Canada-China Relations Committee on Nov. 27th, 2023

[Ian G. McKay]

There was an extraordinarily broad, comprehensive consultation strategy leading up to the formalization of the Indo-Pacific strategy. I think the message we heard from all stakeholders across Canada was “Please make it right this time.” I say that because for decades Canada has had, as I said earlier, episodic interventions—

[The Chair, Liberal, Ken Hardie]

Excuse me, Ambassador.

We have to suspend for just a second. We have a technical issue here.

Ambassador, can we get you to raise your microphone just a smidge? That's better. Thank you.

Please continue.

[Ian G. McKay]

Thank you, Mr. Chair. My apologies.

I think it's an important question, because in the consultations that took place before the formalization of the strategy, the messages were loud and clear—let's get it right this time so that Canada doesn't go into different parts of the region and then get distracted by other global issues. I think the fact that this is a five-year-funded 10-year view across 17 departments and agencies really takes the message from the stakeholders that we have to be all in, in this case. The recognition by business, academia, provinces, territories and associations that the Government of Canada needed to take a leadership role in this and facilitate and allow more Canadians, more businesses, more people to engage in the region on a more fulsome basis was the message we heard loud and clear.

Of all the pillars of the strategy—and they're not in any order of priority; that's just the way they've come on the page—I think the third pillar, the people-to-people exchange pillar of the strategy, will be the most heavy lifting, but I think it will have the most long-term significant benefits for all Canadians.

We're talking about getting more opportunities for small and large Canadian businesses to engage in the region, to increase trade, to increase inbound investments, to encourage students to study in the Indo-Pacific region and also to have the best and the brightest from the Indo-Pacific region come to Canada to build their Canada capacity. This is something that I think will have extraordinarily positive benefits in the long term for Canada. It will require a lot of work and a lot of heavy lifting, but I'm confident that the framework that is set out will allow us to build a generation of Indo-Pacific experts in academia, business, politics and culture through the deployment of this strategy.

[The Chair, Liberal, Ken Hardie]

Thank you, Ambassador.

We'll now go to our second round, and we'll begin with Mr. Chong for five minutes or less.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Thank you, Mr. Chair.

Thank you to all of our witnesses for appearing.

I've read the Indo-Pacific strategy a number of times. It's a succinct 23 pages. It mentions the term “clean energy” four times. For example, it mentions on page 18 that it will “position Canada to be a reliable supplier of clean energy in the region”. What is the definition of clean energy? I have not been able to find that anywhere in the document or on the Government of Canada websites. If somebody could educate me on that, I would appreciate it. What is included in “clean energy” in the document?

[Ian G. McKay]

Thank you for the question, Mr. Chong.

I think there is a significant focus in the strategy for Canada's clean-tech companies to be able to scale up, to be able to do their first commercial demonstrations in key markets in the Indo-Pacific region.

Canada, as you're probably aware, has 15 of the top 100 clean-tech companies in the globe. One of the challenges they've expressed to the government over many years is that for them to be able to scale up and prove their proof of concept in new, complex markets in the Indo-Pacific, they need a leg-up from the Government of Canada. I think the strategy will allow companies that do water remediation, renewables, solar and wind.... In fact, the LNG Canada project, upon its completion, which is very soon, will deliver to the Indo-Pacific region the cleanest and lowest-emission LNG on the planet. It will allow many of our partner countries in the Indo-Pacific to wean off coal much more quickly.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Thank you, Ambassador, for that answer. That's a good segue into my next question.

As you mentioned, Canada's first large-scale LNG terminal is coming online in Kitimat, British Columbia sometime around 2025. Just last week, the Japanese Ministry of Economy, Trade and Industry urged LNG buyers in Japan to secure more long-term LNG contracts for Japan's energy security but also to ensure that Japan reduces its reliance on Russian LNG.

Can you tell us if you've had any discussions, or if the government has had any discussions, with the Japanese government on Canadian LNG exports to Japan?

[Ian G. McKay]

Personally, I've had many, many conversations with Japan at the political and corporate level about the LNG Canada project. Of the five partners in the project, Mitsubishi in Japan is a 15% stakeholder. This is a project that they are waiting for with enormous anticipation, and they are extraordinarily pleased that the completion of the project will be well ahead of schedule—for a couple of reasons. Of course, when they signed on to the project, they weren't aware that they would one day have to wean off their Russian supply of LNG. That is happening, and Canada will essentially replace all of the supply that Japan was getting from Russia.

They are just delighted that the Coastal GasLink pipeline has been completed and that the terminal infrastructure in Kitimat is, I think, over 90% completed now. I suspect that we will be seeing the first test shipments of LNG into Japan well before the 2025 target date, possibly early 2024.

For Japan, it's an extraordinarily important solution to their energy security vulnerability. Japan relies—to an unhealthy degree, I think—on imported energy. This particular project gives them much comfort that it's coming from a reliable and friendly partner who will be delivering to Japan, Malaysia and Korea the cleanest, lowest-emission LNG on the planet.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Thank you, Mr. Chair.

[The Chair, Liberal, Ken Hardie]

Thank you, Mr. Chong.

We'll now go to Ms. Yip for five minutes or less.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Thank you, Mr. Chair.

Welcome to all the witnesses.

Recently, some of us on the committee went on a trip to Washington, and I think all of us learned a lot. I'm sure all of us also have a lot of questions.

My question today is for the ambassador. What are the differences between the Canada and the U.S. Indo-Pacific strategies, and how does it relate to China?

[Ian G. McKay]

I think the first distinction that has to be made is that Canada's Indo-Pacific strategy is a Canadian strategy. It was built with Canadian interests and geopolitical realities in mind, and with a focus on what Canada wants to do for our businesses, students and citizens with respect to the fastest-growing economy in the world.

While the pillars I outlined earlier—security, trade, people-to-people exchange, climate and diplomacy—vary a little from those of the U.S. strategy, I think it's important to underline that, through Canada's deployment of the Canadian Forces, through our naval and air force operations, we are doing more on the security piece by sending three frigates into the Taiwan Strait, the South China Sea and the East China Sea; more to monitor illegal ship-to-ship transfers towards North Korea; and more to disrupt and intercede illegal fishing, which is happening at an enormous scale in the north Pacific and in towards the central Pacific.

We're doing more than any other G7 country, or in fact any NATO country that is not called “the United States”. I think that comes as a surprise to a lot of Canadians, but it certainly comes as a very welcome initiative for our partners in the region—including the commander of the U.S. southern fleet, who operates the largest forward deployment naval operation on the planet out of Japan. Their gratitude and Japan's gratitude for our persistent and ongoing broadening and deepening of our military engagement in the region has been widely noted, and it has been extraordinarily well received.

That's just one of the ways in which we are putting action into the plan, and it's important. It's important for global trade in the region that the Taiwan Strait is maintained as international waters. You will have seen on the news, through the CBC and the Global News crews that were embedded with our navy and air force operations in the region, that people are taking notice. Our aircraft have been buzzed. Our frigates have been sidelined by a large naval presence from the Chinese. Therefore, I think when we're getting their attention by doing what we know is the right thing, it only doubles down and reaffirms the notion that we are doing the right thing by working with our partners in these multilateral exercises in the region.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Great. I did not know that we were doing more than other countries—other than the United States.

My next question is how Canada can strengthen our presence in the Indo-Pacific region. Do you feel there is more we can do?

[Ian G. McKay]

I think there's more we can do over the lifetime of this strategy. It has in fact been a year since the launch of the strategy. Of course, because significant resources are being committed to the strategy, it takes time for the process of Parliament and for budgets to be allocated.

Where there is more for us to do covers all of the pillars. There's more we can do on security, and we're doing a terrific job. There's more we can do on trade by being a leading partner in the CPTPP, which is strengthening supply chain resilience throughout the Indo-Pacific region.

There's certainly more we can do on people-to-people exchange. I want to see more young Canadians take up language, take up expertise and study the history, the culture, the trade and the politics of this region, so that our bench strength, if you will, as a country, over the next decades and generations is much more sophisticated and expert at the goings-on in the region, which will be the most important economic region in the world.

There's more we can do on climate. Some of the extraordinary effects of climate change on the Pacific island nations, for example, are where Canada will engage. There are countries that are literally at risk of not existing anymore if something isn't done to shore up their shorelines through coastal degradation mitigation.

There's more we can do on diplomacy. Canada will be staffing up a number of its missions in the region, again, to build up the expertise on security, on trade and on politics in the region. I think that's a good thing. I think it's a signal of a major once-in-a-generation, or more, shift of Canadian foreign policy, which will require all of these pillars to be executed to their maximum potential.

[The Chair, Liberal, Ken Hardie]

Thank you, Ambassador.

We'll now go to Mr. Bergeron.

You usually have two and a half minutes, but we have a little bit of extra time, so if you went for three, it wouldn't be a bad thing.

[Stéphane Bergeron, Bloc, Montarville, QC]

Thank you, Mr. Chair.

Ambassador, you said that Canada's Indo-Pacific strategy had been adopted as a reaction, so to speak, to China's emergence as an economic, political and military power. The strategy says that “Canada will pursue dialogue with China to advance Canada's national interests.” It also says: “In areas of profound disagreement, we will challenge China, including when it engages in coercive behaviour—economic or otherwise—ignores human rights obligations or undermines our national security interests and those of partners in the region.”

Here again, the words are important. I believe I can say that China is already engaged in, shall we say, dubious behaviour in economic terms or in relation to human rights, national security or the safety of our pilots and others in the region. How do we intend to challenge China in situations like these?

[Ian G. McKay]

Thank you for the question, Mr. Bergeron.

It really is at the core, I think, of the formation of the strategy. I think Canada has said, fairly explicitly, that with regard to our relationship with China, we will compete where we compete; we will collaborate where we collaborate; and we will challenge on issues of human rights and economic coercion where we think that the lines are being crossed.

I think we do compete. I think it's very important for our exporters, our Canadian small and large businesses, that we're able to maintain good export numbers to China. I think we need to do everything we can to make those channels stay open, stay secure and stay resilient. The fact is that we have a lot of things that China needs and wants, and even through the most difficult times of our relationship, our exports to China, on average, have gone up. I think that's a real testament to our exporters of all sorts of goods—agri-food, agriculture, seafood and other export products.

The collaboration with China is very important. We need to collaborate on climate-related solutions. I think Minister Guilbeault's visit to China recently was a very strong demonstration of Canada's willingness and responsibility to collaborate with China. Climate change is a big issue for them domestically, as you very well know. I think doing more together to make climate change in sync with economic opportunities between both countries is very important.

As you said, there are issues on which Canada needs to challenge China. There are significant human rights issues where we have disagreements, and there are economic coercion issues, where we have not only disagreements but an obligation, through the Indo-Pacific strategy, to diversify our economic integration with other partners in the region. It's not comfortable to be one of the smaller countries in the Indo-Pacific if your reliance on your economy is significantly overweighted to China, where there are opportunities for coercion to take place. In that context, it's very important for Canada to have deeper, more integrated economic relationships with partner countries throughout the region, and the CPTPP is a terrific example of how that is happening literally on a daily basis over the past five years.

[The Chair, Liberal, Ken Hardie]

Thank you, Ambassador.

We'll have to now go to Mr. Boulerice, to finish our work with this panel.

Mr. Boulerice, you have about three minutes.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you, Mr. Chair.

In relation to Canada's Indo-Pacific strategy, what measures are planned to enable the federal government to strengthen Canada's diplomatic and economic ties with the countries in the region? What measures will be put in place and what resources will be allocated to them?

[Ian G. McKay]

Thank you for the question.

Certainly, on pillar five, the diplomatic uplift that Canada will be undertaking in the Indo-Pacific region—and Mr. Epp will have more details on the numbers—I think there will be between 100 and 120 strategically trained, placed and positioned diplomats in the region, including a lot of diplomats with more expertise on China, not just to work in China but to work in other missions across the region.

I think that in order for the strategy to succeed to its fullest potential, we need to have more and better trained—linguistically, culturally, politically—diplomats throughout the region, not just from Global Affairs Canada but from other government departments that have significant responsibilities and engagements in the region on energy, climate, trade and security. I think the outlook for the next several years to have a significant uplift in our numbers in the region will pay enormous dividends for decades to come.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you.

Canada is a G7 country. We have some influence and we carry some weight, but we are not a heavy hitter. We are not one of the giants on the planet.

To what extent will the Indo-Pacific strategy that you have developed enable Canada to make a positive contribution to peace and stability in this region of the world?

[Ian G. McKay]

I thank you for a terrifically important question. You contextualized it by saying that Canada is not a heavyweight in our engagement with G7, G20 or CPTPP.

I think one of the charms and the success factors of Canada in the global context is that we don't come across as a super-weight. I hear this from.... I've met, I think, 14 presidents and prime ministers in the Indo-Pacific region over the past six months. We come across as a country that will listen, that will engage and that will sometimes translate some of the dialogue that's going on between some of the heavyweights, if you will.

Canada's approach, our diplomatic approach, our position in the world is very well received as a rational partner, as a partner who understands the position and the context of so many of our partners in the region. We're very well positioned and we're lucky to be in these global forums, in APEC, in the most impressive trade framework in the region and in the G7. We use our platforms there, I think, in a very effective, responsible and understanding way that is very well received by our partners with whom we engage who are not part of those dialogues.

That is a terrific strength that Canada brings to the table. I've witnessed it first-hand and I've heard it from political leaders throughout the Indo-Pacific numerous times over the past six months.

[The Chair, Liberal, Ken Hardie]

Thank you, Ambassador McKay.

This brings us to the end of our first panel. I imagine you're ready for at least your second cup of coffee this morning. It's about 6:30 in the morning there, or something like that.

[Ian G. McKay]

It is indeed.

[The Chair, Liberal, Ken Hardie]

Thank you for your time. It has been time well spent for us, and I hope it has been for you. We'll look forward to your ongoing work.

We will suspend for a few minutes while we set up our next panel.