Evidence of meeting #32 for Canada-China Relations in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was trade.
A video is available from Parliament.
7:35 p.m.
Conservative
Kyle Seeback Conservative Dufferin—Caledon, ON
I am getting, as we say sometimes, into the weeds. Are you familiar with the U.S. entities list and how that came about?
February 5th, 2024 / 7:35 p.m.
Associate Professor, Simon Reisman Chair in International Economic Policy, Carleton University, As an Individual
I'm familiar with the list, but I don't know how they developed it.
7:35 p.m.
Conservative
Kyle Seeback Conservative Dufferin—Caledon, ON
Do you think it would make sense for Canada—the U.S. is one of our closest allies—to be more aligned with the United States on this and to look at using their entities list? It seems like a very simple solution to the problem.
7:35 p.m.
Associate Professor, Simon Reisman Chair in International Economic Policy, Carleton University, As an Individual
Using their list or at least following a similar process could make a lot of sense. During the USMCA negotiations, an area of real dispute between Canada and the U.S. was the transshipment of Chinese steel. The United States had concerns that steel bound for the United States was coming in through Canada.
We can't afford to have Canadian exports to the United States cut off because of American concerns. For instance, there could be goods produced from forced labour transiting through Canada. We should not be allowing that alone to happen, because it's bad, but separately it's also bad for Canadian interests directly.
7:35 p.m.
Liberal
The Chair Liberal Ken Hardie
In fact, you're so close that you are out of time.
We will go to Mr. Fragiskatos for five minutes or less.
7:35 p.m.
Liberal
Peter Fragiskatos Liberal London North Centre, ON
Thank you, Chair.
Thank you to both of you for being here tonight.
Professor Lilly, you have said many very interesting things here tonight. I always like to give witnesses, if they like, the chance to summarize their main argument for us or what they want us as a committee to really take away from their perspective through a recommendation they think is of critical importance to the government.
I realize I'm probably forcing you to repeat yourself going way back to your testimony, but a lot has been said since then, so I would like to offer that opportunity to you.
7:40 p.m.
Associate Professor, Simon Reisman Chair in International Economic Policy, Carleton University, As an Individual
Sure. Thank you for the question.
If the committee could take away the reality that trade diversification goes through the United States, I think that would be a good thing. As much as we seem to understand it, we constantly try to forget that reality. When we're trying to diversify trade, we must do it in a way that works for that primordial trading relationship.
We also need to be much more realistic going forward about supply chain resilience and the increasing marriage of national security with economic security. The Business Council of Canada came out with a report on that. If business is figuring this out, then we really should also be figuring it out and working to ensure that when we're operating in the Indo-Pacific and advancing our relationships with Indo-Pacific countries, we do so in a manner that's consistent with all those things.
7:40 p.m.
Liberal
Peter Fragiskatos Liberal London North Centre, ON
I know sometimes academics think and really even worry about whether or not people read their articles. I see that in 2017 you published a piece called “How Demographic Transition Can Help Predict Canada-U.S. Trade Relations in 25 Years”. It was a very interesting piece, so rest assured that people are reading your stuff for sure.
This is a very general question, but do you think demography and understanding Canada's demography have utility in this whole discussion about Canada-China relations?
7:40 p.m.
Associate Professor, Simon Reisman Chair in International Economic Policy, Carleton University, As an Individual
I do absolutely. I think we often forget the importance of demography and aging populations. China has an aging population. There's lots of commentary about how perhaps its economy has peaked. If you look at the aging demographic profile of China, that makes lots of sense.
If you're looking at markets where we should be spending more time thinking, “This one is rising”, we should be thinking a lot more about Mexico, actually.
7:40 p.m.
Liberal
Peter Fragiskatos Liberal London North Centre, ON
Thank you very much.
Let me turn to Mr. Nagy, if I may.
Last week, Mr. Nagy, we heard from someone else from the Paterson School, Professor Hampson, who told us not to worry about the BRICS nations. They are Brazil, Russia, India, China and South Africa, obviously. The alliance, if you can call it that, has grown a bit recently. He said not to worry about it right now, but that Canada might have to worry about it in five years and plan accordingly. That was his basic argument.
What do you make of an argument like that? I think we have to keep these questions in mind as we go forward.
7:40 p.m.
Professor, International Christian University, MacDonald-Laurier Institute, As an Individual
Thank you very much for the question.
I think the expansion of the BRICS committee is meant to create alternatives to the U.S. currency being one of the global reserve currencies and to perhaps eventually internationalize it through amendment B.
However, the reality is that when we look at the heterogeneity of BRICS and the expansion of its members, I really don't think it provides the kind of economic foundation that would be a viable alternative to the U.S. dollar as a global reserve currency in five or 10 years. Can it make substantial changes in each of those countries so they are more reliable and stable and can create a viable alternative to the reserve currency of the United States? It's possible, but a lot of stars need to align to make that happen.
As Canada looks to BRICS and its ability to be a viable alternative to a western-led or a U.S.-led global financial system, I think we should be more aware of how the BRICS represents the global south or developing countries, and how it may have a position in shaping some of the choices within international institutions such as the United Nations.
I'm a bit more pessimistic about BRICS being a viable financial alternative to the current U.S.-led financial order, but at the same time, I recognize that it has a bigger voice and can shape the global south, and this can affect Canada's engagement internationally.
7:45 p.m.
Liberal
The Chair Liberal Ken Hardie
Thank you, Mr. Fragiskatos.
That brings us to the end of our first panel.
Professor Lilly, thank you for your time.
Professor Nagy, it must be a beastly hour of the morning where you are right now. You're looking surprisingly chipper for the hour of the day you're dealing with. You can go and throw yourself in front of a vat of coffee or something and get on with the rest of your day.
Thank you both for being here.
7:45 p.m.
Professor, International Christian University, MacDonald-Laurier Institute, As an Individual
Thank you.
7:50 p.m.
Liberal
The Chair Liberal Ken Hardie
I call our session back to order.
I want to welcome everybody back for our second panel.
We had somebody from Tokyo in the first panel and now, in the second panel, we have somebody coming in from Great Britain. We are stretching the calendar and the time zones quite a bit tonight.
We have Cleo Paskal, associate researcher at Chatham House, the Royal Institute of International Affairs, in London, United Kingdom, by video conference. From the Balsillie School of International Affairs, we have Ann Fitz-Gerald, who is the director. Also, as an individual, we have Deanna Horton, distinguished fellow at the Munk School of Global Affairs and Public Policy at the University of Toronto, by video conference.
I trust that the folks on Zoom have been given the information with respect to interpretation if they need it, as well as the “raise hand” function and all of that. You're all set to go. Excellent.
Ms. Paskal, we will begin with you for five minutes or less.
7:50 p.m.
Cleo Paskal Researcher, Montreal Centre for International Studies, Université de Montréal, As an Individual
Thank you very much.
Just to clarify, having had enough of British weather, I am now in Miami.
7:50 p.m.
Some hon. members
Oh, oh!
7:50 p.m.
Researcher, Montreal Centre for International Studies, Université de Montréal, As an Individual
Chair, vice-chairs and members of the committee, thank you for inviting me to testify today and for your service to democracy. This is an excellent committee. It's very inspiring.
I'm going to begin by explaining very broadly how I think the Chinese Communist Party looks at the world. With that in mind, I'll offer some suggestions for how Canada might like to engage in one specific area.
To understand CCP strategies, it helps to note two terms that are common in PRC think tanks. The first is comprehensive national power, abbreviated to CNP.
China's Ministry of State Security-like think tank describes CNP as “the sum total of the powers or strengths of a country in economy, military affairs, science and technology, education and resources, and its influence.” It is a very broad definition. Adopted by Beijing in the 1990s, PRC researchers obsessively calculate every country's comprehensive national power score. As Captain Moreland, who served as U.S. Coast Guard liaison to Beijing, explained, “For the Chinese Communist Party, Comprehensive National Power as measured by a CNP score is a goal in itself and pursuit of CNP justifies just about anything.”
Apart from the continued survival of the CCP, the main goal of the CCP is for China to be number one in the world in comprehensive national power. Given that rankings are relative, that can be achieved either through out-competing others or by knocking others down and then comparatively being in a better position.
One way the PRC works to increase its own comprehensive national power while decreasing that of others is through unrestricted warfare. That's the second PRC term to remember. A 1999 book by the same name was written by two People's Liberation Army, PLA, air force colonels. It details a “no rules apply” approach to targeting an enemy. This doesn't mean actual fighting is neglected. Actual fighting is just one of a very wide range of weapons in the tool kit that the PRC employs, guided by perceptions of efficacity rather than morality or law.
The colonels' book details 24 different warfares, including legal warfare, which we know as lawfare; media warfare; and drug warfare. As an example, drug warfare can mean either taking control of medical supply chains to increase your comprehensive national power relative to a country that relies on you for pharmaceuticals, or pumping fentanyl into target countries to weaken them and their comprehensive national power from the inside.
The Chinese Communist Party uses unrestricted warfare to increase its relative comprehensive national power. It is the concept that connects the dots of everything from the artificial islands in the South China Sea to the BRI to getting Canadian teenagers addicted to TikTok.
What does this mean for Canadian global engagement? First, it's an acknowledgement that any good plan, something that bolsters a country's resilience and serenity, will be seen by Beijing as a loss to the PRC's comprehensive national power score and is likely to be attacked. That means anything you try to build should include a plan to protect it and block malign influence. We need a “block and build” approach.
As for Canadian engagement, let's look at one geographic area, Oceania, including the Pacific Islands. This is the contested strategic front line between Asia and the Americas. If China gains control, it can box in Taiwan, Japan, South Korea and Australia, and push America back to Hawaii, as Imperial Japan tried to do through its control of its islands during World War II. Conversely, if democracies flourish, it means the survival of a free and open Indo-Pacific. The stakes couldn't be higher.
In this context, there are broadly three ways for Canada to engage internationally. First is by bolting onto existing multilateral fora, such as the Pacific Islands Forum. Second is by joining a new consortium early enough to shape its development from the start. For example, this would have happened if we had joined Quad or AUKUS. Third is bilaterally, people to people, ideally through specific Canadian strengths.
While all three are important, it might be helpful to spend more time on bilaterals, though they are often last on the list. It would show partners that Canada isn't just a weaker version of Australia but has something special to offer.
For example, there are cultural and historical linkages between the Polynesians and some first nations, specifically the Haida. First nation and Inuit leaders know and understand the challenges of tight-knit communities living in relatively isolated locations, in many cases with complex communal land laws. A knowledge exchange program between them and the people of Oceania would be groundbreaking and would build trust and resilience, something few, including the CCP, can offer.
Another potential advantage for Canada is language. Some of the Pacific Islands speak English, some French. There's limited crossover between English and French analyses. Canada, in particular Quebec, could set up a global centre for excellence for bilingual Oceania analysis that could host visiting scholars from the region, as well as from the U.S., Japan, India and elsewhere. As an additional bonus, French citizens could study for graduate degrees in Quebec at the same rates Quebeckers pay. Students from French Polynesia and New Caledonia are already studying in Quebec. Quebec's proximity to Washington and the United Nations in New York is also a benefit. This is the sort of approach that can explain to the world “why Canada”.
The CCP will not stop in its attempts to increase its comprehensive national power, including by using unrestricted warfare. To ensure democracy continues to flourish in the Indo-Pacific and beyond, we need to block and build, ideally using the tools that are uniquely and wonderfully Canadian.
I'd like to thank you and the excellent interpreters.
7:55 p.m.
Liberal
The Chair Liberal Ken Hardie
Thank you, Ms. Paskal.
We'll now go to Ms. Horton for five minutes or less.
7:55 p.m.
Deanna Horton Distinguished Fellow, Munk School of Global Affairs and Public Policy, University of Toronto, As an Individual
Thank you, Mr. Chair.
Members of the committee, thank you for the opportunity to appear before you this evening.
I would like to focus my remarks on three major themes.
First, while the announcement of Canada's Indo-Pacific strategy was welcomed by many stakeholders, Canada should make every effort to ensure its implementation and even go further in order to reverse its flagging reputation as a reliable partner.
Second, the increasing activity of Asian states, including China, in the Arctic means that, de facto, the Arctic is part of the Indo-Pacific and Canada should be upping its game in support of Arctic development and security.
Third, Canada should be leveraging its relationship with key U.S. allies in the north Pacific, namely Japan and Korea, and should work with them not only in the Arctic but also in Southeast Asia, where they are major investors, and take advantage of their long-standing experience in dealing with China.
My first point is that Canada has a long history of coming and going in Asia. The Indo-Pacific strategy could indeed be a generational change, but its budget is not large, and it may be a challenge to keep the funds flowing in an era of budget cuts. Canada should stay the course and leverage other relationships for greater impact.
In this context I would like to make the point that Canada does very little to leverage one of its most important assets in Asia, namely our large Asian diaspora and alumni from Canadian universities. These pools of human capital would no doubt prove invaluable if we were to call upon them to get involved and to share their knowledge of Indo-Pacific markets, business norms, culture and local politics. Our representatives abroad are likely already in contact with some of these talented people, but this should be actively encouraged and supported by the Government of Canada.
My second point is that many Canadians would be surprised to know the extent to which Asian nations are implicated in the Arctic. China has declared itself to be a near-Arctic state with the development of the so-called polar silk road as a priority. Japan has a long history of Arctic engagement, in particular regarding scientific activities, polar research and innovation. With climate change and the prospect of greater use of the Northwest Passage, South Korea will also focus on shipbuilding. All are interested in mineral development, including critical minerals.
As Munk School founding director Janice Stein stated in a conference last year, the Arctic will be “the next big bucket of investment for Canada”. However, the necessary investments in Arctic infrastructure and security, in spite of the fact that this region is central to Canadian interests, are yet to happen in any significant way. I would argue that further investments in technologies such as spatial and drone reconnaissance and combining with NATO and other partners to shore up defences and build the Arctic's economic resilience would be a long-term benefit to Canada.
My third point is that Indo-Pacific strategies arguably came about as a means of countering China's growing influence in Asia. Canada joined the fray after many of the other players. I believe that in order for Canada to achieve the maximum impact on a sustainable basis, we should be allying with other democratic nations, in particular U.S. allies such as Japan and South Korea. The trilateral summit—the U.S., Japan and South Korea—that took place in August 2023 was truly groundbreaking. There is little doubt that part of the incentive for the increased level of collaboration was the push not only for enhanced communication and interoperability, but also for greater burden-sharing.
The U.S. is facing challenges on all fronts and would no doubt appreciate Canada taking on its fair share in the Arctic, which could free up vital resources for other Indo-Pacific ventures. In addition, Canada should be taking advantage of Japan and Korea's technical innovation and business expertise to expand opportunities in the Arctic and Indo-Pacific, especially in Southeast Asia.
Canada has a good deal of experience in dealing with the United States, and Japan and Korea with China. Against the backdrop of potential changes in America's leadership in Asia, Canada would be wise to strengthen these north Pacific relationships.
Thank you very much. I'd be happy to answer any questions.