Foreign Affairs Committee on Feb. 15th, 2012

[Alex Counts]

I have two very quick things, drawing from my Bangladesh experience. Most of the loans that are made to women, and they predominantly are women, are actually to family-owned businesses. A lot of people, such as the husband and the adult children, are involved, and it can even become an after-school activity for the children who are younger. I think the men and the boys do get involved, but women holding the purse strings seems very important. It seems to be a very essential part of the microfinancing success, even if it is a family enterprise.

The other thing that Grameen has been able to do with its profits is to set up a student loan program. They're able to finance tens of thousands of the children of Grameen borrowers to go for higher education in university, whereas in the past they would probably have dropped out in high school. That's another important part of setting them up for success in the next generation.

[The Chair, Conservative, Dean Allison]

I'm going to hold your time for a second. We're having trouble with the microphones.

Alex, I'll get you to move over to that chair. You guys will have to share a microphone. I apologize for that.

If we reboot, we're going to lose time. We're almost finished, so we'll do the best we can.

Mr. Eyking, you have about a minute left.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Alex, you alluded to—and I might pick this up later—the out-of-poverty process.

Talk to me a bit about the framework, the blueprint. Is it just for organizations? Do you do small countries? Is it for donors and recipients? Tell me about it.

[Alex Counts]

There are two things, and maybe Katleen can add to it. This is one of the 150 organizations that use the index, although they've added some of their own survey questions.

Basically it's a scientific way, based on the progress out of poverty index, of using the intelligence you get out of the national census survey to calibrate a special 10-question survey to correlate a family with where they are on the poverty spectrum.

There are two real reasons for using it, and why these more than 100 organizations do. Number one is that it lets the management of a microfinance group, and also the investors and donors, know if they are being successful. Second, it makes people in the organization aware of whether borrowers are not only repaying their loans but making progress toward and above the poverty line.

It makes it very simple to do that, especially if you put that information into a database and you know how to analyze it. Also, it's about getting business intelligence so you can continue to kind of tweak your products, because the poor are not a monolith; they all don't need the same sorts of products, and they don't respond as well to financial products as rich people.

It allows you to do some pilot testing and market research about what's really going to be a financially successful project and also provides information from a poverty reduction perspective.

Katleen, did you want to add to that?

[Katleen Félix]

No, I think you summarized it well.

I do have the social impact report here, and we talk about it a bit in that report.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

That's what you were talking about.

[Alex Counts]

Yes.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

I'd like to see that.

[Katleen Félix]

I'd be glad for you to take a copy of it. I think that summarizes it.

It's a great tool. We killed some products that we thought were great. An example is the housing credit. We thought people would take a credit to build, let's say, a roof or a latrine or a cement floor, but after doing that survey, we realized they were too poor to repay. It was adding to their debt levels and it was a struggle for them to repay. We were pushing them too hard, so we cancelled that program after doing that survey.

It's very important to track whether you are really helping them or putting them down. That was one of the results of the surveying, so it's a great tool.

[The Chair, Conservative, Dean Allison]

Thank you.

Mr. Dechert, go ahead.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Thank you, Mr. Chair, and thank you both, Ms. Félix and Mr. Counts, for being here today and for the good work your organizations are doing.

Recently I had, along with Madam Laverdière and the Minister of Foreign Affairs, the opportunity to visit Haiti. One of the things we did when we were there was meet with Desjardins and Scotiabank about the operations they have there. Of course, they're very successful Canadian financial institutions.

I wonder if you could give us your thoughts on how Canadian businesses, such as Scotiabank and Desjardins, could partner with the Canadian government through CIDA and microfinance organizations, such as Fonkoze and Grameen, to build financial capacity in Haiti and elsewhere.

[Katleen Félix]

I've been struggling with that for a while now, because it is important that we partner on the ground. At the end of the day, it's not about being Desjardins or being Fonkoze; it's about the Haitian people and giving them access to finance.

One of the things I think it is very important to look into is microinsurance. As financial institutions, we have to forget that we are different entities and look at the market. It's a market of maybe eight or nine million people. That's it. It's not Bangladesh. We don't have that volume, so we have to discuss, as a market, whether we want to insure for catastrophe, for life, and for health. We have to put it on the table and decide how we're going to do this and how we're going to make it a good price for the Haitian people. That's one.

Second is financial access. I think for SMEs, the petites/moyennes entreprises, it is very important to look not only at giving access to finance but at giving business support, and proper business support, by sector.

For example, we're all working in agriculture. Zafèn is receiving thousands of requests on agriculture. We need to look at business support and maybe have a business support bureau or replicate the BDC. I don't know. Something similar to that could be interesting for our SMEs in Haiti. That's something we can work on jointly to look at how we can support SMEs, small growing businesses, and social projects as a whole sector, in agriculture and in other sectors.

The other thing is, again, as I said, the ultra-poor. Here in Canada, we have social security for our ultra-poor and for people who cannot work. How can we integrate that in our activities until the government picks it up? We have to think of the social impact. I think this is something we can work on together.

In those three spheres, I think we can find a way to collaborate. There are probably others, but that's where I am.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Go ahead, Mr. Counts.

[Alex Counts]

First of all, I think there is a big opportunity, as Katleen has said very clearly, in microinsurance. Some Canadian insurance companies could join hands with microfinance organizations that have the field presence. Swiss Re, partnering with Fonkoze, literally, after much preparation, insured 60,000 families across Haiti against catastrophic disaster, so if an earthquake, God forbid, or a major flood were to happen tomorrow in Haiti, Fonkoze's clients would be insured. That takes private sector talent and players and expertise on the ground.

I mentioned a loan guarantee program. In our case, in Grameen Foundation, we joined hands with Citibank and nine families who collectively contributed or pledged, in the case of default, $31 million, and created a loan guarantee pool that leveraged hundreds of millions of dollars without a single default. Citibank got new clients or deepened its relationships with existing clients. It brought local banks in, and it brought capital to microfinance. Citibank earned money on every transaction, although maybe only a tiny amount. Also, Grameen Foundation covers 70% of our costs through the fees paid by the microfinance groups. At the end of the day, the U.S. government, USAID, slow-moving though they can be at times, actually put $32 million into the guarantee pool to match the private sector pledges from our donor guarantors.

Well, we can't keep up with the demand. There's nothing stopping a Canadian bank from partnering with high net worth Canadian individuals who want to do something more than just donate their money, and with CIDA, to come up with some facility. We welcome competition. There are a lot of local banks that just need to get that feeling of an international agency sharing the risk with them and giving them confidence in a financial service provider that's probably off their radar but probably has a high degree of expertise in serving the poor.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Thank you.

Do I have any time left?

[The Chair, Conservative, Dean Allison]

We're out of time, and I apologize.

We're going to reset the microphones and switch out the witnesses. I want to thank both Alex and Katleen for being here and for sharing organizations with us.

We'll suspend for five minutes.

[The Chair, Conservative, Dean Allison]

If we can get everyone back to the table, we'll try to get started. I believe we're going to have bells at 5:15, so we have to move quickly.

From Foreign Affairs, we have Alex Bugailiskis, who is the chief negotiator for the Canada-EU strategic partnership agreement, as well as John Kur, director general for the Europe and Eurasia bureau. They're here to talk about the strategic partnership agreement. I would like to remind people that if we want to talk about trade, we'll probably need to do that another time. We can talk about the strategic partnership right now. Let's try to keep our questions focused there.

You both have an opening statement, and Alex is going to start. I'm going to ask the members not to touch their microphones.

Alex, I'm going to turn it over to you for your opening statement, and then we'll get right in to questions.

[Alexandra Bugailiskis, Chief Negotiator, Canada-EU Strategic Partnership Agreement, Department of Foreign Affairs and International Trade]

Thank you, Mr. Chairman, vice-chairs, and distinguished members of the committee.

Thank you for your invitation today to brief you on the Canada-EU strategic partnership agreement.

I'm pleased to report that discussions on the strategic partnership agreement are advancing well, and that we expect to conclude the agreement later this year.

Let me give you a bit of background.

Canada-EU cooperation has a long and rich history. Canada is one of the European Union's oldest and closest partners. In fact, we were the first country to sign a formal agreement with the EU when we signed a treaty on the peaceful uses of atomic energy in 1959.

Our current high-level engagement is based upon the Canada-European Communities framework agreement for commercial and economic cooperation, which was signed in 1976. This agreement was intended to deepen the Canada-EU commercial relationship and to forge closer economic ties. This agreement was also the first of its kind between what was then the European Economic Community and an industrialized third country. However, it almost singularly focused on economic cooperation.

However, as you can imagine, much has changed in both the EU and in Canada over the past 35 years. The EU has expanded from 9 to 27 member states, and in 2010, with the coming into force of the Lisbon Treaty, the EU created new legal and organizational structures. This included the creation of the European External Action Service, which for all intents and purposes now serves as the foreign ministry for the European Union and has the authority to negotiate and sign legally binding agreements on behalf of the EU and its member states.

We have completed more than 30 agreements with the EU on a range of issues from air transport and fisheries to higher education and youth, and we're currently negotiating five more, including a comprehensive economic and trade agreement.

To manage our ever-expanding relationships with the EU, we hold regular leaders' summits and foreign ministers' meetings, as well as an annual joint cooperation committee meeting at the senior officials' level that reviews the entirety of our bilateral activities. During the year we also hold formal and informal regional and thematic foreign policy consultations among senior officials on everything from disarmament and human rights to the situation in the Middle East.

In recognition of these many changes and the potential for further enhancing Canadian and EU political cooperation, the EU proposed that we negotiate a political framework agreement that would facilitate existing and future areas for cooperation. Canada agreed, and I began my work as chief negotiator in September 2011.

In recognition of the longstanding and strategic nature of cooperation between Canada and the EU, the EU proposed, and we accepted, to name our framework the “Canada-EU strategic partnership agreement”. We have now concluded three formal rounds of negotiations and three discussions by video conference, and we hope to complete our negotiations in 2012.

The strategic partnership agreement is based on our shared values and principles of international peace and security, democracy, human rights and the rule of law and sustainable development; it identifies areas and mechanisms to strengthen our dialogue, cooperation and coordination in promoting these common objectives.

Through consultations with federal departments, we identified a number of potential benefits of a strategic partnership agreement. Among these were enhanced consultations and coordination in multilateral fora such as the UN, new dialogues in areas such as development cooperation, as well as strengthening the role of the joint cooperation committee to bring greater breadth and coherence to our engagement.

As the strategic partnership agreement is intended to provide the foundation for Canada-EU political cooperation well into the future, we have sought to craft balanced language that is forward-looking and enabling. In doing so, we have been mindful of the need to avoid areas of specific provincial or territorial jurisdiction and areas that could overlap with other existing agreements. To this end, I have held regular teleconference consultations with provincial and territorial representatives and have shared proposed language in cases where it might touch upon their areas of responsibility. They've been most cooperative and quite engaged.

We've divided the text into five broad sections or titles. The first is called the “basis for cooperation”, which outlines the general principles, the values, and the objectives underlying our cooperation in the next four areas, which are human rights, fundamental freedoms, democracy, and the rule of law; international peace and security and effective multilateralism; economic and sustainable development; and finally, justice, freedom, and security.

Each of these titles contain articles that describe the mechanisms we will employ to further strengthen our dialogue and coordination in promoting our shared values, including on human rights, non-proliferation, macroeconomic stability, sustainable development, environmental protection, and combatting terrorism and organized crime. We also highlight the importance of our extensive people-to-people linkages, including the value of regular exchanges of delegations among our respective parliamentarians.

The focus and objective of this agreement is to identify ways that we can share ideas and exchange best practices so that we can learn from each other and more effectively promote our shared values with other countries and regions of the world. We are also conscious of the need to avoid new expenditures, and instead seek to increase the effectiveness of our efforts through greater coherence and coordination.

Given the high degree of like-mindedness on most foreign policy issues, we have been able to reach agreement, in principle, on approximately 90% of the text during the last five months in negotiations. There are a few remaining areas to be agreed on, and we expect to resolve these through video conferences over the next few months.

One of these areas is the dispute settlement section. Canada has proposed text that emphasizes the need for an evidence-based approach based on dialogue and expert advice to resolve any differences in a timely and constructive manner.

The EU is currently studying Canada's proposal, and we expect to receive their reply within the next few weeks. Our next round will likely take place in March, by video conference, and I expect to make significant progress toward the goal of concluding in 2012.

Once we have reached an agreement on the text, and following the necessary approvals by cabinet, the strategic partnership agreement will be tabled in the House of Commons for 21 sitting days, in accordance with Canada's policy on the tabling of treaties in Parliament. During this period, members of Parliament can initiate a debate or may also request a vote on a motion regarding the agreement. To ensure that parliaments in Canada and Europe are kept up to date on the negotiations, we have provided briefings to members of the Canada-Europe Parliamentary Association and the European Parliament's delegation for relations with Canada.

With your support we look forward to the conclusion of an agreement in 2012 that will give both vision and voice to the continued growth and evolution in the Canada-EU relationship and further solidify our ties so that we can work together to address the most pressing foreign policy challenges that face us now and well into the future.

Thank you for your attention. I am ready to answer your questions.

I've brought with me a most esteemed colleague, John Kur. He is the real expert on European affairs, so if you have questions on very detailed matters, I will swiftly turn to him.

[The Chair, Conservative, Dean Allison]

Thank you very much.

We're going start with Madam Laverdière.

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

Thank you very much, Mr. Chair.

Thank you both for your very interesting and comprehensive presentation.

Actually, I would like more details, specifically in the area of sustainable development. I gather that a whole section deals with matters of sustainable development. I was wondering if you could give us some more details about it.

[Alex Bugailiskis]

Thank you very much, Ms. Laverdière. I am delighted to answer your question, but I am going to do it in English so that I can be sure that my answer will be clear.

There is, indeed. You're well informed.

This section on sustainable development treats a variety of issues with regard to our cooperation, particularly with regard to our efforts and activities in third world countries or in developing countries. We talk about economic stability being the foundation, of course, for the creation of wealth, much aligned with the conversation you were having earlier on Haiti. This section also treats larger issues with regard to environment and climate change.

These are all dialogues already existing between Canada and the EU. The function of the strategic partnership agreement is really just to reaffirm and underline that commitment to continue and to deepen the dialogue, and particularly to improve our coordination.

Again, Haiti is a perfect example of large efforts on both the European side and the Canadian side to mobilize enormous resources. We need to make sure that those are being spent in a very effective way and that we avoid duplication.

This is basically the objective of that section of the agreement.

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

Thank you.

Could you tell me if CIDA is also part of the discussions with the European Union. It's an obvious question, but…

[Alexandra Bugailiskis]

In fact, Madame Laverdière, we've had discussions with a variety of interested stakeholders from across the federal government, including CIDA, naturally.

One area that hasn't been fully developed is a dialogue in development cooperation. There are informal regional discussions, and in the margins a multilateral forum, but we haven't really had a formal dialogue. That's one of the outcomes we wanted for the strategic partnership: to be able to enhance and deepen that dialogue.

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

I have one last question before letting my colleagues have their turn.

In regard to the dispute settlement issue, what is the stumbling block there?

[Alexandra Bugailiskis]

It's not so much a stumbling block. It's usually the last stage in a negotiation. One gets agreement on the text, and at the end, of course, one has to agree on how to interpret, define, and implement that agreement. That's the point we've come to, with 90% agreement, we think, on the actual text. We're now at the point of deciding how we will be able to ensure that there will be no difficulties in interpreting our various commitments and that we'll be able to have channels through which we can converse and dialogue if there are differences of opinion.

We have put forward a proposal to the European Union, based on long-standing practice, which is really about resolving these in a very diplomatic, constructive manner, but we've also put an emphasis on using good factual data to be able to make these determinations.

We're very hopeful that we'll get agreement in the next month or two and be able to conclude, as I said, this year.