These agreements would lead to increased trade and investment, enhancing Canadian prosperity for generations to come.
Investment is a key driving force for economic growth and competitiveness in Canada. Canadian companies that invest overseas can expand their client base significantly and bring capital back into Canada, which can create jobs. Foreign companies that invest in Canada create jobs as well, boost our economy, and contribute to economic growth that benefits all Canadians.
While Canada and South Korea enjoy a strong investment relationship, ample scope remains for further growth in both directions.
South Korea's direct investments into Canada have risen from $397 million in 2005 up to $4.9 billion by the end of 2013. South Korea is the twelfth-largest investor country in Canada and the fourth from Asia.
South Korea is one of the world's great science and technology powerhouses. I am very interested in innovation and technology, and I had a chance to visit Taiwan a couple of times, as well as Korea, earlier this year.
South Korea has one of the highest expenditures on research and development, R & D, as a share of GDP among OECD countries, spending 4% of GDP. While most private sector R & D takes place domestically, South Korean companies have begun investing in research centres overseas, including Samsung in my home province of British Columbia. Others are becoming more active in utilizing overseas R & D staff and resources.
With this agreement's investment-related provisions and Canada's world-leading, cost-effective R & D environment, Canada would become an even more attractive destination for South Korean R & D investment.
Other examples of South Korean companies' continued interest in Canada are not hard to find. KOGAS, South Korea's national gas company, has already invested heavily in a Canadian LNG project.
My colleague across the way will be interested in knowing that Green Cross, a South Korean biopharmaceutical company, will be opening a new company, a manufacturing facility in Montreal, as it breaks into the North American market. For these companies and many more, Canada is the destination of choice.
Something that is near and dear to the constituents in my riding of Kelowna—Lake Country and to wine lovers across Canada is also something that is very appealing to the palate of the people of South Korea, and that is our great Canadian icewine.
As I alluded to, I had the opportunity and the honour of travelling with the Prime Minister and the Minister of International Trade on March 11 to Seoul, Korea, for the signing of the free trade agreement with President Park. It was an historic moment and an incredible experience. At Blue House, President Park's house, we were able to enjoy a toast of Canadian icewine, which was the icing on the cake.
A champion of the Canadian wine institute is the president, hard-working Dan Paszkowski, who indicated:
|| The Canadian wine industry is pleased to support the Government of Canada in its work to finalize negotiations for the Canada-Korea Free Trade Agreement. South Korea is an important market for Canadian wine producers, as evidenced by the significant growth in the value of Canadian icewine exports, which increased nearly 25 percent between 2012 and 2013. With a successful FTA, the Canadian wine industry anticipates even stronger export growth in the coming years.
I recently spoke with Dan, who said that about 95% of the market right now is the export of icewine to South Korea, but there is a huge potential for other products once the South Korean community starts to taste our product. Something of interest is that the highest price point for red wine is South Korea. These are great things to raise our glasses and cheer about in the future with this agreement.
In other investments abroad, Canadian direct investment in South Korea has fluctuated over the years. We have seen an upward trend in recent years. Specifically, at the end of 2013, Canadian investment stock in South Korea was at $534 million, up from $390 million in 2012.
Canadian companies continue to show increased interest in investing in South Korea. Major Canadian companies such as Magna International, Bombardier—whose facility in South Korea and we had an opportunity to tour with the Prime Minister—and Pharmascience have already invested in South Korea, and more investments and partnerships are on the horizon. Just this past May, the clothing brand Joe Fresh announced it would open its first store outside of North America in Seoul, with plans to open nine more retail outlets in the South Korean capital by the end of the year.
This agreement will level the playing field for Canadian companies in the South Korean market, which we all agree is important. Canadian businesses can compete with the world when they are on a level playing field.
The agreement sets out transparent and predictable rules, something also very important for businesses. They want stability, predictability, and transparency.
The agreement will ensure that Canadian businesses in South Korea will be treated no less favourably than South Korean businesses. It will protect Canadian businesses from discriminatory treatment and provides access to an independent international investor state dispute settlement mechanism. The same rules will apply to South Koreans investing in Canada, further increasing the attractiveness of Canada as an investment destination. I do not think anybody would disagree with each country being treated the same way, respectfully and with the same rules. These rules have been a standard feature of Canada's comprehensive free trade agreements since NAFTA and have been shown time and time again to be in our national interest.
For Canadian companies that invest abroad, there is no substitute for being on site where their clients are. Canadian companies that invest in South Korea will now find it easier to have their professionals on site in South Korea. The agreement will provide new preferential access for professionals from both Canada and South Korea and will facilitate greater transparency and predictability for the movement of businesspersons between the two countries.
Our Conservative government is committed to protecting and strengthening the long-term financial security of hard-working Canadians. Thanks to these actions under our government's free trade leadership, Canadian workers, businesses, and exporters now have preferred access and a real competitive edge in more markets around the world than at any other time in our history.
The global market is shifting. More companies are looking to Asia for growth. The South Korean market provides a landmark opportunity for growth in neighbouring markets in Asia, Japan, and China. This agreement will provide fair access to the whole South Korean market and ensure continued growth for Canada.
Trade has long been a powerful engine for Canada's economy, and it is even more so in what remain challenging times for the global economy. By continuing to actively pursue broader market access and new investment opportunities, we are providing Canadian businesses and exporters with access on preferred terms to the largest, most dynamic, and fastest-growing regions around the world.
I would ask for a quick ratification of this agreement by all parties.
Mr. Gerald Keddy (Parliamentary Secretary to the Minister of National Revenue and for the Atlantic Canada Opportunities Agency, CPC):
Mr. Speaker, it is as real pleasure to rise in the House today to speak to the Canada-Korea free trade agreement.
Before beginning my comments, I would like to thank my colleague from Kelowna—Lake Country not just for his support for this particular agreement but also for his work on trade and on behalf of Canadian exporters during his tenure on the trade committee.
This free trade agreement is an ambitious state-of-the-art agreement covering virtually all sectors and aspects of Canadian-Korean trade, including trade in goods and services, investments, government procurement, intellectual property, labour, and environmental co-operation.
This free trade agreement, Canada's first with an Asian country, is yet more proof that our government is focused on creating jobs and opportunities for Canadians in every region of the country.
I would particularly like to focus on benefits of the Canada-Korea free trade agreement to Canada's fish and seafood industry. Surrounded by the Arctic, Atlantic, and Pacific Oceans and home to the Great Lakes, Canada has one of the most valuable fishing industries in the world.
In 2012 alone, the fish and seafood industry contributed more than $2.2 billion to Canada's GDP and provided some 41,000 jobs for hard-working Canadians. It is also the economic mainstay of approximately 1,500 communities in rural and coastal Canada.
Canada exports most of its fish and seafood. It is the world's seventh-largest exporter of fish and seafood products, exporting an estimated 73% by value of our fish and seafood production.
Asia is an important market for Canadian fish and seafood products, and with this dynamic market, it is rapidly growing in importance in global trade.
Canada has a proven ability to export to Asian markets, including South Korea. Between 2011 and 2013, Canada exported an average of $49 million in fish and seafood products to South Korea. However, there is still much room to grow in this vibrant Asian market, and Canada must act now.
I must say that during this debate I was able to listen to the words of the MP for Winnipeg North, although he mainly concentrated on volume and was a little light on facts. I have heard in this House that all of the parties intend to support this trade agreement and I thank the opposition parties for that.
However, let us be clear on the Liberal record on trade: in the 13 years they were in government, they signed three agreements. We have been in government for eight years and we have signed 43 agreements. There is no comparison.
Times were good when the Liberals were in government. The dollar was low and exports were high. It was not anything they did that caused that; rather, it was the free trade agreement signed by Brian Mulroney's government that caused that increase in dollars in the country. However, the danger of doing nothing in the good times was that when the recession hit in 2008-2009, we were left in a virtual trade deficit. We had to work extremely hard to find markets for our exports, and Canada is an exporting nation.
We took the risk of falling behind. We have not fallen behind. We have actually caught up; now we are moving forward again, and times are getting better.
Canadians well remember that the last time the Liberals tried to talk seriously about trade, they campaigned to rip up the North American Free Trade Agreement. I was happy to see that once they got into government, they forgot their campaign promise, and Canada was actually able to move ahead on that.
Once fully implemented, the Canada-Korea free trade agreement would eliminate South Korea's tariffs on all fish and seafood products. South Korea's tariffs in this sector, which include fresh, frozen, and processed fish and seafood, run as high as 47%. With the elimination of tariffs, Canadian products would become more competitive, allowing Canadian firms to increase exports in this dynamic market. As we know, exporters from the U.S. and the EU are already benefiting from preferential access to the South Korean market.
Some of the products that would benefit from immediate tariff elimination include frozen lobster and Pacific and Atlantic salmon, whether fresh, chilled, frozen, or smoked. They currently have duties of up to 20%.
In all, 70% of fish and seafood tariff lines will be duty free within five years of the agreement's entering into force. All remaining duties in this very sensitive Korean sector will be entirely eliminated within 12 years.
The outcome for Canada's top fish and seafood export interests is on par with or better than those agreements obtained by the U.S. and EU. Compared to the U.S., for example, Canada obtained stronger results for fish and seafood for roughly half of Canada's key exports, including lobster, hagfish, and halibut. By year five, Canada will have duty-free access for more fish and seafood products than either the EU or the U.S. will have at their five-year mark under their respective FTAs with Korea.
The benefits do not end there. In addition to tariff elimination, this agreement contains robust provisions that will ensure that Canadian fish and seafood exports are not undermined by unjustified trade barriers. The chapter on sanitary and phytosanitary measures negotiated with Korea is a good example. In this chapter, Canada and Korea have agreed to build on their shared commitments under the WTO Agreement on the Application of Sanitary and Phytosanitary Measures. The chapter fully recognizes the rights of the WTO members to take the sanitary and phytosanitary measures necessary for the protection of human, animal, or plant health, as long as they are based on science and are not used as disguised measures to unnecessarily restrict trade. Far too often we see phytosanitary measures becoming non-tariff trade barriers. The agreement we have signed with Korea should prevent that from happening. It also establishes a committee of experts who can collaborate and consult on phytosanitary issues to enhance bilateral co-operation. The committee will provide a forum in which issues can be discussed and resolved before they become major problems.
At this time, I would like to take a moment to elaborate on the benefits pertaining to lobster. Lobster is an iconic Canadian crustacean, Canada's top and most valuable export in the fish and seafood sector. It is certainly an important product in my part of the world, in southwestern Nova Scotia. The south shore, along with West Nova, are the main lobster exporters in Canada. In 2013, Atlantic Canada's exports of lobster were worth $888 million and accounted for 95% of all Canadian lobster exports. Canada's exports of lobster to South Korea were worth an average of $18.2 million annually between 2011 and 2013. Again, we accounted for nearly 37% of Canada's total seafood exports to South Korea.
Current duties of up to 20% on lobster products faced by Canadian exporters will be totally eliminated. This summer we got a taste of what increased lobster trade with South Korea will look like. Korean Air Cargo launched weekly service to South Korea from Halifax to transport an expected minimum of 40,000 kilograms of live lobster. This happened only a few months after the announcement of the conclusion of negotiations on this agreement. This is the type of opportunity that can be generated across this country from coast to coast to coast.
Given the many benefits of the agreement, the stakeholders from the fish and seafood industry have shown great support for the Canada–Korea free trade agreement.
I will quote the Lobster Council of Canada, which supports the agreement:
||...it will greatly enhance our industry's competitiveness in South Korea. Tariff elimination and improved market access for lobster exports helps to ensure long-term prosperity of our industry and the thousands of people it employs in [Nova Scotia].
It is not just about Nova Scotia. We have a huge inland fishery in Canada, worth nearly half a billion dollars, in the Great Lakes, Lake Winnipeg, Great Slave Lake, and Great Bear Lake. We have a major fishery in the Arctic Ocean for arctic turbot. We have a fantastic fishery in British Columbia. We are surrounded. We have a very viable wild fishery in this country and an aquaculture industry that will now have a marketplace for its products. For B.C. halibut and arctic turbot, we are looking at a reduction in tariffs of 10%. That is a huge difference for these fishermen and plant owners.
This is a great agreement. This is a smart agreement for Canada, and it is a great agreement for fish and seafood.
Mr. Kennedy Stewart (Burnaby—Douglas, NDP):
Mr. Speaker, it is my pleasure to rise in the House today to speak to Bill C-41, an act to implement the free trade agreement between Canada and the Republic of Korea. Before I start, I would like to note that I will be splitting my time with the member for Trois-Rivières.
There are a few points I want to make on this bill. First, I would like to praise our critic in this area, the member for Vancouver Kingsway. This member is a lawyer with a very good reputation. He has spent a lot of time on this file making sure that he is using the utmost of his knowledge to understand and digest this deal and has explained it to the rest of us.
I feel very confident when the member says to us that we should be supporting this trade deal. The diligence he has put into this file gives me a lot of confidence that this is something we should do. I have been looking through the deal myself, and I concur with the critic's recommendation. I will be supporting this at second reading and look forward to this deal going ahead.
It is not just the local links with my neighbour from Vancouver that also gives me great confidence that this is a good idea. We also have a local MLA, Jane Shin, from Burnaby, who is the first Korean-Canadian MLA elected in British Columbia. I have spent many hours talking with her about how we could build closer links between our country and Korea.
Ms. Shin has been doing fantastic work in Burnaby. I look forward to hosting a round table with her and the member for Vancouver Kingsway on this issue in the near future.
My inclination on trade deals goes back to my Scottish roots, which make me hope for the best and plan for the worst. When I see trade deals, I like to think that perhaps we can support them. We start with the idea that we can support a trade deal, then we look at it in as much detail as we can to decide whether it is good for Canada. In fact, the NDP uses three important criteria to assess all trade agreements.
First, is the proposed partner one that respects democracy, human rights, adequate environmental and labour standards, and Canadian values in general? That is very important. I think most Canadians would agree that priority for trade agreements should be given to countries that share our values.
Second, are these deals of significant or strategic value to Canada? We do not want to sign frivolous deals. Is it just an announcement for the sake of an announcement, or is this really going to lead to economic growth in Canada?
Third, are the terms of the proposed agreement satisfactory?
Looking through this deal, and talking to the critic and local representatives, we think this free trade deal with the Republic of Korea passes all these tests.
I am happy to say that along with the deal we have signed with Jordan, this is another trade deal we can support, and I will be voting yes.
One of the reasons I am favour of this is that it is also different from some other deals, such as the FIPA with China. Where I think Canadians should draw a distinction is that the deal with Korea is reciprocal. That means that both countries will have more or less equal access to one another's markets. The terms of the China FIPA deal are not reciprocal, in my understanding.
It is important to go through the various clauses of these agreements to make sure that we are getting the absolute best deal we can.
I am especially excited about building better links with Korea, because in my capacity as the critic for science and technology, I have had the pleasure of meeting with a number of advisers to the President of Korea regarding their investment in science and technology.
The President of South Korea, Park Geun-hye, is an engineer by profession and has decided to continue her country's investment in science and technology in order to build their economy. I applaud this.
In my conversations with the advisers to the President of South Korea on investment in science and technology, a number of very interesting things came to light.
First, the President of Korea has made a commitment to ensure that 5% of their entire economy is reinvested in research and development.This is a massive amount of money, both from the private and public sector. It actually leads the world in the proportion of money invested in research and development.
It was explained to me that the reason Korea was so gung ho on science investment was that after the war Korea was essentially bombed flat with very few energy resources, so Koreans decided to invest as much as they could into innovation to grow their economy. We can see through the companies Korea is famous for, like Samsung, that this investment has paid off.
In conversations with presidential science advisers, they have said their goal is to make Korea the leader in the world in science and technology, not only in investing in applied sciences but also basic sciences. In addition to committing to investing 5% of the GDP into research and development, the President of Korea recently said that there would also be extra investment in basic sciences. That is in stark contrast to what happens here. Where Korea is aiming at 5% of GDP to be invested in research and development, Canada is only at about 1.7%, and that is a decline over the past few decades from about 2% when the Liberals were in power.
These trade deals will provide windows. We are often boastful in Canada, thinking we are the best in the world and there is not much we can learn from other countries. Closer ties are important to us because maybe here we will see the importance of investing in science and technology.
What is also extremely interesting with the Koreans is that they recognize the link between basic sciences and applied sciences. We cannot have companies building new types of widgets if we do not invest in the basic infrastructure of science and technology. That is exactly what the Koreans do and I hope we will learn from them.
The other thing the President of Korea has also said is that Korea will invest in stable funding for its science community. It is critical not to lurch from year to year with unstable investments, wondering if a lab is going to continue on. Rather, the President of Korea has said that Korea will invest in stable funding, not just increases but longer term.
The value of such agreements is that we get to see what other countries are doing, and Korea is leading us at this point in investment in science and technology.
The New Democrats have a number of proposals going forward that we would like to put in place which would complement this kind of Korean approach to science and technology. At a recent policy convention, we developed a national science strategy just like Korea has. More important, we passed a unanimous resolution that we move to match the percentage of GDP invested by public and private sectors in research and development as found in other global leading countries, such as the United States.
It is not just Canada that is trying to catch up to Korea in its investment in R and D. Korea invests 5% of its GDP into research and development and the United States is at 3%. We are at 1.7%. However, if the NDP became government, this resolution would build on these types of deals in order to increase Canada's investment in R and D.
Mr. Robert Aubin (Trois-Rivières, NDP):
Mr. Speaker, I am tremendously pleased to rise this morning to express my point of view on the free trade agreement with South Korea. I very humbly but very fervently hope to dispel or shatter the false impression that the New Democratic Party is a party opposed to free trade agreements.
Unlike the other opposition party, the NDP understands that people think we should take the time to thoroughly analyze an agreement before deciding where we stand on it. That way, we can provide crystal clear explanations of why we support it, what its weak points are and what can be improved.
We take this thorough approach to studying these files and figuring out the real benefit to Canadians, whether they are workers or business people, because of the analytical ability and experience of our leader, the member for Outremont. He is very capable of sharing his analytical ability and his experience with the whole caucus, and I believe that makes us all better analysts.
Getting back to the free trade agreement with South Korea, one of the key principles around trade policy is the diversification of export markets. The slowdown in demand from the United States in 2008 made each and every one of us realize the risks involved in concentrating all of our exports and investments in just one market.
The vagaries of current economic conditions are pushing us to gradually reduce our trade dependence on the United States. Supporting the measures set out in Bill C-41 is therefore crucial. However, we must not forget to use our critical thinking skills when it comes to certain controversial measures in the bill, notably the investor-state dispute settlement mechanism.
It is important to bear in mind that NDP support for free trade agreements depends as much on democratic criteria as it does on criteria related to Canada's economic interests.
In fact, those criteria must be analyzed together when we assess the social and economic effectiveness of a free trade agreement. It would be completely absurd and counterproductive, for instance, to sacrifice respect for labour and environmental standards on the altar of economic effectiveness.
Accordingly, we support the implementation of this free trade agreement, especially given that South Korea represents a successful model, both politically and economically. Moving from a dictatorship to civilian rule, the Korean political system has proven its openness to civil society by allowing freedom of expression and promoting a multi-party system. The Korean political system rests on a vibrant trade union movement that is working to provide social protection for workers by guaranteeing labour standards comparable to ours here in Canada and offering relatively high wages.
The South Korean government's budget for 2014 includes a significant increase in spending on improving that country's social safety net and support for local communities. In economic terms, South Korea has a diverse industrial base, bolstered by high public spending on research and development, to the tune of 4% of GDP. Canada can learn something from the Koreans in that regard, since Canada is far less involved in research and development. A top-notch education system supports the efforts by the government to strengthen the industrial fabric.
These criteria are vitally important. Other countries offer attractive economic opportunities for Canada, but the absence of democracy, minimal social protection and transparency makes their political system completely unpredictable and therefore naturally detrimental to trade and investment. Accordingly, having South Korea as a preferred trade partner is a good choice on many levels.
South Korea is Canada's seventh-largest trade partner, with Canadian exports to South Korea worth $3.7 billion.
It is interesting to see that the Canadian and Korean sectors that will benefit from this free trade agreement are complementary markets rather than competing markets. There is a high demand for raw materials in South Korea, while Canada has a limited ability to export its energy resources. The free trade agreement will create a market for Canada's energy resources, thereby creating jobs in the energy sector in Canada. This is an important part of the NDP's analysis of each free trade agreement: looking at how it will improve the everyday lives of Canadians, no matter which province they live in.
What is more, with regard to Korea's social and environmental standards, Canada's economic sectors will not fall prey to social and fiscal dumping measures, and neither will the social safety net that our workforce enjoys.
Korea has also worked on improving its corporate governance. Some groups broke up or restructured in the wake of the Asian crisis in order to rebuild on a more solid financial and management foundation. Korea has an economic profile that is highly favourable to us. Rating agencies have assigned Korea an A2 risk rating. In other words, its political, social and economic situation is conducive to business and long-term investment.
Of course, Bill C-41 will allow us to win back the market shares lost to our American and European competitors, whose countries have already ratified free trade agreements with Korea. This has had a negative impact on the Canadian aerospace industry, whose exports to Korea have dropped by 80%.
I would also like to point out that free trade agreements rarely obtain the consensus and support of all of the economic sectors involved. I am thinking here of the Canadian automobile industry's concerns about this free trade agreement. In reality, it is up to the government to support the automobile industry's growth. The evolution of this industry strongly depends on the growth recorded in countries such as China and Korea. The same could be said for the forestry industry, which specifically affects Quebec and the riding and region that I have the pleasure of representing.
However, Bill C-41 provides for a dispute resolution mechanism that promotes the export of Canadian automobiles to Korea, and includes transitional safeguards if there is a sudden increase in imports affecting the Canadian automobile industry.
Finally, let us look at the unfortunate investor-state dispute settlement mechanism included in this bill. It is a regressive and undemocratic measure. Under this mechanism, private companies could take legal action against the Canadian government if the government were to pass legislation that would reduce the future profits of those private companies or investors.
With such a mechanism in place, private companies would have the ability to undermine Canadian health policies, social policies and financial regulation policies by suing for damages in courts outside Canada's jurisdiction. What is more, the investor-state case law shows that the courts more often find in favour of investors, calling into question the sovereignty of states over their own jurisdictions. An NDP government would repeal this provision, which is opposed by the main opposition party in South Korea. We have found some kindred spirits there.
The free trade agreement between Canada and Korea provides a momentous opportunity to diversify the Canadian economy and promote the creation of quality jobs in Canada. Some of the terms of the agreement are not what an NDP government would have negotiated. However, a cost-benefit analysis shows that the advantages outweigh the risks involved.
A critical examination of free trade agreements can be vital since such agreements can undermine local producers and entire sectors of the economy that were once thriving. Nevertheless, it will allow Canada to gain market shares in an area of the world where economic growth has not yet reached its full potential.
Mr. Erin O'Toole (Parliamentary Secretary to the Minister of International Trade, CPC):
Mr. Speaker, it is my honour to stand today in the House to speak to the Canada-Korea free trade agreement. I am proud of the work done by our Prime Minister, our Minister of International Trade, and truly our government in growing new markets for Canadian employers, because one in five jobs is directly attributable to trade. It is an honour for me to talk about yet another important trade agreement that this government has brought to Canadians and to Canadian exporters.
I am also going to use some of my remarks today to talk about why I am very proud of this agreement in particular, as a Canadian and as the member of Parliament for Durham, for bringing together two peoples who have a deep and rich shared history, although it is only about 70 years long in duration. Our relationship was forged in the battles of the Korean War and has emerged as an important relationship for Canada and Asia. I will dedicate a few remarks to that aspect of the relationship.
Trade promotes dialogue between nations, and it also promotes security. The deals we are negotiating are not just huge wins for Canadian employers, but they are also huge wins on international security and helping make sure that globalization allows all people to benefit. The result will be a mutual dependence between countries on the trade and commerce front and more stability and security for their citizens, particularly in Asia.
This is truly yet another incredible free trade agreement negotiated by our government. The Korean GDP is $1.3 trillion. Korea's economy is the 15th largest in the world and it has roared into that position in the last few decades. It is already Canada's seventh-largest trading partner, which is an important point that we focused on. It is a market of 50 million people, and increasingly, a market that is seeing a middle class emerge in the country, and with that middle class comes the demand for quality of products, particularly food and agricultural products, from a country like Canada. People want to provide the best food in the world for their families, and we are seeing that in Asia, particularly in South Korea.
We are following a pattern of engagement to make sure we also keep the playing field level with our main competitors in global commerce. The European Union negotiated a free trade agreement with South Korea in 2011. The United States negotiated a free trade agreement with South Korea in 2012. We have been at the table pretty much alongside our friends and competitors from Australia. We want to make sure our exporters have a level playing field and the opportunity to grow in an important market. Since the U.S. free trade agreement with Korea came into force, we have seen a reduction of $1.5 billion in exports to South Korea because of the tariff elimination that some of our competitors saw.
We were still able to forge a great deal. We do not rush and make a poor deal on behalf of our exporters. We make sure we stay at the table to negotiate an ambitious and important outcome, and that is where we are at.
A review of this free trade agreement has led to estimates that our exports to South Korea would increase upon implementation of this deal by 32%. That is almost a $2 billion addition to our gross domestic product. When fully implemented, the agreement would remove duties on 98% of tariff lines.
I will go back to what I said at the beginning of my remarks. One in every five Canadian jobs is attributable to trade. Deals like this not only secure those jobs that are there now, but they grow more, because as a modest country in the 33 million to 35 million range, we need to sell beyond our borders.
I would remind the House, particularly people who are just waking up to the benefits of trade such as my friends in the NDP, it is Conservative governments that have granted Canadian exporters access to 98% of the markets that are available to Canadian exporters. Pretty much every trade deal or all of that access is attributable to this government and the last Conservative government. That is a fact that as a free trader I am very proud of. Our exporters, once given a level playing field, can compete with the best. Those are the opportunities, an almost $2 billion addition to our GDP from this deal.
What are the big winners? As parliamentary secretary, I have had the good fortune of visiting parts of this country to talk trade, to talk this agreement and to help industries consider market access to take advantage of these agreements. The big winners are all regions of the country because of their particular products, and I will run through those, but also our agricultural sector. In the years of our best friend and trading partner to the south playing games on the trade front with country-of-origin labelling and things like this, our beef and pork producers needed secure access to a growing market. Korea is big beef- and pork-consuming market. It is only going to grow more. The Koreans want access to high-value, high-quality products, yet we could not get in there.
First, there were regulatory issues that we had to smooth out, but also a tariff rate of up to 72% on beef and beef products. Adding 72% to the cost means we cannot access that market; it is as simple as that. Pork and pork products had a 30% tariff rate with most pork products and processed pork products. The tariff walls that Canada has had in reverse on some South Korean products are trivial in comparison. We are talking about 4% or 5% nominal tariffs that an efficient business can perhaps absorb. We cannot absorb a 30% or 72% tariff rate, so those markets are essentially not accessible. Now they will be.
Another huge winner is a part of the country that is dear to my heart. Atlantic Canada will have immense wins with this deal, and British Columbia as well and potentially the Arctic. Seafood tariffs were another one of those high-tariff ranges, ranging from 16% to 47% tariff rates. That is essentially a tariff wall.
I had the honour of being in Korea a few a weeks ago, and I will speak to that in my remarks shortly. We were there a few days before the beginning of Chuseok, which is the Korean thanksgiving celebration. The Koreans were happy to tell us about this and we were talking about the differences between our Thanksgiving and theirs. Theirs is more of an ancestral history event where they go back to the town where they grew up, and it is a point of honour for them to bring a special food to their ancestral home and their family at Chuseok. The most popular food in the last year to two years was Atlantic Canadian lobster. That is a product that already had a 20% tariff rate, yet people were recognizing that the best lobster in the world comes from Atlantic Canada and they were still absorbing that 20% hit. That is going to be eliminated.
I was also fortunate to be at the Halifax Stanfield International Airport some months ago to meet with Korean airlines officials as they sent their second of many dedicated cargo flights to Halifax to take Atlantic lobster back to South Korea, where most was consumed in South Korea or traded in Asia. That is a market we have already been forging, and it will only benefit more from this deal.
Wood and wood products, another major export for us, had tariffs in the 5% range on most wood products and 10% on processed wood products. I have seen first-hand Viceroy Homes, which employs people in both Port Hope, Ontario, and in Burnaby, B.C., a Unifor unionized workplace that has predicted it will double the size of its workforce as a result of South Korea alone. It already had market access as a high-value wood-product company of windows and homes. With the reduction of the 10% tariff, it is now very competitive and it is hiring Canadians because of that.
In Newfoundland and Labrador, frozen shrimp and a lot of crab products have a 20% tariff wall. In Nova Scotia, known for its blueberries, there is a 45% tariff on fresh and 30% on frozen. In Prince Edward Island and New Brunswick, parts of our country known for potatoes and processed potato products, such as french fries, of which I perhaps have had a few too many from time to time, there is an 18% tariff rate, making it hard to be competitive in that market.
In Quebec, maple syrup has an 8% tariff. As for flight simulators, CAE is a company I visited while I was in South Korea to see its investments in that country. On flight simulators there is a 5% tariff rate that will come down. In Ontario, aerospace and rail has an 8% tariff. On nickel products and a lot of refined metal products, there is an 8% tariff. In Manitoba, chemicals have an 8% tariff. On pork, as I said earlier, there is a 30% tariff. I toured the Maple Leaf site in Brandon, which is waiting for access to South Korea. It has made the investments and is ready to do it. It just needs the markets that we are now opening up.
In Saskatchewan, canola oil has a 5% tariff. One of the craziest ones is unroasted barley malt, which has a 269% tariff rate. That is a wall. That is a tariff cage, I would suggest. In Alberta, industrial machinery is at an 18% tariff rate. Once again, Alberta beef, which we just enjoyed here in Ottawa last week, has a 72% tariff rate. We cannot access those markets. In B.C., of course, which has a robust, diverse economy but is also known for its wine, wine has a 15% tariff rate. I know my friend, the MP for Kelowna—Lake Country, is quite keen to see access to that market increase.
This is our first free trade agreement in Asia. As I said at the outset of my remarks, the cultural and historical bonds between the countries make this a perfect partner for our first FTA in Asia because its dynamic economy, which is now the 15th largest in the world, with brand names we all recognize, that opportunity and freedom was secured by Canadians.
There were 26,000 of our young men and women who served in the Korean War from 1950 to 1953, and 516 gave the ultimate sacrifice. When I was in South Korea last month, I was amazed. From schoolchildren to ministers of the government, every one of them thanked us for that commitment 60 years ago. That is the foundation upon which our relations are built. This is a lovely evolution to that relationship now, that we will drop our tariff walls and fully trade as partners.
Many of us took part in the PPCLI, Princess Patricia's Canadian Light Infantry's 100th anniversary just last week on the Hill. There was a wonderful parade, joined by the Van Doos, another proud regiment also celebrating its century. That regiment distinguished itself on the battlefields of South Korea.
In the battle of Kapyong, the PPCLI was one of the few units, the only Canadian unit, to receive a presidential unit citation because its bravery over the course of several days, repelling a communist Chinese advance and saving the lives of Americans, New Zealanders, Australians, and Koreans. They were surrounded. They called in fire on Hill 677, their own position, to make sure they held that line. That is the Canadian commitment to countries such as South Korea and that is why I was so touched to see that first-hand in Seoul.
I also had the honour of joining Minister Park, Korea's Minister of Patriots and Veterans Affairs, at the national war monument and national hall of honour, where our delegation, which included the MP for Haliburton—Kawartha Lakes—Brock and Senator Yonah Martin from British Columbia, laid wreaths at the hall of honour and at the 60th anniversary marker that our government erected when we tried to make sure that our veterans from the Korean War do not think of it as the forgotten war anymore. We have been trying to show them how much we appreciate them. Minister Park laid those wreaths with us and spoke with fondness of the Korean War veterans from Canada he has met over the years.
In the hall of honour and in the war museum, we got to see the spectacular artwork of Canadian war artist Ted Zuber. It was really Korean veterans themselves who raised a lot of the money to hang that spectacular painting by a Canadian artist, a war artist who, incidentally, served in the Royal Canadian Regiment. Now I have named all three of our regiments. His work depicting our service and sacrifice in South Korea is stunning and sits in a place of honour in that war museum.
On a personal level, in Durham, my friend who lives quite close to me, Doug Finney, is currently the president of the Korean Veterans Association of Canada representing those veterans in Canada. I was honoured that he was able to join our government, the Prime Minister and the Governor General at a state dinner just last week at Rideau Hall honouring the visit of President Park from South Korea, the night before the historic signing ceremony for this trade agreement.
We are forged in the history of war and of conflict, but what has emerged is a robust, strong democracy in Asia that is now our gateway into a fast and growing part of the world.
The Koreans I met were truly inspiring. Our first evening in Korea we met with children from H2O Pumassi, who had just two months earlier visited Canada to come and thank our veterans. In fact, in solemn ceremonies, they even washed the feet of some of our veterans. These are children whose parents may not have even born when the conflict took place. Their deep remembrance of our sacrifice is palpable and moving for us. That was our first dinner. They hosted us to show us photos of their trip to Canada. It was truly inspiring.
Many Korean Canadians came here for opportunity, have done well and are now trying to help out back in their home country. Mr. Ron Suh was on the ground in Seoul and joined us for some of the events. He has been working to build bridges for decades as the regional president of the National Unification Advisory Council. It is a position that the president of South Korea asked Ron to fill so that he could work as part of the diaspora toward unification, which is something I think all of us would like to see to eliminate some of the horrors of oppression in North Korea. People who have been building these person-to-person ties between our countries since the war are inspiring.
Similarly, there are South Korean veterans who fought in the war and then immigrated to Canada afterward. They have an association and I have been very fortunate to meet some of these veterans in my travels across the country. They are the living embodiment of the bridge between our countries.
Our work in the national assembly during that visit was to make sure that our friends in South Korea ratified the deal on their side quickly, as we will in the House. I have to thank Minister Park and Minister of Education Hwang; Representative Chung, the speaker of the national assembly who met with us and hosted a meeting; Representative Kim and the trade committee, who we met with us directly to ensure quick passage of this free trade agreement.
We also met with members of their opposition to make sure that events in their country at their national assembly and other things did not interfere with the passage of this important new evolution of our relationship as countries. We met with Representative Woo, the policy chair for the opposition coalition, NPAD.
I thank all of those representatives for the meeting and for helping forge the bonds between our countries.
Durham is an area with a history of a strong and productive auto industry with General Motors in Oshawa. My father is a GM retiree. As the member of Parliament for Durham, I am happy to say that our government has secured an outcome on automobiles that is as strong or stronger than some of the provisions our U.S. friends have. Not only do we get immediate duty-free access to those markets, but we have a permanent specialized dispute settlement procedure for non-tariff barriers.
This is not a five-year dispute settlement such that the U.S. secured in its agreement. We have a permanent dispute resolution so that we can make sure that our automakers have access.
An important point that some of my friends in the opposition like to ignore is that the decision on what vehicle rolls off the lines for our great and productive workforces in Oshawa, Oakville and Windsor is not made at the Canadian subsidiary. That decision is made in Detroit.
How could our government possibly allow our country and those plants to have one less market that they could access? How could we possibly do that? I said to Unifor and representatives of one of the big three that it would be against our national interest. We want to make sure our plants, which are some of the most efficient in North America, have the same market access as their counterparts in the U.S. because they compete for new products to roll off their lines.
I hope that, with my remarks today, I have shown why South Korea is our partner in Asia with our first free trade agreement there. It is a relationship forged in sacrifice, service, and mutual respect. This agreement would be a tremendous win for both countries.
Mr. Randall Garrison (Esquimalt—Juan de Fuca, NDP):
Mr. Speaker, I am pleased to stand in the House today to support this Canada-Korea free trade agreement—appropriately, Canada's first in Asia.
Contrary to the incessant rhetoric about our position from the government side, we in the NDP have always supported balanced trade. When evaluating trade deals, we have been clear about the criteria that should be applied. New Democrats believe that, in fact, there are three essential criteria that should be used in deciding whether to endorse any trade deal that is before us.
First is the question of who we should prioritize when it comes to doing business.
If we are going to have special deals in place, who are the partners with whom we should be dealing? This is not just a question of values, like practising democracy and respecting human rights—important as those are—but it is also a question of fair trade. Does the prospective trade partner trade on a fair basis? Is it a nation that ensures fair labour laws and necessary environmental standards are in place at home; or is it a nation engaged in a race to the bottom and one competing solely on the basis of who can pay workers the least and endanger the environment and health of workers the most?
The second criterion is the question of the strategic value of prospective partners to Canada. Can both countries benefit from a trade deal; or is this a case where one will take the other for a ride?
Finally, there is the question of the deal itself. Are the terms of this agreement acceptable for Canadians? Is this a fair deal? New Democrats have consistently voted against trade deals that have unfairly bound Canada to losing deals for decades at a time.
However, when it comes to Korea, I believe members will hear universally from this side that we believe this deal with Korea meets those criteria.
Korea struggled for many years in what proved to be a very painful transition to democracy, but now, Korea has arrived and is a stable multi-party democracy.
Korea's human rights record is generally good—one of the best in Asia. It is a country with rule of law and very low rates of corruption. Even on a topic very dear to my heart, LGBTQ rights, the situation is rapidly improving in Korea, even including movement on transgender rights.
The role of Ban Ki-moon, the UN Secretary-General, as a strong advocate for recognizing LGBT rights as human rights seems to have resonated in his home country, and social acceptance for the LGBT community in Korea is growing rapidly.
Perhaps down the road, as even closer friends, Canada and Korea can give each other a nudge on LGBTQ rights. Equal age of consent, for instance, exists in Korea, though not formally in all provinces in this country and, of course, equal marriage is not yet a reality in Korea.
On the second criterion—is Korea a strategic partner for Canada—as both are trading nations, the answer to this is, clearly, yes. Korea is Canada's seventh-largest trading partner and our third-largest partner in the Asia-Pacific.
In 2012, manufactured goods accounted for more than half the value of Canada's exports to South Korea and, with a GDP that is very high for Asia, about 75% of Canada's, the South Korean population has the resources to consume the full range of products—from technology to agri-food and from consumer goods to culture—that Canada has to offer.
In fact, to maintain our present position in trade with Korea, we actually do need this deal. Canadian exporters have lost 30% of their market share in Korea since 2012, when the EU and the United States implemented agreements and secured preferential access for their companies.
This deal is needed to help Canada level the playing field for Canadian exporters and protect the jobs they provide. It raises the question of why this deal was not prioritized over some of the others that we have had in front of us, in this House, previously. When, in fact, Canada and Korea have largely complementary economies, then that means, in most areas, we will not be in competition with each other.
There are also some great opportunities here. As Korea is rapidly becoming a world leader in renewable energy technology, there are some great opportunities in the exchanges of new ideas on how we reach a sustainable energy future together.
In one area where we do compete, autos, it is important to note that many of the Korean cars coming into Canada are already being manufactured in North America, in the United States or Mexico, so they already enter our markets duty free. Plus, this deal would see the gradual reduction in Canadian auto tariffs, from their current level of 6%, but the immediate elimination of duties on Canadian autos going to Korea.
In fact, I believe this is a balanced deal, even in the one area where we do compete.
I have already entered the realm of the third criterion: are the terms of this deal fair, in and of themselves? My conclusion is that this deal is a fair trade deal.
This deal does not include some of the things I find most pernicious in other deals. As a former municipal councillor, I am very glad to see that sub-national procurement is not part of this deal. We have seen too many agreements come before the House which tie the hands of municipalities and local governments in attempting to achieve their objectives by requiring them to submit to some free trade requirements, which are quite onerous.
We do have some concerns about this deal. We are opposed to the investor state mechanism in this agreement as is the main opposition party in Korea. When the New Democrats form government, we will work to have this provision dropped.
Fortunately, and unlike the Canada-China FIPA, this agreement does not tie the government's hands for 31 years. In fact, if things go wrong, it can be renegotiated or cancelled after only six months.
Beyond the three criteria that we think apply to all deals, there is another reason that Korea is a good candidate for closer economic relations, and that is the long-standing relationship between Canada and Korea. That relationship is not just based on immigration, though as of 2011 were more than 161,000 Koreans were living in Canada with over one-third of those, more than 53,000, living in British Columbia. While Koreans are still not a large community in my riding, they are a growing presence in greater Victoria.
This long-standing relationship is not just based on the large number of Korean students studying in Canada each year, more than 20,000 Koreans, but that makes Korea the fifth-largest source of foreign students in Canada.
I also note that there are more than 100 active exchange agreements in place between educational institutions in the two countries, including agreements with institutions in my riding. Camosun College, where I taught for 20 years before coming here, teaches the Korea language and also hosts Korean exchange students every year. These international exchange students help provide an important element of diversity in the student body at Camosun and, as I know from my own teaching experience, an important value of diversity within the classroom.
This close relationship is also not just a result of a large number of Canadian teachers who have taught in Korea, but there is an amazing number of Canadians teaching in Korea right now. I note that even the current occupant of our chair taught English in Korea. There are some 5,000 Canadians teaching English in Korea right now.
This relationship is not just a consequence of the fact that 2013 marked the 50th anniversary of diplomatic relations between Korea and Canada, but we do have an important shared history in what is sometimes to referred to the Forgotten War; that is the Korean War from 1951 to 1953 and the two-year period when Canada remained in Korea following the ceasefire.
A total of 26,791 Canadians served in Korea during the Korean War, plus another 7,000 served there in the ceasefire in 1953 through 1955. While 5,000 women were recruited and served in the Canadian Forces during the Korean War, only a small number of nurses actually served in the combat zones, while the rest played key roles here at home.
Of those who went to Korea, 516 died in combat, including 378 buried at the United Nations Memorial Cemetery in Busan, South Korea. Over 1,000 more were seriously wounded. These losses had a huge impact on many families in Canada, not forgetting the much greater losses and the enormous scar left on Korean society to this day, a society which remains technically at war in a war which has been largely forgotten.
In Canada, the Korean Veterans Association struggles to keep the memory of those sacrifices alive in the face of dwindling numbers as a result both of the passage of time and unfortunately of illness and death.
Unit 27 of the Korean Veterans Association has remained active in greater Victoria under the leadership of Ken Kelbough as president from 2011 to 2013, and now Ray Renaud as the 2014 president.
In conclusion, I would argue that Korea is the best prospective trade partner the government has presented to the House. Who better to trade with than a developed country that is a stable democracy with high labour and environmental standards? Who better than a country that is the world's eight largest importer? Who between than a country with whom we have a long-standing series of close relationships? Who better as a partner than Korea with which Canada has had this relationship for the past 50 years, including blood shed in a common struggle?
Who better than Korea? Few nations I can think of. That is why I am proud to stand in the House and support Bill C-41.
Mr. Bev Shipley (Lambton—Kent—Middlesex, CPC):
Mr. Speaker, I appreciate the opportunity to talk about one of the historic agreements that Canada has embarked upon and what it means in the creation of jobs and prosperity, not only for the individuals in Canadian businesses but for individuals and their families as well.
I am pleased to talk about the Canada-Korea free trade agreement and the effects it will have on our economy.
My riding is Lambton—Kent—Middlesex in southwestern Ontario, so I am likely going to focus a little more on the particular area of southwestern Ontario. However, in Ontario in general, Ontario's exports to South Korea were an average of about $516 million. When this agreement comes into force, Ontario's key exporters and providers will see a significant amount of new opportunities. Exporters to South Korea will benefit not only from markets that open, but from non-tariff provisions as well. These provisions will ease regulatory barriers, reinforce intellectual property rights and make open, transparent rules for market access.
Today, colleagues will be speaking, and from what I understand, we are going to see consent to support the agreement, which is good.
I want to also direct my comments and appreciation for the Minister of International Trade, who spends so much time not only travelling but with his colleagues across the world to make agreements like these come into place. In this case it is South Korea.
A little while ago we heard the Parliamentary Secretary to the Minister of International Trade speak. He spoke in depth about the trade and benefits that would be seen, not only by Canada but also the reciprocal benefits for South Korea. He spoke with compassion that comes with the history of why Canada and South Korea were able to make such a strong agreement that would give Canada, in some cases, such preferential treatment.
We have talked about the Korean war and its effects on Canadians. Because of our government wanting to recognize that significant conflict, these tributes have been made across Canada to recognize our veterans who died in that conflict.
This agreement will not only improve market access, but it will also look at the interests of Ontario in many areas. We think about agriculture, minerals and metals, but in many cases we do not think about aerospace, medical devices and clean technology. We are a leader in the environmental aspect of clean technology. We have food manufacturing, information, communications technology and life sciences. Canada and Ontario are leaders in these areas. It will also improve access to professional services with Ontario, with greater and more predictable access to a diverse South Korean market.
The agreement would also provide predictable and non-discriminatory rules for our investors and ensure that investments benefit from greater protection in the South Korean market. Suppliers from Ontario would also benefit from preferential access to procurement by South Korean central government agencies for contracts that would be valued above $100,000.
There will be strong provisions in the agreement, such as on non-tariff measures. That is a critical point. When we talk about developing trade agreements, we need to talk about effective dispute settlement provisions for non-tariff measures.
As was said earlier, particularly by the parliamentary secretary, the benefits for Canada in terms of those dispute settlement provisions in this agreement will give strong reference to Canada, should those issues ever arise. We often look at how that would work for Canada in relation to the examples of Europe and the United States. What we have is a stronger agreement with South Korea than even Europe or the United States have. That is not in all areas, but they are comparable, and in some areas we are preferred.
Let us talk a bit about the industrial goods sector, which accounts for about 12% of Ontario's GDP. It affects about 525,000 workers in Ontario. Once this agreement is in place, 95% of tariffs on industrial products will immediately go away. This is going to be a huge benefit to Ontario and to the industrial sector. Unlike in the United States, where they will go in three to five or 10 years, the majority of ours will go right at the start.
In terms of the Canadian Manufacturers and Exporters, most of us in this House recognize the name Jayson Myers, who is its representative. He said:
|| Our Free Trade Agreement with South Korea is...a first step in gaining more open access for Canadian exports.... this agreement should make Canada an even more attractive destination for investors and manufacturers, create jobs and opportunities for Canadians and level the playing field for Canadian businesses making them more competitive on the global stage.
I want to also touch a bit, as others have, on the automotive sector, which will benefit from this agreement. It looks at going beyond the traditional North American markets and reaching into South Korea. It will provide a level playing field for competition for our auto industry. In fact, in terms of this agreement, Canada got preferential treatment over the EU and the United States, particularly around accelerated dispute settlements. Our agreement between Canada and the South Korea government will have an expedited dispute settlement agreement provision.
I want to get to an area that is close to my heart, and that is agriculture and the processing part of agriculture. As we know, the agriculture and food processing industry is a significant driver in Ontario, with some $44 billion in GDP generated by that industry alone. Almost one-third of that $44 billion comes from agriculture and food processing. As well, the total agriculture-agrifood system, which includes primary agriculture, processing, food services, retail, and wholesale accounts for almost 12% of jobs in Ontario.
Since the implementation of Korea's free trade agreements with the U.S. and EU, Canada's share has dropped significantly, which is the other reason this agreement is so important to get into place now. This agreement will eliminate tariffs, in whole or in part, on 86% of current agricultural exports. This duty-free access will give Canadian products, particularly beef and pork, preferential access to the South Korean market.
We know that there are other products in Ontario, and those are our great wines. This will take away that 15% tariff on our ice wine, something that is unique. The 20% tariff on Canadian rye whisky will also disappear. Spirits Canada has been very supportive of that.
We are looking forward to getting the agreement signed by January, because it is not only good for Canadians as a whole but is good for Ontario and Lambton--Kent--Middlesex.
Ms. Isabelle Morin (Notre-Dame-de-Grâce—Lachine, NDP):
Mr. Speaker, I am delighted and very proud to rise in the House today to speak in favour of Bill C-41, An Act to implement the Free Trade Agreement between Canada and the Republic of Korea. I would like to congratulate the minister for his work on this file.
The vast majority of Koreans who live in Quebec live in my riding. I speak with them a lot, and I take part in many of their activities. This agreement was a frequent topic of conversation in recent months. They are proud that such a free trade agreement has been concluded with Canada. They are very happy. This Thursday, I will be in Montreal with them to celebrate the Republic of Korea's national day. I am sure that we will have some very rewarding discussions about this agreement.
This will be the first time that the NDP will vote in favour of a free trade agreement because the NDP has a very rigorous position on this. We use three key criteria to support or reject this kind of opening up of markets, which will be the focus of my speech.
First, the proposed partner must have utmost respect for democracy and human rights, as well as adequate environmental and labour standards. The partner must basically share Canadian values. If those criteria are not met, the country must be on its way to meeting them.
Second, we look at whether the proposed partner's economy is of significant or strategic value to Canada. Finally, the terms of the agreement must be satisfactory.
In this case, the NDP feels that this free trade agreement has net benefits for Canada. I will address these benefits sector by sector in my speech.
The reason why we have been opposed to most free trade agreements, whether under the Conservatives or in the past, is that the environmental, human rights and labour law criteria were not met. To me and my party, entering into a free trade agreement with a country is a lever that Canada can use to raise the standard of living of people in the country. South Korea is a very democratic country with a high rate of unionization. It upholds human rights and is quite advanced in green technology.
Since its transition from a dictatorship to civilian rule in 1987, South Korea has become a vibrant, multi-party democracy with a very active trade union movement. South Korea's economy made it possible to industrialize the country and raise the standard of living of the Korean people.
Two years ago, I travelled to Asia with some of my colleagues in the House. We went to Thailand and Cambodia. I found that the standard of living in Asian countries is unfortunately not adequate sometimes. The leaders of those countries must raise the bar, because the world is becoming more industrialized and is developing more and more positively. That is why Canada must do its part on the world stage. I am glad that we are signing an agreement with a country that is well aware of that.
South Korea is currently ranked 15th on the human development index, the highest ranking of all East Asian countries. South Korea has introduced social programs and sound rule of law. It has low levels of corruption and provides high access to quality education. South Korea has the highest level of post-secondary education participation in the OECD. That is quite impressive, and I congratulate them.
Furthermore, Korea has emerged as a world leader in renewable energy and green technology. Canada could increase its trade with Korea in this important sector. Canada should be thinking more about the green economy and renewable resources. Perhaps we could learn from Korea.
The right to unionize is very important to us, and Korea allows that. Here, convenience store owners are going out of business because they are not allowed to unionize. In contrast, Korea is trying to encourage people to unionize and have good working conditions, specifically humane working conditions, and decent wages. We are very proud of that aspect of Korea.
We are still wondering if this proposed partner's economy is of significant and strategic value to Canada. As I said earlier, Korea is Canada's seventh-largest trade partner and its third-largest in Asia, behind China and Japan. Canada already does a great deal of trade with those countries.
In 2013, Canadian exports to South Korea were valued at $3.4 billion, while South Korean exports to Canada were worth $7.3 billion. Canada and Korea already do a fair bit of trade. Canada imports roughly the same amount from Korea as it does from the United Kingdom. Our exports to Korea are about the same as what we export to France. Thus, it is already a reliable market.
South Korea is an important player in Asia's global supply chain. In fact, South Korea is the gateway to Asia. A free trade agreement will allow Canada to potentially discover new markets through this country.
However, there is a caveat. Right now, Canada and South Korea have complementary markets. To date, the two countries have not developed the same specialities.
Many sectors have already indicated that they are in favour of this free trade agreement, including some very significant segments of the manufacturing industry. For example, the Aerospace Industries Association of Canada has indicated that it will benefit from the agreement. Bombardier, in my riding, is also very happy about the agreement. The Aluminum Association of Canada and the Mining Association of Canada, which represent heavy industry, have said that this is a good agreement. The agreement will certainly be good for wood products. By all accounts, Canada will be able to export many forestry products. Canada will also have to expand its agricultural sector. The food processing, seafood and high-tech sectors have already indicated that they support the free trade agreement and that it will be beneficial for them.
The terms of a free trade agreement are the third criterion the NDP uses to determine whether it will support that agreement or not. For example, what will the agreement do for jobs in Canada? It will level the playing field for Canadian workers and Canadian businesses that export their products to South Korea. Ever since the European Union and the United States signed free trade agreements with Korea, Canadian exporters have been losing market share. We are going to try to gain it back.
Every year, Korea's tariffs are reduced for European Union and United States exporters. Right now, tariffs are costing Canadian producers hundreds of millions of dollars a year. We are going to try to recover that money.
Since I only have a minute left, I cannot talk about all of the sectors that I wanted to. Personally, I support the agreement. Had the NDP negotiated this agreement, we would have made some small changes. My colleagues spoke about the automotive industry, which may be affected. Parliamentarians will be responsible for discussing this situation and finding measures to help that industry. The automotive industry provides good jobs, and we must make sure that those jobs are not lost. I admit that I am a bit concerned about that.
I would like to state once again that I will vote in favour of the agreement and that I am proud of it. I am now ready to answer my colleagues' questions.
Mr. Colin Mayes (Okanagan—Shuswap, CPC):
Mr. Speaker, it is a pleasure to stand before the House today to speak about the benefits of the Canada-Korea free trade agreement.
This free trade agreement, Canada's first with an Asian market, would create thousands of new jobs in Canada and provide Canadian businesses and workers with a gateway to Asia, enhancing their global competitiveness.
No government in Canada's history has been more committed to the creation of jobs and prosperity for Canadian businesses and workers and their families than this government. Deepening Canada's trade relationships in dynamic and high-growth markets around the world is a key to these efforts.
I would like to focus on the benefits of the Canada-Korea free trade agreement in relation specifically to small and medium-sized enterprises. Small and medium-sized enterprises, or SMEs, make up the backbone of the Canadian economy. This importance is highlighted in our Conservative government's global markets action plan. In fact, a key part of this government's pro-trade plans is to provide SMEs with new and improved market access so that they can expand and win in the global marketplace.
The reality is that many barriers exist that prevent SMEs from accessing new market opportunities and taking advantage of global and regional value chains, and one of the most significant barriers for SMEs is high tariffs. High tariffs pose a significant barrier for any business trying to break into a new market, but this is especially true for SMEs, which tend to have fewer resources and a smaller market share. As we know, tariff reductions are at the core of the Canada-Korea free trade outcome.
Our Conservative government understands that when SMEs sell more of their goods, they create jobs, so when our free trade agreements bring tariffs down, helping our SMEs compete and win, those free trade agreements create jobs for Canadians.
I am happy to report that the Canada-Korea free trade agreement would eliminate tariffs on virtually all current exports from Canada to South Korea. The Canada-Korea free trade agreement would result in the elimination of 100% of South Korean tariffs on industrial goods, forestry and wood products, and fish and seafood products, as well as the elimination of the vast majority of South Korea's agricultural tariffs. In all, once the agreement is fully implemented, South Korea will remove duties on 100% of non-agricultural exports and on 97% of current agricultural exports. This would significantly improve South Korean market access for Canadian SMEs.
To help business owners, the Canada-Korea free trade agreement contains simple and clear rules of origin that would make it easier and less costly for Canadian SMEs to do business in the South Korean market. The Canada-Korea free trade agreement also contains clear and transparent origin procedures that would ensure the effective and consistent administration of the rules of origin so that they do not represent costly barriers to trade.
Non-tariff barriers are a growing concern in international trade. Non-tariff barriers, whether in the form of unjustified trade restrictions or lack of transparency, could seriously undermine gains made in market access. The effects of non-tariff restriction barriers tend to be magnified for SMEs that do not have the level of resources of a large national or multinational corporation. The Canada-Korea free trade agreement contains strong disciplines on non-tariff measures that would help SMEs reap the benefits of this agreement.
For instance, the agreement promotes and requires the use of internationally accepted standards to minimize duplicative certification and testing of products. Moreover, the Canada-Korea free trade agreement would improve transparency with respect to standards and regulatory development by ensuring that SMEs and other companies have access to information such as laws, regulations, and administrative rulings that can affect trade.
I would like to note that these strong disciplines on non-tariff measures are backed up by the Canada-Korea free trade agreement's fast and effective dispute settlement provisions.
The benefits of the Canada-Korea free trade agreement do not end there. In addition, through tariff elimination, user-friendly rules of origin, transparent origin procedures, and reduced non-tariff barriers, the Canada-Korea free trade agreement contains strong provisions that would improve access for services and facilitate business mobility.
With regard to services, Canadian SMEs would benefit from preferential market access in key areas of export interest, including research and development services, professional services, environmental services, and business services, among many others.
In addition, the Canada-Korea free trade agreement would enhance business mobility by giving Canadian business people new and preferential access to the South Korean market by removing barriers to entry, such as economic needs tests. It would also ensure that new barriers in this area, such as quotas and proportionality tests, will not be introduced in the future.
Some of these provisions are the most ambitious that South Korea has ever agreed to in its free trade agreements, and they would allow Canadian SMEs to compete with key competitors in the U.S. and the EU on a level playing field.
Lastly, I want to speak briefly on investment.
Canada already has significant foreign investment in South Korea, including in the automotive, transportation, financial services, and life sciences sectors. The Canada-Korea free trade agreement includes a robust framework of rules that will result in an environment characterized by greater predictability and stability for Canadian firms that already have investments in the South Korean market and for companies that wish to expand their investments or make new investments. This is relevant to Canadian SMEs whether they exist on their own or are looking to partner with larger Canadian firms.
These are just a few examples of how the Canada-Korea free trade agreement would enhance market access for SMEs and make them more competitive in the global market. As we can see, the Canada-Korea free trade agreement is a much needed, high-quality agreement that would bring significant benefits to Canada's small and medium-sized enterprises as well as to Canadian consumers and other businesses.
Our government understands the importance of trade and exports to our economy. Exports are responsible for one out of every five jobs in Canada. The prosperity of Canadians depends on the continued expansion beyond our borders into new markets that serve to grow Canada's exports and investment.
However, this past summer the NDP's critic protested alongside well-known radical anti-trade activists, like The Council of Canadians and the Canadian Centre for Policy Alternatives at an anti-trade protest.
The NDP's record is just as bad and shameful as the Liberal record. During 13 long years in government, the Liberals completely neglected trade. When our government was elected in 2006, Canada only had trade agreements with five countries, the most important two being the United States and Mexico, and that agreement was signed by another Conservative government.
The Liberals took Canada virtually out of the game of trade negotiations, putting Canadian workers and businesses at severe risk of falling behind in the era of global markets. With the free trade agreement with Korea and the historic agreement between Canada and the European Union, Canada will have ratified free trade agreements with 43 countries.
Only our government is focused on what matters to Canadians: jobs, growth, and long-term prosperity. The Canada-Korea free trade agreement is just another example of how this Conservative government is getting the job done.
Mr. Massimo Pacetti (Saint-Léonard—Saint-Michel, Lib.):
Mr. Speaker, I am very pleased to rise in the House today to debate Bill C-41 on the Canada-Korea free trade agreement.
The Liberal Party and I support the initiatives that lead to free trade agreements. There are definitely many advantages to free trade agreements, and it goes without saying that Canada's economy gains strength when markets are opened. That is why we will support the bill to establish a partnership between South Korea and Canada.
We believe that it is important to establish a special relationship with South Korea, since we do more than $10.8 billion of bilateral merchandise trade with this country. Furthermore, South Korea already has free trade agreements with the European Union and the United States, which is an incentive for us to act quickly. We are now playing catch-up. We could end up at a serious disadvantage if we delay an agreement with South Korea even further.
Canada already lost more than 30% of its share of the South Korean market when South Korea signed agreements with the United States, the European Union and Australia. Since negotiations have been going on for nearly 10 years, we sincerely hope that this agreement will take effect quickly. Strategically, we are lagging far behind on markets we should already have access to.
This is the first free trade agreement that establishes an agreement with an Asian country, yet our primary trading countries are Asian countries, including Japan, China and Korea. The government is lacking a clear vision when it comes time to targeting new markets or quickly carving out a space in emerging markets.
The government boasts about signing free trade agreements, as we saw with the last member who spoke, but we have had some significant trade deficits since 2009. The announcement of a free trade agreement with South Korea will not magically fix that situation, as the Conservative government hopes. We think that the government needs to commit resources and make investments to increase trade.
For example, since the free trade agreement between South Korea and the United States was established, Canadian pork producers have lost the Korean market to the United States. This situation is unacceptable. We should have acted much more quickly before these kinds of things happened. Now that the agreement has been signed, this government has the duty to protect these industries and ensure that they regain their market share.
As the Liberal critic for small business, I am aware of the importance of this agreement for Canadian workers. Removing tariffs is often the support small and medium businesses want, to ensure that they have an equal chance of being competitive on the markets. The agreement can only help Canadian companies doing business with South Korea and the many subcontractors involved.
This agreement is even more beneficial when you take into account that the customs tariffs imposed by South Korea are about three times higher than Canada's, and they will be eliminated, on different schedules, once the agreement is in effect. These are small things that will matter a lot at the end of the year for Canadian small and medium-sized businesses.
I am pleased to hear the news for Canadian entrepreneurs who do business with South Korea, but I hope it is not too late for those who would like to enter the Korean market. Indeed, the various competitors from other countries have already become well-established since the signing of free trade agreements that preceded ours.
From another perspective, what concerns me about the free trade agreement between Canada and South Korea is the current situation with the Canadian automobile industry and what will happen once this agreement is implemented. The Canadian and North American auto market has already been significantly infiltrated by Korean vehicles.
About 100,000 Korean vehicles worth $2.6 billion are imported into Canada annually, while Canadian or North American vehicles do not really reach the Korean market. One hundred or so Canadian vehicles worth about $12.5 million are exported annually to South Korea.
Objectively speaking, it would be wrong to believe that free trade will create a balance. The government is really turning its back on the auto industry under this agreement.
In the final agreement summary, only South Korean imports from Canada are mentioned. There is no mention of Canadian imports from South Korea. We can therefore neither compare nor see the scale of the imbalance.
The government has gotten us used to that kind of thing: hiding important information to make it easier to pass bills that might be controversial. My concern is that the gap will only grow wider.
According to Unifor, Canadian auto sector imports from South Korea have increased by 1,010% since 1997. In that sector, the benefits are exclusively South Korea's. A greater number of Korean cars will enter the Canadian market, and it will get harder and harder to compete.
Another important and interesting aspect of the bill we are debating today is that it would not change anything in terms of intellectual property. Since becoming a member of the Standing Committee on International Trade, I have seen how big a global issue this has become. There are increasing demands to improve intellectual property protection, and there is a lot of pressure around that in various agreements.
From negotiations with the European Union to creating a trans-Pacific partnership, there is always disagreement about intellectual property. The surprising thing is that when a country complies with international intellectual property protection standards, a negotiating partner can ask it to do even more than the good things it is already doing, can expect all the parties to an agreement to use the same system. I am surprised but pleased to see that a free trade agreement that respects each country's system can happen.
Will the government be able to respect and protect our own Canadian standards as it negotiates agreements with the European Union and the countries working on a trans-Pacific partnership? It is difficult to tell at the moment, but our preliminary information suggests that the European Union's high expectations regarding intellectual property seem to be finding their way into the final agreement.
Over the course of the committee meetings, we repeatedly heard concerns about increased protection for intellectual property from representatives of various fields, including the pharmaceutical field.
Just this week, since the text of the final Canada-EU agreement was released, Canadians have already expressed concern about the potential increase in costs for drugs, as well as the possibility of higher costs in our health care system. I sincerely hope that their concerns will be taken seriously by this government.
To get back to the bill being debated today, I wish to support it so that it can be sent to committee for further study. I hope that we will have the viewpoints of all the sectors and stakeholders of society in the testimony at committee.
I hope that this agreement will not add significantly to the imbalance we can see in the automotive sector or that the government will at least keep an eye on the health of the Canadian sector.
I also hope that this agreement will help Canadian businesses by fostering more and more trade between the two countries. I think the elimination of trade barriers can only benefit the majority of Canadian businesses.
As I said before, such agreements have significant repercussions on local entrepreneurs. In fact, customs tariffs alone can account for many unnecessary direct and indirect expenses for small businesses.
Mr. Randy Hoback (Prince Albert, CPC):
Mr. Speaker, I am pleased to rise today to talk to the Canada–Korea free trade agreement, or CKFTA, specifically the benefits and opportunities created by the agreement for the Canadian beef and pork farmers.
Canadian beef and pork are world renowned and a significant contributor to our national economy. In every region of our country, hard-working beef and pork producers produce reliable and high-quality products that are constantly in high demand. The size of the industry is staggering. By 2014, there were 12.2 million head of cattle on over 82,000 Canadian farms and ranches. In the pork sector, there are approximately 12.9 million hogs on over 7,000 farms.
Our government, along with Canadian beef and pork producers, understands that Canada's prosperity requires expansion beyond our borders into new markets for economic opportunities that serve to grow Canada's exports and investments.
While the United States is a major export market for Canadian beef and pork, diversification and ensuring that Canadian farmers have access to a wide range of export markets for their products is key to their success. That is why our most recent Speech from the Throne committed to expanding trade in the Asia-Pacific region to benefit hard-working Canadians and businesses, especially to our crucial small and medium-sized enterprises and industries across Canada.
South Korea represents a significant market for beef and pork, and there exists much potential for increased Canadian exports. Between 2010 and 2012, South Korea's global imports totalled an average of approximately $1.3 billion annually, while global pork imports were worth an average of approximately $1.1 billion annually. Currently, Canada supplies only a fraction of South Korea's beef and pork markets. Canada's market share is also currently falling due to the competitive disadvantage vis-a-vis the United States and the European Union that benefit from lower tariffs and preferential access due to the FTA they presently have with South Korea.
Specifically, following the implementation of the Korea-U.S. or Korea-EU FTAs, Canada's share of South Korean fresh, chilled and frozen pork imports dropped from 14.2% in 2010 to 8.9% in 2013, representing a loss of export value in excess of $22 million. During the same period, U.S. and EU market share increased from 66% to 76%.
In 2012, following the resumption of Canada's access to South Korea's beef market, Canada's fresh and chilled beef exports to South Korea were valued at around $10 million. However, in 2013, Canadian beef exports declined to $6.7 million as a result of a growing tariff differential, again vis-à-vis U.S. competition.
Our Conservative government is committed to levelling the playing field and opening new markets for high-quality Canadian beef and pork as Canada's first free trade agreement in Asia. The Canada-Korea free trade agreement provides critical new market-access opportunities in a dynamic region where there is significant demand for both beef and pork.
Starting with beef, exports to South Korea of fresh, chilled and frozen beef, which totalled over $43 million in 2002 prior to the BSE outbreak, are in the rebuilding phase following the restoration of access to the South Korean market in 2012. Canada's exports of beef to South Korea reached an average of $5.5 million from 2011 to 2013, while exports of bovine genetics, offal and tallow averaged at over $15 million.
Importantly, the Canada-Korea free trade agreement would eliminate high tariffs that serve as a barrier for increased Canadian exports. Specifically, the 40% tariff on fresh, chilled and frozen beef cuts, as well as the 72% tariff on some processed and prepared beef, will be eliminated within 15 years. Tariffs of 18% on most beef offal will be eliminated within 11 years, while tariffs on beef fats and tallow will be eliminated upon entry into force of the free trade agreement. In addition, the 18% tariff on embryos will be eliminated upon entry into force.
Beef stakeholders from across the country have unanimously and publicly supported this agreement. These include the Canadian Cattlemen's Association, the Canadian Meat Council, Manitoba Beef Producers, British Columbia Cattlemen's Association, Alberta Beef Producers, Saskatchewan Stock Growers Association and Beef Farmers of Ontario. Martin Unrau, past president of the Canadian Cattlemen's Association, said, “This announcement means Canadian beef will be able to compete for meaningful access in the South Korean market”.
Canada's export of fresh, chilled and frozen pork to South Korea reached an average of $138 million from 2011 to 2013, while exports of processed pork, pork offal and fats reached $9 million during the same period. Although Canadian pork farmers are already exporting to South Korea, high tariffs remain for many of the pork products they produce. Thus, there is remaining significant untapped potential for this industry to export to South Korea, potential that can only be accessed through a tariff elimination pursuant to the Canada–Korea free trade agreement.
Under the agreement, the 22.5% and 25% tariffs on fresh, chilled and frozen pork guts will be eliminated within five to thirteen years. The 18% to 30% tariffs on most processed and prepared pork will be eliminated within six years. As well, the 18% tariff on pork offal will be eliminated within five years, while the 3% tariff on pig fats and oils will be eliminated upon entry into force of the Canada–Korea free trade agreement.
In addition to the industry associations mentioned above, key pork stakeholders across the country have publicly voiced their support for the agreement, including the Canadian Pork Council, Canada Pork International, Éleveurs de porcs du Québec, Alberta Pork, Maple Leaf Foods, Olymel, HyLife Foods, and the Canadian Agri-Food Trade Alliance.
This agreement also recognizes the integrated nature of this industry in the North American economy. It provides the rules of origin that would allow these world-class products to benefit from preferential treatment in South Korea. This is important as it allows Canada to continue to compete with other exporters of beef and pork to South Korea, including the United States and European Union, competitors that have benefited from lower tariffs since the implementation of their own respective free trade agreements with South Korea.
Take what Michael McCain, president and CEO of Maple Leaf Foods, said, “This agreement is a major win for Canada's agri-food industry”.
Shamefully, despite all the evidence that trade creates jobs, economic growth, and economic security for hard-working Canadian families, the NDP, together with its activist-group allies, is always ideologically opposed to trade. Just as bad are the Liberals, who during their 13 years in power completely neglected trade. The Liberals took Canada virtually out of the game in trade negotiations, putting Canadian workers and businesses at severe risk of falling behind in the era of global markets.
In these uncertain times our prosperity depends on our ability to take advantage of economic opportunities in emerging markets. Not only would the Canada-Korea free trade agreement provide robust outcomes for Canadian beef and pork farmers, but it would allow Canada to level the playing field with key competitors and reverse the decline in beef and pork exports to South Korea.
Our government understands the importance of trade to our economy. It represents one out of every five jobs in Canada and accounts for more than 60% of our country's annual income.
Any delay in ratifying this agreement would place Canadian farmers at a further disadvantage against their competitors, and Canadian jobs and opportunities. As Australia is nearing the implementation of its own FTA with South Korea, there is even a greater urgency for Canada to implement the Canada-Korea free trade agreement and gain preferential access as soon as possible so as to establish an even stronger foothold in this most important export market.
In order to support Canadian farmers and expand their export opportunities, the Canada-Korea free trade agreement needs to be passed now. This would create jobs and opportunities and contribute significantly to Canada's long-term economic growth and prosperity.
Mr. Alexandre Boulerice (Rosemont—La Petite-Patrie, NDP):
Mr. Speaker, the NDP does not usually rise in the House in support of a trade agreement, a free trade agreement with another country. In the past, we have been rather skeptical. We are still skeptical, because we are critical thinkers and we want trade agreements to benefit our economic sectors and workers, and to protect and defend our jobs. That being said, we are also aware that we must diversify our exports.
Canada and Quebec have always been nations of traders. Ever since we traded with the aboriginal peoples when we arrived, traded furs and dealt with our neighbours to the south, the Americans, we have always worked in production and commerce. We know that this is part of our economic and social fabric and that, today, we need to provide our goods and services to the whole world in order to keep thousands of jobs in the country and to sell our products, be it in Africa, Japan, Europe or China. We are aware that this is key to the economic well-being of our workers in all our economic sectors. However, we must consider and assess each trade agreement on its own merits and what we will or will not gain from it. We must ask ourselves certain questions every time we sign a treaty with another country.
The NDP determined that the trade agreement with South Korea had more advantages than disadvantages for many economic sectors. I will come back to that, but I must say first and foremost that we conducted a careful study to assess the benefits, the losses, the costs and the profits. I would like to point out that, unlike the Liberal Party, which gives the government a blank cheque by voting in favour of any free trade agreement without considering its contents, we think that we must do some serious work and determine whether it is truly advantageous for our businesses and the workers they employ. There are some very interesting things in South Korea's case.
We believe that we should always ask ourselves three questions before signing a treaty. For the most part, the Conservatives have botched these negotiations, which are not always to our advantage. That is why we have opposed these agreements many times in the past. In some cases, it was because we came out on the losing end; in others, it was because we were signing agreements with governments that had abysmal human rights records. Sometimes, the governments were linked to crime or there were politically motivated murders of union activists. For example, we were very concerned about the Conservatives' free trade agreement with Honduras, which we refused to support.
Question number one: Does the proposed partner respect democracy and human rights, and does it have adequate environmental and labour standards?
Question number two: Is the economy of the proposed partner of significant or strategic value to Canada and our exporters? We are a nation of traders, therefore exporters, and we are trying to diversify our exports. Opening up a new market can be a very attractive prospect, but does it have a significant strategic value?
As they say, the devil is in the details. The third question is the following: Are the terms of the proposed agreement satisfactory?
According to the NDP's assessment, the trade agreement with South Korea is positive and satisfactory overall. Why?
I have been involved with unions and the defence of public services. I believe that protecting our public services and procurement for various levels of government is vital when governments have to make purchases or provide services. In the proposed agreement with South Korea, there is absolutely nothing that affects procurement for various levels of government.
Our public services are not at all affected by any aspect of this trade agreement. It really affects only the private sector. That is very important to me and to the people I represent. The agreement proposed today does not pose any threat regarding the privatization of public services, but we have serious doubts about the proposed agreement with the European Union. We still have not been given any details or seen the text of the agreement.
This is a fundamental value for me and for many progressives and social democrats. Some safeguards are in place in the private sector. Agricultural production, a supply managed industry, is not subject to this agreement. That is good news for most producers and farmers in Quebec and Canada, and we are very pleased about that.
First, this agreement does not privatize anything or attack any public services, which is a good thing. Second, we are concerned about the dispute resolution mechanism as it now stands.
Every trade agreement contains a dispute resolution mechanism for the two partners, in case a company deems that it has been treated unfairly with regard to its investments or its production capacity, for example.
One of the mechanisms in this agreement is not what the NDP or the main opposition party in South Korea would have negotiated.
It is clear that, next year, when the NDP takes office, we will sit down with our South Korean partners and review this dispute resolution mechanism to ensure that companies will not be able to take legal action against a government or a level of government over future loss of profit. This seems undemocratic to us and we are particularly concerned about it. We want to resolve this issue.
We are able to live with this agreement as it stands because it contains a clause that allows us to terminate our relations or a dispute with six months' notice, unlike the trade agreement with China, which ties our hands and is binding for 31 years. This clause protects us and it protects our workers and businesses in Quebec and Canada.
We can live with this, even if we are concerned about it and it seems undemocratic to us. We want to renegotiate with South Korea when we take office.
Third, we are concerned about support for the automotive sector in this agreement. The agreement has some huge benefits for a number of economic sectors, including the forestry, aerospace and agriculture sectors, and I think we have everything to gain. This will enable us to increase our exports and sales to South Korea, the 15th biggest economy in the world, which has 50 million inhabitants with purchasing power similar to that of Quebeckers and Canadians. It is a very attractive market in which to sell our products.
However, we also know that this country produces a huge number of automobiles. There are 100,000 good jobs in Canada—not in Quebec anymore—in the automotive sector, and we encourage the Conservative government to adopt measures that will support the jobs in Canada's automotive industry.
We do not think that the existing 6% tariff really protected us from exports coming from South Korea, especially since they had plants in the United States, and later Mexico, so that 6% tariff did not exist.
However, we are concerned about the potential increase in the number of South Korean cars coming into the country. We would like the government to be more proactive about protecting and defending the automotive industry to protect these good jobs.
I remind members that this agreement will help our farmers and our aerospace companies, such as Bombardier, which is why the NDP will support it.
Mr. Blake Richards (Wild Rose, CPC):
Mr. Speaker, it is pleasure to rise on this debate today.
Our Conservative government is focused on creating jobs and opportunities for Canadians in every region of our country. That is why our government launched the most ambitious pro-trade plan in Canadian history. We are pursuing deeper trade and investment ties with many of the largest, most dynamic, and fastest-growing markets in the world. We are doing so to enhance Canada's competitive edge in a fiercely competitive global economy.
To this end, our government has developed the global markets action plan, GMAP, Canada's blueprint for creating jobs and opportunities at home and abroad through trade and investment, the twin engines of economic growth. Under the GMAP, our government will concentrate efforts on markets that hold the greatest opportunities for Canadian businesses.
In support of this, our government stands ready to harness Canada's diplomatic assets in the pursuit of commercial success by Canadian companies abroad, particularly by small and medium-sized enterprises. In fact, the GMAP establishes ambitious yet achievable targets over the next five years to expand the export footprint of the Canadian small and medium enterprise community.
Throughout the GMAP consultation process, it was clear that the Asia-Pacific region is a crucially important one to Canadian companies. It is home to the high-growth markets of the future. As Asia continues to prosper, the implications for Canada are profound in both the short and the long term. Trade has long been a very powerful engine for Canada's economy, and it is even more so in what remains a challenging time for the global economy.
It is shameful to note that during 13 long years in power, the Liberals completely neglected trade. They completed only three free trade agreements. The Liberals took Canada virtually out of the game of trade negotiations, putting Canadian workers and businesses at severe risk of falling behind in this era of global markets. In fact, the last time the Liberals tried to talk seriously about trade, they were campaigning to rip up the North American Free Trade Agreement.
It was also very disappointing to see this past summer the NDP trade critic protesting alongside well-known radical anti-trade activists, like the Council of Canadians and the Canadian Centre for Policy Alternatives, at an anti-trade protest. Fortunately for Canadians, they can count on this Conservative government to get the job done.
With the conclusion of negotiations for the Canada-Korea free trade agreement, our government has taken a meaningful and concrete step toward ensuring that Canadian companies have increased access to the Asia-Pacific region. South Korea has been designated a GMAP priority market. In addition to being the fourth largest economy in Asia, boasting a robust, export-oriented $1.3 trillion economy, South Korea is also a key gateway to the wider Asia-Pacific region that offers strategic access to regional and global value chains.
With a population of 50 million and a per capita GDP of more than $25,000, which is one of the highest in Asia, South Korea is one of Asia's most lucrative, dynamic, and advanced markets. It is home to many large global businesses, including household names like Samsung, Hyundai, and LG. I am sure almost every member in the House would be able to say they have products from some of those companies in their homes and offices, and I am sure most Canadian households would be able to say the same.
The priority sectors identified under the GMAP as holding promising opportunities for Canadian companies in the South Korean market include, but are not limited to, areas like agriculture, education, oil and gas, mining, information and communications technology, and sustainable technologies.
I will now touch on just a few of these priority sectors and emphasize how the Canada-Korea free trade agreement would transform these opportunities into engines of growth for Canadian companies and for the Canadian economy as a whole.
South Korea imported over 29 billion dollars' worth of agrifood and seafood products in 2013. Canadian exports to South Korea of those goods were nearly $416 million last year, representing less than 2% of the market share. This marks more than a 60% decline in Canadian agrifood and seafood exports over the proceeding two years. A key reason for this is the preferential access that our competitors have enjoyed since their free trade agreements with South Korea came into effect. Most notable are the Korea-EU and Korea-U.S. free trade agreements, which came into effect in 2011 and 2012, respectively.
South Korea's growing per capita income and demand for high-quality food present considerable potential for our Canadian products. Export growth in agrifood and fish and seafood products depend on the full implementation of the Canada-Korea free trade agreement. Only this would ensure that Canadian producers are on a level playing field with major competitors in the South Korean market.
Based on 2011 to 2013 average trade values, the Canada-Korea free trade agreement would eliminate tariffs on around 70% of agricultural imports from Canada into South Korea within five years, and about 97% of agricultural imports within 15 years. This includes all key Canadian products of interest. This duty-free access would give Canadian agricultural products, including beef, pork, canola and grains, the preferential access to the South Korean market that they need.
South Korea was Canada's eighth largest market for all goods exported in 2013. Even so, Canada is not ranked as one of South Korea's top 10 suppliers of mineral resources. Obviously, what that tells us is that there are significant opportunities for growth for Canada in this sector.
The Canada-Korea free trade agreement would significantly improve market access opportunities for Canada's metals and minerals sector by eliminating tariffs on all Canadian metal and mineral exports. This includes aluminum, iron, steel, nickel, non-ferrous metals, precious gems and metals, and other mineral products. Upon the agreement's entry into force, over 98% of South Korea's current metals and minerals imports from Canada, which currently face duties of up to 8%, would be duty free, and all remaining tariffs would be eliminated within five years.
If I may, I will move on to another sector that would benefit from the Canada-Korea free trade agreement and boost the ability of Canadian firms to expand their access into the South Korean market and beyond. That is the information and communications technology sector. South Korea is a major manufacturer of ICT products. Significant opportunities exist for Canadian ICT companies to partner with major South Korean companies, many of which are global leaders, and to leverage their global value chains.
In addition, South Korea is home to a large consumer base with a high propensity for adoption of new ICT technologies, particularly in telecoms, game development and entertainment. These are areas in which Canadian companies have significant expertise. The fast growth of 4G mobile services in South Korea also presents opportunities to be involved in the development of new wireless technologies and network services. South Korea has a high smartphone penetration ratio of 73% of its population, which is the highest in the world. That provides a great market base for Canadian game developers and digital entertainment producers.
The Canada-Korea free trade agreement would significantly improve market access opportunities for Canada's ICT sector by eliminating tariffs on all Canadian exports. Products such as cameras, transmission apparatus, and electrical conductors, which have current duties of up to 13%, would enter the South Korean market duty free upon entry into force of this agreement.
Without question, the Canada-Korea free trade agreement would level the playing field for Canadian companies and enhance their ability to tap into lucrative global value chains, boosting their global competitiveness, profitability and long-term sustainability. Going forward, our government will continue to work closely with industry stakeholders to keep the GMAP attuned to global trends and to align it with our government's priorities.
Working together, we will build on our past successes to ensure a prosperous Canada that remains a champion of global trade and investment. On that note, I urge all members of Parliament to join me in supporting the implementation of the Canada-Korea free trade agreement, which would create jobs, growth and long-term prosperity in every single region of this country.