March 26, 2009 (10:30 a.m. EDT)
No. 78

Minister Day Introduces Legislation to Implement Colombia and Peru Free Trade Agreements

The Honourable Stockwell Day, Minister of International Trade and Minister for the Asia-Pacific Gateway, today announced that legislation has been introduced in the House of Commons for the free trade agreements (FTAs) Canada recently signed with Colombia and Peru. These agreements will open new doors for Canadian companies doing business in Colombia and Peru by expanding market access in key sectors such as extractive industries, manufacturing, agriculture and financial services.

“Canada is taking action during these difficult economic times by reaching out to our trading partners and reducing the barriers that undermine our mutual prosperity,” said Minister Day. “These agreements provide our companies with a competitive edge in many sectors, including wheat, paper products, mining, oil and gas, engineering and information technology. This is another example of the government’s efforts to deepen Canada’s presence in Latin America.”

Supporting strong labour and environmental standards in Colombia and Peru is crucial; therefore, robust side agreements in these areas were negotiated alongside these FTAs.

The labour provisions commit all parties to respect and enforce standards such as the elimination of child labour, the freedom of association and the right to bargain collectively. Environmental provisions will help protect and conserve the environment, in areas including where Canadian companies are active.

“We recognize the progress that Colombia, in particular, is making in its efforts to strengthen its economy and society. We believe that engagement, rather than isolation, is the best way to support positive change,” added Minister Day. “The work of Labour Minister Rona Ambrose, Environment Minister Jim Prentice and their predecessors has been instrumental in supporting labour rights and environmental protection as we liberalize trade with Colombia and Peru.”

“These agreements offer essential benefits to Canadian exporters,” said Perrin Beatty, President and Chief Executive Officer of the Canadian Chamber of Commerce. “This is an opportunity for Canada to obtain a competitive advantage over our competitors in these markets by eliminating tariffs and other trade barriers for our exporters.”

In 2008, two-way merchandise trade between Canada and Colombia totalled more than $1.3 billion, while two-way merchandise trade between Canada and Peru reached $2.8 billion.

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For further information, media representatives may contact:

Mélisa Leclerc
Director of Communications
Office of the Minister of International Trade and Minister for the Asia-Pacific Gateway
613-992-6186

Trade Media Relations Office
Foreign Affairs and International Trade Canada
613-996-2000

Backgrounder

Canada-Colombia and Canada-Peru Free Trade Agreements

Canada-Colombia Free Trade Agreement

The free trade agreement (FTA) will provide commercial benefits to both Canadian and Colombian business, including the following:

Better market access through the elimination of tariffs on goods

Canadians will benefit from better market access through the elimination of tariffs on goods. Colombia will immediately in some cases, or over a five- to-10-year period in others, eliminate tariffs on virtually all Canadian exports. Once the agreement is implemented, products that will enjoy immediate duty-free access to Colombia include wheat, barley, lentils, peas, beef, as well as paper products, machinery and equipment. Colombia will also eliminate the use of their price band mechanism on selected products, including wheat, barley and pork.

Canadian importers and consumers will also benefit from the elimination of tariffs on most imports from Colombia. Some will be eliminated immediately and others over three- or seven-year periods. Over-quota tariffs on dairy, poultry and eggs are excluded.

Better market access for service providers

The FTA will provide enhanced and more secure market access for service sectors of interest to Canada, including infrastructure, mining, energy and professional services. Canada and Colombia have agreed to comprehensive disciplines in the FTA for the financial services sector, including banking, insurance and securities. Both countries will encourage their domestic professional bodies to enter discussions regarding the negotiation of mutual recognition agreements, with priority given to the engineering profession.

Promotion of two-way investment between Canada and Colombia

Two-way investment flows between Canada and Colombia will be promoted through reciprocal commitments. The FTA will lock in market access for Canadian investors and provide them with greater stability, transparency and protection for their investments. Obligations are included to ensure the free transfer of capital related to investment, to protect against unlawful expropriation and to provide for non-discriminatory treatment of Canadian investments. Canadian investors will also have access to international arbitration to resolve disputes.

Better access to government procurement contracts

The FTA also includes a comprehensive chapter on government procurement that guarantees Canadian suppliers the right to bid on a broad range of goods, services and construction contracts carried out by Colombia’s central government entities. It will also ensure that practices remain transparent and fair for suppliers.

Canada-Peru Free Trade Agreement

The FTA will provide commercial benefits to Canadian and Peruvian business, including the following:

Better market access through the elimination of tariffs on goods

Immediately on implementation of the FTA, Peru will eliminate tariffs on virtually all Canadian exports, with most remaining tariffs to be eliminated over a five- to-10-year period. Products that will enjoy immediate duty-free access to Peru include wheat, barley, lentils, peas and selected boneless beef cuts, as well as a variety of paper products, machinery and equipment.

Canada will immediately eliminate its tariffs on almost all Peruvian imports. The rest will be eliminated over three- or seven-year periods. Over-quota tariffs on dairy, poultry, eggs and refined sugar are excluded from tariff reductions.

Better market access for service providers

The FTA will provide enhanced and more secure market access in service sectors that are of interest to Canada, including mining, energy and professional services. Canada and Peru have also reached agreement on comprehensive disciplines for the financial services sector, including banking, insurance and securities. Both countries will engage their domestic professional bodies in discussion regarding the negotiation of mutual recognition agreements. Priority will be given to the engineering profession.

Promotion of two-way investment between Canada and Peru

The agreement includes existing provisions in the Canada-Peru Foreign Investment Promotion and Protection Agreement. It will also lock in market access for Canadian investors and provide them with greater stability, transparency and protection for their investments. Strong obligations are included to ensure the free transfer of capital related to investment, to protect against unlawful expropriation and to provide for non-discriminatory treatment of Canadian investments. In addition, investors will now have access to binding international arbitration to resolve disputes.

Better access to government procurement contracts

The FTA will give Canadian and Peruvian suppliers improved market access in the area of government procurement. It guarantees Canadian suppliers the right to bid on a broad range of goods, services and construction contracts carried out by Peru’s federal entities. It will also ensure that practices remain transparent and fair for suppliers.

Other Key Provisions on Trade-related Cooperation, Corporate Social Responsibility and Corruption

The FTAs will contribute to each party’s economic development by creating new market opportunities for exports of Colombian and Peruvian goods and services, and by providing a more secure and stable environment for Canadian direct investment. As Colombia and Peru are developing countries, many of their products already enter Canada duty-free; these products will have more secure access to Canadian markets. The FTAs also acknowledge the developing-country status of Peru and Colombia by allowing both to phase out their tariffs on products over a longer period than Canada will have.

To complement Canada’s development cooperation objectives with Colombia and Peru, and to help maximize the benefits of the agreement, both FTAs include a chapter on cooperation to facilitate trade-related capacity initiatives. These efforts aim to strengthen the ability of Peru and Colombia to maximize the agreement’s benefits.

The agreements also encourage Canadian, Colombian and Peruvian businesses operating within each others’ borders to respect and follow internationally recognized corporate social responsibility standards, practices and principles. The FTAs reaffirm the parties’ commitment to combat bribery and corruption.

Agreementson Labour Cooperation

The labour cooperation agreements with Colombia and Peru will strengthen labour rights and the protection of workers. These agreements include enforceable obligations and associated penalties. Colombia and Peru have committed to ensuring their laws respect the International Labour Organization (ILO)’s 1998 Declaration on Fundamental Principles and Rights at Work, which covers the right to freedom of association and to collective bargaining, the abolition of child labour and the elimination of compulsory labour and discrimination.

Moreover, the parties commit to providing protections for occupational health and safety, as well as minimum employment standards, such as minimum wages and overtime pay. Migrant workers will have the same legal protections as nationals with respect to their working conditions. Failure to respect ILO principles and enforce domestic laws is subject to penalties for violations. Any penalties accrue to a special cooperation fund to help strengthen conformity with the norms, and to enhance and enforce workers’ rights.

The labour cooperation agreements respect Canadian provincial/territorial jurisdiction on labour matters, but provide Canada with the ability to immediately use the dispute resolution process. Canada is offering its resources and expertise to help Colombia and Peru fully implement these agreements and has announced a $1-million labour-related cooperation program for each country.

Agreements on the Environment

The environment agreements with Colombia and Peru commit the parties to pursuing high levels of environmental protection, effectively enforcing their domestic laws and policies, and not allowing derogation from these laws in search of increased trade or investment. The agreements further encourage corporate social responsibility and reaffirm the parties’ international commitments under the United Nations Convention on Biological Diversity.

Both Colombia and Peru have some of the most diverse biological resources in the world. Canada is committed to working with both countries to help protect and conserve these resources in a manner that respects, preserves, and maintains the traditional knowledge, innovations and practices of indigenous and local communities.

For more detailed information, and for the complete text of the agreements, please visit: Foreign Affairs and International Trade Canada.