The Multilateral Trading System Final Revision II

1
The Multilateral Trading System What Now and
What Next?
Prepared for Canadian Services Coalition
Business Forum 2006

Michael R. Landry Vice President Corporate
Development Manulife Financial
November 16, 2006 Ottawa, Canada
2
Manulife Financial

• Net income 3.3B (FY 2005)
• FUM 372B (FY 2005)
• Total premiums and deposits 61.5B (FY 2005)
• Market cap 58.5B (October 7, 2006)
• 2 listed company on the TSX (by market cap)
• 2 largest life company in North America (by
  market cap)
• 4 largest in the world (by market cap)
• Also listed on the NYSE, PSE, and SEHK
• All Canadian unless otherwise noted

3
Worldwide Reach

• 19 countries and territories worldwide
• 75 of business and earnings from outside Canada
• 50 of our jobs are in Canada
• U.S. biggest operation and most profitable
• 50 of our business
• Asia fastest growing and sells most policies
• 2 among foreign companies

4
Global Operations
Canada
United States
Australia
5
Strong Business Franchises

• Canada
• Individual Insurance
• Individual Wealth Management
• Group Benefits
• Group Pensions

• United States
• Insurance
• Group Pensions
• Annuities
• Long Term Care
• Mutual Funds
• College Savings
• Managed Accounts

6
China Offices and Licenses
City Pop. (mil) SH 17.8 BJ
15.4 GZ 7.5 FS 5.8 DG
7.5 ZS 2.4 SZ
8.3 JM 4.1 NB
5.6 HZ 6.6 SX 4.4 JX
4.0 WZ 7.8 NJ
6.9 WX 4.5 CD
10.8 JN 6.0 Total 125.4
Province Pop. (mil) SH 17.8 BJ
15.4 GD 91.9 ZJ 49 JS
74.8 SC 87.5 SD
92.5 Total 428.9
Source Local gov statistics report of Year 2005
7
Japan Wealth Management

Exceptional Growth
Yen billions
8
WTO Multilateral Trading System

• Importance to Manulife
• Market entry
• National treatment
• Transparency
• Rule making and administrative/regulatory
  procedures
• Strategically Critical
• Offensively
• China market access, led to market opening
• Manulife gt licenses than any other foreign
  insurer
• Secured 51 JV ownership level
• Access to the group life and health market (at
  least in theory so far)
• Transitional Review Mechanism provides review of
  commitments
• Defensively
• Japan Post Office/Kampo privatization
• Many advantages (tax, regulatory, etc) over
  competitors (incl. domestics)
• Resolution may come from the WTO

9
The New Reality A Fragmented Trade Policy World

• DDA on life support -- WTO risks losing primacy
• Successful round needed to remove uncertainty
• Increasingly fragmented global trading system
• Proliferation of regional and bilateral trade
  arrangements
• Some 200 regional agreements in place WTO
  Secretariat
• Other countries moving ahead
• US FTAs with 15 countries in the last 5 years
• EU 13 FTAs covering 18 countries
• Pan-Asian Free Trade Area
• ASEAN's 10 members, Japan, China, South Korea,
  New Zealand, Australia, India
• Not Canada or the US
• Japan is leading the initiative offering 100
  million for formation
• Canada needs to progress
• Working on Korea FTA, but getting CDN domestic
  push-back
• Central American (CA) 4 and Singapore that are
  stalled
• Exploratory discussions Japan, Caricom, Andean
  Pact countries
• Competing for face time is going to get very
  tough
• Regional interests and major powers

10
Proliferation of Regional Trade Agreements
Source The Economist/Special Report / World
Trade - July 29, 2006
11
New Reality Demands a New Response What the
Private Sector Can Do

• Private sector must engage
• Must ensure negotiators know our priorities
• How else are they to know our needs and how they
  fit into the myriad of agreements with their
  inter-connections, etc.
• For financial services, Finance Canada needs to
  know
• Companies must step up
• Take on international trade role to set their own
  course and control their own destiny
• Both in the corporate office and international
  divisions
• Engage locally
• Our country GMs are our Ambassadors and Senior
  Trade Officers/Reps
• They engage with host governments and our posts
• Issues are too important to leave this to distant
  head office

12
New Reality Demands a New Response What the
Private Sector Can Do

• Support Canadian Services Coalition
• Affiliated with the Global Services Coalition
  network
• Taken on the role of corporate statesmanship
• Represent broader interests and have power of
  numbers
• Companies tend to focus on their specific
  priorities
• CSC Chair, the Hon. Sergio Marchi
• CSC membership sign-ups are available

13
New Reality Demands a New Response What the GOC
Can Do

• First and foremost Canada must be firm in
  support of the WTO/GATS multilateral trade system
  and successful conclusion of the DDA
• Must find ways to deal with the WTOs increased
  complexity
• Originally 23 signatory countries -- Vietnam is
  150th
• Victim of its own Success
• Explains why 5 years later the DDA hasnt been
  completed
• Must find alternate approaches to the current
  all-or-nothing, sequential AG gt NAMA gt Services
  approach
• Prioritize issues/files and negotiate single or
  few undertakings inside or outside WTO, FTAs
  or other agreements
• e.g. if financial services entry is a priority,
  then negotiate financial services
• Use other instruments
• e.g. tax treaties

14
The new reality demands a new response What the
GOC Can Do

• New/different approaches outside the WTO?
• Use FTAs?
• Trade Policy Review in bilaterals and regionals
• Does NAFTAs Financial Services Committee provide
  a roadmap for negotiating single/few
  undertakings?
• Must Ensure
• Coherence and integration among agreements
• Integrated FTAs into RTAs into the WTO?
• Capital-based and mission capacity is adequate
• Need best and brightest on the trade file
• The private sector must support this effort
• Love your trade negotiator!

15
New Reality Demands a New Response What the GOC
and Private Sector Can Do Together

• Take a leading role in developing country
  capacity building and technical assistance
• Help negotiate and implement agreements
• Reduce barriers, improve regulatory structures
  and transparency, synchronize policy for
  prudential supervision, investment policy, and
  other infrastructure
• Leverage existing organizations
• International Association of Insurance
  Supervisors (IAIS)
• World Bank
• OSFIs International Advisory Group (IAG)
• International Leadership Centre for Financial
  Sector Supervision
• Continue informal government-to-government
  dialogues with emerging markets on regulatory
  issues

16
Conclusion

• Multilateral Trade System Benefits All
• Stability and growth for emerging markets
• Developing country flexibility
• Capital market development
• Strengthening regulatory frameworks and best
  practices
• Market entry, national treatment, transparency
• Financial services liberalization