Thank you, Chair. I'm happy to be acknowledged as the closer today.
Thank you to the chair and the members of the committee. Thank you for the opportunity to speak to the standing committee during this extraordinary period.
This evening I would like to highlight some reflections, from my perspective, on how the emergence of COVID-19 has heightened some pre-existing risks to Canada's critical supply chains and consequently reinforced the need to deeply rethink not only the self-sufficiency of our supply chain, but also the sources we rely on for such materials.
As my background and expertise focus more on foreign affairs and security, I would like to tailor my remarks around that lens.
First, it is important to reiterate that while we are in an unprecedented time and grappling with a global pandemic, the crisis has also provided a moment of clarity for many countries, Canada included, on the importance of secure supply chains. Indeed, the lockdowns around the world induced by COVID-19 have revealed important weaknesses in supply chains for many multinational companies, including those that are Canadian and that Canadians rely on for critical supplies such as personal protective equipment, or PPE.
Indeed, acquiring PPE and ensuring a stable supply chain has been an enormous challenge for Canada since the pandemic was declared in March of this year. This has been particularly challenging because one of the main source countries for this PPE has been China, where the pandemic originated. Many Chinese companies have been engaged in horse-trading and often disingenuous auctioning of such supplies, in an apparent move to take advantage of an international market for PPE and other medical supplies that cannot be satiated in the near term as a result of the pandemic.
As some have aptly described it, the procurement of supplies in the COVID-19 era has turned into the wild west of procurement practices. Ethics and safety are often pushed to the sidelines in favour of rapid transactions and profit maximization.
Of course, China has not been the only challenge, as was mentioned earlier from other witnesses. There have also been critical strains in our procurement of materials from the United States—a key ally. There will be a time and a place to look back at procurement practices and particular episodes, such as Canadian planes returning from China empty-handed last month.
However, the more essential question that we need to think about, and think about imminently, is how Canada, both our government and our companies, can and should respond in order to emerge from this pandemic with stronger and more reliable supply chains. On this point, I would like to make a few observations and recommend guidance markers going forward.
First, we must prioritize safety in our supplies. This means, as others have mentioned as well, dealing with partners and allies who are committed to transparency, high-quality materials and unimpeded market practices. We can no longer wager bets on supply chain sources that are antithetical to our principles and our interests. More concerning, however, is when this reliance on questionable supply chains endangers our national security.
Second, the COVID-19 era has been instructive, not just as a moment of clarity on these vulnerabilities, but also on the opportunism of many other state actors—and often the state-owned or state-backed enterprises associated with them—that are intent on taking advantage of the economic stress that the pandemic has caused to a range of industries and companies, in Canada as well as our allies. Many such companies have found that their market share and value have plummeted over the past few months.
There are foreign state-backed investors who are voraciously looking at acquiring such companies in Canada and elsewhere at bargain basement prices. One such example would be the recent acquisition by the Chinese gold giant Shandong Gold Mining Co. of the Canadian company TMAC Resources.
Third, the geopolitical lessons from COVID-19—and there will be many that transcend our discussion today on supply chains—necessitate a robust, dynamic, engaged and interests-based rethink of Canada's foreign policy strategy. From my perspective, for example, we can't separate supply chain resiliency from other security risks, be it in the maritime realm, infrastructure building—which has been discussed a bit today—the cyber domain, or the nascent battle over technology, AI and the Internet of things.
As I noted at the onset of my remarks, Canada is not alone in grappling with this challenge, and it will be imperative to work ever more closely with our friends and allies, such as the United States, Australia, New Zealand, Japan, South Korea, the United Kingdom and the European Union. It will also be important to work with emerging partnerships such as India, ASEAN and so on. Moreover, Canada often underestimates its ability to build resiliency away from non-transparent markets. The imperative to diversify to our like-minded friends and allies in the Indo-Pacific, for example, has never been stronger.
In conclusion, this moment of challenge has brought clarity of purpose and should be seen as an awakening to reorient and rethink the nature of our partnerships and priorities overseas and to build an appropriate strategy to underpin this.
Thank you again, Mr. Chair and members.
