Evidence of meeting #31 for Foreign Affairs and International Development in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was japan.
A recording is available from Parliament.
Associate Professor, Institute of Asian Research, University of British Columbia, As an Individual
You can go straight to Mr. Van Assche as well.
Liberal
Full Professor, Department of International Business, HEC Montréal, As an Individual
There are a lot of opportunities for collaboration with Japan and Korea, and they're already starting to go on. We have things to offer to Korea.
This goes back to the question of Monsieur Guilbeault. It's not only critical minerals. We are also very strong in artificial intelligence and many other services sectors that we often forget about. Korea has been very good in developing a supply chain early warning system that allows it to identify where potential choke points are. I've written a piece with a Korean colleague on trying to think about how Canada and Korea would be able to collaborate on developing a more advanced supply chain early warning system. This is a very good example.
It is the same thing with Japan. When we think of clean energy technologies, we are always worried about the dominance of China, for very good reasons. If you start looking at where we can diversify, the two countries that really jump up are Korea and Japan. Again, there is a lot of interest for us to start looking at these countries, which are very natural allies, to reflect on a joint economic security strategy and also as a part of our trade diversification strategy.
Liberal
Anita Vandenbeld Liberal Ottawa West—Nepean, ON
We would be very interested, as a committee, in getting a copy of that article you wrote about the supply chain early warning system.
Are there other examples like that in the region, where there are things that could be shared across in terms of some of the strategies?
Full Professor, Department of International Business, HEC Montréal, As an Individual
There are many examples of this. As we're thinking of engaging more with ASEAN, just to give an example, it's actually very natural to do this right now, because China is getting expensive. Doing assembly in China is not something that a lot of companies are looking at. Automatically, we're already starting to look at Vietnam and maybe Malaysia and other countries. Ultimately, focusing on these other countries and the strong points they have that we can develop complementarities with is what we should be doing as we're trying to develop a richer Indo-Pacific strategy.
Liberal
The Chair Liberal Ahmed Hussen
Thank you very much. You're right on time.
I want to thank our witnesses for appearing before the committee and for their testimony. We really appreciate it.
We will now briefly suspend in order to prepare for the next panel.
Thank you.
Liberal
The Chair Liberal Ahmed Hussen
I call this meeting back to order.
I would now like to welcome our witnesses for the second panel. We have Dr. Stephen R. Nagy, professor at the International Christian University and China policy project lead and senior fellow at the Macdonald-Laurier Institute, joining us by video conference, and Cleo Paskal, non-resident senior fellow at the Foundation for Defense of Democracies.
Unfortunately, Mr. Berkshire Miller, senior fellow at the Macdonald-Laurier Institute, who was going to join us by video conference from Budapest, was not able to do so because he had technical issues with his headset, so we have two witnesses for the second panel.
I now invite Dr. Nagy to make an opening statement.
Stephen R. Nagy Professor, China Policy Project Lead and Senior Fellow, International Christian University, Macdonald-Laurier Institute, As an Individual
Thank you very much, Chair.
It's a great pleasure to share some ideas with this committee on Canada's Indo-Pacific strategy going forward. I'd like to break down my ideas into four points that focus on Canada's national interests in the Indo-Pacific and five points in terms of our strategic approaches to be able to achieve these national interests.
First, in terms of national interests, I think our Prime Minister said it very well. Maybe he quoted me, from one of my earlier papers, but we need to be “at the table, not on the menu” in terms of being on every single agreement within the region. I say that in good humour, but we need to be at that regulatory table for AI development; for technology and energy security; for how we deal with sea lines of communication, defence, regional security and disinformation; as well as for economic security.
Second—and I think this is really important—as we think about where Canada should be, we are clearly interested in preventing traditional and non-traditional security issues from emerging. Traditional securities could be a Taiwan contingency, the proliferation of weapons of mass destruction on the Korean peninsula or some kind of incident in the South China Sea. All of these have severe implications for Canada in terms of the economy. In the previous panel, when we talked about the Taiwan Strait, most estimates are between $10 trillion U.S. and $15 trillion U.S. in damage to the global economy in the case of some kind of contingency. I'll come back to that. In terms of non-traditional security issues, they're quite clear. They're about climate change. If we think about the Pacific Islands, about the maritime environment in the South China Sea and how this could affect food security in Southeast Asia, this will have spillover effects in Canada.
Third, I want to talk about preventing the emergence of a regional hegemon. In this case, there's only one country that would like to be the regional hegemon, and that's China. If China is the regional hegemon, this is going to affect Canada's access to trade agreements. It's going to affect Canada's access to sea lines of communication, and it's going to affect how regional agreements emerge, whether they're trade, AI or technology.
Fourth, and most importantly in the Canadian context, we need to plan beyond political cycles. When I come to Canada, I see this fixation on the United States, but in the next four or five years, we're going to see a change of power in Russia, China and India, as well as the United States. In Russia, we expect a more ultra-nationalist country. In China, when Xi Jinping steps down—or we don't know what will happen to him—we will see a blank in leadership from China. This has happened in the past. We have seen China disappear for three or four years.
What does this mean for our engagement within this region? What does it mean for those traditional and non-traditional security issues? Most importantly, what does it mean for Taiwan? I want to reassert this.
When we think about India, Prime Minister Modi has brought stability, but he has also brought Hindu nationalist behaviour. We know that India killed a Canadian of Sikh background in Canada. What happens if a more nationalist India emerges?
Last, of course, is the United States. We don't know how the MAGA movement will mutate in the future, but we need to think beyond the news cycles of today and what our southern neighbour's president will be saying. I can't emphasize this enough. This is Canada's national interest.
In terms of our strategic approach—and this will be controversial—I believe that we need to anchor our Indo-Pacific strategy within the region by having the strongest relationship with the United States, meaning that means we are the indispensable partner for the United States. We are an asset economically, technologically and strategically. We need to continue to invest in the United States, despite the difficulties. As I mentioned, Trump will be gone and MAGA will change, but the United States' geographic, institutional and legal realities that connect Canada to the United States will remain.
Secondly, we need to develop bilateral and minilateral relationships. Both of the previous witnesses mentioned this, and I'm so glad they talked about Japan and South Korea as dependable partners, as well as Singapore. We need to develop new dependable partners. They may not look like us politically, but I think Vietnam and Indonesia are important partners to invest in as we think about how to cultivate strong and enduring relationships with trade partners in Southeast Asia that also share our interests in the region.
I know one of the committee members talked about values. I appreciate the emphasis on values, but if we focus only on values, we're going to alienate key partners that I think are really important, such as Vietnam, Indonesia and, frankly, India. This is going to be important.
We also need to think about minilateral relationships. This echoes a little bit our Prime Minister's comments about middle power coalitions, although I think about this very differently. We need to have functional partnerships that are focused on problem-solving. Our efforts in terms of illegal, unregulated and undocumented fishing are a very good example of that.
We need to leverage—
Professor, China Policy Project Lead and Senior Fellow, International Christian University, Macdonald-Laurier Institute, As an Individual
Lastly and importantly, we need to strengthen Canada at home. If we are not strong at home, if we're not integrated at home, and if those interprovincial barriers are not broken down, we're not going to be a strong, competitive and productive economy that can engage in the Indo-Pacific. We're not going to be an attractive partner that attracts Indo-Pacific partners to engage with Canada and the North American market.
Thank you.
Liberal
The Chair Liberal Ahmed Hussen
Thank you very much.
I now invite Ms. Paskal to make her opening statement for up to five minutes.
Cleo Paskal Non-Resident Senior Fellow, Foundation for Defense of Democracies, As an Individual
Mr. Chair, members of the committee, thank you very much for inviting me.
Given the committee’s depth of knowledge, I'm going to focus on areas that are easy to overlook, which is why I gave you a map.
The first is strategic geography. Indo-Pacific plans often take for granted a continuation of access. For example, U.S. planners assumed the ability to freely use the critical American base on Diego Garcia in the Indian Ocean for the Iran operations. However, not only did the U.K. initially deny the U.S. permission to use the base, but the U.K. was also on the cusp of handing the Chagos archipelago, including Diego, to Mauritius, a country with close ties to China. It’s possible that, had the Iran war not happened, the strategic implications of the proposed U.K.-Mauritius deal would not have reached the Oval Office, and the U.S. defence posture in the Indian Ocean region would have been seriously undermined. I’m not sure that we have planned for that.
From a Canadian perspective, the situation is even more acute in the Pacific. If you've been to Japan or the Philippines, you know how long the flight is. Now imagine that by ship, which is how most of our trade travels.
Since the end of World War II, the Central Pacific has been peaceful, and unfettered east-west travel between Asia and the Americas has been the foundation of a free, open and increasingly prosperous Indo-Pacific. That was not an accident. Imperial Japan controlled a section of the Central Pacific almost the size of the continental United States from 1914 until it was dislodged by American troops 30 years later in World War II. It took the deaths of 100,000 Americans who died fighting on islands like Peleliu and Saipan before Washington could work up the infrastructure to liberate the region. After the war, it worked with islanders to set up unique structures to try to ensure the critical Central Pacific would stay free.
The entire region was offered to become part of the United States. The Northern Mariana Islands voted in favour and became the newest part of the U.S. in 1976. The other islands divided into three new independent countries, Palau, the Marshall Islands and the Federated States of Micronesia, or FSM. On the map, they're the east to west countries in the middle. That zone bridges the maritime space roughly between Hawaii, the Philippines and Guam.
U.S. ties with these three countries are unlike anything the U.S. has with anyone else. They are beyond a doubt America's closest allies. Their citizens can live and work freely in the U.S., something Canadians cannot do. They can serve in the U.S. military. They receive a wide range of U.S. federal government services. The U.S. is responsible for their defence. Defending Palau, the Marshall Islands and the FSM means ensuring a hostile foreign power can't block the east-west flow between Asia and the mainland U.S.A. or Canada.
This leads to a second point. We shouldn't be taking this for granted. Whenever anyone talks about China taking Taiwan, as we have heard several times today, operationally that means China, at the very least, neutering the U.S. in these islands and taking off-line the U.S. territories of Guam and the Marianas. Beijing is currently actively trying to do that, and locals know it. One of the preferred tools is corruption.
In 2023, the then president of the FSM, David Panuelo wrote, “We are bribed to be complicit, and bribed to be silent.” He went on, “The practical impact of this is that some senior officials and elected officials take actions that are contrary to the FSM’s national interest, but are consistent with the PRC’s national interest.” He wrote this when he was a sitting president. The intention was to pull the FSM “very close into Beijing's orbit, intrinsically tying the whole of our economies and societies to them.”
The U.S. has been countering this, but until recently, the U.S.'s definition of defence has been largely kinetic, for example, $2 billion in announced military infrastructure investments in the FSM alone. If Beijing pays off the right low-level environmental officers, let alone members of the FSM government itself, the implementation will get bogged down while Chinese companies move in, and the U.S. could be building infrastructure China will end up using.
What does all this mean for Canada? Given our limited resources, I would suggest an element of the renewed strategy be to identify strategic geography that underpins a free and open Indo-Pacific, and then work smart with a block-and-build approach. That means help block what the Philippines calls China’s illegal coercive, aggressive and deceptive operations, which corrupt local societies, politics and economics, and at the same time build real resilience.
For example, for blocking, Palau would like access to Canada’s dark fleet detection technology. It would help. For building, one example of effective people-to-people work is that of Métis innovator Bruce Hardy, who is leading indigenous-led food and energy resilience work incorporating first nations communities in Canada and the Pacific.
The U.S. is starting to test this approach. Agreements signed with Palau in December will result in the U.S. sending investigators to help with corruption cases, foreign investment screening and border security—that's blocking—while at the same time funding a new hospital—building. The just-announced 4,000-acre Pax Silica-related U.S. economic security zone in the Philippines is another example.
The Indo-Pacific is off balance. We need to block and build in key locations to maintain balance. At this stage, sending investigators and lawyers to support partners fighting corruption can have a bigger real effect than sending a few extra delegates to yet another multilateral cocktail party.
Thank you.
Liberal
The Chair Liberal Ahmed Hussen
Thank you very much for your statement.
I will now open the floor for questions, beginning with MP Michael Chong.
You have six minutes.
Conservative
Michael Chong Conservative Wellington—Halton Hills North, ON
I'd like to ask Madam Paskal about her opening statement.
Could you elaborate a bit on the corruption that the PRC is promulgating throughout Palau, Micronesia, the Marshall Islands and globally? Could you get into further detail about that?
Secondly, could you then make recommendations to this committee about the role Canada could play in providing lawyers and capacity-building to fight that kind of corruption?
Non-Resident Senior Fellow, Foundation for Defense of Democracies, As an Individual
China will often come into countries like this and present what looks like the sort of commercial support they really need. In the case of Palau, for example, China says it's going to help them build up their tourism sector. Then once it's got them, it then uses that economic leverage to, in the case of Palau, literally crash the economy. It pulled out all the tourists at once, because Palau is a country that recognizes Taiwan. China said that unless they de-recognize Taiwan or recognize China, the tourists aren't coming back, but that was after it had built up the economic dependency.
At the same time, there was major Chinese organized crime operating in Palau. This is a country of less than 20,000 people, and there were triad operators like Broken Tooth operating there. The reason is that as the money comes in, you have this commercial face with a strategic component to it, but the third element of the braid is always corruption. There's always a corruption element, and it's sometimes put on steroids by Chinese organized crime. That is a weak point for the Chinese.
If you take away the corruption, their investments look a lot less attractive. The obviousness of the strategic element is there.
Very quickly, just to get this on the record, we know the 2017 National Intelligence Law requires all Chinese individuals and organizations to support Chinese intelligence efforts, as you've said yourself. This is the sort of thing that we need to incorporate into the assessment of any Chinese engagement in the region. What should we do? We should put in place extremely strong domestic Canadian FARA regulations to begin with, and make sure we're not living in a glass house while we're throwing stones.
Conservative
Michael Chong Conservative Wellington—Halton Hills North, ON
The Foreign Influence Transparency and Accountability Act is being implemented as we speak.
What specifically could Canada do in these islands to help people, like the president you quoted, with fighting corruption?
Non-Resident Senior Fellow, Foundation for Defense of Democracies, As an Individual
Unfortunately, President Panuelo wasn't re-elected. That's another thing that happens: If you stand up against China in the region, you end up being targeted.
I would say that in the case of countries like Palau, Marshall Islands and Tuvalu—countries that already recognize Taiwan—security and law enforcement infrastructures are highly targeted by China. They really want to resist China, so it's investigators, specialists in money laundering and specialists in how to track illegal money flows. Then, say stuff. The U.S. recently designated the president of the Senate of Palau for taking Chinese money and being corrupt.
Conservative
Michael Chong Conservative Wellington—Halton Hills North, ON
In other words, help build the independence of their judicial system and help to train law enforcement to prosecute these kinds of crimes.
Non-Resident Senior Fellow, Foundation for Defense of Democracies, As an Individual
They don't actually need more workshops. They need people to come and do the work. They are very much open to having people come to do the work.
I would also argue that this area is unlike any other area that we're talking about. It would make sense to shift that area to Canada's embassy in Japan. Japan has much closer ties to the region. They're tracking this more closely. Canada can start working with the Taiwanese in countries that recognize Taiwan to help—
Conservative
Michael Chong Conservative Wellington—Halton Hills North, ON
Which embassy currently has this responsibility?
Non-Resident Senior Fellow, Foundation for Defense of Democracies, As an Individual
They're mostly sitting in Canberra.
They are just lumped in with “the Pacific Islands”. We set up an embassy in Fiji, but this is a whole different strategic environment.
Conservative
Michael Chong Conservative Wellington—Halton Hills North, ON
Dr. Nagy, do you have any comments on this?
Professor, China Policy Project Lead and Senior Fellow, International Christian University, Macdonald-Laurier Institute, As an Individual
I think Ms. Paskal's comments really are spot-on. We see corruption throughout the region. It's an area that we have, as Canadians, actually worked on in the context of the South China Sea in helping to bolster the Vietnamese legal thinking so it can better defend how it positions itself vis-à-vis China and the South China Sea.
Again, how we provide some legal training to the islanders may provide some assistance in dealing with corruption and preventing corruption from emerging. This is a soft contribution to the region, but I think it's a meaningful contribution that can help us deal with corruption and Chinese influence within the Pacific Islands.
Conservative
Michael Chong Conservative Wellington—Halton Hills North, ON
Should that be the priority of our foreign aid policy in the region?
Professor, China Policy Project Lead and Senior Fellow, International Christian University, Macdonald-Laurier Institute, As an Individual
Ultimately, Canada has limited resources, Mr. Chong. In that sense, we may want to outsource some of these activities to countries that are closer to the Pacific Islands, primarily Australia and New Zealand. We could provide assistance.
As we think about the size of the Indo-Pacific, there are priority partners that we need to develop, such as Japan, South Korea, Indonesia and Vietnam. We may need to pick and choose where we're investing resources. We have huge financial problems back at home. We have to pick and choose and build momentum in our Indo-Pacific policy.
While I think this is an important initiative, again, I'm in favour of choosing priority partners that are big enough to provide some momentum for Canada's permanent engagement in the Indo-Pacific.