Canada-China Relations Committee on June 19th, 2023

[Kathleen Wrye]

I wouldn't say that it is not considered. I'd say that things are considered to the extent that they would materially affect the financial interests of the pension plan. Ultimately, the purpose of the pension plan is to provide benefits to all members and retirees.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

If I can earn a great return in Xinjiang province by running a T-shirt factory using cotton from slave labour, what happens then?

[Kathleen Wrye]

I can't speculate on the investment decisions of pension plan administrators, other than to say what I have already mentioned. They have a fiduciary duty to plan members and beneficiaries, and as part of that duty, they're required to take all factors into consideration when making investment decisions.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Pardon me, but we all follow the news, and this has been an ongoing issue since before the pandemic. Before the pandemic, legislation was passed in the United States, and Canada is trying to do it too, to clamp down on what's happening in Xinjiang province. Parliament passed a motion saying that there is an ongoing genocide of the Uyghur population.

I don't really care what the returns are. Wrong is wrong. I'm trying to understand what the rules are when it comes to private sector pensions in Canada. If they can earn a return, it sounds like there are no rules, and if it doesn't materially impact the pension plan, it's considered discounted, and they carry on. Am I correct?

[Kathleen Wrye]

I'd like to say that in some respects the whole framework rests on fiduciary duty, so it is up to each plan administrator to determine what is considered when making investment decisions. As I said, there's a growing acceptance that ESG considerations have an impact on investment decisions, and plan administrators should be taking them into account.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

You've said before that specific companies are not excluded. There's not a restricted entities list. Is that correct?

[Kathleen Wrye]

That is correct.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

That is correct.

Years ago, when the Canada Pension Plan came before the finance committee, in their passive investments they had two companies they had invested with that were credibly found to be organizing and setting up the technology being used in some of these concentration camps where Uyghurs are being led, persecuted and abused. One was Hangzhou Hikvision, and the other was Xinjiang Aquatech.

At the time, the CPP then followed up with me to inform me that they had divested themselves, and that they knew this was a risk to their investments. Have any private sector pensions come to you asking those types of questions about specific companies they should be divesting themselves from because they could be a risk to them?

[Kathleen Wrye]

No. That is not an area that my team or, I'd say, the Department of Finance gets into. We are primarily focused on the overall framework and pension policy.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Even really bad technology companies, then, that are continuing the persecution by setting up IT.... I mean cameras. They're setting up video technology in these camps. They're allowing for biometric surveillance of Uyghurs who are being released after being abused in these camps. Even though there are specific companies that are in the news, if you're proactively asked by a private sector pension plan, your branch section won't tell them that they should probably not invest in it, because it could impact their bottom line. Is that correct?

[Kathleen Wrye]

That's not the type of question the department would receive with respect to specific investments. I would say that it is possible that pension plan administrators might speak with the Office of the Superintendent of Financial Institutions, which is responsible for supervising and regulating private sector plans. I can't really speculate on what types of questions OSFI may receive, but that's not the type of question that would be asked of the department.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Does your section send out any notices, then? How do you inform private sector pension plans about their responsibilities or about potential risks in investing in the People's Republic of China, specifically Xinjiang province? Would you send out a notice to administrators in Canada that these are the things they should pay attention to, just as a forewarning?

[Kathleen Wrye]

That's not something my department would do. However, as I mentioned in my opening statement, there is the Canadian Association of Pension Supervisory Authorities, which is the body of national regulators. It's represented by all pension regulators across the country. For the federal government, it's represented by OSFI. Guidance on these kinds of areas is a thing that this group does.

As well, OSFI issues guidance. They are working on draft guidelines at the moment with respect to ESG considerations in investment. It was out last year for consultation. I believe it's going out again for a second round.

That's the area where pension plan administrators could look to seek guidance on things that they should be considering as part of their investment role.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

You said “could” look, but this is—

[The Chair, Liberal, Ken Hardie]

Excuse me, Mr. Kmiec. You are out of time. Thank you.

Mr. Cormier, you have five minutes or less.

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

Thank you, Mr. Chair.

Mr. Hutchison, if I recall correctly, you said earlier that you help businesses export to other countries, such as China. You also said that China was Canada's second-largest export market.

An area of great interest to me, to my riding and to the Atlantic provinces is the fisheries sector. New Brunswick's exports totalled $2.2 billion in 2022, of which almost $1 billion went to China.

In your portfolio, do you help businesses from the fisheries sector export their products to China or other foreign countries?

[David Hutchison]

Yes, the trade commissioner service assists exporters from all sectors in collaboration with some partner departments, such as Agriculture and Fisheries and Oceans.

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

Is the fisheries sector one that you are actively looking at, seeing as there are more and more investments from both sides, that is, by Canada in China and by China in Canada? Is that something you are taking more and more seriously, seeing as this sector has seen tremendous growth over the past few years? In terms of Canadian exports to China, we are talking about an increase of almost $2 billion in just a few years.

Do you work with this sector more often than with other sectors, or is it no more important than any other sector?

[David Hutchison]

I think it is a very important sector among many others. I personally don't have a lot of expertise in that sector, so I wouldn't be able to comment much further than that.

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

All right. That is perfect.

You also said before that...

[The Chair, Liberal, Ken Hardie]

Excuse me, Mr. Cormier. I believe Ms. Robinson wanted to chime in on that as well, if you're okay with that.

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

Yes, of course. Thank you.

[Jodi Robinson]

Thank you, Mr. Chair.

I just wanted to respond that fisheries and the export of our fish products to China, as well as the diversification of our exports, is something that my team works on very closely with the Canadian Food Inspection Agency and Agriculture Canada. While they have the lead, we work with our trade commissioner service around the region, not only to deal with market access issues but also to find new markets for our products.

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

I will continue with the same line of questioning.

Have you ever heard of any Chinese companies who do business with Canadian companies and who are responsible for human rights or other violations in this sector?

[Jodi Robinson]

I have not been made aware of any human rights violations specifically in the fisheries sector.