Evidence of meeting #16 for Government Operations and Estimates in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was chinese.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Stephen R. Nagy  Fellow, Canadian Global Affairs Institute, Distinguished Fellow, Asia Pacific Foundation of Canada
Clerk of the Committee  Mr. Paul Cardegna

2:25 p.m.

Bloc

Julie Vignola Bloc Beauport—Limoilou, QC

Okay.

You talked about multilateral agreements. Should Canada consider producing more here at home rather than depending on everyone else?

2:25 p.m.

Fellow, Canadian Global Affairs Institute, Distinguished Fellow, Asia Pacific Foundation of Canada

Stephen R. Nagy

When we're thinking about how to manage selective decoupling, there are certain industries that I think we will have to seriously consider reshoring back to Canada. This could be personal protective equipment, other forms of medical equipment and some pharmaceuticals. However, we need to be realistic about the comparative advantages that Canada has.

Moving forward, perhaps we need to find more reliable partners to work with, not only in terms of being like-minded countries, but reliable partners.

2:25 p.m.

Conservative

The Chair Conservative Tom Lukiwski

Doctor, I hate to interrupt you once again, but could you keep the microphone up? Thanks.

2:25 p.m.

Fellow, Canadian Global Affairs Institute, Distinguished Fellow, Asia Pacific Foundation of Canada

Stephen R. Nagy

We need to continue to work with reliable partners who can provide the essential medical equipment and other equipment that Canada needs in the case of COVID-19.

We need to be realistic that it's going to be very difficult to replace many aspects of the global production network that are centred in China in the short term, but over the mid- to long term—again, working with the United States and other like-minded countries—we need to start to diversify those supply chains within China, and also globally.

2:25 p.m.

Bloc

Julie Vignola Bloc Beauport—Limoilou, QC

Thank you.

In your remarks, you mentioned China's lack of transparency. We're hearing more and more about an independent investigation. Ms. Gould recently said that it's not up to the World Health Organization to launch the investigation; it's up to member nations.

How can Canada and its partners demand more transparency from China?

We also know that different countries have different ways of calculating COVID-19 data and assessing its repercussions, so what can we do to convince China to be more transparent?

2:25 p.m.

Fellow, Canadian Global Affairs Institute, Distinguished Fellow, Asia Pacific Foundation of Canada

Stephen R. Nagy

I think a focus on good governance is crucial in convincing China to move forward on some kind of international investigation to improve its responses to an emerging pandemic, as we've seen with COVID-19.

China does not respond well to shaming. Its response when it's shamed internationally is to double down. More effective ways for Canada to engage with China—

2:25 p.m.

Conservative

The Chair Conservative Tom Lukiwski

Doctor, I know you've got more to say and I do apologize once again for interrupting, but if you could complete your thoughts in written form and send that answer as soon as possible to our clerk, I would appreciate it, as would Madame Vignola.

We'll now go to our next round of questioning from Mr. Green for five minutes, please.

2:25 p.m.

NDP

Matthew Green NDP Hamilton Centre, ON

Thank you, Mr. Chair.

I've been watching with interest what appears to be a Conservative about-face on China, so I'm going to put this to our guest, Mr. Nagy, and then ask for his response.

Former prime minister Stephen Harper's Conservative government signed an agreement between the Government of Canada and the Government of the People's Republic of China for the promotion and reciprocal protection of investments, commonly known as FIPA on September 9, 2012. They didn't even release the full text to the public. They ratified the agreement two years later, despite warnings from experts in labour and from human rights and environmental advocates that the agreement was detrimental to Canada's interests. Specifically, article 11 of the FIPA states that if Chinese firms in Canada suffer losses “owing to war, a state of national emergency, insurrection, riot or other similar events”, they can sue the Canadian government for compensation.

I wonder if you can comment on what impacts FIPA might have on a shift in the Canadian policy of procurement as it relates to China.

June 1st, 2020 / 2:25 p.m.

Fellow, Canadian Global Affairs Institute, Distinguished Fellow, Asia Pacific Foundation of Canada

Stephen R. Nagy

Although I'm not a legal expert and my understanding of FIPA is probably not as strong as it should be, I think when we're looking at Canadian engagement with China, first and foremost we should understand that the legal environment within China is not rule of law, it's rule by law. That's an important distinction when we're understanding how Canadian governments are investing within China. They are subject to the legal system produced by the Communist Party of China, which is subject to shifts in the Communist Party. This is very different from the Canadian context where a rule of law system means the court system has an independent decision-making process that can protect businesses and give them a predictable environment.

When we are looking at trade agreements with China and instruments such as FIPA, we should not be naive and think we will receive reciprocal treatment in China.

I'll stop there.

2:30 p.m.

NDP

Matthew Green NDP Hamilton Centre, ON

I certainly appreciate that. I've been trying to balance the economic coercion that China has put on during this, but also the United States of America. I have yet to hear anybody speaking directly about that.

Would you care to comment on that? We've heard horror stories of the Trump government bribing people on runways to have shipments redirected.

2:30 p.m.

Fellow, Canadian Global Affairs Institute, Distinguished Fellow, Asia Pacific Foundation of Canada

Stephen R. Nagy

No, I'm not familiar with these kinds of rumours, but I think we should be aware as Canadians that we've already been victims of economic coercion from the United States in the renegotiation of NAFTA 2.0, with steel tariffs.

I think if President Trump is re-elected we should continue to expect this kind of behaviour from the United States. If we have a new president, President Biden, I don't think these tactics will disappear but I think they will probably be softened and couched within a more multilateral mindset of a potential Biden administration.

2:30 p.m.

NDP

Matthew Green NDP Hamilton Centre, ON

I appreciate that feedback.

Again, I'm still trying to figure out the about-face by my Conservative friends. It says here that on September 16, interim Conservative leader Rona Ambrose said that if Trudeau is “not going to listen to British Columbians about LNG (liquefied natural gas) and the rest of Canada about how important our resource sector is, I hope he listens to the Chinese because they want those commodities and they want to see that energy infrastructure built.”

As it relates to selective decoupling and foreign influence on our national resources, what risk of economic coercion could Canada face without reliance on Chinese investment in the oil and gas sector, and if we rely on them to become a significant importer of Canadian oil?

2:30 p.m.

Conservative

The Chair Conservative Tom Lukiwski

You have about 30 seconds, Doctor.

2:30 p.m.

NDP

Matthew Green NDP Hamilton Centre, ON

I have my time at four minutes and 30 seconds. Are we doing only a five-minute round?

2:30 p.m.

Conservative

The Chair Conservative Tom Lukiwski

We are. I mentioned that at the outset.

2:30 p.m.

NDP

Matthew Green NDP Hamilton Centre, ON

My apologies.

2:30 p.m.

Fellow, Canadian Global Affairs Institute, Distinguished Fellow, Asia Pacific Foundation of Canada

Stephen R. Nagy

In the COVID-19 era, we've seen all economies slow down significantly. As a result, we've seen global oil prices also decrease. This is going to be a heavy blow for our natural resource industries in Alberta and Saskatchewan, and I think this is going to make your question somewhat of a moot point that China will not be able to invest profitably in our energy sector going forward.

2:30 p.m.

Conservative

The Chair Conservative Tom Lukiwski

Thank you very much.

We'll now go to a four-minute round of questioning.

Once again, we will start with you, Mr. Genuis.

2:30 p.m.

Conservative

Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB

Thank you, Mr. Chair.

It is a bit rich to hear a member from the socialist party talking about an about-face. They voted against bringing back the Canada-China committee a week ago, and then were telling the National Post something different about 48 hours later. I'll let Mr. Green explain that. I'm sure he'll be keen to.

Dr. Nagy, could speak about the possible implications of Chinese aggression outside of the economic sphere—what we're seeing in Hong Kong, what we're seeing across the border in India and I'm sure escalating fears related to that, and in Japan about possible action in the East China Sea and the South China Sea? What should we be tracking there? What should we be doing to prepare to respond?

2:30 p.m.

Fellow, Canadian Global Affairs Institute, Distinguished Fellow, Asia Pacific Foundation of Canada

Stephen R. Nagy

In order of priority, I would prioritize Taiwan and cross-strait relations. Second, I would prioritize the instability that's occurring in Hong Kong. Third, I would prioritize increased presence of Chinese naval ships in the South China Sea, the potential declaration of what's called an “air defence identification zone”, and finally, some kind of potential friction between the Japanese and the Chinese over the Senkaku Islands in the East China Sea.

Taiwan has managed the COVID-19 crisis extremely well. They had a successful election in January. These are all challenges to the Communist regime in China, and it makes it more imperative, more than ever, to try to push reunification as soon as possible.

Hong Kong will have the 31st anniversary of the Tiananmen Square massacre this Friday, on June 4. I expect that there will be huge protests and violence commemorating the massacre but also protesting against the recently adopted national security act by the Chinese government. This will continue to be a problem. We're most likely going to see Chinese intervention in Hong Kong that will fundamentally disrupt Hong Kong's role as an international finance centre, going forward.

I'll finish with the South China Sea area. Again, China is expanding its presence in the South China Sea through consolidation of its territories or its artificial islands in the South China Sea. It is also deploying more and more resources on the surface of the South China Sea and on submarine and other resources to really dominate the underwater environment in the South China Sea.

2:35 p.m.

Conservative

Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB

Thank you.

Just to follow up on the first round about the AIIB and BRI distinction, you said we're talking about two different things. Conceptually we are, but the AIIB is part of the BRI, or a relatively small part of it. Arguably, it's sort of the public relations part of it. Where the AIIB is a little bit more public-facing in terms of what it does, it's still very much dominated by the Chinese government.

Going back to your point about maybe having some Canadian influence on this, we're less than 1% of the AIIB, which is a relative speck in the larger sea of the BRI. We know what the BRI is all about. You talked about it. On what basis would we want to make the case to Canadian taxpayers that it's worth their money to be anywhere near these kinds of strategic vehicles?

2:35 p.m.

Conservative

The Chair Conservative Tom Lukiwski

Once again, unfortunately, Doctor, we're out of time. While it was a very good question, I would ask you to answer it in writing at your first opportunity and deliver that to our clerk.

We will go to our next four-minute intervention.

Mr. MacKinnon.

2:35 p.m.

Liberal

Steven MacKinnon Liberal Gatineau, QC

Thank you, Mr. Chair.

Actually, I'll allow Dr. Nagy to answer that question. What I'm taking from the Conservatives is that we don't need to have a relationship with one-sixth of the planet with a growing economy. We don't need to be able to sell our agricultural or other commodities into China. We should just hang up the phone and not deal with them at all—

2:35 p.m.

Conservative

Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB

Mr. Chair, I have a point of order. Mr. MacKinnon is casting aspersions that have nothing to do with the substance of this. What he's saying is false. It's completely false and he should spend his talking about his position rather than making things up about other people's positions.

2:35 p.m.

Conservative

The Chair Conservative Tom Lukiwski

Mr. Genuis, I will take that as a point of debate, not a point of order.

Go ahead, Mr. MacKinnon.