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.