Opposition lawmakers may stall Canada-Panama free trade accord
Bloomberg | 14 August 2009
Opposition Lawmakers May Stall Canada-Panama Free Trade Accord
By Alexandre Deslongchamps and Eric Sabo
Aug. 14 (Bloomberg) — The free trade agreement between Canada and Panama signed Aug. 11 may be stalled or even defeated in Canada’s Parliament unless Prime Minister Stephen Harper can convince at least one opposition party to overcome concerns about Panama’s tax policies.
Lawmakers from all three opposition parties said that while no decisions have been made, they may oppose the agreement over concerns that the Central American country is a tax haven.
Panama’s tax policies are “an area where we have a concern,” Scott Brison, the main opposition Liberal Party’s trade critic, said yesterday in an interview from Wolfville, Nova Scotia. “We are evaluating this particular agreement and will determine through the committee process whether or not it’s in the best interest of Canada.”
A refusal to pass the accord by opposition lawmakers would hamper Harper’s foreign policy strategy of forging tighter links with countries in the Americas. Harper has said he wants to bolster investment and trade in the region after negotiations at the Doha round of World Trade Organization negotiations stalled.
The Conservative government holds a minority of seats in the House of Commons and need the support of at least one opposition bloc to pass legislation.
A similar trade accord between Panama and the U.S., which was signed in 2007, has stalled in Congress after Democrats refused to support it unless Panama agrees to clamp down on tax evaders who find refuge there.
‘I Have My Doubts’
“We’ll read the text and look at the impacts, but given the problems with the tax haven status of Panama, I have my doubts,” Peter Julian, the trade spokesman for the New Democratic Party, said in an interview from Halifax, Nova Scotia. “If the deal has the results that we’re thinking about, then we’d be opposed to it.”
The Bloc Quebecois is also likely to vote against the agreement if it doesn’t contain new fiscal rules, said Serge Cardin, the party’s international trade spokesman.
“We at the Bloc Quebecois have denounced tax havens many times,” he said in an interview. “Now we have a chance, through the free trade agreement, to tell a country, if you want to do business with us, some things must change.”
Panama was the fastest-growing economy in Central America last year, expanding 9.2 percent. More than 17 corporations moved regional headquarters to Panama since legislators passed a tax exemption law in 2007, according to the Commerce Ministry.
The Paris-based Organization for Economic Cooperation and Development reiterated today that Panama is one of 26 jurisdictions that hasn’t “substantially implemented” its standard for sharing tax information, after the country agreed to do so in 2002.
Engaging Through Trade
Brison said the Liberals believe in the principle of free trade and that negotiating pacts with other countries can help engage them on issues such as governance, labor, and the environment.
Canada intends to propose negotiations on a tax information exchange agreement with Panama, a finance department official said in an e-mailed statement on condition that he not be identified by name.
The free-trade agreement would remove tariffs on 90 percent of Panamanian goods imported from Canada, with the remaining ones to be phased out over the next decade, Harper’s office said in an Aug. 11 statement. Canada exported C$128 million ($118 million) of goods such as meat, forest products and flight simulators to Panama in 2008, up 48 percent from 2007.
Under the agreement, Canada would immediately eliminate 99 percent of its tariffs on imports from Panama, leaving duties on some imports of sugar, poultry, eggs and dairy products. Panama would also end a ban on Canadian beef imports it imposed in 2003 following the discovery of mad cow disease in Canada.
A free-trade agreement with Peru came into force on Aug. 1 and Harper’s government is pushing opposition parties to approve another agreement it signed with Colombia last year.
