Evidence of meeting #97 for International Trade in the 42nd Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was mining.
A video is available from Parliament.
Liberal
Linda Lapointe Liberal Rivière-des-Mille-Îles, QC
You said earlier that Export Development Canada, EDC, and the Business Development Bank of Canada, BDC, are a big help to businesses. You talked about small and medium businesses, and said that they offer quality support, are very qualified and know the markets.
How could we go even further? For example, with Mexico, Chili, Colombia and Peru. You made a slight distinction with regard to Mexico.
What can we do to further help small and medium businesses?
Vice-President, International Business Development, Cypher Environmental Ltd.
Do you mean EDC or the trade commissioner service?
Liberal
Linda Lapointe Liberal Rivière-des-Mille-Îles, QC
It could be the Canadian Trade Commissioner Service or EDC.
Vice-President, International Business Development, Cypher Environmental Ltd.
The EDC provides financing for qualified projects overseas. What we can do to further that is extend financing, not only to companies that are developing projects, but also to Canadian companies that are interested in setting up manufacturing facilities, both to cater to the Pacific Alliance markets and to re-export back to Canada. That's where I would focus the attention.
Liberal
The Chair Liberal Mark Eyking
We're going to continue and go to the Conservatives for our last MP on the list.
Mr. Hoback, you have the floor for five minutes.
Conservative
Randy Hoback Conservative Prince Albert, SK
Thank you, witnesses, for coming here this morning.
Francesca and Kate, your values on women's rights and gender equality are interesting. I agree with you 110%. I think where we're going to disagree a little is how we get there. I'm going to ask a few questions with regard to the best tactic to get that accomplished.
Now you're saying let's tie it in to trade agreements and enforce it. Let's make sure it's embedded in there strongly so it has to happen. I see a problem with that. We had Amnesty International in front of this committee last week. In our Colombia trade agreement we tied in human rights and a review mechanism and thought that's a good start. But they came back and said that was horrible because it created this false sense that we're taking care of the problem. In reality no money was given to NGOs or other groups to work on human rights in Colombia. There was no focus outside of government using our foreign aid to say let's go to Colombia and do something on human rights.
I look at it similarly to the Australians. They say that a trade agreement is a trade agreement, but then they do these side agreements where they focus on human rights, gender equality, women's rights, and we put feet on the ground, money in the bank you might say, in those groups so they can do that. They like that approach because a lot of countries do not want to be preached at. They don't want to be told how to live their lives. If the Americans are criticized anywhere in the world it's because they tell people what they have to do. Canadians are respected because we say this is what works for us, why it works for us. We encourage them to go this way, but we do it in a very respectful manner. We don't say this is the way it has to be.
Your approach and the Liberal approach looks like this is the way it has to be. A lot of countries will say they're not going to deal with us. They won't do a trade agreement. We're still going to trade, we just won't have a trade agreement where we have rules that regulate how that trade will happen. The threat I'm scared of back in Canada is that company in Ontario that has 35 employees all of a sudden loses a market and has to drop to 15 employees.
Is there a better way to get the results than putting them right in the trade agreement? I'm open for ideas, I really am.
Director, Policy and Campaigns, Oxfam Canada
No, no, this is why it's great to have a dialogue and the opportunity to have this conversation. As I said, I think we see a trade agreement as one of many policy tools we can use to promote gender equality here at home and around the world. The ombudsperson, who will lift the bar here for Canada on corporate accountability, I think is a great move. The international assistance policy is another great move. We believe integrating a gender dimension into the labour chapter, but also as a gender chapter in trade agreements, is a really important first step.
One of the key reasons we're advocating for this is that while we agree absolutely with our colleagues from Amnesty, who encourage more support for women's rights organizations or human rights organizations on the ground in these countries, we believe we need to start tackling the systemic inequality in the economic system. If we make this a side deal or a side issue, we're going to continue to perpetuate this gross inequality that Francesca mentioned. In the report we launched around Davos at the World Economic Forum just two weeks ago, 82% of the world's wealth that was created last year went to the top 1%, while the bottom 50% of the population received absolutely no increase in their wealth. Part of that is because billionaires are continuing to accrue a huge amount of wealth, and a lot of that is on the backs of the poorest workers in the world, many of whom are women.
Integrating and doing whatever we can to support human rights and women's rights abroad is absolutely key. We see a trade agreement as a key way to start to tackle this systemic inequity that we see in the economic system.
Conservative
Randy Hoback Conservative Prince Albert, SK
Help me out, then. If you do it in a trade agreement, as you're proposing...as we saw, the Prime Minister went to China, brought these progressive ideas, and was sent home with nothing. Now we're doing business with China with no effective rules in place on how to manage that trade. Is that better than nothing at all?
Director, Policy and Campaigns, Oxfam Canada
What we're discussing here is the Pacific Alliance, and we saw the Chilean government coming to the table on the gender chapter, which I think is a very positive step. We know the Colombia government has really engaged—
Conservative
Randy Hoback Conservative Prince Albert, SK
But the question I have in that gender chapter is does it really have teeth? Can it do what they say it will do?
Director, Policy and Campaigns, Oxfam Canada
We're encouraging further and future gender chapters to have teeth. That requires more specific targets, sex-disaggregated data and analysis so we can understand the gender-disaggregated impact of trade agreements and take action through the trade agenda and also through, for example, our feminist international assistance policy to work out what we can do to mitigate some of these inequities.
Director, Policy and Campaigns, Oxfam Canada
I'd be happy to continue the conversation.
Liberal
The Chair Liberal Mark Eyking
Mr. Hoback, we're going to have a five-minute break. This is good dialogue and they are good questions and answers, but our time is up and we have another group coming in.
Thank you, panellists. The dialogue has been very good. We will have a report coming out in the upcoming months that will be put before Parliament, and you're welcome to have a copy of it.
We're going to suspend for probably five minutes to get the next group of panellists on deck.
Liberal
The Chair Liberal Mark Eyking
Welcome back, everybody.
Welcome, panellists. Thank you for coming here this morning. This is the second meeting in which we're dealing with the opportunities of a potential agreement between Canada and the Pacific Alliance countries.
Some of you have probably come before a committee previously. If you did, welcome back. If not, we would like to keep your presentations to five minutes or less so that we can have lots of dialogue with the MPs.
We'll start with the Canadian International Council. Erin Hannah, you have the floor. Go ahead.
Erin Hannah Senior Fellow, Canadian International Council
Thank you, Chair and committee members, for inviting me here today. In addition to my role as senior fellow with the Canadian International Council, I'm also associate professor and chair of the department of political science at King's University College at Western University. What I'd like to do for you today is to set the proposed Canada-Pacific Alliance free trade agreement in the broader context of global trade and to offer four arguments to which I'll return in our discussion.
First, multilateralism in global trade is dead, at least for the foreseeable future.
Second, the time is now for Canada to take leadership in gendering global trade. The political will is strong. This is very key. Many seem to be looking to Canada for our leadership on this agenda.
Third, while we have the chance to set the gold standard in gendering global trade, we need to take a holistic approach with concrete commitments, and this FTA is the right opportunity.
Finally, we need to walk the walk all the way down the runway. That means that we bring all the pillars of our trade policy, including our foreign investment practices, into line with our socially progressive, gender-sensitive trade agenda.
The present challenges for multilateralism are too many to list here, but I think a few are worth considering.
One is the effective abandonment of the Doha development agenda at the World Trade Organization. We have the Trump administration's hawkish stance on trade. We have the gutting of the WTO's dispute settlement system. We have the U.K.'s withdrawal from the EU. As well, we have very strained relations between the U.S., the EU, and China over a whole host of issues.
All of that, and more, served as the backdrop for WTO's recent ministerial conference in Buenos Aires in December, in which I had the opportunity to partake. This was the place where members agreed to almost nothing. Instead what we got was a series of best-endeavour promises among a series of like-minded countries to do deals in the future with or without the U.S. and India, and quite possibly outside the context of the WTO. This sets the backdrop against which we'll negotiate an FTA with the Pacific Alliance.
Equally significant for our discussion is the declaration on trade and women's economic empowerment that was signed by 119 WTO observers and members. The declaration is premised on the idea that one billion women are excluded from the global economy. It sets a bunch of promises together to generate gender-disaggregated data on the impacts of proposed and existing trade deals. It's purely aspirational and non-binding, as are the gender chapters in the existing FTAs, such as the Chile-Canada FTA, but many are very hopeful that this signals a willingness to link human rights and broader social agendas to the regulation of global trade. It's important to note that Canada, as well as its partners, was an architect of this declaration. We are front and centre on every stage where gender and trade is a topic and we are the gender champions on the global stage right now, so this is a prime political moment for us.
The gender chapter in the Chile-Canada FTA was an important first step in mainstreaming the idea that gender equality could be addressed through progressive trade policies, but it's my view that voluntary best-endeavour commitments are not enough to bring about meaningful social change and to close gaps in gender equality.
A socially progressive, gender-sensitive FTA with the Pacific Alliance should do several key things. It has to ensure marginalized groups participate in a meaningful way in the negotiations. It must not be viewed as a “gender clip-on” by civil society.
It needs to improve economic opportunities for women entrepreneurs, particularly women-owned MSMEs and e-commerce.
We have to identify and provide support for those negatively impacted by trade policies. Economic empowerment is only part of a socially progressive trade agenda. We must also work to minimize the negative and differential impacts of trade liberalization on those who are most vulnerable. That means women who are adversely incorporated into jobs that are precarious and low pay. It means women who are working in export processing zones, sweatshops, and forced labour. It means women who are working in the informal sector, in agriculture and inside the home.
We have to set specific milestones and goals, and commit to mobilizing knowledge and technical and capacity-building resources. These are things we can talk about in the discussion period.
Equally, we need to ensure that we have gender-sensitive coherence across the entire FTA, applying a gender lens to the entire agreement rather than to a stand-alone chapter. If we're serious about advancing a gender-sensitive agenda, we must bring all of the pillars of the FTA into line with those objectives. Part of that might include a strong labour chapter, but that's only one option.
We also need to ensure that investor protections do not curtail government's duty to protect women's rights and promote gender equality, or work at cross-purposes with gender-sensitive trade policy outlined in other areas of the FTA.
Arguably, the way the Canadian government has been negotiating investor protections contradicts the spirit of a socially progressive trade agenda. In particular, inclusion of an ISDS in the Canada-Pacific FTA could be viewed as socially regressive because of the dangers associated with regulatory chill.
Senior Fellow, Canadian International Council
I have one more point.
If we do negotiate an ISDS in the FTA—and I think it's quite likely that we will—we need explicit carve-outs in the FTA that shield human and environmental rights from ISDS and give governments the policy space that is necessary to pursue positive discrimination in favour of those who are most vulnerable.
Thank you.
Liberal
The Chair Liberal Mark Eyking
Thank you.
We're going to go to the Mining Association of Canada, with Mr. Brendan Marshall.
Go ahead, sir. You have the floor.
Brendan Marshall Vice-President, Economic and Northern Affairs, Mining Association of Canada
Thank you for the opportunity to appear today in support of a free trade agreement with the Pacific Alliance.
Canada is a mining nation. Mining is a significant engine of the Canadian economy, contributing $57 billion to national GDP. The sector employs more than 400,000 people directly and an additional 196,000 indirectly, supports one of the largest supply sectors in the world, and is a top employer of indigenous peoples.
Mining and associated activities, both domestic and international, generate significant economic benefits that flow to Canadians. For example, metal and non-metal mining products accounted for 19%—or nearly $90 billion—of the total export value of Canada's exports in 2016. Mining also accounted for a significant volume of Canadian direct investment abroad, exceeding $90 billion in 2016.
Much of this investment that is raised on the open market is transacted in Canada. As the global centre for mining finance, the Toronto Stock Exchange and the TSX Venture Exchange list 57% of the world's publicly traded mining companies.
Recent data indicates that roughly 1,211 of the firms listed on the TSX-V and TSX are mining companies and that together they have a combined market value exceeding $310 billion. At the end of December 2017, $8.4 billion in mining equity had been raised on the exchange. A significant volume of this equity is raised for projects in Latin America, which jurisdictionally comprises the largest number of projects financed outside of Canada. That's 18%, or more than 1,100 projects overall.
The assets of Canadian companies operating in the Pacific Alliance nations of Chile, Colombia, Mexico, and Peru combined exceeded $48.9 billion in 2015. As a recent stat update, that's nearly $80 billion in 2016.
Underscoring the significance of these countries for mining, together they account for 29% of the total value of Canadian mining assets abroad. Further, internal analysis of eight MAC member countries revealed that Canadian combined mining investment into Pacific Alliance countries in 2016 exceeded $5.8 billion, underscoring that these assets are active.
Further, acknowledging that Australia, Canada's principal global competitor in the mining space, was also invited to become an associate member of the Pacific Alliance underscores the critical importance of Canada's active engagement in the negotiation of a free trade agreement with the bloc.
The alliance members—Chile, Colombia, Mexico, and Peru—are business-minded. They're generally socially progressive countries. They embrace a rules-based democratic order and have more than 221 million consumers and a combined GDP equivalent to the world's sixth-largest economy.
MAC recognizes that Canada already has comprehensive FTAs with all four members of the Pacific Alliance. That said, an FTA with the alliance as a bloc offers the chance to modernize and expand elements of the existing bilateral FTAs, thus improving legal certainty and transparency for Canadian businesses with ties to the region.
Further, acknowledging the significant uncertainty around the fate of NAFTA and, as we heard earlier from Erin, significant uncertainty around trade globally, generally speaking, this provides an opportunity to create greater linkages in a new space and in a new way that counteracts that.
In addition to focusing on reducing tariffs and easing the movement of goods, services, people, and capital, the Pacific Alliance is also building deeper co-operation through measures such as integrating regulation and addressing emerging issues like the digital economy. The goal is to make the bloc more competitive in global trade, not just to implement measures to make it easier to trade with one another.
I believe, and the Mining Association believes, that Canada should be party to this agreement and engage and be at the table.
Thank you. I'd be pleased to answer any questions you may have.
Liberal
The Chair Liberal Mark Eyking
Thank you, sir.
We're going to move over to Scotiabank next. We have Jean-François Perrault, senior vice-president and chief economist.
Welcome, sir. You have the floor.
Jean-François Perrault Senior Vice-President and Chief Economist, Scotiabank
Good morning, Mr. Chair and honourable members. I am very pleased to be here today representing Scotiabank, and I want to thank members of this committee for the invitation to share our views on the important trading relationship and this exciting opportunity for Canada.
Scotiabank, as some of you may know, is the bank of the Pacific Alliance. We operate across Latin America, with a strong presence in Mexico, Chile, Colombia, and Peru, generating 18% of our total income in these four countries. In recent years we have made the Pacific Alliance countries a strategic focus of our work, investing to grow organically within our footprint in the region.
Today I'd like to take this time to highlight some of the benefits of deepening our economic relationships within the alliance.
The Pacific Alliance's combination of economic size—keep in mind that the Pacific Alliance has about six times more folks than Canada does, and a young population, as UN data suggests that 35% to 45% of the population in the alliance is under 25—relative ease of doing business, and a shared commitment to macro stability are some of the key forces driving attraction to the bloc.
The alliance has made gradual but consistent moves to deepen the integration of its members' economies, placing a particular emphasis on deepening financial integration, and expanding its membership to include other like-minded countries. With the members of the Pacific Alliance consistently among the countries with the widest network of free trade agreements globally, the region stands as an example of the success that can be achieved with strong trade ties, particularly within the context of the rising tide of protectionism among the various developed countries.
Within the financial sector, deeper integration between Canada and the Pacific Alliance is likely to enhance business investment opportunities, increase trade and capital flows, and drive higher returns on Canada's investments in the region, while at the same time reducing the cost of borrowing for households and businesses in this underbanked region.
The economic composition of the Pacific Alliance provides an opportune market for the expansion of various sectors of the Canadian businesses globally. The Mexican market, for instance, is important not only for the financial services industry but also for mining and manufacturing firms and for Canadian pension plans active in infrastructure, renewable energy, and public markets. In addition, the moves to open the energy sector in the country offer attractive business opportunities for Canadian energy firms.
In Colombia, our natural resources companies as well as our financial services firms stand to benefit from greater market integration. Also, in both Chile and Peru, Canadian pension funds and mining companies maintain a very active presence.
As negotiators continue discussions on the content of the agreement, we encourage the government to ensure that both digital innovation and the mobility of talent are addressed in the agreement. The speed of digital innovation in the financial services and the growth of fintech companies is well evidenced throughout the globe. However, the emergence of fintech is particularly true in the Pacific Alliance as the relatively underbanked populations are rapidly adopting digital technologies.
With this in mind, Scotiabank has opened five digital factories, one in Canada and one in each of the Pacific Alliance countries, over the last couple of years. Given the rapid advances happening in digital innovation within financial services in the Pacific Alliance, a free trade agreement between Canada and the bloc should feature provisions to enable coordinated co-operation in the regulatory space with respect to product testing for fintechs and established incumbent financial institutions. Such provisions would go beyond the terms of existing bilateral free trade agreements between each of the Pacific Alliance individual members and Canada. These provisions would also allow Canadian financial services providers to operate in an integrated fashion across the bloc, which would be a substantial improvement on the hub-and-spoke bilateral agreements that currently exist.
In an environment when most fintechs are leveraging cloud services, the challenge of data localization provisions, when the cloud is outside of the country, may hinder the speed of product development and increase business costs. Addressing data localization provisions would further accelerate time to market and encourage services export growth opportunities for all signatories to a possible trade deal.
In addressing the digital needs of today's economies, ensuring smooth, professional talent mobility across international organizations remains of paramount importance to international business, and it is critical to the success of Scotiabank's operations today. As we have in the past, Scotiabank will continue to advocate for freer flow of professionals across borders in North America, within the Pacific Alliance, and globally.
As Canada looks to pursue a free trade agreement with the Pacific Alliance, the further removal of visa requirements for business travel across the bloc and with Canada should be pursued. The objective is an important issue not only for the financial industry but also for Canadian players in the manufacturing sector and resources, who share the need to enhance the two-way flow of knowledge and expertise in an effort to better cope with global competition.
In its latest discussions, the Pacific Alliance took steps to boost cross-border investments by member countries' pension systems. These steps were focused on tax systems. Going forward, progress on an agreement with the Pacific Alliance that protects investments of pension funds would be useful for Canadian interests more broadly, particularly steps to improve the legal environment and dispute resolution.
As a bank, we continue to be supportive of the government's pursuit of progressive trade agreements addressing environmental protections, gender rights, and strong labour safeguards. Over the last three decades, Canada has pursued strong trading relationships with the four member countries of the Pacific Alliance, and today we have an opportunity to deepen our integration with the bloc as a whole and further position Canada on the global stage as a reliable trading partner. To this point, I would like to note the importance of Canada participating early in the bloc. Given that full membership to the Pacific Alliance requires commitment to conditions set by all members, it's in Canada's best interests to move toward full membership early, gaining a seat at the table in governance of future member nations. This is particularly true given the potential joining to the bloc of similar economies, such as Australia, which in many ways can be a direct competitor to our own economy.
A Canada–Pacific Alliance free trade agreement would further strengthen Canada's commercial and financial linkages with Latin America and advance our interests in diversifying our trading relationships. At the same time, a particular focus on enhanced financial sector integration and a free trade agreement with the alliance would help reduce the cost of capital on the bloc's economies and speed their progress toward their development objectives. The invitation to Canada to pursue associate membership and progress toward full membership with the Pacific Alliance is a win-win proposition that offers a unique opportunity to help shape the alliance's engagement with the rest of the world. This is an opportunity Canada should seize.
I'll end my comments there, and I'll be happy to take any questions.
Liberal
The Chair Liberal Mark Eyking
Thank you, sir.
Before I have dialogue with the other MPs, I have a question for both Mr. Marshall and Mr. Perrault.
You guys have a fairly large footprint in the Caribbean and in South America, no doubt. I have a question for both of you, if you could just give me short answers. In a lot of these countries the labour standards—whether they have EI, maternity leave, or various things—are not like Canada's. Do your organizations go above what's required? Could you give a few examples?
For instance, if clerks are working in your bank in Jamaica, would they have a different maternity leave or anything like that?
Is there anything more that you do as companies beyond what the country expects from your core dealing with labour issues. I know that's a big question, but could you give a couple of little examples?
Senior Vice-President and Chief Economist, Scotiabank
I'm not the best person to answer that, but I will say that working conditions in Scotiabank—this is true in Canada and the rest of our countries of operation—exceed minimum regulatory standards, generally speaking. I think the answer to that would be yes, but I can't give you a very specific example. It's just that our policies are designed to attract the best and the brightest in the countries in which we work, and that requires that we're competitive on salary and that we offer very good working conditions. That is true across all the countries in which we work, not just the Caribbean and Latin America.