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Evidence of meeting #35 for International Trade in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was japanese.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Jean-Michel Laurin  Vice-President, Global Business Policy, Canadian Manufacturers and Exporters
Richard Phillips  Executive Director, Grain Growers of Canada
Janice Hilchie  Vice-President, Government and International Relations, Canadian Life and Health Insurance Association Inc.
Peter Wilkinson  Senior Vice-President, Government Relations, Manulife Financial, Canadian Life and Health Insurance Association Inc.

11:05 a.m.

NDP

The Vice-Chair NDP Don Davies

Ladies and gentlemen, welcome to the Standing Committee on International Trade. We're embarking on a study of a comprehensive and high-level economic partnership agreement with Japan.

I want to start off by welcoming all of our witnesses today. I also bring you best regards from the Honourable Rob Merrifield, the chair of this committee. Unfortunately he's travelling today, so I'll be chairing the meeting in his stead.

We have witnesses today from three organizations: the Canadian Manufacturers and Exporters, the Grain Growers of Canada, and Canadian Life and Health Insurance Association Inc.

We'll start off by hearing from the Canadian Manufacturers and Exporters.

Monsieur Laurin, I understand you're an expert at this, so we look forward to hearing your testimony.

11:05 a.m.

Jean-Michel Laurin Vice-President, Global Business Policy, Canadian Manufacturers and Exporters

I don't know if I'm an expert, but I've had the pleasure of coming here a few times.

Thank you, Mr. Chair, for inviting me to appear before the committee again on behalf of the Canadian Manufacturers and Exporters. We are happy to take part in these important consultations on an economic partnership agreement with Japan.

I see some new faces around the table, so before I begin, I'll say a few words about our association. CME is Canada's leading trade and industry association and the voice of manufacturing and global business in Canada. Our association, through various initiatives such as the establishment of our Canadian manufacturing coalition, represents more than 10,000 leading companies engaged in manufacturing, global business, and service-related industries. More than 95% of our members are small and medium-sized companies representing every industrial sector and every export sector of the Canadian economy.

I always like to remind people that manufacturing is the single largest business sector in this country. Our members' sales totaled $571 billion last year. Companies that make things in Canada account for approximately 13% of our GDP and employ 1.7 million Canadians in highly productive jobs that pay better than the average. Our members' contributions are critical to the wealth generation that sustains our standard of living. Also, the business of manufacturing includes much more than the companies that make things. In fact, manufacturers consume close to half of the resources grown and extracted by Canada's farming, fishing, forestry, mining, oil and gas industries. Manufacturers account for one-third of the output of our utilities sector. We consume 30% of the value delivered by business management, engineering, technical, and software services; and we estimate every dollar of value created by Canadian manufacturers generates more than $3 in total economic activity.

Manufacturing is an export-intensive business—more than half of our industrial production in Canada is exported directly to other markets, mainly the U.S. Taken together, manufacturers are responsible for 63% of Canada's merchandise exports. It's increasingly critical for our members to succeed in global markets. The more manufacturers invest in innovation, become more agile, and specialize to serve niche markets around the world, the more they need to find customers, suppliers, and business partners outside North America.

A growing share of our members are looking to take advantage of new and emerging opportunities beyond North America. By opportunities, we mean finding customers and new markets, looking for potential investors in Canada, seeking investment opportunities in other markets, and sourcing services from around the world. We are also looking for qualified personnel to address some of our skill shortages. When it comes to the government's trade policy agenda, as well as specific trade negotiations such as those with Japan, our priority is to ensure that we enhance manufacturers' and exporters' abilities to compete and win in both domestic and global markets. In other words, our priority is to ensure that trade agreements put us in a position to grow and strengthen Canada's manufacturing base and increase Canada's exports of goods and services.

In the case of Japan, here are some of the key facts about these trade negotiations. For starters, Japan is the world's third-largest economy after the U.S. and China, according to the World Bank. It's our fourth-largest export market after the U.S., Europe, and China. It's also our fifth-largest import supplier after the U.S., China, the EU, and Mexico. Coal, canola, copper, lumber, and pork are our top five exports to Japan, and they account for 58% of our exports to that country. Autos, auto parts, heavy equipment, printing equipment, tires, aerospace parts, and telecommunications equipment—these seven products taken together account for 52% of Japan's exports to Canada.

As you can see, the majority of our exports to Japan are natural resources. They are natural resources that Japan needs to procure outside of their own borders, while the majority of our imports that Japan sells to Canada are manufactured goods that we in large part also happen to make in this country.

In total we have about an $8.2-billion trade deficit with Japan on manufacturing goods, and a $5.9-billion surplus in natural resources and goods, such as agrifood products—Richard can talk about that—forestry and energy products. Overall it makes for a negative trade balance of $2.3 billion.

Taking all of these facts into account, we believe we should conclude a trade agreement with Japan to the extent that it provides a net benefit to the Canadian manufacturing and exporting sectors.

I'll let Richard and my colleagues talk about it from a resource and services perspective. But from a manufacturing perspective, while we definitely see potential in the Japanese market—it's after all one of the largest markets in the world—at the same time we're also concerned that an agreement could exacerbate our trade deficits on manufactured goods.

In our opinion it's critical that a trade agreement with Japan provides a net benefit to our members by providing open and reciprocal market access. I mean, some of those barriers to trade and investment between Canada and Japan are structural in nature. We have some questions as to whether we can deal with them through a bilateral trade agreement.

Given that both Canada and Japan are interested in joining the trans-Pacific partnership negotiations, we believe we're more likely to be able to address these market access issues on a regional basis through TPP, if only because Japan will secure access to a much greater market as a result and might be willing to provide more in return for an accession to TPP. In fact, Canada would not be alone in raising these issues with Japan in the context of TPP. I know that the U.S., Vietnam, and Malaysia have also voiced concerns with respect to market access into Japan.

That being said, we'd rather negotiate with Japan on a regional basis through TPP, for three reasons. One is that we have a strong level of manufacturing supply chain integration in North America. Negotiating an agreement alongside the United States and Mexico—our two NAFTA partners—would ensure we could open markets throughout the Asia-Pacific region, including Japan, in a way that allows our manufacturing base to meet rules of origin requirements and doesn't hinder North American manufacturing competitiveness.

Also, as I outlined earlier, we have a strong convergence of interest with the U.S., and to a lesser extent with other TPP countries, with respect to Japan.

Thirdly, and finally, I think we would have more negotiating leverage with Japan by standing alongside our NAFTA partners in a regional context.

The decision on whether Canada will be allowed to join TPP rests with the U.S. and the other countries negotiating the agreement. I think our trading partners have gone on record, saying they'll be allowing new entrants on the basis of whether we'll be able to hit the ground running and join the negotiations in progress and meet the level of ambition that other parties are pursuing. They will invite new partners that have a good track record of addressing bilateral trade issues.

I think in that context it's important that we pursue negotiations and discussions with the U.S. and other countries, and that we do what's needed in the context of TPP, but we also understand that the government is simultaneously pursing bilateral negotiations with Japan. I think we can't put all of our eggs in the same basket.

I think the way we see these trade negotiations is that they provide us with an opportunity to address our persistent trade deficit, especially as it relates to manufactured goods. I want to put it on the record that our members have as much at stake in these negotiations as probably anyone else in Canada, so for that reason alone we will be following these negotiations with a very high level of interest.

I'll stop here. We'll be pleased to answer any of your questions and maybe expand on some of the points I touched on in my comments.

Thank you.

11:15 a.m.

NDP

The Vice-Chair NDP Don Davies

Merci, Monsieur Laurin.

Mr. Phillips, you have 10 minutes.

11:15 a.m.

Richard Phillips Executive Director, Grain Growers of Canada

Thank you.

My comments will be much shorter than 10 minutes.

We are excited about the new prospects and opportunities that a Canada-Japan partnership represents for Canadian farmers. A new trade deal that decreases current Japanese tariffs will unlock new markets for Canadian farmers and give us a lot of room for new growth. A recent government report, sanctioned by both Canada and Japan, shows there is potential for Canada to increase its GDP from between $3.8 billion to $9 billion.

In 2010 Canada exported $3.3 billion in agrifood products to Japan. That equates to 10% of Canada's total agrifood exports, making Japan a high-priority market for Canada's agriculture sectors. Within the grain sector more specifically—we are the Grain Growers of Canada—Japan is Canada's second-largest export market and a major customer for the crops we grow, like canola, wheat, durum, and malt barley.

Japan is Canada's third-largest market for wheat, with exports in 2011 totalling $471 million. It's our sixth-largest market for durum. Durum is also a wheat, but it's used for pasta, noodles, and couscous.

Canola has more than a 40% market share of Japan's total edible oil consumption, and Japan imports over two million tonnes of seed worth over $1.4 billion, consistently one of our best markets.

Canada is Japan's largest malt supplier, with a 28% share of malt imports. When I say “malt”, that's malting barley, which is used to make beer.

Beyond just these numbers, even more importantly the Japanese market is what we call a premium market. Japan pays premium prices for premium quality, and this means more dollars in farmers' pockets.

An economic partnership agreement will open the doors to discuss issues like tariff escalation, where our value-added exports are often facing higher tariffs than the raw products. Whether it is pulse flour or canola oil, for example, we are looking for the opportunities that a level playing field can provide.

Canadian companies will also be able to use a trade deal with Japan as a foothold to the larger Asia-Pacific region. We also took the opportunity recently to go to Japan with the agriculture minister, the Canadian Wheat Board, and the Canadian Grain Commission to meet with the Japanese flour millers association and assure them that quality Canadian wheat will continue to be produced and marketed.

I would be happy to discuss that trip more in the open forum.

Thank you for the opportunity to be here today. I look forward to the questions.

11:15 a.m.

NDP

The Vice-Chair NDP Don Davies

Thank you, Mr. Phillips.

Mr. Wilkinson, Ms. Hilchie, you have 10 minutes.

11:15 a.m.

Janice Hilchie Vice-President, Government and International Relations, Canadian Life and Health Insurance Association Inc.

Thank you, Mr. Chair.

I'll begin this statement then turn to my colleague to say a few words about his company's operations in Japan. Then I'll conclude the remarks, all in 10 minutes.

Mr. Chair, ladies and gentlemen members of the committee, I am very pleased to have the opportunity to be here today with Peter Wilkinson, from Manulife Financial, on behalf of the Canadian Life and Health Insurance Association, or the CLHIA. We appreciate the opportunity to share our support for the comprehensive and high-level economic partnership agreement with Japan.

The CLHIA is a voluntary trade association whose member companies account for 99% of Canada's life and health insurance business. Our industry provides a wide range of financial security products such as life insurance, annuities and supplementary health insurance to about 26 million Canadians.

Canadian life and health insurers are also an international success story. Almost half of the industry's premium income is generated from outside Canada, while a majority of its employees reside in Canada. Our industry has operations in 20 foreign markets and is keen on expanding its horizons.

The most active Canadian insurer in Japan is Manulife Financial, and I will let Peter say a few words about their operations in the country.

11:20 a.m.

Peter Wilkinson Senior Vice-President, Government Relations, Manulife Financial, Canadian Life and Health Insurance Association Inc.

Thank you, Janice.

Thank you, members of the committee, for giving us the opportunity to share our views today on the economic partnership agreement with Japan.

Just as Japan is an important market for Canada, it is also an important market for Manulife. Japan is the second-largest insurance market in the world. Japan is one of Manulife's oldest success stories; in fact, our story dates back to 1901. Today Manulife Japan has its own sales force of more than 3,000 advisers, with an extensive network of eight regional offices and approximately 120 local sales offices across the country. Manulife conducts roughly $4-billion worth of business in Japan per year.

Manulife Japan provides a range of financial protection and wealth management products designed to meet the changing needs of consumers, with two main business lines--an individual insurance business that provides more traditional life and health insurance products to consumers, as well as an annuities business. Manulife was among the first companies to introduce universal life products to Japan.

Last September I accompanied our CEO, Donald Guloien, to Japan to meet with a diverse group of Japanese CEOs who represented a range of sectors to discuss how we could reaffirm our commitment to an EPA between our two countries.

Mr. Guloien led a team of Canadian CEOs that included Duncan Hawthorne of Bruce Power; Ian Smith of Clearwater; Robin Sylvester of the Vancouver Fraser Port Authority; John Manley from the Canadian Council of Chief Executives; and David Culver, the former chairman and CEO of Alcan Aluminum.

Our experience was extremely positive, and we quickly realized that we were pushing on an open door. We were well received by all private and public sector representatives with whom we met, and there was a lot of goodwill towards Canada, especially given the immediate assistance provided by both Canadian companies and by our government in the aftermath of the tsunami and earthquake.

Also, the majority of the Japanese CEOs whom we met with had experience doing business with Canada. In that sense they were our natural allies and valuable contacts for all of our companies.

We discussed how to make the most of and enhance our existing relationships, and we came away with the following conclusions. First, Canada and Japan need to pursue a free trade agreement. Second, the agreement should be as ambitious and comprehensive as possible in order to fully leverage our current position in Japan. The agreement needs to cover more than just tariff negotiations. Third, the agreement needs to address other aspects of doing business in Japan. Regulations that govern the insurance and other financial industries need to be internationally benchmarked to ensure compatibility. Also, issues like double taxation and social security should be addressed in order to remove the barriers that dissuade the movement of senior executives. Fourth, there should also be a focus on the elimination of non-tariff barriers, which, according to the European Business Council in Japan, are problematic for foreign businesses to operate on a level playing field in Japan, compared to Japanese companies. Janice will discuss in more detail one particular issue that affects our industry. Finally, dispute resolution mechanisms should be timely and effective. Both of our countries have sophisticated judicial systems that can form the basis of this without creating new and onerous regulations for an already regulated industry.

I thank you for your attention.

Now I hand it back to Janice for the rest of our presentation.

11:20 a.m.

Vice-President, Government and International Relations, Canadian Life and Health Insurance Association Inc.

Janice Hilchie

Thank you, Mr. Chair.

As you can see, the Canadian life and health insurers welcome the Canadian government's decision to pursue a comprehensive and high-level economic partnership agreement with Japan.

We believe an EPA will help to eliminate impediments to Canadian businesses operating in Japan and to ensure a level playing field between Canadian companies and other competitors. In support of any engagement strategy, the industry believes there must be an open dialogue and good coordination between government and Canadian life insurers with operations and interests in the Japanese market.

However, there is one issue we'd like to bring to the attention of the committee respecting Japan Post Insurance. The issue is that Japan Post Insurance is a state-owned enterprise with 30% owned by the Government of Japan, and our industry has concerns that they might receive advantages in the marketplace because of this. Most recently, new legislation to reform Japan Post Insurance was passed on April 27, which, if acted upon, we believe runs contrary to Japan's international trade obligations.

Over and above the issue of not ensuring a level playing field, the legislation will provide Japan Post Insurance with special legal and regulatory exemptions; allow Japan Post Insurance to enter into new business under a notification system whereas private insurers must operate under a pre-approval system; and require Japan Post Insurance to offer insurance products as a universal public service in perpetuity while having virtually exclusive access to Japan's post office distribution network before a level playing field is established with private companies.

The position of the CLHIA, which is shared by other insurance associations around the world, has been that no new or modified products or services should be introduced by Japan Post Insurance until a level playing field is assured between Japan Post and other private sector insurers operating in Japan, including their domestic insurers.

The Canadian and global insurance industries have expressed serious reservations about Japan Post Insurance reform in the past. We're grateful to our Canadian embassy staff in Japan who have approached their Japanese counterparts in order to relay their and our concerns about proposed reforms to Japan Post Insurance and the implications it has on ensuring fair and equal competition in Japan's domestic insurance market. We urge them to continue to advocate on behalf on Canadian life and health insurers operating in Japan.

In conclusion, Mr. Chair, the industry is committed to supporting the Canadian government in its efforts to secure a fair and equitable EPA with Japan. We note that the existence of an EPA will help to better protect market access and reinforce a level playing field through safeguards built into the Canadian bilateral free trade agreement, safeguards that are not as rigorous as those available through the WTO's dispute resolution mechanism. The recent Japan Post Insurance legislative developments, outlined earlier, point to the benefits of the additional level of protection offered by an EPA.

Japan can and should be seen as an effective beachhead for Canadian companies who operate in Asia. Given its democratic values, stable government, strong legal system, protection of intellectual property, world-class infrastructure, and Japan's own FTAs in Asia, it's an ideal starting point for Canadian companies looking to ease into the region. Similarly, Canada can provide entry for Japanese firms into the U.S. and the Americas. In order to fully leverage this potential, we need this economic partnership agreement.

Thank you again, Mr. Chair, for the opportunity to appear before the committee today. We'd be pleased to provide any further input that the committee would find useful.

11:25 a.m.

NDP

The Vice-Chair NDP Don Davies

Thank you to all the witnesses.

We'll now proceed to the questioning.

We'll be led off by the official opposition New Democratic Party.

Mr. Sandhu, you have seven minutes.

11:25 a.m.

NDP

Jasbir Sandhu NDP Surrey North, BC

Thank you, Chair.

Welcome, and thank you for being here.

First, to Mr. Laurin, what are the major trade barriers in the manufacturing sector?

11:25 a.m.

Vice-President, Global Business Policy, Canadian Manufacturers and Exporters

Jean-Michel Laurin

Thank you. That's a very good question. I was hoping you would ask it, because I kind of excluded that from my opening remarks.

As for the barriers to trade, I think Richard, Peter, and Janice alluded to some of them in their own sectors.

For manufactured goods, I think what we often hear from our members is that the barriers are related to standards and certification, both in their complexity and in the lack of transparency in terms of changing regulations and changing standards, and also in regard to the costs and the delays associated with getting products certified for sale into the Japanese market.

We often hear about the industrial structure in Japan. You tend to find, especially in certain key markets, that Japanese companies are vertically integrated, so they have a very close relation with their suppliers. In fact, they tend to be related parties owned by a common shareholder. They tend to have very strong control over the distribution networks. So for companies that are looking to establish a presence in that market, if there is an existing Japanese company that has a strong presence, the barriers to entry make it sometimes prohibitive for companies to really be able to grow market share and establish a presence in that market.

We also hear about issues around certification of products, as I mentioned earlier, and issues around access to the distribution network. Some of those issues can probably be dealt with through an FTA, while some of them are a little more structural in nature. That's why we think that maybe negotiating these things alongside the U.S., and with other trading partners that have raised similar issues with Japan, might hold more promise.

But these are, in a nutshell, the large overarching issues and market access issues that our members experience.

11:30 a.m.

NDP

Jasbir Sandhu NDP Surrey North, BC

If I hear you correctly, you're talking about non-tariff barriers that are in place.

11:30 a.m.

Vice-President, Global Business Policy, Canadian Manufacturers and Exporters

Jean-Michel Laurin

Exactly, yes.

11:30 a.m.

NDP

Jasbir Sandhu NDP Surrey North, BC

What about the tariff barriers? You certainly would like to see some progress on the non-tariff barriers.

11:30 a.m.

Vice-President, Global Business Policy, Canadian Manufacturers and Exporters

Jean-Michel Laurin

Yes. We cannot take those for granted. In the context of an FTA negotiation, the traditional FTA model is that you start by at least getting rid of most tariffs and having as few exclusions as possible. We kind of take that for granted. In the new generation or the next generation of trade agreements, certainly what we're trying to do with Europe, for example, is that we're looking to move beyond just tariff elimination.

Especially in the case of Japan, the tariff barriers are sometimes a problem. But even if you get beyond them, I think what our members are telling us is that you can deal with the tariff barriers, but the non-tariff barriers are much harder to deal with.

So yes, the tariffs remain an issue, but I think if we are serious about getting Canadian companies to do more business in Japan, we have to look at the non-tariff barriers especially. That's the number one issue on our list, as far as I'm concerned.

The escalating tariff issue that Richard mentioned earlier is also an issue, because it actually discourages value-added manufacturing activity in Canada. It says that if you export raw materials, you pay a lesser tariff than if you actually transform the goods in Canada to export them to Japan. So that's another issue related to tariffs.

Our expectation.... In the context of a negotiation and these issues, having a broad chapter on tariffs is certainly something that we kind of take for granted, but the issue for us is that I think Japan would get much better access into Canada if we just got rid of the tariffs. If we just get rid of the tariffs, it won't make that huge a difference in terms of our market access into Japan.

11:30 a.m.

NDP

Jasbir Sandhu NDP Surrey North, BC

We've heard in this study, and also from you, that when you look at the trade coming our way, you see that it's mostly manufactured goods that come to Canada. Yet most of our trade that goes the other way is not manufactured goods. It's raw materials or farm goods. Do you see that balance shifting or would you say that it's going to further widen the gap?

11:30 a.m.

Vice-President, Global Business Policy, Canadian Manufacturers and Exporters

Jean-Michel Laurin

Well, you want to do an FTA with a country where there are trade barriers, right? I mean, the whole idea of negotiating a free trade agreement is to reduce trade barriers and allow companies to do business more easily. If we try to do FTAs with countries where there are no barriers, it would make a good announcement, but it doesn't necessarily do much for business.

I think there's potential with Japan in the context of how this is a country where we've had persistent problems getting access to that market. So to the extent that we can resolve those issues through bilateral negotiation, we're certainly seeing that in a way that's very positive. But the goal here shouldn't be to negotiate an FTA at all costs. I think it should be to negotiate an agreement that is of benefit to the Canadian manufacturing sector. Also, I would assume that Japan wants to get a similar outcome for their own sectors.

I don't think the fact that we export mostly raw materials and processed raw materials and they export to us manufactured goods.... I mean, I would like an FTA to help us achieve more of a balance. I think there's potential. Canadian manufacturers are used to competing globally. I think I made that pretty explicit in my comments. Our members feel they can compete against anybody around the world, as long as they have a fair chance to compete on a level playing field.

So I think that when it comes to Japan, that's the issue our members keep raising: we want reciprocity. It's okay for Japanese companies to come here and compete with us, but only to the extent that we can actually go to their market and compete on the same basis. To the extent that we can accomplish that through these trade negotiations, we'd certainly be in support.

11:30 a.m.

NDP

Jasbir Sandhu NDP Surrey North, BC

You represent manufacturing sectors across this country. What areas would benefit the most? What sectors would benefit the most?

11:30 a.m.

Vice-President, Global Business Policy, Canadian Manufacturers and Exporters

Jean-Michel Laurin

That's a good question.

I mean, it depends on what the outcome of the agreement is. I'm sure you'll hear from sectors such as the auto sector. Both the Canadian and U.S. auto sectors have been raising market access issues with Japan for a very long time.

So would this be a sector that...? It's a hypothetical question. It depends on what the actual outcome of the trade agreement is. But I think for manufacturers in pretty much all industrial sectors, Japan is a very large, very mature industrial market. We have solutions in every sector, from textiles to forestry, to aerospace to defence, to automotive. Pretty much all sectors in manufacturing would stand to gain from an FTA with Japan to the extent that it provides that level playing field and that reciprocal market access.

It's easier said than done, but we're looking at these negotiations in good faith, and we're hopeful that we should put our name down on the agreement. Canada should sign this agreement to the extent that it really does address those issues.

11:35 a.m.

NDP

The Vice-Chair NDP Don Davies

Thank you.

Now we'll turn to Mr. Keddy from the governing Conservative Party, for seven minutes.

May 8th, 2012 / 11:35 a.m.

Conservative

Gerald Keddy Conservative South Shore—St. Margaret's, NS

Thank you, Mr. Chairman.

Welcome to our witnesses. Most of you have been to the committee before, so welcome back.

To Monsieur Laurin, just listening to your testimony, I have one slight difficulty with it. I agree with what you're saying, so don't misunderstand me. The challenge here on negotiating this economic partnership agreement with Japan is probably that we have to do it in parallel, and not necessarily with the Americans.

The Americans already have an agreement, number one. Number two, they are in an election cycle, and it's very, very doubtful.... I mean, we certainly are ambitious in our trans-Pacific partnership, but in an election cycle, it makes it even more difficult. Therefore, we have an I think even greater urgency to negotiate a bilateral. And the opportunity.... The doors are open.

I go to Mr. Wilkinson's statement of his high-level delegation to Japan. We've seen a willingness that has never been there in the past to negotiate and discuss difficult issues.

I understand what you're saying about our rules of origin. That's a great obstacle for Canada, without question, with an integrated marketplace with Mexico and United States. But whether or not the trans-Pacific partnership gets off the ground, this is the third-largest economy in the world, our fourth-largest trading partner. We need to do this without attaching any strings to it, and I just want to be clear on that. An agreement with Japan, even if the TPP doesn't work, is still important.

11:35 a.m.

Vice-President, Global Business Policy, Canadian Manufacturers and Exporters

Jean-Michel Laurin

Just quickly, I agree with you; I think we need to keep all of our options open. In fact, negotiating bilaterally with Japan actually gives us more leverage as we're seeking to enter TPP.

I guess my point was just that if we had a preference between either, we'd rather see negotiations multilaterally through TPP. But I think you're right; we can't sort of sit on the sidelines and just wait for others. The U.S. has its own thing. Mexico has its own free trade agreement with Japan. I'm not too familiar with the terms of that and the impact it has had, but I think it's interesting to know that one of the NAFTA partners does have an FTA with Japan.

11:35 a.m.

Conservative

Gerald Keddy Conservative South Shore—St. Margaret's, NS

I think we all agree that the multilateral forum is a better forum, but we tried that with Doha for a number of years, right, without a whole lot of success.

I would just go over to Mr. Wilkinson for a moment. I'd like to have a little more in-depth discussion of your delegation and your Japanese reception.

I'm thinking of a comment, actually, that Marc-André Morin made this morning at another meeting about the whole Japanese psyche. If we negotiate too hard.... You can't jam them into a corner.

So they have actually come to us. They are willing to put certain things on the table. I'd like you to just expand on that a little bit and on the importance of not just what can come out of this but the importance of negotiating in a relationship and building on the relationships we already have—being aggressive, but not so aggressive that we force them away from the table.

11:35 a.m.

Senior Vice-President, Government Relations, Manulife Financial, Canadian Life and Health Insurance Association Inc.

Peter Wilkinson

Yes, at the end of the day, negotiations are about discussions between people. I think you have to be concerned about the concept of face for everyone; that everyone comes away from negotiations feeling that they have won something. They've also given up something, but they've won something to their benefit.

As I was saying, Manulife first went into Japan in 1901. We were asked to leave in 1939 for awhile, and then we came back in the 1990s again. Our discussions and interactions with the Japanese government and Japanese business people have always been very fruitful. They were at times longer than we liked, but I think that's a difference in business culture more than anything else. At the end of the day it is about relationships and having frank discussions with people about what's important to us, what's important to them, and coming to a conclusion that works for everybody.

I suspect that the conversations will actually be tough on both sides at the negotiations table. I believe that the folks from the Department of Foreign Affairs and International Trade and our professional negotiators from the Government of Canada have long experience in doing this with many people around the world, and they will do a very good job for us on it. It will be beneficial to everyone.

As you were saying, we saw an opening back in September 2011 that none of the CEOs who have been going to Japan for a number of years had ever seen before on this issue. There was a willingness—a more dynamic sort of feeling in the country in the business, political, and bureaucratic circles—for handling this issue. That's why we came back very enthused about it.

11:40 a.m.

Conservative

Gerald Keddy Conservative South Shore—St. Margaret's, NS

Excellent.

Do I have time for another quick question?