Issue link: http://clhia.uberflip.com/i/821274
8 4.0 International Trade Agreements 4.1 Free Trade Agreements Free trade agreements (FTAs) are an important way to address some of the challenges associated with international expansion and are a vital component of Canada's international trade strategy. Like many Canadian financial institutions, life and health insurers are working to expand their international operations and are specifically interested in underserved markets with low foreign penetration rates. Target markets tend to have similar characteristics such as high growth potential, political stability, as well as predictability and transparency of the regulatory process. Markets with a strong or growing middle class are also of interest to the sector. As incomes and purchasing power increases, the growing middle class exposes hundreds of thousands of people to the financial services sector for the first time. For emerging economies, increased access to financial services means greater economic opportunities for citizens and local businesses. Financial services allow citizens and businesses to save money, build investments, guard against uncertainty and ultimately provide a pathway to reduce poverty. Unfortunately, emerging economies can be challenging markets to penetrate due to a wide assortment of restrictions such as opacity of the regulatory process, bias towards local firms, limits on the degree of foreign ownership, the form of establishment and the range of services that can be offered. For Canadian financial services firms wishing to export their services to these markets, FTAs can be very helpful in boosting cross-border business by reducing trade barriers, increasing certainty by establishing transparent rules for economic activity, and improving dialogue between parties. Recommendation 2: Canada should ensure that its international trade agreements include a strong focus on the financial services sector. In cases where existing FTAs do not have coverage for the services sector, efforts should be made to update them. 4.2 Proposed Bilateral and Plurilateral Trade Agreements Canadian life and health insurers are strongly supportive of the Government's efforts to increase Canada's trade through international agreements. The eventual implementation of the CETA will position Canada as a country with an ambitious trade agenda at a time of increasing global protectionism. This is, however, only a first step. There are other areas where Canada should seek to expand its footprint internationally.