Submission regarding Canada’s ratification of the Trans Pacific Partnership Agreement (TPP) Canada’s ratification of the Trans Pacific Partnership Agreement (TPP)Release Date: 02/22/2016 Staff Reference: Leah Littlepage
February 22, 2016
The Honourable Chrystia Freeland
Minister of International Trade
Global Affairs Canada
Lester B. Pearson Building
125 Sussex Dr.
Ottawa, ON K1A 02G
Re: Canada’s ratification of the Trans Pacific Partnership Agreement (TPP)
On behalf of our member companies, the Canadian Life and Health Insurance Association (CLHIA) appreciates the opportunity to provide commentary on Canada’s potential ratification of the TPP. The CLHIA has always been a strong supporter of the TPP negotiations and urges the Canadian government to ratify the agreement in a timely fashion.
The CLHIA is a voluntary, non-profit trade association founded in 1894 that represents the collective interest of its member life and health insurance companies. Our membership accounts for 99 percent of the life and health insurance sector in Canada and is an important contributor to the Canadian economy. Not only does the sector maintain $721.1 billion in Canadian assets, but life and health insurers pay out more than $1.6 billion a week in benefits.
Canadian life and health insurers are also very active internationally with operations in more than 20 countries. More than $61 billion (over 40 percent) of Canadian life and health insurance premiums are generated abroad and Canadian companies holds $729 billion in
overseas assets. Canadian life and health insurers are among the most globally competitive with three Canadian companies ranked among the top 15 largest in the world.
Our members are strongly supportive of trade agreements that improve market access, increase transparency and promote fair competition. Once ratified, the TPP will secure access for Canadian companies to some of the fastest growing markets in the world and will provide strong, transparent rules to govern international trade in the region.
In fact, the fast-growing economies of the Asia-Pacific region are of particular interest to the sector. Some projections estimate that the TPP will represent 50 percent of global GDP by 2050. As it currently stands, the TPP represents a combined GDP of 28.5 trillion and is home to 800 million consumers.
The agreement includes an unusual variety of low, middle and high income markets with a diverse set of economic conditions and represents a significant opportunity for Canadian insurance companies.
Canadian life and health insurers already have operations in Japan, Malaysia, Singapore and Vietnam and have a strong interest in other markets in the region. Some key priority markets including Indonesia and the Philippines have already expressed interest in eventually joining the TPP. Canada’s participation in the agreement will facilitate the expansion of these operations and reinforce Canada’s life insurers’ foothold in the region.
Canada’s participation in the TPP will be vital for the long-term health of the Canadian economy. While there are winners and losers in every trade agreement, our members believe that the TPP will be of net benefit to the Canadian economy. Furthermore, should the U.S. and Mexico ratify the agreement and Canada does not, then the competitive advantage provided by the NAFTA will be eroded. For the past 20 years Canada and Mexico have enjoyed preferential access to the U.S. market. This unique trading relationship has benefited all three partners. Since 1993 trilateral trade has quadrupled from $297 billion to $1.4 trillion. But once the TPP enters into force, the competition for preferred access to the U.S. market will increase. Furthermore, in many areas the TPP will provide more modern and comprehensive obligations and companies wishing to trade with North America are more likely to rely on these new obligations. By not being covered by the TPP, Canada runs the risk of losing business to their NAFTA partners. Should Canada accede to the TPP then Canada will ensure that its close relationship with its NAFTA partners is protected.
The stated goal of the TPP was to establish new, market-oriented rules and to reduce trade and investment barriers among TPP parties. A close examination of the text of the agreement demonstrates that this goal has been accomplished. The agreement aligns very closely with Canada’s existing international trade regime and breaks new ground in a number of key areas. For example, the TPP contains rules that will protect the digital economy such as limiting restrictions on cross-border data transfers, broadly prohibiting data localization requirements and tariffs on electronic commerce. State-owned enterprises (SOEs) will also face more regulation. Once in force, the agreement contains provisions to ensure that the commercial operations of SOEs are transparent and fair thereby ensuring a level-playing field for the companies with which they compete.
Improved regulatory cooperation is another area of interest to Canada’s life and health insurance sector. The TPP formally recognizes the importance of streamlining regulatory procedures and seeks to increase the predictability and transparency of the regulatory process. Parties have agreed to provide advanced notice of proposed regulations and include a commentary period for regulations with a corresponding consultation mechanism. There is also recognition of the need for an appropriate window of time between the notification of regulatory changes and the application of such changes. Such measures should prevent TPP members from using regulation, without proper justification, as a means of restricting market access. These provisions will greatly improve the regulatory environment for Canadian suppliers in TPP markets and will facilitate further expansion in the region.
We would like to take this opportunity to thank you for your consideration of the views of the Canadian life and health insurance industry. Should you have any questions about this submission, please do not hesitate to contact us.
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