Foreign Affairs Committee on Dec. 11th, 2012

[The Chair, Conservative, Dean Allison]

Good morning, everyone.

Pursuant to Standing Order 108(2), our study of Canada's Arctic foreign policy will get under way.

With us here is James Manicom, research fellow, global security, with the Centre for International Governance Innovation. Mr. Manicom, thank you, and welcome.

We have a colleague from Yukon College via video conference from Whitehorse, Yukon. He is Stephen Mooney, director of cold climate innovation.

There's a three-hour time difference, right?

[Stephen Mooney, Director, Cold Climate Innovation, Yukon Research Centre, Yukon College]

Yes, so I am wearing my pyjamas.

[The Chair, Conservative, Dean Allison]

It's a quarter to six, right?

Thank you very much for being on the call with us this morning. We realize that three hours is quite a difference at this time of the day.

I'm going to start with you, Mr. Mooney. We'll have you present your opening statement for about 10 minutes, and then we'll go to Mr. Manicom, who is here. After that we'll go back and forth around the room to follow up with questions for the next 55 minutes.

Mr. Mooney, thank you very much for being here. I'll turn it over to you, and you can give us your opening statement.

[Stephen Mooney]

Thank you for letting me share my perspective on opportunities and interests today.

First, I'll give you a little about myself and my background. I have called the Yukon my home for 42 years. I grew up in Whitehorse. I graduated from high school in Whitehorse. Like most Yukon students, I had to leave the Yukon for post-secondary education. But I have returned. I am an industrial engineer with a computer science background. I have been certified as a project management professional. Prior to my role with Cold Climate Innovation, I spent seven years working in the field of telecommunications across northern Canada in product development, project management, and marketing. I have also spent seven years developing and implementing computer software throughout the United States.

Now I'll speak about our centre. The Yukon Research Centre, located at Yukon College in Whitehorse, is Canada's largest research and innovation facility north of 60. The YRC provides a broad array of programs and services with multi-year public and private funding. The YRC is poised to support Canada's chairmanship of the Arctic Council. I would like to share a few examples of our contribution for today's discussion.

The YRC integrates itself into all aspects of the pursuit of resources and sustainable development in the Yukon and the Arctic region. We are involved with information communication technology, mining, alternative energies, agriculture, housing construction, industrial applications, transportation systems, permafrost engineering, waste reduction, and synthetic fuels. In essence, the YRC initiatives can be pursued in a manner that improves the health and well-being of people who deliver northern economies. A recent example is our resource and sustainable development for the Arctic program, or ReSDA. ReSDA is designed to find ways to ensure that a larger share of the benefits of resource development in the Arctic stay in the region with fewer costs to northern communities.

I would like now to profile two major programs within the YRC. For the past 12 years, the YRC's northern climate exchange has been a leader in the north at building the capacity of northern communities to identify hazards such as permafrost and flooding for adaptation to climate change. Several rural communities in the Yukon have benefited from these climate change-related reports, and the city council of Whitehorse has adapted these findings into their future community planning. Since 95% of Yukon's electrical generation comes from hydro that is distributed through a stranded grid, we also partnered with a local energy provider to study the effects of climate change on the glacier-fed Yukon River.

Recently, Cold Climate Innovation, or CCI, under my leadership, was established through financial support of the Yukon government economic development branch. We are focused on the development, commercialization, and export of sustainable cold climate technologies and related solutions for northern regions around the world. CCI supports the partnership between applied scientific researchers, industry, and government dedicated to addressing cold climate and technical issues affecting northerners. The mandate of the CCI is to stimulate economic development in the Yukon through cold climate innovation and technologies. We focus on these two statements to build an economy in the north, by the north, and for the north.

I have come to understand that the CCI business model, an innovation sector that I represent today, does not fit into the traditional or standard definition of economic development in the north. In building the CCI, I have come to believe that innovation is the biggest opportunity space in the Arctic economies. As an example, with Prime Minister Harper's announcement of the Canadian High Arctic Research Station in Cambridge Bay, we assessed this opportunity and offered support with four separate initiatives, which include: using our proven methodology to conduct a community energy audit that will establish a comprehensive baseline on the energy usage within Cambridge Bay; new technologies for wind power installation in remote communities; wind and solar monitoring; and a very important heat recovery ventilation study that will place up to 10 HRV units from three Canadian manufacturers in various communities within all three territories.

The project goal is to develop specifications for the most effective and efficient HRV and to challenge Canadian HRV manufacturers to build the best-of-class HRV. It will be used in the new CHARS facility and sold globally.

It surprises some to learn that CCI is also active internationally. The Department of Foreign Affairs and International Trade has been a great partner to the Canadian International Centre for the Arctic Region in circumpolar affairs. We partnered with DFAIT on a mission to Scandinavia in 2010 and developed a joint initiative with a Danish technical university for joint research projects. It has resulted in their students attending a Yukon-based master's and doctoral-level course on advanced highway design through permafrost. It is delivered each spring in Whitehorse and includes a valuable field trip to the Alaska highway permafrost test facility, where students and professional engineers learn adaptive techniques. Through our partnership with the University of Laval in Montreal, this permafrost course has earned the attention of Russian and Chinese interests, whose students will likely attend the May 2013 course.

I would also like to highlight our efforts to bring the first continuous feed plastics-to-fuel machine in North America to Whitehorse. In partnership with Blest Co., in Japan, and with financial contributions from the Canadian Northern Economic Development Agency, we are developing a ruggedized machine that can convert 10 kilograms of plastic to 10 litres of fuel every hour. This fuel will be used to heat buildings while reducing landfill requirements in northern communities.

Yukon College is also proud to be the first institute in the Canadian north to be eligible for grants through the Natural Sciences and Engineering Research Council of Canada. We have been successful in receiving funding for a three-year study on mine remediation using biochar and for a five-year industrial chair on the mining life cycle.

Since wild-harvested foods represent a large portion of northern diets, the Arctic Council may also be interested to know that we have submitted an NSERC application, under the college-university Idea to Innovation fund, to work jointly with the University of Toronto and an industry partner to develop an airborne mercury measuring device. It is our goal to have this product developed, tested, and commercialized prior to the United Nations making it mandatory for countries to monitor airborne mercury particulates.

These are just a few of the 27 projects, totalling $1.8 million in public and private funds, that Cold Climate Innovation completed last year.

It has always been our goal to have an industry partner and a post-secondary master's or doctoral student involved in all of our projects. By doing this, we help solve industry problems while supporting the retention of our knowledge economy.

I would like to highlight again that innovation is the untapped opportunity space in northern economies. The YRC can help showcase Canadian expertise and can collaborate with other circumpolar communities on an exchange of tools and technologies to prepare for a changing Arctic.

Thank you very much.

[The Chair, Conservative, Dean Allison]

Thank you very much, Mr. Mooney.

We will now turn it over to Dr. Manicom, who is here with us. You have 10 minutes, sir.

[Dr. James Manicom, Research Fellow, Global Security, Centre for International Governance Innovation]

And now for something completely different.

[Voices]

Oh, oh!

[Dr. James Manicom]

Thank you very much for having me, and thanks for the invitation.

I'm relatively new to the study of the Arctic, certainly compared to some of the other speakers who have come already. My own background is in the study of East Asian territorial politics and East Asian foreign policy—East China Sea, South China Sea—Chinese foreign policy, and Japanese foreign policy, which is actually what drew me to Arctic studies in the first place.

I work at the Centre for International Governance Innovation, or CIGI. We basically have two Arctic projects on the go. One looks at East Asian states and their interests in the Arctic and Arctic governance, particularly the Arctic Council. The other one relates to capacity-building in the North American Arctic, so Arctic corridors, a project that's supervised by John Higginbotham, who used to be in government.

I have recently travelled to Asia as part of the former project, so I'll talk to you today about those issues. I'll talk about East Asian states, the Arctic Council, and their interests, which is what I meant by “something completely different”. I'll start with their interests in the Arctic, their perceptions of Arctic geopolitics, their views on the permanent participants in the Arctic Council, and I'll try to touch on what this might mean for their bids for permanent observership.

As far as I can tell, there is no hidden Arctic agenda in China, Japan, and South Korea. Their interests are consistent with those of what you would call maritime states. They are predominantly commercial in orientation. They are export-oriented economies, so they obviously have an interest in the savings associated with Arctic shipping. The Northern Sea route is particularly appealing, not only for liquefied natural gas imports from Norway, as was recently reported in the media, but also for exports with the EU and improved trade relations with the EU. Furthermore, all three have very large and very competitive global shipbuilding industries. They are thus interested in Arctic shipping because it portends a greater demand for ice-strengthened vessels and also a new class of vessels entirely.

The prospect for LNG imports from Europe brings me to the second interest of East Asian states: energy and resources. Japan and South Korea are the world's largest two importers of liquefied natural gas. Japan's imports will continue to grow dramatically, as long as its nuclear reactors remain shut down, and that appears to be the case for the medium term. China is likewise interested in resource and mineral exploitation. All three East Asian states have similar energy security strategies that rely on a close relationship between the state energy companies, which may or may not be state owned, to procure access to resources worldwide. At the same time, they have diversified both energy type and the geographic location of their imports—diversifying from the Middle East to Latin America to Africa to the Arctic. The Arctic is important for that reason.

A final commercial interest relates to fisheries. These three East Asian states are the world's leading distant water fishery states, along with the EU and the United States, and demand for fish products in these states is strong. Furthermore, there is considerable overcapacity in their domestic fishing industries, particularly in China, so the opening of a new fishing ground in the Arctic would obviously be of interest.

In a non-commercial sense, their main interest is climate change and climate change science. The Arctic is perceived not only as a place to learn about the effect of and rate of climate change, but also a place to learn about the source of climatic events in East Asia. One Chinese scholar I spoke to drew a link between the then-lowest recorded ice level in the Arctic, in 2007, and the ensuing particularly cold winter in southern China in 2008.

When it comes to Arctic science, it's important to recognize that these states consider themselves to be polar states, not Arctic states. They all have considerable research expertise in polar research and in Antarctica. Furthermore, they see themselves as in some ways being more capable at polar research than Arctic states. One Korean scientist told me there are things they can do up there that we Canadians can't do.

Scientific research is seen to be a collaborative effort. They're all parties to the Svalbard Treaty. They all have research stations at Spitsbergen, and they have considerable experience in Antarctic research. One telling figure is that both China's and South Korea's polar research budgets are weighted 80:20 in favour of the Antarctic.

Turning to their perceptions of Arctic geopolitics, East Asian scholars of Arctic politics, who then in turn report to their governments, have done their homework. They have read their Scott Borgerson, their Rob Huebert, who was supposed to be here, and their Michael Byers. They are all aware of that “resource race/militarization of the Arctic” perspective that was so popular for three or four years. I think they recognized that much of that was overblown. They have read the Government of Canada's Arctic policy documents. They find them reassuring. The Russian flagpole incident in 2007 stands out, but they recognize Arctic geopolitics as being largely cooperative. As one South Korean colleague pointed out, Arctic geopolitics is nothing compared to their neighbourhood.

I would also point out that East Asian scholars are as entrepreneurial as their North American counterparts—including me—which means that scholarship is sometimes actually punditry, designed to attract attention rather than inform.

I raise this because I want to talk about the statement by Admiral Yin Zhuo in the Chinese navy in 2010. He made a statement to the effect that the Arctic was the common heritage of all mankind. That remark was quickly picked up by another pundit in North America, who turned that remark into a Chinese claim to the Arctic. That misperception has, unfortunately, endured.

Admiral Yin is retired. He doesn't speak for the Chinese government, any more than Lewis MacKenzie does for the Canadian government at least. Chinese scholars I spoke with raised concerns about the effect that remark had on North American academic treatments of China's Arctic interests.

I think Zhuo's statement, though, does reveal a concern on the part of East Asian states. East Asian states see the Arctic as an ocean, one from which user states cannot be excluded as a matter of international law. This concern about exclusion colours their interpretation of governance in the Arctic.

I suspect that's really through a disconnect between what we mean when we say “Arctic” and what they hear. When we say “Arctic”, we often mean Canada's northern lands and Canada's claimed waters. East Asian states hear “Arctic Ocean”. They are focused on Arctic waters. Issues to do with Arctic land in their perspective are bilateral issues, whereas Arctic Ocean issues are multilateral issues.

Serious concern exists in East Asia that non-Arctic states are entitled to a say in Arctic governance, since as user states they will be among the governed. The fact that the Arctic is an ocean means that these states are entitled to use ocean space for navigation, military research, and intelligence gathering. In the area beyond the exclusive economic zone, they are entitled to fish, and in the area beyond national jurisdiction, beyond the extended continental shelf, they are entitled to conduct marine scientific research and resource extraction.

As the final point, I would point out that both China and Japan are leading states in deep-sea mining. China, in particular, is seeking greater influence at the International Seabed Authority, which regulates mining in the area beyond national jurisdiction. East Asian states may view efforts by Arctic states to regulate the area beyond their national jurisdiction as totally inconsistent with international maritime law.

When it comes to governance, some East Asian scholars believe that Arctic Council permanent observership may be irrelevant. They recognize the relative impotence of the status, and suggest that it will be tough to actually convince their governments to make the bid again if rejected this time around. All three states have considerable capacity and are, in their view, not used to sitting at the back of the room without a microphone.

This doesn't tell us much about what would happen if their bids for permanent observership were rejected in the spring. One scientist I spoke with was confident that even if they were not a permanent observer, he could still do the work that he needed to do to engage in and collaborate with Arctic research. But there are other forums for that—at the International Arctic Science Committee, at the Pacific Arctic Group, and so forth. There are other institutions in which they can engage in Arctic science.

In contrast, others point out that they have quite legitimate Arctic interests, which I outlined above, and that they will pursue these regardless of whether or not they gain permanent observership at the Arctic Council. They argue that there are other forums available to pursue these interests, including the International Maritime Organization, the International Seabed Authority, the Food and Agriculture Organization, the Commission on the Limits of the Continental Shelf, and even the UN.

Finally, I think the concept of the permanent participants is not well understood in East Asia. There is a growing recognition in East Asia that permanent participants in the Arctic Council...the transnational indigenous groups are an important part of Arctic governance. That understanding is strongest amongst East Asian scholars and scientists who have attended Arctic Council meetings and/or working group meetings. I don't think, though, East Asian states have a clear idea of how to engage with the permanent participants.

This is probably an experience thing. Governance in East Asia is very heavily state-based. Regional states make a point of not commenting on the internal affairs of other states. But of course in the Arctic Council, permanent participants are at the table. They represent transnational peoples, oftentimes, and have tremendous moral authority.

I say that PPs are not well understood because my discussions in East Asia suggest very little research capacity is allocated to understanding how they work, what their role is, and how East Asian states might engage with them. But I think that will change in the very near future.

What does all this mean for these states' bids for permanent observership in the Arctic Council? My opinion is that they should be welcomed. Functionally, they bring capacity, such as money and polar research expertise. Conceptually, if a body is going to make rules about an area, it makes sense to have users in the room. Given the lack of capacity of Arctic states to enforce the rules they make in the Arctic, engagement with the users might be the best way to ensure compliance.

I have two final comments on the implications for Canada's Arctic foreign policy. First, I think there's a need to get ahead of the curve on some issues. I echo the statements of Michael Byers when he was here a couple of weeks ago that we need to get ahead of the fisheries issue before it emerges. This means engaging with the countries that will do the fishing, including East Asian states. There's nothing terribly dissimilar, as far as I understand it, about Arctic fisheries that would make their emergence as an unregulated fishery different from any other fishery in the world, meaning they would be overfished to the point of collapse in the absence of regulation.

Second, I think it's worth making the Arctic Council an inclusive organization for the reasons I outlined above. This does mean asking tough questions, such as who should not be a member of the Arctic Council. Does India have a place, for instance? What about flag-of-convenience states such as the Marshall Islands or Liberia? Does Liberia have a place in the Arctic Council?

The alternative option to exclude non-Arctic states that have Arctic interests risks alienating those states that have other institutional means at their disposal to pursue these interests. The Arctic Council does not have a monopoly on Arctic governance.

Thanks for your time. I look forward to the questions.

[The Chair, Conservative, Dean Allison]

Thank you very much.

We're going to start the first round. Mr. Dewar and Mr. Bevington, you have seven minutes.

[Paul Dewar, NDP, Ottawa Centre, ON]

Thank you, Chair, and thank you to both of our witnesses today.

I will kick off with a question to Mr. Manicom, and then I will hand it over to my colleague, Mr. Bevington.

You have been fairly explicit. You think it's a good idea to have the EU and China as permanent observers at the Arctic Council. For the record, is that correct?

[Dr. James Manicom]

Yes.

[Paul Dewar, NDP, Ottawa Centre, ON]

I'm tempted to ask you some questions about the South China Sea issues, because they're very current and we haven't examined them, but that will be for another time perhaps.

One of the things I think is important to put on the record is to have everyone in, so we have engagement in a multilateral approach. That's why we think it's a good idea to invite them as permanent observers.

The other issue is that it has to be put in context. Recently Canada was shut out of the East Asia Summit.

Given that you're an expert in this area, could you explain your belief that we should be engaged with China and the EU on the Arctic? If we are seen as engaging more multilaterally with Asian countries—obviously China has a role here—would this also benefit further engagement that would help us gain a seat at the table at other forums, in particular the East Asia Summit?

[Dr. James Manicom]

That's a very good question.

I think the shortest route to joining the East Asia Summit is to engage with East Asian states, particularly the ASEAN states. ASEAN drives the pace of regionalism in East Asia. The way into the East Asia Summit is to engage ASEAN, not so much China, Japan, and South Korea. ASEAN has the normative veto on who gets in and who doesn't.

With that understanding, very few ASEAN states, with the exception of Singapore, have made an argument about becoming Arctic states. I don't think that being conciliatory or welcoming on the Arctic Council side advances us very far in the East Asia Summit.

The ASEAN chair was clear that what he wants from us is more regional engagement. Whether or not we could trade Arctic Council support for support in the EAS is a separate question. Possibly; I don't know. That might be worth exploring, although we'd be getting more than they would because a permanent observer on the Arctic Council doesn't get to do or say much, whereas as a member of EAS, you do have a bit more say.

I'll make one quick point on the South China Sea. It's not worth comparing China in the Arctic and China in the South China Sea. China has a territorial claim in the South China Sea, making the South China Sea a priority for the Chinese government. The Politburo Standing Committee does not discuss the Arctic, so China does not perceive the Arctic and the South China Sea through the same lens.

[Paul Dewar, NDP, Ottawa Centre, ON]

That's very helpful.

I'm going to pass it on to my colleague.

[Dennis Bevington, NDP, Western Arctic, NT]

Thank you to the witnesses. I appreciate you being here and also coming by video conferencing, which is a great medium for northerners.

Mr. Manicom, I'm interested in your views on the development of the Chinese icebreaker fleet. They've been successful this summer in picking a route across the North Pole for taking their ship through there, but they've also got plans for a much larger fleet. I'm also interested in Korea and Japan and what they're building right now for capacity, for use in the Arctic.

[Dr. James Manicom]

I don't have the actual numbers for you. The main difference between the Chinese icebreaker fleet and the South Korean and Japanese icebreaker fleet is that the South Korean and Japanese icebreaker building capacity can be allocated for private use. When companies want to build Arctic ships to do, say, LNG shipping in the north, they will likely task a South Korean company because South Korea makes the best ships. Chinese icebreakers, by contrast, are likely to be used either for Chinese government research purposes or will be flagged by China, so they will be shipping Chinese goods on a Chinese ship, Chinese crude, across the Arctic.

As to what China intends to do with the fleet, I suspect it's related to improving research capacity and the transportation of goods.

[Dennis Bevington, NDP, Western Arctic, NT]

Okay. Good.

On resource development, right now in Canada's Beaufort, which is the most likely area for oil and gas development, we've given out a number of leases to various large companies and extremely small, speculative companies. Interestingly enough, Canadian leasing policy has no qualifications on transfers of a lease. Leases can be transferred from those that take the lease to another company really just by notification of the minister.

Do you see that as something we should be looking at for the future? Is there going to be great interest by these countries in perhaps pursuing leases in the Arctic in our waters?

[Dr. James Manicom]

I was told by a Chinese Arctic academic that there is considerable interest by small Chinese mining companies, so not government-owned but privately owned Chinese mining companies, in Arctic resource exploitation.

[Dennis Bevington, NDP, Western Arctic, NT]

I'm talking about offshore oil and gas.

[Dr. James Manicom]

Yes. He didn't specify whether it was offshore or not, but this is in the context of discussing who makes Arctic policy in China, if in fact there is a Chinese Arctic policy, which I don't think there is. I was interested in asking about big state-owned companies. He said yes, they're interested, but the small Chinese mining companies are actually more eager, because from their point of view they confront similar incentives to small western oil companies. They need to lock in reserves. They need to be a bit more risk-accepted. I wouldn't be surprised if there was interest from small Chinese mining companies in those leases.

[Dennis Bevington, NDP, Western Arctic, NT]

Here's another question. If we see the Canadian agenda on the Arctic Council focusing on national issues—it's also very interesting, and for northerners, it's fascinating—would that mean that the Arctic Council would lose its impetus to deal with the larger international issues of shipping, fisheries, pollution prevention, those things that are really international in scope?

This is a key question right now because there are two points of view in terms of the direction we should be taking with our chairmanship.

[The Chair, Conservative, Dean Allison]

That's all the time we have, but I'll ask you for a quick response, if you could, Mr. Manicom.

[Dr. James Manicom]

It's an interesting debate. I would assume that Canada's Arctic Council chairmanship would be focused on the agenda of the Arctic Council, which are the international aspects of the Arctic, and that our domestic policy would focus on the domestic aspects.

[The Chair, Conservative, Dean Allison]

Thank you very much.

We'll turn it over to Mr. Dechert. You have seven minutes.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Thank you, Mr. Chair, and thank you, gentlemen, for being here today and sharing your expertise with us.

Thank you very much, Mr. Mooney, for getting up so early in the morning.

You've spent most of your life, I think you said, in the north. You've returned there and are using your expertise to focus on technological issues in the north, which I think is very interesting. As you no doubt know, because you're one of them, northerners have contributed greatly to Canada's economy and to the economy of that region. You'd probably also know that Minister Aglukkaq, who will be chairing the Arctic Council for Canada, has spent a considerable amount of time in recent months meeting with northern community groups to ensure that northern communities are being listened to and that it's their issues and their thoughts and concerns that are being carried forward to the Arctic Council and become part of Canada's Arctic policy.

Can you tell us in your opinion how important the views of the northern community are with regard to Canada's Arctic policy?