Rick Waugh, the CEO of Bank of Nova Scotia, has been enlisted by the Canadian government to lead a group of chief executives who will help broker deeper trade and investment relations with Brazil, the world's seventh-largest economy.
Together with Brazilian CEO Murilo Ferreira, Mr. Waugh will co-chair a chief executives forum of 12 that will offer Ottawa and Brasilia advice on expanding bilateral trade.
Mr. Waugh and Mr. Ferreira – the CEO of Brazil's mining giant Vale SA, which bought Canada's Inco several years ago – will each choose five additional chief executives from their respective countries to round out the advisory group. The CEO forum will meet on the sidelines of future high-level political meetings between Canada and Brazil.
In Prime Minister Stephen Harper's [Sao Paulo]speech, he chides Brazil and Canada, saying given the health of their economies and the amount of economic wealth they generate, their trade links are relatively minuscule. What are the challenges in trying to foster more economic ties?
This is one of the ideas behind the [Canada-Brazil]CEO forum which I will be heading up on the Canadian side. And the opportunities are just absolutely great. What we're going to focus on are some very simple, straightforward wins and successes. We're both similarly sized economies – we've obviously got a different makeup. And in today's world, these partnerships are very important. I think this is going to lay some groundwork.
What's been standing in the way [of the relationship] Is it just benign neglect?
We've had a lot of things going on. Financial crises and a lot of distractions and whatever. So I think these things take some time. But I think the focus, the window of opportunity Canada has, the window of opportunity Brazil has, is fantastic. Now windows do get closed, but I think we see these as opportunities and we're very excited about this. And this is why we just made this recent acquisition from Dresdner Commerzbank [Bank of Nova Scotia agreed last year to purchase Dresdner Bank Brasil SA]and we're looking forward to doing more in Latin America.
But have there been trade barriers that have stood in the way, whether they be high tariffs or conditions placed on investment and what Canadian companies can do in this country?
Sure. There's been a lot of complexity. Brazil has been a market unto itself. But the standard of living of the Brazilian is going up. They are seeing the benefits. There [are]no more islands. The world is flat. If you see the number of Brazilians entering the middle class – and as you enter the middle class, you want more goods and services, you want the BlackBerry. You're not just interested in some prepaid telephone package. And so they're seeing their standard of living going up. And that's how globalization, competition all helps. But listen, it's a journey and these things don't happen overnight.
On Brazil, specifically, your company has been trying for years to build up [here]but it takes a lot of time. It's easy to talk about improving trade with Latin America. It's harder to do, right?
For Scotiabank, we've been here 30 years. We have over $2-billion in trade financing with Brazil already. We've just acquired one of the banks here, which will be focused not on retail but on trade finance. On lending to Brazilian companies – to looking after Canadian companies coming down here. We see over the next three to five years we're going to significantly increase what we already have – a great position to be in. I think Canada and Brazil are well positioned. We've had some great meetings in the last day or two – and good feelings.
Are you concerned about the effect of the U.S. [credit rating]downgrade on Canadian banks?
I think we have to put everything in perspective. And I think that Canada is well along on this road to recovery. Our fiscal policies, our monetary policies – the Canadian financial institutions have been, and are, strong. I am very comfortable, obviously, with Scotiabank. And so I think we've obviously got to be not complacent about what's happening in the world markets.
But from a Canadian perspective, from where we are, from where our financial institutions are – and our customers – we're in good shape. We've got to remember we're not an island, but I think if we stay consistent in what we've been doing, we'll weather the storm quite well.
What of the Prime Minister's message – that one ought not in government and business to be totally distracted by the fluctuations in the market?
Absolutely. We've got to focus both as a country and a lot of our businesses. Our bank is 180 years old. We're down here in Latin America. We're talking about what we're going to be doing for the next three, five or 10 years – how we can do that. And we're very comfortable doing that. If we stay focused, this is where Canada is in a very good position. We have a strong dollar, which means people believe in what the Canadian model's all about. And I think we should stay consistent, on plan and move forward and if we do that we will come out of this just fine.
Is it difficult for [Mr. Harper]to come down here and keep the focus of his audience on trade when everybody's checking their BlackBerries to see how their portfolio is doing?
I left mine in my briefcase because it can overpower you at times; you are right. But that's what our strength is. We have to have a good idea of where we are going and get there and that's what we have to do. And I think that's one of the problems we have in the world today and it's on basically the political levels. You saw with the debt ceilings in the United States, you saw the ongoing issues in the Euro: there was no focus. Where are they going? So it's not so much where the debt level was. It's not even so much how to handle Greece – they're important – but where does this lead us to?
So this is one of the strengths we have in Canada. We have a pretty good idea, at least I have with my company, with Scotiabank, we have an idea of where we are going and we have the wherewithal to get there. You cannot say that for a lot of the Europeans and of course the Americans, on where this thing ends up in three and five years.
This interview has been condensed and edited.