Opposition Lawmakers May Stall Canada-Panama
Free Trade Accord
By Alexandre Deslongchamps and Eric Sabo
(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.
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