International Trade Committee on Feb. 6th, 2018

[Erin Hannah]

ISDS is a controversial thing, partly because we have poor data. We have poor data on the impact of ISDS on attracting foreign investment. Conventional wisdom is that ISDS attracts foreign direct investment, but we have very inconsistent information about whether that actually happens in practice, so that's one issue.

The other issue is its impact on regulations. The concept I used was regulatory chill. One form of regulatory chill is when a government rolls back some kind of regulation, because it lost a case. Canada knows about this. We've been the subject of 35 cases in ISDS disputes; we've lost only six.

The other kind of regulatory chill, actually, which is more problematic is when governments fear a dispute. It's, again, harder to measure, because people are unwilling to tell us about circumstances where they choose not to introduce new legislation.

[The Chair, Liberal, Mark Eyking]

Thank you.

Mr. Fonseca.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

Thank you, Chair, and thank you to the presenters.

Overall, we're all very proud of Canada's trading history. It doesn't matter if we go back to our fur trading through HBC, or lumber, or cars, or financial services, or mining. We have some amazing clusters. One is the mining sector. Over 50% of the world's mining headquarters are located here in southern Ontario, which we're very proud of, and the work that you do around the world.

For your competitive advantage in terms of the supply chain, you spoke to this, Mr. Marshall, referencing white-collar work in mining. How is labour mobility today? How do you move your people around? Will the Pacific Alliance agreement help with that?

[Brendan Marshall]

It could have potential to. Labour mobility is generally an issue that MAC supports for inclusion in modern trade agreements. Now, some context is important there. There are certain positions, certain types of mining, certain expertise, where you just simply can't procure that locally. The opportunity to bring that expertise to bear on a project is not only in the best interest of that project, it's in the best interests of the communities around it as well.

Being able to reasonably and fluidly move professional individuals to work, cross-border, via free trade agreements is important for the mining sector. We would look forward to seeing provisions like that incorporated into or included in any agreement that comes forward.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

Mr. Perrault, financial services have a great deal of success here domestically, but also internationally, especially since the meltdown in 2008. We're seen as a very stable and secure place to invest and do business.

When you take that to the Caribbean, South American countries, and Pacific Alliance countries, you mentioned they are an underbanked region. What is Scotiabank's competitive advantage in that region? Why have you grown so much in that region?

[Jean-François Perrault]

There are likely a range of reasons. One is we target our markets well. We have very deep knowledge on the ground of areas of the economy that we think are likely to grow, and we target those aggressively. We have a tremendously capable workforce that allows us to go after clients in a pretty aggressive and effective way.

We also have the balance sheet of the Canadian operation, which allows us to expand, and take advantage of opportunities as they arise, as we did in Colombia last week and as we did in Chile late in 2017. We approach the region from a global perspective in terms of how we think about capital, how we think about opportunities, and we are very aggressive in pursuing those. It's worked out very well for us.

This is now occurring in a market where, as I indicated at the outset, these economies are growing very rapidly. They're very young. They're underbanked. The middle class is rising very rapidly. There's a high degree of informality, which is lowering in time. These are all incredibly great opportunities for us, and for any organization for that matter.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

We've heard from a number of presenters around the great work that EDC does and our commissioner services. How would that align with the services you provide to many of our Canadian operations that are looking to do work in South America, specifically in the Pacific Alliance countries? How does that work? It almost seems like you're in parallel with each other.

[Jean-François Perrault]

There is no question that in some instances EDC competes with the private sector in the pursuit of business. There's no question on that, but by and large we are more complementary. We provide trade finance. EDC does. We use EDC insurance to help provide trade finance to our clients.

Our expertise, though, in terms of matching businesses together is very much based on our business contacts in both countries. It's kind of like an investment banker or a matchmaker. We are aware. We have, obviously, a very deep footprint in Canada and very deep footprints in the countries that we operate in. We're able to put opportunities, folks with capital, and folks looking for opportunities together in a very effective way. EDC does a little bit of that as well, but it doesn't understand the places where we do business as much as we do, nor does it understand our clients as much, necessarily, as we do. We think it is complementary more than anything.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

My last question is for—

[The Chair, Liberal, Mark Eyking]

No, your time is up. I know you have a really good question, but you might want to punt if off to your colleague.

We're going to the second round. We have time for two more MPs.

Ms. Goldsmith-Jones, you have the floor. Go ahead.

[Pam Goldsmith-Jones, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you for being here.

Mr. Perrault, given Scotiabank's primary focus in the Pacific Alliance countries and significant presence, I'm very interested in knowing how Scotiabank intends to either respond to or engage with the declaration on trade and women's economic empowerment.

[Jean-François Perrault]

Obviously, that's something we support. As I alluded to in one of my questions, we are extremely supportive of the gender agenda, and we do so with or without that kind of government pressure. We certainly push that very aggressively in the Canadian context in terms of our recruiting efforts and in terms of our efforts to move women up in the organization and to attract women to the organization.

We do so equally, if not more aggressively, in the Pacific Alliance countries where we are very aggressive in pursuing—“pursuing” sounds terrible—in identifying female talent within the organization, as well as outside the organization and bringing it in. I don't have the exact statistics, but, in fact, we have been promoting women to senior ranks of the organization a little more rapidly in the Pacific Alliance countries than we have men in the last couple of years as a direct reflection of the priority attached to that.

[Pam Goldsmith-Jones, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you.

I understand that in the context of Scotiabank and those corporate goals, but there might be a role because of your leadership in the region more broadly.

Ms. Hannah, that was a fairly strong statement that we need to walk all the way down the runway. That's certainly, from a progressive trade agenda perspective, our goal.

You gave such a rich presentation, but if there were three things that that means to you, what would they be?

[Erin Hannah]

The most important thing we need to do is ex ante data discovery. We need to do some analysis on what will be the impact of a proposed Pacific Alliance free trade agreement on women's lives.

There are places we can look for help. I mentioned the OECD. UNCTAD also has the gender and trade tool box, which I think is a very good methodology for studying the potential impact of a free trade agreement. It's only been tested in one case so far, and that's the proposed economic partnership agreement with the east African community and the European Union. The caveat, as I mentioned before, is the data doesn't study the impact of the free trade agreement on women in the informal economy. There needs also to be some qualitative study on the impact of the free trade agreement. Better data is the most important thing, I think.

Then we need to think about some positive discrimination. Canada has proposed, in the context of domestic services regulation, both in the TISA negotiations and in the WTO negotiations, some positive differentiation for women. That makes it easier for women to get licensing, for example, so it's cutting the red tape to give preferential access to women.

That's on the domestic services side, but there are other places where we can give preferential access. We have some experiences with this on the LDC side. We can think about the LDC services waiver, which is something that we have agreed to as far back as Nairobi in 2015. In the WTO context, we could think about some kind of positive differentiation for women in the services context in Canada. To steal your question, I think that maybe we give preferential access to women-owned service providers in the Canadian economy. We could take some positive regulatory approaches like that.

I already told you about what I think of the ISDS provision, so I won't belabour the point.

I think we need to work really closely with our trade partners. I mentioned Côte d'Ivoire, the Netherlands, and Iceland. I think we need to take a leadership role in some of these big intergovernmental organizations that have initiatives under way.

We need coherence on this agenda. We don't want a whole bunch of initiatives blooming around the world that are potentially working at cross-purposes. This is an ideological issue as well as a practical issue.

One place where we could build some coherence is in aid for trade. Canada is quite a leader in aid for trade, the delivery of official development assistance to better integrate women, for example, into global markets, but doing so in a way that is sensitive to some of the other progressive items that I've talked about today.

Those are maybe four.

[Pam Goldsmith-Jones, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you.

Is that it?

[The Chair, Liberal, Mark Eyking]

That's pretty well it, yes.

[Pam Goldsmith-Jones, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

That's it. That's the only question I've asked in a year and a half.

Thank you.

[The Chair, Liberal, Mark Eyking]

They're good questions.

We're going to wrap up again with Mr. Hoback.

Go ahead, sir, you have the floor.

[Randy Hoback, Conservative, Prince Albert, SK]

Again, thank you, witnesses, for being here this morning.

Ms. Hannah, you went to a ministerial meeting in Buenos Aires. I've been to ministerials in the past. Actually, I think the last was before I even got into politics, 2004 or 2005. I remember one of the bilateral meetings I had with Japan. They said the WTO will not work. There are just too many people there with so many ideas of what should be done and what should be prioritized that you can never get cohesion. You can never put it together to get everybody to agree on one agreement. Basically, it's proven true moving forward.

The WTO has just become a body where you have some people who are anti-trade, and then some who want to progressively move along. It's a frustrating body. That's why bilaterals became important, because you couldn't rely on a multilateral like the WTO to do everything. I think the government at the time was hoping that was the way to do it, and then they realized that, no, the Australians and others are doing bilaterals. It's interesting to see now the bilaterals, and even the smaller multilateral agreements, like the TPP, come into play.

It's really interesting. When you start talking about foreign aid, we're tying it to a trade agreement, but we're not tying it to a trade agreement. The Conservative government was talking about doing a trade agreement, but then we also look at our foreign aid and we cohesively target it into that agreement, not in the agreement itself, but indirectly. Maybe instead of doing a social chapter in a trade agreement, we could just do a progressive social agreement with countries and tie it to foreign aid, and say, “If you want our foreign aid, this is the agreement. This is what you have to adhere to. These are the standards we want you to get to on gender rights and women's rights”, and then let trade do what trade does, so it can be focused on getting workers' rights and getting the other things right.

I think I'll stop there, because I also have some more questions for Mr. Marshall. I'd like to talk to you more about it, Ms. Hannah, afterwards, but I only get five minutes.

Mr. Marshall, 70% of the economic investment in the mining sector comes out of Canada, around the world, so any mine around the world comes to the TSX, PDAC, and that's where to look for the money. Now if we're not developing mines here in Canada, why would the industry that creates the tooling for the mining sector stay here in Canada?

[Brendan Marshall]

There's an attractive ecosystem. There are benefits to being listed here through networking, through close proximity to other areas of expertise that are directly and indirectly related to your core business.

[Randy Hoback, Conservative, Prince Albert, SK]

You network, though, and you look at it and say, those people, those specialties, they're very mobile, also. They can move to London. You can look at the Pacific Alliance countries, if we decided not to join them, and see what they're doing at their exchanges. What's preventing them from moving to Mexico City or moving to London if they see a better advantage, taxation-wise, or a better environment for them to actually be located there?

[Brendan Marshall]

Well, that's a fair point, and the reality is nothing is preventing them from moving to another jurisdiction if there is a more compelling benefit to being there than being here.

[Randy Hoback, Conservative, Prince Albert, SK]

The impact, if they were to move, would be what in Toronto?

[Brendan Marshall]

Lost, found wealth.

[Randy Hoback, Conservative, Prince Albert, SK]

So 60% of the exchange is actually related to mining and banking. If all of a sudden that wasn't there, what would Toronto look like?