Canada-China Relations Committee on June 19th, 2023

[Serge Cormier, Liberal, Acadie—Bathurst, NB]

All right.

Earlier, you said you wanted to have a credible strategy that would allow you to have a clear look at the situation. So far, have you found that Canadian companies are taking these human rights factors into account? Are they more careful about whom they do business with? Have you seen a change in attitude these past years, since the geopolitical climate has changed a bit? I am not just talking about the fisheries sector. I am talking about any other export sector or other businesses with which you do business or which you help.

[Jodi Robinson]

Business investment decisions are undoubtedly impacted by geopolitical tensions. We are hearing this from many companies, not just Canadian companies but among our allies as well.

Foreign investment decisions, whether institutional or business oriented, are based on the interplay between risk and return, as you know. While China has benefited and continues to benefit from foreign investments and has offered good returns for investors, as we continually hear, it's increasingly seen as an unpredictable business environment. We have heard from several companies that are reconsidering some of their investment decisions at this time.

[The Chair, Liberal, Ken Hardie]

Thank you, Mr. Cormier. Your time has expired.

We'll now go to Mr. Brunelle-Duceppe for two and a half minutes or less.

[Alexis Brunelle-Duceppe, Bloc, Lac-Saint-Jean, QC]

Thank you, Mr. Chair. I have to say, I thought it was interesting that Mr. Hutchison mentioned in his opening remarks the new Canadian law prohibiting the import of goods made using forced labour but then, when we asked him questions about it, he claimed he couldn't answer them because it isn't his area of expertise. Next time, witnesses might consider not talking about issues they don't want to answer questions about.

Mr. Hutchison, in your opening remarks, you said that China was Canada's second-largest export market while making a connection to human rights. If China was our 54th export market, would you have emphasized it as well, or would you have chosen not to talk about it? Since China is our second-largest export market, does that mean we can afford to take that into consideration when human rights issues come up?

[David Hutchison]

I'm not in a position to respond to that question.

[Alexis Brunelle-Duceppe, Bloc, Lac-Saint-Jean, QC]

Listen, I think you might consider reviewing your opening remarks. You should really expect to be asked questions about the points you choose to raise.

Here's what I want to know: Since we've learned about the genocide being committed in Xinjiang, have the results of Canadian businesses in terms of respecting human rights in the supply chains, in imports as well as exports, improved at all thanks to the work you've done?

[David Hutchison]

I'm not in a position to respond to that question.

[Alexis Brunelle-Duceppe, Bloc, Lac-Saint-Jean, QC]

Mr. Chair, I'm going to stop asking questions, because I can see they're refusing to answer each and every one.

When you appear before a committee, you need to do your homework and come prepared to answer parliamentarians' questions, which are legitimate. There are analysts who prepare questions and documents for us. I think that officials have access to everything that's prepared by the analysts, who do incredibly important work. Their work helps us, and I suppose that the witnesses who appear before the committee to answer parliamentarians' questions usually do their homework and come prepared.

What I'm seeing today, however, are people who made opening remarks that highlight certain points, but that are unable to answer when we ask them questions about the very points that they themselves raised. I think the departments ought to review the way they prepare their officials to come testify before our committees. It is pretty appalling.

I'll yield the rest of my time to my colleague from Edmonton Strathcona. Thank you.

[The Chair, Liberal, Ken Hardie]

Thank you, Mr. Brunelle-Duceppe.

I believe you have the disadvantage of not having been here for some of the earlier panels, where perhaps some of those answers could have been forthcoming. If time permits, perhaps somebody can ask the panellists here who best could in fact answer those questions.

If I were sitting in your chair, I would ask for a written response from them to some of the questions you have.

[Alexis Brunelle-Duceppe, Bloc, Lac-Saint-Jean, QC]

Mr. Chair, I just have one question about what occurs in the context of a discussion: When witnesses raise a point in their remarks, am I wrong or am I right in thinking that, normally, they would expect to get questions on that point?

[The Chair, Liberal, Ken Hardie]

Well, I can't disagree with you, sir, but we will have to move on at this point to Ms. McPherson for two and a half minutes.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Great, thank you.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you very much, Mr. Chair, and thank you all for being here tonight.

My colleague's questions do bring up the point that it is very difficult to get transparency with regard to how decisions are made—the process by which decisions are made—which puts parliamentarians in a bit of a tricky situation. We are meant to be enforcing and ensuring that Canadian companies are living up to our obligations, yet we aren't able to get the information we need to answer those questions, so there is a transparency issue.

When I have asked about some of the processes, I've been told they're very complex.

I appreciate, Mr. Hutchison, that you're going to bring us a written document that gives us a bit more information about that.

Perhaps, Ms. Wrye, I could ask you some questions as well in terms of the transparency around this. I still don't quite understand how it is determined that there is risk, that there are human rights abuses taking place, that there is environmental degradation, that there's investment in these companies, particularly considering those companies.... It could change over time. On day one it could be fine and on day two it could not be. How is that evaluated? Who does that, and how frequently is it done?

[Kathleen Wrye]

It's difficult to answer because of the way that pension legislation is put together. There is generally a broad framework of fiduciary duty.

As I mentioned, the onus for evaluating these risks—which, as you mentioned, are evolving—really does fall on each plan administrator who is making these investment decisions. I don't think it's possible for the government to be privy to all of the investments that are being considered and the decisions that are being made. I would say that with respect to ESG and transparency, in the previous budget the government announced that we would be moving forward with disclosures with respect to ESG considerations in investment decisions for federally regulated plans. Doing so is meant to help increase transparency in the decision-making process of plan administrators. They will have to show how ESG considerations are being taken into account in their investment decisions.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

It is 2023 and this has been an issue for some time, for quite a long time, and the government has now said it is going to do this work. Certainly I would hope that the work would happen quite soon, but just digging down a little more, let's say we have a—

[The Chair, Liberal, Ken Hardie]

Maybe you can get to that in the next round, Ms. McPherson. Get your shovel ready, and you can do the digging then.

We're going to round off and get a complete second round in, and then we'll do the same for the second panel.

We will now go to Mr. Chong for five minutes or less.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Thank you, Mr. Chair.

Clearly there's a lot of interest here in ensuring that pension funds are not investing in companies in the People's Republic of China that are either partnered with the People's Liberation Army or engaged in gross human rights violations.

Two U.S. administrations now have issued executive orders banning U.S. investments in a number of companies in the PRC under one of two rubrics, either gross human rights violations—such as the case of Hikvision or Huawei, which is engaged very intimately in the propagation of a genocide against the Uyghurs in Xinjiang—or being closely aligned with the PLA, which is obviously threatening a lot of the countries in the Indo-Pacific region.

Here is my question for you. About 10% of pensions in Canada are federally regulated. With respect to those federally regulated pensions, if the Government of Canada wants to ban pension investments because of human rights violations or because of proximity to the PLA, what is the right instrument for the Government of Canada to use to implement a ban on certain federally regulated pension investments in certain companies in the PRC? Does statute currently provide for those powers through regulation, or does new legislation need to be introduced? What instrument, if any, is available to do that?

[Kathleen Wrye]

I'm not really in a position to be able to speculate on future changes—

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

I'm not asking you to speculate. I'm asking what instruments are available if a government wanted to ban, let's say, Royal Bank, which has a defined benefit pension plan, from making investments in certain companies in the PRC. What instrument is available to the Government of Canada?

[Kathleen Wrye]

Again, it's not a question I can really speak to, as to what legislative or regulatory vehicle the government may or may not decide to use.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Are you familiar with the federal statute called the Pension Benefits Standards Act?

[Kathleen Wrye]

Yes.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Are there powers granted to the Governor in Council to ban federally regulated pensions from making investments outside of Canada?

[Kathleen Wrye]

In order to be clear, I'd like to get back to the committee in writing on that question.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Sure. That would be helpful.

In respect of the Canada pension plan, which as you know is a joint federal-provincial arrangement, what instrument could be used there to prevent the CPPIB from making investments into companies, either directly or indirectly, through indices in the PRC? What would be the instrument or the mechanism by which to do that? Would there have to be a reopening of the federal-provincial agreement on this, or are there instruments available to the government to use presently?