Canada-China Relations Committee on Feb. 26th, 2024

[The Chair, Liberal, Ken Hardie]

I call the meeting back to order.

I'd like to make a few comments for the benefit of the witnesses and members.

Today's meeting is taking place in a hybrid format. Members are attending in person in the room and remotely by using the Zoom application.

Please wait until I recognize you by name before speaking. For those participating by video conference, click on the microphone icon to activate your mic, and please mute yourself when you're not speaking.

There is interpretation. Those on Zoom have the choice at the bottom of your screen of either floor, English or French. Those in the room can use the earpiece and select the desired channel.

This is a reminder that all comments should be addressed through the chair. For members in the room, if you wish to speak, raise your hand. Of course, we have the questioning order here, so that will work very well.

Now I'd like to welcome our witnesses on the matter of Canada's Indo-Pacific strategy.

Appearing by video conference are Dominique Caouette, professor and chair, Asian and Indo-Pacific studies, Université de Montréal, and Claude Vaillancourt, Association pour la Taxation des Transactions financières et pour l’Action Citoyenne. We also have, from the Canada West Foundation, Carlo Dade, director, Centre for Trade and Trade Infrastructure.

Each of you will have five minutes to make an opening comment.

Monsieur Caouette, we will begin with you.

[Dominique Caouette, Professor and Chair, Asian and Indo-Pacific Studies, Université de Montréal, As an Individual]

First I'd like to thank the committee for the invitation. It's an opportunity to discuss something that I think we simply don't talk about enough yet in Canada.

I'll be speaking in French, but I'm willing to answer questions in French and English.

Tonight I would like to offer five thoughts on Canada's Indo‑Pacific strategy and Canada‑China relations.

The first is the global impact of China's emergence on power dynamics. The second is power dynamics in a region I focus on, Southeast Asia, which I think is representative of the existing challenges and opportunities given that it's the neighbouring region closest to China. It has lengthy experience dealing with China. Third, I would like to talk about the role of Chinese diasporas in Southeast Asia. Fourth, I will make a connection with the role of Asian and Chinese diasporas in Canada. Finally, if I have time, I would like to talk about the intentions of Canada's Indo‑Pacific strategy and perhaps provide an initial report card.

What are the power dynamics that underlie the emergence of China and, at times, the tensions between Canada and China? We hear a lot about that these days. I think we are at a major turning point: the end of the San Francisco system.

This system was put in place in 1951, at the end of the Second World War, as a result of a treaty between the Allies and Japan. The system has shaped the regional co‑operation of Asian, Canadian and American players. It meant that the Asian and Indo‑Pacific regions were under American multilateralism, and therefore American influence. This system combined bilateral relations between the United States and certain countries led by the United States, giving allies access to its market and international multilateralism—I am thinking, in particular, of the Bretton Woods institutions—because it encouraged Asian countries to participate in international organizations and forums. In the context of the Cold War, this structure dominated international relations in Asia, having a direct and sometimes negative impact on the development of other regional initiatives, as was the case with the Indochina War.

Today, in my opinion, we have gone beyond the San Francisco system. We are in a period of declining U.S. dominance in the region. We are now seeing a proliferation of commercial and financial bilateralism that takes the form of country‑to‑country relationships or ones between certain regions and China, for example, that largely bypass the United States. This challenge to the San Francisco system's multilateralism also calls into question the power of influence of the U.S. and Canada in the region. East and Southeast Asian countries' challenge to the San Francisco treaty has generated a series of new initiatives, and China is often at the centre of them.

Rather than American multilateralism, I would like to talk about Chinese multilateralism and how China practises it. One way is China's increasing and intensifying participation in various multilateral programs. These include the Shanghai Five, the Shanghai Cooperation Organisation and the six‑party talks, in which China is playing a larger and larger role. It has joined international organizations, but also Asian regional organizations. It has set up its own international bodies. It practises a form of flexible multilateralism that involves encouraging states to participate and collaborate without necessarily interfering in their domestic policies, which is typical of China.

There have also been some troublesome attempts at rapprochement with Japan that have not worked so far. However, what is clear is that China's approach is increasingly assertive in the Southeast Asia and Indo‑Pacific regions. In a number of areas, it seems to be competing with the United States.

What kinds of tensions are going to emerge? What does that mean? That's a big debate right now among experts on the region.

Many researchers see China as the catalyst against which foreign policy choices made by countries in the region must be evaluated. Trends observed in multilateral relations are shaped by the U.S.-China duality.

Other authors are more optimistic. Despite the negative impact of this emergence, they see it as resulting in more space for dialogue. As such, they welcome the fact that some organizations are dominated by the west, or the American bloc, and others by Asia.

How should we interpret the current movement? There are two schools of thought. The first is informed by realism: China's emergence will inevitably lead to confrontation or rivalry between China and the American bloc countries. Some authors say this region is ripe for rivalry.

The second school of thought is more positive. It suggests that China's ascendance is attributable to trade and various international organizations that create space for co-operation.

China needs foreign markets for its domestic development, and other countries need China for important goods.

That means it's possible to create a community of security.

To conclude this first part of my intervention, here's what I believe is important. First, to be sensitive to issues around the Chinese perspective on its own emergence. Second, to see that spaces for socialization and interaction are positive and preferable to spaces that isolate and put up walls. Third, to understand that Canada is well positioned to play an important role in this dynamic.

I think Canada's Indo-Pacific strategy is intended to help Canada play that role, but it has certain limitations, which we can discuss afterwards.

[The Chair, Liberal, Ken Hardie]

Thank you, Mr. Caouette.

We will now go to Mr. Vaillancourt for five minutes or less. There may be a little more time if you need it, but not much more.

[Claude Vaillancourt, Author, Association pour la Taxation des Transactions financières et pour l’Action Citoyenne]

Good afternoon.

I'd like to begin by thanking the committee for inviting me to appear.

As an engaged citizen, I've been interested in international trade for going on 25 years. As a member of Action citoyenne pour la justice fiscale, sociale et écologique, or ATTAC-Québec, I'm primarily interested in free trade agreements and social justice concerns.

I believe that commercial ties with other countries fall into three categories: ties with economies equivalent to ours, ties with developing countries and ties with countries where forced labour is a major presence.

The problem with the latter is twofold. First, it creates a competitive advantage for those countries, which exploit labour to reduce production costs. However, the worst problem by far is the humanitarian catastrophe that this exploitation entails.

Canada has recognized offences against the Uighurs and other Turkic peoples in China. We're talking about genocide, forced labour and political re-education camps that employ practices such as torture. This is all happening against a backdrop of unimaginable surveillance capacity supported by technology and artificial intelligence. Moreover, Uighurs are even being harassed outside of China in countries such as Canada.

This situation should prompt a strong response from Canada because China is setting a new bar for repression, which other countries may seek to emulate.

Our options when it comes to a country as powerful and influential as China are limited. At the very least, Canada can respond by banning goods produced by forced labour in Xinjiang, but Canada is hardly exemplary on that front.

Over the past few years, 2,547 shipments of goods suspected of being made with Uighur forced labour have been banned from the United States. During that time, Canada stopped only one single shipment from China; it was eventually allowed to enter the country.

What we're seeing here is complacency and a dire need for more robust criteria for blocking goods produced under questionable conditions.

Countries such as France, Germany, Norway and the United States have adopted such policies. Canada should do at least as much as them and create its own model, a model that could, in time, become exemplary.

In the past, Canada has not been known for its strong desire to take action against the exploitation and repression of specific populations. In 2014, it signed an investment protection agreement with China despite concerns articulated by human rights advocates and the agreement's lack of reciprocity. To justify its actions, Canada has always invoked investor-state dispute settlement mechanisms, even though they favoured mining company expansion at great environmental cost to countries in the global south.

The economic liberalism underpinning the free trade agreements Canada negotiated over many years has encouraged the expansion of worker exploitation zones, such as the maquiladoras in Mexico.

[The Chair, Liberal, Ken Hardie]

Monsieur Vaillancourt, can you slow down just a little? The interpreters are struggling to keep up.

Thank you.

[Claude Vaillancourt]

Okay.

To some extent, Canada seems to be rejecting the idea that corporate profits and low prices for Canadians are more important than the fates of countless workers and environmental protection. Recognizing the Uighur genocide and that of other Turkic peoples and minorities in China forces us to rethink certain aspects of trade with that country. We have to implement truly effective measures to prevent goods produced by forced labour from ending up on our store shelves. For example, we should adopt legislation similar to the American Uyghur Forced Labor Prevention Act. We should implement mandatory corporate due diligence legislation with respect to human rights and the environment. We should transform the Office of the Canadian Ombudsperson for Responsible Enterprise into an independent office with robust investigative powers.

We also have to revisit the free trade paradigm that has shaped our economy over the past 30 years and implement industrial relocation and export replacement policies.

This will help reduce greenhouse gas emissions due to the movement of goods over very long distances. Moreover, by limiting the quantity of goods from China, we can more easily identify imported goods and reduce the risk of bringing in goods produced by forced labour. Taken as a whole, these significant decisions would signal our deep disapproval of the Chinese government's treatment of Uighurs and other peoples.

Thank you for your attention.

[The Chair, Liberal, Ken Hardie]

Thank you, Mr. Vaillancourt.

We'll now go to Mr. Dade for five minutes.

[Carlo Dade, Director, Centre for Trade and Trade Infrastructure, Canada West Foundation]

Thank you, Mr. Chair.

I would also like to thank the committee members for inviting me. It's good to be here again. It's been over three years since we last appeared before this committee.

It was also a pleasure to hear Canada West Foundation's work referenced during the committee. I would like to thank the committee members who brought that to our attention and also the witnesses who mentioned our work.

Today, you're well familiar with Canada West's work. We publish the only brief on western Canada's relations with the Indo-Pacific and with China. We've also done analysis of the Indo-Pacific strategy and convened a summit of prairie trade ministers to discuss a strategy.

I would like to switch the focus today and talk about a comparative analysis of the strategy, based on my previous experience as executive director of Canada's Latin America think tank during the time of the implementation of the Americas strategy. Had I realized that the minister responsible for the strategy was going to be in the room, I might have prepared a bit. I'll take my life into my hands and try to make some comments regardless.

I'm not going to talk about LNG. The government has already been excoriated on that by previous witnesses, so that frees me to take a bit of a different tack.

On the Americas strategy, think about this as a foreign ministry official back at headquarters in their country or capital, or think about it as an officer assigned to Canada from a foreign country to follow the Indo-Pacific strategy. One of their first steps to understand and analyze the current strategy would be to look at Canada's previous attempts to have a framework. I would take this tack and pull out three things from the history of the Americas strategy that may be helpful in your study and your recommendations, hopefully, and two or three observations for things to consider as you formulate recommendations.

The first difference between the Americas strategy and the Indo-Pacific strategy is the time frame. You've heard Ambassador McKay and ADM Epp describe the strategy as a generational response to a generational challenge. This is language that we didn't hear with the Americas strategy and we don't traditionally hear in Canadian foreign policy. I'll tell you, from talking with foreign officials and with think tanks in the region, that this statement really got people's attention. The time frame difference was a huge signal.

The second signal was the resources that were set aside. Putting aside serious money was very important.

The third thing that the strategy did was talk about the inevitability of China. I'll spend a couple of seconds on this aspect.

The Americas strategy was in some ways seen as optional for Canada, but China is not optional. India is not optional. What I mean is that it's not because they're our second-largest trade partner; that is not the point of China's inevitability. You've heard other witnesses say that China is the world's second-largest economy. It's the leading trade partner with 120 countries, not just in the Indo-Pacific, but with Brazil, Argentina, Chile, Paraguay, Uruguay, Peru and Panama. In our own hemisphere, if you're trading, you're going to run into China.

China spent a trillion dollars building infrastructure that receives and moves our goods when we ship them abroad. We struggle to build trade infrastructure. Ever since the Asia-Pacific gateway, which was a highlight for Canada, and the highest point of our trade infrastructure rankings, we've struggled. China is responsible for the infrastructure on the other side that moves our goods, so even if you tried to run away from China, you're going to run into China, and you're probably going to be doing so on roads built by China.

The last point is capacity. Under the Americas strategy, there was not much money for new capacity for Canadians, not just for business, but for the full range of Canadian stakeholders to be able to engage in the region. With the Indo-Pacific strategy, we have those investments: not just trade commissioners and not just an academic centre, but money to bring the full range of Canadian actors up to speed. Again, if you're going to run into China, even if you try to run away, you need to have the full range of Canadian actors that will run into China better prepared. We tend to bring up expertise from the U.S. to do this, and I think the Indo-Pacific strategy can correct that. We need our own expertise, our own analysis and our own experts analyzing from Canadian perspectives.

The last point is on the North American trade negotiations. We had the Americans scaring us away from engaging China at the very same moment that the Americans were negotiating their own trade agreement with China, one that positioned them to take market share and money away from western Canadian producers.

With the Americans, we co-operate on security and intelligence, but if there's money on the table, we need to have the ability to defend our own interests with them, and that is certainly the case on China. We've seen it in the past, and with India we may be seeing the same thing.

I'll leave it there and welcome your questions. I hope that was helpful.

[The Chair, Liberal, Ken Hardie]

Thank you very much, Mr. Dade.

Now we will go to our questions, and we'll begin with Mr. Kmiec for six minutes.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Thank you, Mr. Chair.

I'm going to begin by noting that Minister Freeland is not appearing today, as she said she would many weeks ago. It's been many months since she was asked by this committee to appear on the Asian Infrastructure Investment Bank.

I want to put on the public record the profound disappointment on the Conservative side that she has chosen to not be here again when she would have known ahead of time that she expected to be somewhere else and did not provide a new date on which she would appear to testify before the committee about exactly what's going on with Canada's participation in the Asian Infrastructure Investment Bank.

Mr. Dade, I'm going to have to ask you to excoriate the government on LNG, because back in December 2022, you wrote an opinion piece with the CEO of the foundation, Gary Mar, in which you said, “From a western Canadian perspective, there are two major misses in the strategy. There is no mention of exporting LNG.” You went on to say, “Instead, the strategy pivots to renewables and hydrogen.”

Others have excoriated the government. I have to give you a chance, as a westerner, to excoriate the government here as well.

[Carlo Dade]

I was really hoping to use the time for other things.

We have a strong stance. I think everyone knows the logic of that, and the problems with that have been described by others. Dr. Lilly is an honorary westerner, so I could attribute this to her to some degree, but yes: Time and time again, we hear from allies in the region that Canada claims it wants to help and Canada claims it wants to be involved in the region and Canada claims to want to contribute, so why, then, are we hoarding the one thing they need the most? Why are we hoarding energy?

We're trying to explain to folks that we're not hoarding it, that there are just these political difficulties. Folks say, “We're getting your gas from Mexico. Costa Azul has come online in Baja California in Mexico. If Mexico can send us your gas, why can't you?”

It's a really difficult position to try to defend. We worry about it from the security perspective and we worry about it from the competitive perspective. Once again, we see the Americans eating our lunch. They're taking it from us off the table and eating it. If we don't produce it, someone else will.

We're going to make greenhouse gas emissions worse by having places like Senegal, which has just discovered 11 trillion cubic feet of gas, exporting gas, rather than having it come from Canada. We're doing no one any favours with this. We're probably harming the environment.

How's that for excoriating, even though I didn't want to?

[Tom Kmiec, Conservative, Calgary Shepard, AB]

I'd give you more time, as a westerner, and you can keep doing it.

In January 2023 you also wrote a critique in The Globe and Mail of Canada's Indo-Pacific strategy, specifically for not making the proactive expansion to the CPTPP a priority focus area. However, in 2024, Canada is taking over as commission chair for the CPTPP.

I'd like to hear from you, as a westerner. At the end of this year, what does failure look like and what does success look like? What are the metrics? What do you think the government has to do right, and what will failure look like by the end of the year if it doesn't do that?

[Carlo Dade]

Let me start by saying we're huge fans of the Indo-Pacific strategy. We think it corrects a lot of things that were missing, or builds upon some of the successes in the Americas strategy, so we have very specific complaints.

However, on the TPP, what we need is a degree of modesty. Trying to exercise leadership at the TPP would be failure. The region does not want Canada's leadership. The region does not need Canada's leadership. The region wants Canada to put its shoulder to the wheel and do the hard work of improving the agreement.

There's a review of the agreement. What needs to be strengthened in the agreement? What needs to be changed? We have to start showing up and doing the unglamorous hard work of building the agreement and doing the nuts and bolts.

We're still digging ourselves out of the hole that the Prime Minister dug in Da Nang when he embarrassed Japanese Prime Minister Abe and had the Australians cursing us out in public. We're rebuilding from that. You don't do that with bold claims of leadership. You do it by showing up and doing the hard, unglamorous work. That's what success looks like. Failure looks like trying to claim leadership at a summit when people neither want it nor need it from us.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

You talked about the hard work that needs to be done this year as the chair of the CPTPP. What are some of those parts that the government should be focusing on? This year, what should those announcements be of work actually done?

[Carlo Dade]

On the Indo-Pacific strategy, separate from the TPP, I'd expect the government to release an update on the strategy and implementation steps. If that doesn't come out, then I'd be worried. It's time for the government to be able to show what it's done and to put out a report card, in essence. I'd look for that.

On the TPP itself, I would look for steps that would allow Australia to continue looking at accession. How are we going to set the criteria for other countries to join? That will not be done at this meeting, but we can begin the work and make sure that the Australians are well positioned to continue it. It's not glamourous and it's not going to get headlines at CBC or in the Globe, but that's the type of hard work.

There's a review of the TPP. What concrete changes do we need to make to the agreement in terms of the rules as they've been working or not working? Those little things are what I would hope would come out of Canada's being the chair.

[The Chair, Liberal, Ken Hardie]

You are out of time, Mr. Kmiec.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Thank you, Mr. Chair.

[The Chair, Liberal, Ken Hardie]

We will now go to Mr. Oliphant for six minutes or less.

[Rob Oliphant, Liberal, Don Valley West, ON]

Thank you, Mr. Chair.

Just as Mr. Kmiec put on the record, I want to make sure that the viewers at home—of whom there may be many thousands—are very aware that the Deputy Prime Minister was unable to attend tonight's meeting because she has had travels to Ukraine and Poland. I can't confirm Latvia, but I understand that it's also perhaps on the agenda. This is the second anniversary of Russia's illegal invasion into the sovereign territory of Ukraine.

The Deputy Prime Minister, the Prime Minister and the Minister of Defence are standing in complete solidarity with the people of Ukraine, recognizing that the war that they are fighting is also on our behalf.

I'm very proud of our deputy prime minister, who is fluent in her Ukrainian language skills, which is a huge value added to ensure that Ukrainians understand that Canada will continue to stand with them. We are disappointed as well that she wasn't able to be here. However, she has very clearly said that she understands her role as being accountable to Parliament. She will attend a future meeting when we can schedule it.

I just want to make sure that this is understood, because Canadians do wonder about the Conservatives' support for Ukraine, as they have failed to support Ukraine in a free trade agreement, which was the request of the Government of Ukraine and the people of Ukraine. Now we are hearing that a brief appearance at this committee is more important than standing with the people of Ukraine, which our government will always do. I'm glad to put that on the record for those watching at home.

I have one brief question for Mr. Dade.

You said that witnesses excoriated the Government of Canada with respect to LNG. Are you aware of the testimony given by the ambassador of Japan to our committee two weeks ago when he spoke very positively about the future of LNG exports, which would be available for the Asia-Pacific region, particularly Japan, and about his looking forward to the opening up of that capacity for Canada to provide energy for Japan?

[Carlo Dade]

Yes, I am.

[Rob Oliphant, Liberal, Don Valley West, ON]

Okay.

[Carlo Dade]

I read all the committee testimony before coming in.

[Rob Oliphant, Liberal, Don Valley West, ON]

Thank you.

I want to go to Mr. Caouette now.

Professor Caouette, thank you very much for your testimony. During the testimony, I was reminded of my first-year course in economic history with Professor John Munro. He looked at the ebbs and tides of economic power and primacy of various countries over centuries. In your analysis around the power shifts towards China, as well as the huge challenges that Canada faces with respect to those changing dynamics of where money is, where money lies, you also acknowledge that there's a reality of China's position.

I want to give you a chance to talk further on the emerging China—both the dangers that it presents to Canada, including challenges, as well as the opportunities that it could present in the future for Canada and how we can best prepare ourselves for a world that is in flux over the next 50, 100 or 150 years.

[Dominique Caouette]

That's a broad question, but it's a relevant question.

In political science, we talk about the tectonic plates moving. I think we're at a moment such as this. The Indo-Pacific strategy was a step forward in terms of defining more clearly what Canada can do. It also was much awaited for years in the region. Canada had been involved, but in a very different time. Sometimes in the past, Canada was very present. In the 1980s, there were times that it would withdraw. Then the Indo-Pacific strategy tried to make a position that it would engage for a continuous time in the Indo-Pacific region.

Canada has to understand its role in this power shift. Canada was considered a middle power, but we have to accept that the bloom is off that rose. The region now has several rapidly emerging countries. Southeast Asian countries, China's immediate neighbours, have had to learn to navigate that emergence. I think we have a lot to learn from Singapore, Malaysia and Indonesia, which have an ongoing dialogue with China.

I also want to comment on the standards that my colleague, Mr. Vaillancourt, talked about. In places like Myanmar, there have been human rights violations, forced labour camps and ill-treatment of ethnic groups. There were sanctions, but channels of communication have remained open. The most important thing Canada can do is put its priorities out there, and that's what the Indo-Pacific strategy does. For example, sustainable development is an important issue. Right now, China is the world's leading electric vehicle manufacturer. It is also the world's leading solar panel producer. That means there are opportunities for co-operation.

It's also important to work with allies rather than confront China directly. This work happens within distinct cultural contexts. The Association of Southeast Asian Nations, for example, operates on a consensus basis. However, many have tended to approach regional organizations in Asia the same way they did the European Union or the North American Free Trade Agreement, which operate according to other norms. Above all, we must be present. We must take part in those dialogues without broad condemnation and without causing the region's representatives to lose face.

[The Chair, Liberal, Ken Hardie]

Mr. Caouette, I'm sorry. I have to interrupt. Mr. Oliphant's time has expired.

Perhaps Monsieur Bergeron, in his six minutes, will pick up where Mr. Oliphant left off and have a further discussion with you.