Foreign Affairs Committee on April 17th, 2018

[Dr. James Boutilier]

The points I was trying to make were, first, that by Canadian standards militaries play a disproportionate role in politics in many of the Asian states we interact with. You can see this in Thailand, for example. You can certainly see it in China and elsewhere. Second, I would suggest that this part of the world is militarizing very rapidly, compared with Europe or South America. Indeed, I would suggest that a naval arms race is unfolding. Maritime power is increasingly the coin of the realm in the Indo-Pacific region, and our navy is very professional but very small. It can have only a tiny influence. I'm suggesting it's an available tool and should be utilized in orchestration with other departments in Canada to maximize the telegraphing to the region that we are committed to the region. It's a highly militarized region; it's a region with high levels of defence expenditure; and it's a region that is bracing itself for a military contest. It behooves us, I think, to position ourselves with nations like Australia, Japan, and South Korea to utilize our military professionalism to advance our national agenda in an appropriate manner.

[The Chair, Liberal, Bob Nault]

Thank you, Mr. Boutilier, and Madam Laverdière.

We'll go to Mr. Saini, please.

[Raj Saini, Liberal, Kitchener Centre, ON]

Good afternoon, everybody.

Thank you very much for coming here.

Mr. Grinius, I'll start with you, especially because you have experience in North Korea. We forget that 27,000 Canadians fought in the Korean War, of which 516 were killed, and we had a presence there at one time.

The previous government had a policy of controlled engagement with North Korea. You have stated on the record, or publicly, that Canada has been running hot and cold for decades in terms of its substantive commitments on the security side, and we should be very interested in long-term stability and security.

If you look at the current situation in the United States right now, there's no U.S. ambassador to South Korea, and there's no U.S. deputy secretary to Southeast Asia.

What is your opinion of the long-term stability of this situation, and what role could Canada play moving forward?

[Marius Grinius]

As I mentioned initially, I do believe that Canada has to know for itself what is happening on the ground in North Korea, and you can't do that by reading intelligence reports by somebody else, or listening to what others have to say. I really do believe that you have to be on the ground. After seven or eight years of so-called engagement—which was zero engagement except for one consular case—one has to re-establish credibility and expertise on North Korea. That is the starting point.

It may be a modest impact, but one has to engage regularly at a high level in Pyongyang to say, “Hey, we're here. We have certain concerns that we will raise with you consistently, and we will go from there, whether it's nuclear proliferation, human rights, or regional security, and so on.”

Truly, you can only speak with authority on a difficult and dangerous situation like that happening in North Korea if you have actually been there. From my own experience, when I did travel to Pyongyang, countries like the United States, South Korea, and Japan were always interested in what I had to say about what was happening in North Korea, and perhaps I was able to bring a measured and, one hopes, a sensible perspective to the table. Believe me; they were ready to listen. Certainly, with so much unpredictability, we have to plan and be engaged to do so.

[Raj Saini, Liberal, Kitchener Centre, ON]

I'd like to follow up with Dr. Boutilier about your comments on the South China Sea. It's an open secret that the conflict there is based on resources. There is an estimated 11 billion barrels of oil in the South China Sea and an estimated 190 trillion cubic feet of natural gas. We also know that it's a major waterway for international trade; almost $5 trillion U.S. goes through that waterway. There is a naval arms race there with the Indian, Japanese, Australian, and the Malaysian navies.

There was an attempt in 2015 by John Kerry at the ASEAN summit to have the three halts. That seemed to have started a conversation. I know they are going to negotiate now on a multilateral basis, as opposed to China at that time wanting to do more bilateral negotiations on that.

Mr. Grinius, you mentioned something, as did you, Mr. Boutilier, in a very roundabout way. Mr. Grinius, you said there's an ascendancy of China. Is that not the classic definition of the Thucydides trap? Is that not what we're faced with today?

[Marius Grinius]

I've read all the papers, the interpretations of that. It was Santayana who said that one must know one's history or else you'll have to re-live it. One would that we have actually learned from those possibilities and do not make the same sorts of mistakes.

I do believe that the globe is so much more integrated, so much more complicated. Certainly, there is always the danger of miscalculation, but—

[Raj Saini, Liberal, Kitchener Centre, ON]

The reason I say that is over the last 500 years, there have been 16 instances where the Thucydides trap has emerged. Twelve of those times, countries have gone to war.

[Marius Grinius]

Let us make sure that our political masters are much wiser than they have been in the past. MacMillan's The War That Ended Peace is a fine example of how things can just go downhill. I believe we have a huge challenge in terms of the United States right now.

[Dr. James Boutilier]

I would entirely endorse what the ambassador just said. While Nero fiddles in Washington, the global architecture is shifting in an unattractive way for us. It's desperately important that we pull together in the west. We're far too absorbed with individual concerns, because a new era has dawned in China with Xi since 2012, and is now confirmed with the 19th party congress.

A new, coercive, assertive, arrogant China is on the march, and it's not interested in war. It doesn't have any appetite for war, despite a huge modernizing of the PLA, because it can achieve everything it wants incrementally. It's the carborundum effect, which we saw in the Crimea, which we saw in the South China Sea, and which could be unfolding—that's one of the anxieties—beneath the one belt, one road. Is the belt and road initiative in some ways, in the eyes of some analysts, the thin edge of the wedge in terms of being a larger South China Sea phenomenon, but in the Indian Ocean? I would suggest that we in the west are increasingly endangered by the larger architecture of global affairs, and we need to pull together.

[The Chair, Liberal, Bob Nault]

I want to leave it there and take this opportunity to thank our witnesses, Mr. Beck, Mr. Grinius, and Mr. Boutilier. I very much enjoyed it. There are days when you sit here as the chair and you don't enjoy it much, but I have to tell you that it was very enjoyable today. I want to thank you very much for being very frank and open, and using your experience and expertise to give us a sense of what we could recommend to the government, because I think this group of members has a very strong sense that we need to do more in Asia. That's certainly why we're reviewing the work that's been done so far and hopefully future endeavours.

Again, thank you very much for your approach today. It was much appreciated.

Colleagues, we're going to suspend for a couple of minutes and then go to our next witnesses.

Thank you very much, Mr. Beck.

[The Chair, Liberal, Bob Nault]

I want to continue by introducing our witnesses. I'm looking to see if they have shown up on the video. So far, they haven't. In front of us is Mr. de Kerckhove, a fellow and lecturer in the graduate school of public and international affairs at the University of Ottawa.

We also have Hugh Stephens, distinguished fellow of the Asia Pacific Foundation of Canada, by video conference from Victoria, and Sarah Kutulakos, executive director of the Canada China Business Council.

I'll start with the Canada China Business Council, unless people have decided amongst themselves who is starting. Why don't we start with the Canada China Business Council, and Ms. Kutulakos?

Can the people on the video conferencing hear us here in Ottawa?

[Hugh Stephens, Distinguished Fellow, Asia Pacific Foundation of Canada, As an Individual]

Yes, this is Hugh Stephens in Victoria. I can hear you loud and clear.

[The Chair, Liberal, Bob Nault]

Sarah, can you hear us?

No.

Until we get coverage for Sarah, why don't we start with Mr. Stephens' presentation, and then we'll go to Mr. de Kerckhove after him.

Mr. Stephens, the floor is yours.

[Hugh Stephens]

Thank you.

Good afternoon, committee members. My name is Hugh Stephens, as you know, and I would like to thank the committee for this opportunity to discuss the important issue of deepening Canada's engagement in Asia.

First, I'll say a brief word about my own background. I served for 28 years with what is now the department of Global Affairs Canada. During that time, I was privileged to have extensive exposure to Asia and to Canada's role in Asia. As a young officer, I was assigned by the then Department of External Affairs to learn Mandarin in Asia before taking up an assignment at the Canadian embassy in Beijing in the late 1970s. I was therefore there at a seminal time for China's emergence from the turmoil of the Cultural Revolution and the beginning of its market reforms and economic opening.

Back in Ottawa, I worked on Asia-related issues among other assignments. My subsequent postings in Asia were at the Canadian embassy, now high commission, in Islamabad in the mid-1980s; at the Canadian embassy in Korea from 1989 to 1992; and finally, as director of Canada's unofficial representation in Taiwan, the Canadian trade office in Taipei from the mid to late 1990s.

I was assistant deputy minister for policy and communications at Foreign Affairs and International Trade when I decided to leave the public service in 2001 to take up an opportunity in the private sector as senior vice-president for public policy for Asia-Pacific for the U.S. media multinational Time Warner. I worked for 12 years for Time Warner, most of it at the company's regional headquarters in Hong Kong.

Upon my return to Canada, I became associated on a voluntary basis with the Asia Pacific Foundation of Canada. The then CEO, now Senator Yuen Pau Woo, asked if I would serve as an executive in-residence to provide advice to the foundation on media issues. I have continued my association with the foundation and am now a so-called distinguished fellow there and concurrently vice-chair of the Canadian National Committee for Pacific Economic Cooperation. This body represents Canada in PECC, the Pacific Economic Cooperation Council. This is a non-governmental track-two organization supported by the foundation that provides its secretariat.

I would like to add that while I am associated with the foundation, I do not speak for it today. I know you had Mr. Beck on earlier, and I am presenting only my own personal views.

Since the committee is considering how Canada should be optimizing its policies toward countries and regional organizations in Asia, I would like highlight briefly the role of PECC because it is, I believe, a regional organization that Canada should continue to use and further develop as but one element of its presence in the region.

PECC was established in 1980, well before to the existence of APEC. In fact, you could say that it was the midwife for APEC's birth. I apologize for the acronyms. Just to clarify, APEC, or Asia-Pacific Economic Cooperation, as I'm sure you are aware, is a governmental organization of 21 economies on both sides of the Pacific Ocean that was established in 1989.

I'll go back to PECC. PECC is composed of experienced practitioners from academia, business, and government, although government officials participate in their private capacity. PECC has conducted many studies on issues affecting the Asia-Pacific region. Its current focus is on sustainable and inclusive growth, trade liberalization and regional integration, and connectivity. PECC's membership is largely synonymous with that of APEC, although there are some minor differences. PECC has a close relationship with APEC and the APEC secretariat and is invited as an official observer to all APEC meetings. Given this special relationship, of course, it focuses its studies and research on issues of relevance to APEC, acting in a sense as its unofficial think tank. Canada has participated in PECC since the outset in 1980 and, in fact, the current co-chair of PECC is Don Campbell, former deputy minister of Foreign Affairs and a former Canadian ambassador to Japan.

Another similar unofficial regional organization is the APEC Business Advisory Council, or ABAC. Again, I apologize for yet one more acronym. Each APEC economy has three ABAC members. Canadian members are appointed by the Government of Canada to serve in a private capacity to offer advice to APEC officials and governments on issues that affect or impact the business community and to recommend policies. Currently, however, Canada has only one of three members. He is Mr. Ralph Lutes, from Teck Resources. Delay in appointing members to ABAC is chronic, and it is rare that Canada has a full complement of ABAC members. This puts a very heavy load on those who voluntarily agree to serve on this council.

As noted, both PECC and ABAC support APEC, which is still the only governmental organization with broad coverage of the Asia-Pacific region, even though it is more of a consultative than a rule-making body. Canada is a founding member of APEC, but in recent years has tended not to give much attention, or to accord much priority, to APEC activities. In fact, the last time that Canada hosted an APEC year, and thus the annual APEC summit, was in 1997 in Vancouver. We are well past the time when we should be seeking to host APEC, which would give us an opportunity to help shape the ongoing Asia-Pacific agenda.

In brief, Canada should take greater advantage of the existing platforms in Asia-Pacific in which it already participates through PECC, ABAC and APEC. I'd be happy to elaborate on what we could possibly do.

In addition to playing a more active role in APEC, I believe that Canada needs to diversify its relationships beyond China, where there is an obvious need for a more structured relationship. In my view, China is an economic and political reality that Canada has to deal with, whether or not we happen to like the path of governance chosen by the current Chinese regime. It's far better to have agreed institutional relationships with China, such as possibly an economic partnership or a free trade agreement, for example, that establishes a rules-based framework to deal with issues and differences, and to build a habit of dialogue, than to try to deal with the rise of China on a case-by-case, reactive basis. But in order to develop relationships with China—and you will know that this is controversial, given the divided opinion of the Canadian public—it's important for Canada to balance any move toward closer ties with China by simultaneously strengthening our linkages with other parts of Asia.

I am pleased to see that this has been done with Korea and has finally been done with Japan through conclusion of the comprehensive and progressive TPP, but there is also a need to reach out to the 10-country ASEAN bloc.

There are many reasons to pursue closer relationships with ASEAN, including helping ASEAN balance China's growing influence in the region; the existence of a large ethnic community in Canada from at least one major ASEAN country, the Philippines; and potential economic benefits for Canada from securing improved access to a market of almost 600 million people.

The Canada-ASEAN trade talks have moved very slowly and cautiously. In fact, they are not official talks at this stage. While it was positive for Canada to establish its own embassy to ASEAN in 2016, I would contend it's time to kick this relationship up a notch and embark on negotiating a free trade or economic partnership agreement with ASEAN in parallel with whatever we do with China.

I will close my remarks at this point. I look forward to your questions.

Thank you very much.

[The Chair, Liberal, Bob Nault]

Thank you very much, Mr. Stephens.

Sarah, the floor is yours.

[Sarah Kutulakos, Executive Director, Canada China Business Council]

Thank you for accommodating me via video, and congratulations to the committee for its important work on Canada's engagement in Asia.

While you are looking at Asia writ large, I will focus exclusively on China.

The Canada-China Business Council was founded 40 years ago by some forward-looking Canadian business people who, back when there was no bilateral business, saw potential to create a non-profit, non-governmental, non-partisan membership organization to help create what I call more business with China and better business with China.

Our 300-plus member organizations are 90% Canadian, with the other 10% being Chinese companies that have made significant investments in Canada. We exist to ensure that Canada benefits from the opportunities that China presents. This is important because, while more trade and investment in both directions benefits both countries, we want to make sure that Canada's economy derives advantage.

The government's relationship with China is crucially important. The health of the relationship has a strong and direct impact on Canadian companies' ability to make deals, to sell and invest more in China, and to attract capital needed here in Canada. China has gone from what I would call an interesting emerging market to play to a major driver of the world economy, contributing fully one-third of the world's annual incremental GDP growth. China's growth is now off such a large base that, at 6.8%, it adds an equivalent of a Canada or an Australia every year wto world GDP. While the broader subject of diversification across Asia is relevant, the fact is that China is just so much bigger than any other Asian country.

Our merchandise trade with China in 2017, at $94 billion, is triple that of our trade with Japan and more than 11 times that with India. It's a very important market for exports of agricultural commodities, like grain and oil seeds, as well as for pulp and paper products. These numbers don't even cover services, which will grow even faster as China's economy focuses on consumption.

Two very important sectors, education and tourism, are what I like to think of as easy sectors, where our exporters don't even really need to leave the country to sell. Both provide important people-to-people connections in which Canadian values can be expressed and shared.

In many ways, China is the elephant in the room; it can't be ignored. Even though our exports to China grew nicely last year, at 13%, they still only make up about 4% of our global exports. With many Canadian companies not even thinking about China yet as an export destination, this number shows two things: that the growth is there, and that this is what we can do without even trying very hard.

When I say “trying very hard”, I don't mean to diminish the efforts by all the institutions that I consider tools in the China tool box; but as a country, we don't have a strategy for China and we are not focused enough. Think what we could do with an economic partnership that brings issues and irritants to the fore on a regular basis, reduced tariffs, and open industries. Take Australia, whose FTA with China has been in force for two years now. The news broke yesterday that Australian wine exports to China grew 51% in 2017 to become the first billion-dollar market for Australian wine growers. Canada exported $15 million in wine to China in 2016, and despite its being the destination for 44% of Canadian wine exports, these wine exports were basically flat versus 2015.

Why aren't we doing more business with China? I can answer questions later about the exact barriers, but in fact it's easy to do business with the U.S., so companies have focused there. Companies that choose not to engage China ignore the fact that, as China has grown, it has built capability that creates competition in our core markets. Even if it's for nothing more than ensuring they stay competitive against Chinese companies, every Canadian company needs a China strategy.

Kishore Mahbubani of Singapore's national university argues that the most important event in 2001 was not 9/11; it was China's entry into the WTO, with almost a billion workers joining capitalism, waking up over time to discover they can perform as well as anyone else in the world. This should be Canada's wake-up call that we need to out-innovate and out-compete.

Why aren't we engaging more politically? It might be a question I should ask the committee. We know that surveys show that many Canadians dislike China. There are lots of things I don't like about China, and I've been engaging with it for more than 30 years. I've dealt with China my entire career, including more than a decade with Eastman Kodak, where I learned to think in terms of photographic analogies. If we take a snapshot of China today, I can guarantee there's plenty to find in that snapshot that you don't like—some of the issues that come up in progressive trade negotiations, for example. If we then look at the video of China, we see how things have changed and how quickly, and how the rapid pace of change and the overall impact of China on the world presents both opportunities and challenges. The fact is that China is a part of our world and the more we engage, the more we can discuss things we don't agree on.

I encourage the government to consult Pitman Potter of the University of British Columbia, who has done extensive work on trade and human rights. His 2016 report offers important insight that can inform our progressive trade agenda. Pitman argues that human rights is too general a term, because countries define human rights differently. Think of Maslow's hierarchy of needs, where we think freedom of speech and democracy are paramount but China puts poverty reduction at the top of its list. By expanding the definition of human rights to include development, public health, labour relations, poverty and inequality, and government accountability, a framework can emerge for developing more effective approaches to integrating trade and human rights.

For our government, engagement with China is not an option. It's an imperative, and China is a long-term game. China appreciates strategic continuity, which is why no matter which party is in power, engagement is crucial. Based only on public press reports, I can tell you what China's goals are for 2050. Few countries in the world, including Canada, can map and publicize a 30-year path for development.

Government engagement is absolutely necessary to keep business going. When we consulted with companies across Canada last year about an FTA, many said there would not be that much for them in an agreement, and yet they knew that the process of negotiating it would keep the relationship warm and healthy, and would be good for their business. I strongly encourage the government to launch that free trade negotiation process, which will not be a quick process.

I fear that over the past couple of years, we've been saying nice things to China, but not really showing our ability to act. Delay comes at a cost because as Chinese consumers develop preferences, they will choose to prefer goods and services from the parts of the world that are aggressively engaging with China. Think about my Australian wine example. We need to make a conscious choice to engage and to use the relationship with China to build Canada's prosperity. There are some easy immediate opportunities, like ensuring that we're serving Chinese tourists well so that they tell their friends to come, or developing environmental technologies that China needs as it works very hard to clean up its environment. Neither of those is controversial.

What do we want from China? The business community simply wants a free and fair playing field. Let our companies compete based on our own merits. Let us enter the market and get better at what we do. Don't dictate what corporate structures we have to have. Canadian business will be more inclined to take advantage of China's market opportunity if we have a rules-based system that protects the rights of companies and citizens in both countries.

Where there are really thorny issues like technology transfer, industrial policies that discriminate against foreign companies, and potential encroachment of the government on corporate governance, Canada should speak up and should also do so multilaterally. Multilateral pressure can work.

The China we want and the China we get may be two different things, but we will definitely not get what we want if we don't engage effectively with China's government.

I'm happy to take questions later. Thank you to the members of the committee for undertaking this important work and for giving me the opportunity to testify.

[The Chair, Liberal, Bob Nault]

Thank you very much for that presentation.

Now we're going to go to Mr. de Kerckhove.

[Ferry de Kerckhove, Fellow and Lecturer, Graduate School of Public and International Affairs, University of Ottawa, As an Individual]

Thank you, chairman and honourable members of the committee. It's an honour to be here in front of this committee, which has often been a reference point throughout my career. I'll make my remarks in English.

That said, I can of course answer in French and maybe in Russian a bit, but not in Chinese.

Although I sent a detailed CV in advance, I should start by underlining, on the one hand, that I have had three postings in Asia. Iran was my first, then I was in Pakistan as high commissioner, and then Indonesia as ambassador. My three others were to NATO, Russia, and Egypt. The latter, if it were not for ancient geographical prescription, could very much belong to Asia as much as it belongs to Africa.

On the other hand, in my six years of policy planning at the Department of Foreign Affairs over a period of 13 years, I've been involved in pretty much every aspect of strategic thinking on the place of Canada in the world. You won't be surprised with a few thoughts on my part on Canadian foreign policy writ large, which in one way or another underpins our engagement in Asia, or the lack thereof. You will also understand how much I applaud your efforts to try to deepen the knowledge of Canadians regarding things Asian.

While I served my country on the international stage to the best of my abilities during my 38-year tenure in Foreign Affairs and International Trade, now GAC—it has so many acronyms—since leaving government, I have allowed myself to comment on international issues and Canadian government policies and processes to handle these. I draw your attention to the yearly papers produced in both official languages by the Conference of Defence Associations Institute, of which I was the executive vice-president for a number of years. I have either co-authored or authored these papers over the last four years, 2013, 2014, 2015, and 2016. I've given a few copies here. Unfortunately I don't have any 2016 copies left. They're out of print. Maybe they were just too good.

Over a span of four years, I've been able to assess a series of trends and Canada's adjustment to these changing times. There is a constant in these studies: the lack of a real Canadian policy towards Asia beyond platitudes along the lines of its being “an important region for Canada”. I'm not exaggerating by much. Given the high quality of the previous presentation by a very informed expert, I will focus more on the security dimension, but I will also start with some commonplace remarks that we've noted over the last 10 years.

The greatest platitude, if I can call it that, and yet a glaring reality, is that there is no such thing as a monolithic Asian continent. The one that matters most positively for Canada borders mostly on the Pacific and the China Seas, but clearly includes India as well. Notwithstanding the important security issues that have been discussed all day long, such as Chinese encroachment in the China Sea, the most glaring troubles of the region start west of India, into the extended Middle Eastern linkages.

The second point is that a general shift in trade and security to the Asia-Pacific region has been noted by Stewart Beck and others, where security is primarily built around a patchwork quilt of bilateral security arrangements rather than the kind of multilateral framework we enjoy within NATO. This is a region in need of a security architecture, even though we know perfectly well who will dominate it. That's why the decision made by Canada in 2012 to actually participate in the first iteration of the Trans-Pacific Partnership was indeed a major sign of engagement and quite a positive step, which was recently enshrined, albeit with a temporary hiccup. It is all the more important that in terms of trade with the region, Canada has been lagging behind our competitors. I was very pleased to hear the head of the Canada China Business Council, because over the past 15 years Canada's exports to China were much lower in terms of total value and rate of growth, so there's a lot to be done on that account.

An additional point is that despite claims to the contrary, there has been little movement in anything approximating a strategic shift beyond the strong trade focus of Canada. While we claim to be a three-ocean nation, our blue navy leaves a lot to be desired, particularly if one remembers that at the end of the Second World War the Canadian navy was the fifth largest in the world. The region that has suffered most from this state of affairs of Canada's maritime presence is definitely the Asia-Pacific region.

There is no doubt in my mind that your repeated visits to the region will make you a strong supporter of the ongoing effort to rebuild our navy to be able to play its part in the most important maritime theatre in the world.

The fact that—most likely for a certain lack of adequate preparation—the Prime Minister's attempt to launch a free trade negotiation with China failed. That fact does not mean that the Canadian government will not continue to engage China, but it underscores that a very careful review of Canada's strategy toward China remains essential as the key subset of a fully articulated Asia-Pacific strategy. And that strategy must take into account the evolving strategic outlook in the region.

Herein lies my key message. At the broadest level, any real review should take into account the impact of the 2008 economic crisis, which affected mostly the western world, and could be the most significant event of the last 50 years, on a par with the fall of the Berlin Wall, as it has irreversibly opened two Chinese doors to the world—economic and political.

Economically, 2008 had many countries in the world starting to look askance at the western version of the capitalist model and its so-called Adam Smith mantra of the invisible hand. Many Asian countries turned their eyes toward the Chinese version of state capitalism with a far less invisible hand, while still allowing winners and losers to battle it out within the ambit of clearly defined state objectives. Today Asian countries all have China as their number one trading partner, and they have adopted in large part the same “more effective” economic model. The belt and road initiative has created a further impetus despite its flaws and uncertainties. That's on the economic side.

Politically, in the same vein, contrasting the vagaries of the American presidency to the clear-sighted approach of the Chinese “emperor” and the “advantages” of an authoritarian regime guiding economic policy, many leaders in the region have felt empowered to reduce political freedom and democratic practices, transforming the legacy of Lee Kuan Yew into a permanent virtue of self-preservation—hence, Duterte and others in the region.

Canada cannot ignore these developments and would benefit, at least from a security perspective, from look carefully at the Australians who, as a Canadian scholar said, are “better at conceptualizing their security and defence perspectives, formulating them into strategies and policies and actually spending the capital determined by these guiding documents for defence procurement and renewal.” The Australians do it well. We do it poorly.

Canada may live in a quieter environment with a powerful ally to the south—although Minister Freeland has rightly pointed out that we cannot count on the U.S. automatically—but we need to be clear-eyed and ensure that while trading with our Asian partners, we don't lose sight of their geostrategic ambitions and don't sacrifice our fundamental values in the process.

From a security perspective, Canada cannot be content with a defence policy review that is not based on a national security concept and an accompanying foreign policy. I've lamented time and again the lack of a real foreign policy review, which should underpin a defence policy review, and not the other way around.

I agree with my friend and former colleague, Stewart Beck, CEO of the Asia Pacific Foundation, that “now is the time for Canada to make decisions, take action, and differentiate itself in the Asia Pacific region.... [O]ur country is a beacon and open to the flows of people; however, to be successful...Canada needs focus, intensity, consistency and, more importantly, non-incremental change.” However, and this is the key, that policy must be accompanied by a broader political and strategic commitment, what I would call a full-service policy.

Thank you.

[The Chair, Liberal, Bob Nault]

Thank you very much.

I want to thank all three witnesses.

We're going to go very quickly.

I want to go to Mr. Genuis, please.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Thank you, Mr. Chair.

Thank you to the witnesses.

I'm going to go quickly as well. I really appreciated the testimony.

Ms. Kutulakos, I found your discussion about human rights engagement as it relates to business, and particularly the definition of human rights, interesting. I agree with you that the definition of human rights can be so broad in many contexts that it can be a moving target, and that we need to drill down and be specific about what we're talking about, but I think that requires specificity, not a broadening.

When we were in China as a committee and raised specific human rights issues there—the abuse of Tibetans and Falun Gong practitioners and others—we heard the argument that China has advanced economically, so let's focus on this so-called set of rights as opposed to this set of rights.

I think most of us accept, in the western world at least, that political and civil rights, which you might call intellectual rights, the rights of the mind, have a prior status, that you can't pay someone to give up their right to vote, to practise their religion.

I'm curious if you think our engagement with China should reflect a clear-eyed prioritization of these concepts of human rights over newer, more materialistically defined concepts of rights.

[Sarah Kutulakos]

I think we should stick to the details of what we think is important, but we need to be prepared to accept that China may prioritize in different ways. We shouldn't shy away from talking about exactly the things you've brought up, but to be able to keep moving forward in the conversation, we should try to understand the framing of why they are choosing to focus on the things they are focusing on. We come from very different historical backgrounds. Our governments were constituted in very different ways.

It's a very tricky issue. As the business community, we try to focus on how we make things better in the work that we're doing. I think Pitman's work, which I referenced, tends to link what specific things companies can do on things like corporate social responsibility and some of the bigger, thornier issues that tend to be more in the purview of the government-to-government discussion.

I simply bring that forward as a way of framing the discussion.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Thank you.

What you're saying, if I understand it, and I don't want to put words in your mouth, is that we should express the views that we think are important. We recognize that there may be disagreement on the other side of the table, and that's precisely what constructive dialogue looks like: people discussing and putting these things forward.

Building on that, I look at some of the data from Canada's trade with China over the last 15 years. It seems evident to me that, despite some degree of hand-wringing about how this or that comment might offend the Chinese government, that there has been a relatively steady increase in trade that isn't obviously linked to perceived greater or lesser emphasis on human rights in the context of the discussion.

Does that suggest that we can both trade and be pointed about raising issues of human rights without worrying that the Chinese are going to somehow stop trading with us because they don't like the fact that we talked about some of these fundamental issues, recognizing that trading with us in their interest as much as it is in ours?

[Sarah Kutulakos]

Yes, I think you've hit it on the head that we shouldn't shy away from talking about what we think is important, and we shouldn't think that one has to stop because we're talking about the other. I would agree.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Thank you so much.

I'll move to Mr. Stephens now. I want to ask for your perspective on the issue of state-owned enterprises. If you want to comment on the human rights engagement as well, please do, but I want to specifically drill in on how Canada should respond to concerns about the impact of Chinese state-owned enterprises on commerce, and the fact that we're seeing greater emphasis of party committees even in private companies that are not state owned.

[Hugh Stephens]

I know there's a lot of concern among some parties here about the presence of state-owned enterprises and state-owned investments in Canada. It's clear that state-owned enterprises are not exactly like other Western companies and, as you point out, there has been a growing tightening of party control.

That said, I think we have to be confident as Canadians and look at the regulatory framework that we have. The suggestion that a Chinese state-owned enterprise, because perhaps it acted in a certain way in Africa is going to act in this way in Canada—that it's going to undermine labour standards, it's going to undermine environmental standards, it's going to do this, it's going to do that, and act in anti-competitive ways—I think is ridiculous.

We set the playing field here. We set the rules. State-owned enterprises have to act by the same rules as large multinationals from other countries. I think we have to be aware that they're not the same, and we do have to be careful, but I think there's a lot of benefit for Canada in inviting state-owned enterprises into Canada—properly regulated to ensure that they contribute to the economy of this country.