Canada-China Relations Committee on Dec. 11th, 2023

[Stéphane Bergeron, Bloc, Montarville, QC]

In view of Mr. Pickard's testimony before this committee and the questions you have been asked, will this expanded review include asking Mr. Pickard more questions?

[Steven Kuhn]

We have continued to keep the door open to conversations with Mr. Pickard. As we continue the review over the coming months, yes, I would certainly welcome further conversation with him to offer him continued opportunity to elaborate on some of the issues that we will be investigating as part of this continuation of the review.

[Stéphane Bergeron, Bloc, Montarville, QC]

The United States refused to join the bank, citing concerns about its governance and transparency.

Would that not have raised some flags for you?

[Steven Kuhn]

At the time the government chose to join the institution, certainly the United States' position was well known and was considered alongside the beneficial aspects for Canada of joining the institution. I can't speak for the specific reasons that the Government of Canada chose to make the decisions it did, but there certainly are benefits for being part of the institution as well.

[Stéphane Bergeron, Bloc, Montarville, QC]

What benefits are you referring to?

[Steven Kuhn]

We spoke about two already in our testimony with respect to the declared interest in the news release at the time of joining the institution, when the then Minister of Finance spoke about the inclusive economic growth in the region that could be assisted through this multilateral development bank, which is a core reason that Canada and other like-minded partners engage in a range of multilateral development bank institutions. We also spoke about the commercial opportunities for Canadians and Canadian corporations as a result of participating in the institution.

The third reason that I think is important for us to talk about is that being represented at the AIIB and having our voice at the table allows us to have discussions of issues that are consistent with Canadians' priorities and Canadians' values in trying to ensure that we're able to speak about those priorities and values as the AIIB considers projects that it chooses to invest in.

[The Chair, Liberal, Ken Hardie]

Thank you, Mr. Bergeron. That's time.

We'll now go to Ms. Ashton for six minutes or less.

[Niki Ashton, NDP, Churchill—Keewatinook Aski, MB]

Thank you very much.

My first question is on the issue of benefits. From some of the figures you shared, I mean, there's simply the fact that 16% of bank transactions involve Canadian banking institutions. Those are some pretty significant numbers.

Could you speak to some of the benefits that Canadian companies are gaining from Canada's involvement in the AIIB?

[Steven Kuhn]

Thank you.

I previously enumerated a number of contracts that Canadian companies have received from projects and from corporate procurement within the AIIB, as well as individual consultants that are engaged in the work of the AIIB. Those numbers are what they are. I think they represent a number of Canadians and Canadian companies that are directly benefiting from engagement in the institution.

I also think it's important to continue to emphasize that Canadians receiving benefits from the institution is only one reason why governments such as Canada choose to be members of these institutions. It's an important reason, but it's not the only reason.

[Niki Ashton, NDP, Churchill—Keewatinook Aski, MB]

In terms of specific projects that Canadian companies are involved in, you mentioned that some are related to the post-COVID recovery. Is there a project you can share as an example of important work being done by Canadian companies through the AIIB?

[Steven Kuhn]

I'm afraid I don't have specific details of specific projects that are available, but I would note that information on every one of the projects the institution engages in is made publicly available and transparent on its website. Anybody who wants to understand those projects—what their purpose is and what they do—can gather that information online.

[Niki Ashton, NDP, Churchill—Keewatinook Aski, MB]

Sure. That sounds good.

You talked about the 16% with respect to the banking transactions. That number is certainly in sharp contrast to the 0.83% of voting shares that Canada has in the organization. It seems, for those kinds of shares, that's significant involvement when it comes to the area of banking transactions.

Would you agree that Canada's involvement in terms of these banking transactions is significant given Canada's place within the organization and on the world stage as well?

[Steven Kuhn]

I noted that number because it jumped out at me as representing one way in which Canada is engaged in the work of the institution, and it is certainly larger, as a percentage of the transactions that are occurring within the institution, than what our vote share is within that organization. Further than that, on why the institution has the confidence of Canadian financial institutions to that degree, I cannot speculate.

[Niki Ashton, NDP, Churchill—Keewatinook Aski, MB]

I want to tie something into that. I come from western Canada, and we know that the western provinces consider China to be a significant trade partner. In fact, three prairie provinces have a trade surplus when it comes to China. My own constituency depends on trading agricultural products and mineral products, including nickel from my own hometown.

I'm wondering if it isn't important to continue to engage, not just with China but also with an institution like the AIIB, given the important trading relationship that Canadian provinces like mine, as well as Canada, have with China.

[Steven Kuhn]

The clarification I would make to your question, if I might, would be to make a distinction between the Government of China and the AIIB as an institution. That is a key distinction we need to be talking about in this conversation, but it is important to recognize that the conversation we're focused on is about the institution itself and not about the Government of China.

In that respect, I have a mandate and knowledge to speak to Canada's engagement with that institution, but for conversations about trade relationships on a bilateral basis with the Government of China, those questions would have to be referred to Global Affairs Canada.

[Niki Ashton, NDP, Churchill—Keewatinook Aski, MB]

That's fair. It just strikes me that the entire premise of this conversation is around the accusation that China is involved in the AIIB; hence, the review.

Just to confirm, Canada's review of the AIIB was based on a Facebook post by a former employee who decided to leave. Is that accurate, in terms of the actual timing of the call for the review?

[Steven Kuhn]

The review was launched by the Deputy Prime Minister once she was made aware of serious allegations that were made by a Canadian employee who worked at the institution. Those allegations were made known to us for the first time on Twitter, as it turns out—that is, on social media.

So, yes, we did launch the review on the basis of serious allegations made by an employee of the institution.

[Niki Ashton, NDP, Churchill—Keewatinook Aski, MB]

Thank you for sharing that.

As somebody who spends some time on Twitter, I know that obviously there's a lot there.

I appreciate what you've shared today. I'm certainly looking forward to tracking down some more information about Canadian companies' involvement and how they have benefited as a result of their involvement in the AIIB.

Thank you.

[The Chair, Liberal, Ken Hardie]

Thank you, Ms. Ashton.

We'll now go to Mr. Seeback for five minutes or less.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

Thank you, Mr. Chair.

In your statement and in answering questions, you've talked about Canada's participation in the AIIB to help promote inclusive global economic growth.

I want to talk a little bit about Uyghur forced labour. The United States has put out the UFLPA entity list, a list of companies the United States has determined use forced labour from the Xinjiang region to mine, produce or manufacture goods.

Does the Government of Canada have a system in place to make sure, with respect to any investments our money goes into through the AIIB, that none of the projects the bank has provided financing for violate the UFLPA entity list?

[Steven Kuhn]

Thank you for the question.

The issue of forced labour is an important one, especially when we're having conversations about Canada's engagement in the AIIB. I would note that it has been an important one on our radar for longer than the time period of the review we are engaged in. For example, it is an issue that the deputy prime minister was raising even last year, in 2022, as part of her role as governor of the institution. As we heard in previous testimony, Canada's director on the board of directors has also been raising this issue with his counterpart directors around the table at the AIIB in respect of specific projects.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

I understand raising an issue—that's one thing. I'm raising an issue right now. But there's a difference between raising an issue and actually assuring Canadians and parliamentarians that no Canadian funds that went to the AIIB ended up financing projects that used Uyghur forced labour. It's not hard to do. There's an entity list that the U.S. has published. It's readily available. I've raised it with the trade minister many times.

Did the Government of Canada ensure that no funds from the AIIB that were invested or used to finance a project were given to companies on the UFLPA entity list?

If you don't know, you can say you don't know. If the answer is no, you can say no, or you can say yes, we did. I don't want to hear about processes. I want to know whether we did it or we don't know whether we did it and if there's a process in place to make sure that we didn't.

[Steven Kuhn]

Mr. Chair, I think this is an important question, and the answer requires a little bit of context in understanding how the finances of a multilateral institution work, in two respects.

One is that our capital that we have provided to the institution is not itself directly invested in specific projects. It is used to leverage, on the financial markets, those bond issuances that are themselves lent into projects.

The second element that is important, and is important for this conversation, is the fact that Canada is a less than one per cent shareholder at that institution. Therefore, speaking about projects is important, but we do not have the ability ourselves to veto projects that are considered by the board.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

Good. I understand that. However, is there a system in place to check where the funds from the AIIB are being invested to make sure that companies on the UFLPA entity list can't get access to those funds through bonds or any other financing? Does the finance department in Canada have a system in place to make sure that those companies can't access those funds through the AIIB? It's a yes or no.

[Steven Kuhn]

I'm afraid that I can't answer specifically to the question because I'm not familiar with the UFLPA list specifically.