The Multilateral Trading System What Now and What Next Prepared for Canadian Services Coalition Business Forum 2006 Michael R Landry Vice President Corporate Development November 16 2 by wwq16075

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									The Multilateral Trading System
What Now and What Next?

Prepared for:
Canadian Services Coalition
Business Forum 2006

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



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    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




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    Global Operations




          Canada                    England     Germany
                                              Belgium

        United States                                           China             Japan
                        Bermuda
                                                               Hong Kong
                                                                Macau       Taiwan
                         Barbados                         Thailand   Vietnam
                                                          Malaysia          Philippines
                                                          Singapore
                                                                      Indonesia



                                                                           Australia




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    Strong Business Franchises
    Canada                                  Asia
    Individual Insurance                   Vietnam, Hong Kong, Philippines,
    Individual Wealth Management           Singapore, Indonesia, Malaysia,
    Group Benefits                         Thailand, Taiwan, China, Macao
    Group Pensions                               Individual Life Insurance
                                                  Group Life & Health Insurance
                                                  Pension Products
    United States                                 Mutual Funds
    Insurance             Investments
    Group Pensions        United States, Canada,
    Annuities                                              Japan
                           United Kingdom, Japan,
    Long Term Care                                         Individual Insurance
                           Australia, Hong Kong,
    Mutual Funds                                           Annuities
                           Southeast Asia
    College Savings                                Reinsurance
    Managed Accounts
                                                    United States,
                                                    Canada, Europe,
                                                    Asia



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         China: Offices and Licenses
    City Pop. (mil)    Province Pop. (mil)
    SH          17.8 SH          17.8
    BJ         15.4    BJ        15.4
    GZ          7.5    GD        91.9
    FS           5.8   ZJ         49
    DG           7.5   JS        74.8
    ZS           2.4   SC        87.5
    SZ           8.3   SD        92.5                                                  Beijing

    JM          4.1    Total:   428.9
    NB          5.6                                                                           Jinan

    HZ          6.6
    SX           4.4                                                                              Nanjing            Wuxi
    JX           4.0                                                                                                   Shanghai
                                                                                                        Jiaxing
                                                                                                                         Ningbo
    WZ          7.8                                                     Chengdu                       Hangzhou
                                                                                                                     Shaoxing
    NJ           6.9
                                                                                                        Wenzhou
    WX          4.5
    CD         10.8                                                                               Guangzhou
    JN           6.0                                                               Foshan               Dongguan
                                                                                  Zhongshan               Shenzhen
    Total:    125.4
                                                   Office established             Jiangmen

                                                   Licenses granted

6   Source: Local gov statistics report of Year 2005
7
                 100
                       200
                             300
                                   400
                                         500
                                               600
                                                     700
                                                           800




             0
    Feb-02

                                                           Yen billions
    Apr-02
    Jun-02
    Aug-02
    Oct-02
    Dec-02
    Feb-03
    Apr-03
    Jun-03
    Aug-03
    Oct-03
    Dec-03
    Feb-04
    Apr-04
    Jun-04
    Aug-04
                                                                 Exceptional Growth




    Oct-04
                                                                                      Japan Wealth Management




    Dec-04
    Feb-05
    Apr-05
    Jun-05
    Aug-05
    Oct-05
    Dec-05
    Feb-06
    Apr-06
    Jun-06
    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 > 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
                  National treatment
                  Transparency in the privatization process
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    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
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        Regional interests and major powers
     Proliferation of Regional Trade Agreements




10   Source: The Economist/Special Report / World Trade - July 29, 2006
     New Reality Demands a New Response:
     What the Private Sector Can Do
     1. Private sector must engage
     2. 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
     3. 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
     4. 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




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     New Reality Demands a New Response:
     What the Private Sector Can Do
     5. 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




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     New Reality Demands a New Response:
     What the GOC Can Do
     1. First and foremost: Canada must be firm in support of the WTO/GATS
        multilateral trade system and successful conclusion of the DDA

     2. Must find ways to deal with the WTO’s increased complexity
         Originally 23 signatory countries -- Vietnam is 150th
         Victim of its own Success
         Explains why 5 years later the DDA hasn’t been completed

     3. Must find alternate approaches to the current all-or-nothing,
        sequential AG > NAMA > 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



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     The new reality demands a new response:
     What the GOC Can Do
     4. New/different approaches outside the WTO?
        Use FTA’s?
        Trade Policy Review in bilaterals and regionals
        Does NAFTA’s Financial Services Committee provide a roadmap for
         negotiating single/few undertakings?


     5. Must Ensure …
        Coherence and integration among agreements
        Integrated FTAs into RTAs … into the WTO?
        Capital-based and mission capacity is adequate


     6. Need best and brightest on the trade file
        The private sector must support this effort
        Love your trade negotiator!

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

     1. 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

     2. Leverage existing organizations
           International Association of Insurance Supervisors (IAIS)
           World Bank
           OSFI’s International Advisory Group (IAG)
           International Leadership Centre for Financial Sector Supervision

     3. Continue informal government-to-government dialogues with
        emerging markets on regulatory issues
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     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



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