CIIT Committee Report

Open to trade, but not on just any terms

Bloc Québécois supplementary opinion

This is a very strange report.  It jumbles up together Canada's trade relations with the European Union, the Gulf region and Southeast Asia.  It presupposes that the solution to everything is freer trade, no matter what the conditions, without analyzing the implications and without distinguishing between profitable trade and trade that is likely to impoverish us.

Despite this, the Bloc Québécois has chosen not to dissent from the Report, because it contains one element that we strongly approve:  it supports the conclusion of a free-trade agreement with the European Union.

As everyone knows, the Canadian petrodollar has shot up considerably vis-à-vis the American dollar, which is creating a real crisis in the manufacturing sector, the backbone of our economy.  What is it less widely known is that the Canadian dollar has not gone up nearly so high against the Euro.

If our trade were more diversified, and we were less dependent on the United States, our manufacturing sector would be much less at the mercy of fluctuations in the value of the Canadian petrodollar.  From this perspective, the European Union is the obvious partner.

Furthermore, a free-trade agreement with the European Union would be advantageous from the investment standpoint.  Coupled with NAFTA, such an agreement would offer European businesses conditions that would encourage them to make Canada their gateway to the North American market, and therefore to do some of their production in Canada.

Quebec, where already almost 40% of European investment in Canada is concentrated, would be a natural destination for European firms wanting a toehold in North America.

Because partnerships between private enterprise, the state and workers are commonplace in Europe, where they are seen as a form of risk-sharing that ensures businesses greater security, European investors can find in Quebec a business environment with which they are familiar.  There is every likelihood that Quebec would receive the lion's share of European investment in Canada.

Lastly, Europe is a continent whose residents enjoy a high standard of living, where there are strict rules governing human rights and environmental protection, and where there is an extensive social safety net.  Concluding a free-trade agreement with Europe would not promote moves to cheaper offshore locations, a source of social and environmental dumping.

As for the rest of the Report, the Bloc Québécois dissociates itself from it because it does not focus primarily on increasing Quebec and Canadian exports, which are the guarantee of prosperity and employment.  Instead, it focuses on making it easier for Canadian companies to do business abroad, and even move offshore, by multiplying agreements on economic cooperation and foreign investment protection.

This approach poses problems for the Bloc Québécois for two reasons.

On the one hand, we do not support the kind of foreign investment protection agreement (FIPA) that Canada concludes, or the Committee’s recommendation to make greater use of such agreements.  FIP agreements in their current form, which give multinational corporations the right to sue a foreign government directly if it adopts a measure, even a social or environmental measure, that might diminish the return on their investment, seem to us unreasonable and perverse.

A multinational should not have the power to instigate a trade dispute.  This prerogative belongs to governments.  Canada's existing investment protection treaties must be amended to bring businesses back under government authority before any new agreements are entered into.

On the other hand, and more generally, the Bloc Québécois has set out its trade policy priorities in detail in a dissenting opinion it drafted in response to the Seventh Report of the Standing Committee on International Trade, adopted last March.

As we said then, the trade environment has deteriorated considerably in recent years.  Between 2003 and this year – in just four years – Quebec has gone from a trade surplus of $7 billion to an anticipated trade deficit of $15 billion.  The Bloc Québécois's urgent priority is restoring balanced trade.

Trade in a product manufactured under conditions that flout major international agreements on labour, the environment and human rights is a form of unfair competition.  It puts enormous pressure on our industry, gives noncompliant countries the advantage over countries that respect their international commitments, and encourages the exploitation of foreign workers and the degradation of the environment.  This development model is not sustainable over the long term.

And since it is only by multilateral action that this situation can be regularized, the Bloc Québécois deplores the fact that the government is devoting all its energy to evading multilateral agreements in favour of more and more bilateral agreements.

To have access to foreign markets, countries should respect certain rules.  The Bloc Québécois considers that this aspect must become the major trade priority for Quebec and for Canada, and strongly deplores the fact that the Committee has ignored it; it may well become a key international issue in the coming years.

These considerations, which could re-establish balanced trade, are missing from the Report.  The Committee's support for freer trade with Vietnam is revealing in this regard.

Another example is the Committee’s recommendation that Canada conclude a FTA and a FIPA with Singapore.  The Committee appears to have approved this recommendation, innocuous enough at first glance, without any concern for the consequences.

Currently, a number of businesses are moving their production to China or other places where they can produce goods at a lower cost without having to worry about protecting the environment or respecting the rights of workers.  The products then come back here in the form of cheap imports and threaten our own manufacturing jobs.

The only benefit that Canada derives from this comes from the taxes it levies on the profits of Canadian companies that have moved their production abroad.  An agreement with Singapore allowing Canadian companies to establish offices there responsible for coordinating their production activities in Asia would mean that from then on the profits these companies made on their foreign production would not even be taxable here anymore.

In short, the Committee is seeking to facilitate offshoring and the relocation of production.  This approach, though likely to please a few multinationals, is absolutely contrary to our interests, and the Bloc Québécois does not support it.

Quebec is a trading society and needs access to the world to ensure its prosperity.  The Bloc Québécois is therefore in favour of freer trade, but not on just any terms and under any conditions.  Far from being doctrinaire, we base our judgments solely on the best interests of Quebec.

We say Yes to free trade with countries where production activities are carried on with respect for human rights, the environment and workers, like the European Union, and that is why we are not dissenting from the Report.

But we say No to poorly designed agreements like the FIPA as they are currently drafted, and to agreements that will encourage offshoring, the erosion of our manufacturing sector, and social and environmental dumping.  We are therefore submitting this supplementary opinion.