Canada-China Relations Committee on June 3rd, 2024

[The Chair, Liberal, Ken Hardie]

I call the meeting to order.

Welcome to meeting number 43 of the House of Commons Special Committee on the Canada-People's Republic of China Relationship. Pursuant to the order of reference of May 16, 2022, the committee is meeting on its study of Canada-People's Republic of China relations.

This is for everybody in the room, but the MPs are now quite accustomed to making sure their earpieces are well away from the microphones. We don't want feedback hurting our interpreters, and that has happened. We have had some pretty serious incidents. Just be aware of that.

We are meeting, of course, in a hybrid format with members attending in person and remotely using the Zoom application. Wait until I recognize you by name before speaking. For those participating by video conference, click on the microphone icon to activate your mic. Please mute yourself when you're not speaking.

For interpretation, for those on Zoom, you have a choice at the bottom of the screen. Just look for that little planet and click on it. You can choose floor audio, English or French. For those in the room, of course, you have the earpiece and the channel available to you.

Just as a reminder, all comments should be addressed through the chair. They should be, but quite often they are not. That's okay. That's just the way things have progressed as we have gone along.

We're meeting today on the matter of Canada's Indo-Pacific strategy. I want to welcome our witnesses for our first panel today and thank them for their patience while we got a vote out of the way. It was national pharmacare tonight, third reading. It's on its way to the Senate, I would presume.

From the University of British Columbia, we have Kai Ostwald, associate professor, Institute of Asian Research.

From the University of Delaware, we have Alice Ba, professor, international relations and comparative politics, University of Delaware, by video conference.

From the Asia Pacific Foundation of Canada, we have Hugh Stephens, distinguished fellow—both generally and by title, I presume—again by video conference.

Each of you has up to five minutes, but make it shorter, if you can manage it, because we have lost a bit of time tonight.

We will begin with Mr. Ostwald.

[Kai Ostwald, Associate Professor, Institute of Asian Research, University of British Columbia, As an Individual]

Thank you very much for the introduction. It's a pleasure to be here. I appreciate the opportunity to speak to you.

I want to make four points in my opening remarks. First, Southeast Asia's economic and geopolitical importance is rapidly increasing. You know that. You wouldn't be here otherwise, but I will note a couple of points to substantiate that.

Southeast Asia has 11 countries and 675 million people. As a block, it's the world's fifth-largest economy and is rapidly growing, with an expanding middle class and favourable demographic structures on the whole that position it well to sustain high growth rates for the next two, three or four decades. All of that makes it one of the most sought-out regions of the world for economic partnership and trade diversification. Of course, its location at the heart of the Indo-Pacific region and inclination to multilateralism make it important for geopolitical reasons as well.

The second point is that the Association of Southeast Asian Nations, ASEAN, is the primary vehicle for coordinating regional activities and interests. It's an odd organization, though. A noted diplomat from Singapore, Bilahari Kausikan, has called it a cow, not a thoroughbred, and it's important to understand that, because, of course, if you approach a cow expecting it to run like a horse, you're going to be disappointed. The reasons for that are several.

I will begin by saying that ASEAN is an intergovernmental organization, not like the European Union, a supranational government. What that means is that it has no independent power. It doesn't have legal authority over its member states. It's not a military alliance. It is led by a small secretariat. To put into context how small, it has approximately 400 people, with a budget of around $20 million U.S. per year. By contrast, the European Union has somewhere between 30,000 and 40,000 staff and a budget of 170 billion euros—orders of magnitude greater.

ASEAN's main purpose is to facilitate dialogue and coordinate engagement, both within the region and beyond the region. It does this through regional forums. The ASEAN Summit is the most important, with heads of government. The East Asia Summit is another key one. Canada is not part of it but does participate in the ASEAN Regional Forum.

ASEAN operates on the basis of consensus and non-interference in members' domestic affairs, which essentially means it's a talking organization for facilitating talking. It has been criticized as ineffective for this. I imagine in the question period we'll come up with examples of why it's ineffective and where it's ineffective, but there are reasons for ASEAN being structured as it is. The success, I think, in some cases is also underappreciated.

The third big point is that Southeast Asia is highly diverse in almost every conceivable way, but a couple of key commonalities are relevant for this committee. The first is that across the 10 member states of ASEAN, there is almost a uniform prioritization of economic development as the key focus of governments. The preferred way to do that is through multilateral engagement. Foreign policy is typically driven by developmental objectives, not by other considerations.

Importantly, for us, China is, for better or worse, the most important economic partner to every state in Southeast Asia. It's seen as critical for continued growth, especially with concerns around the U.S.'s commitment to the region growing and signs of U.S. protectionism on the increase. There is, of course, a lot of concern about growing Chinese assertiveness across Southeast Asia, but the general view is that China has to be lived with. Of course, Southeast Asia is geographically in China's backyard.

Given that, there is mounting fear that great power competition between China and the United States will force Southeast Asian countries to pick sides. There is little interest in that. In fact, there's a lot of concern about that pressure.

The 2019 “ASEAN Outlook on the Indo-Pacific” articulates those positions clearly. It calls for an Indo-Pacific region that is inclusive—that includes China—that resolves disputes through dialogue rather than through coercion and that recognizes ASEAN's centrality, which is a key point that ASEAN member states frequently emphasize. What's meant by that is that ASEAN states preserve maximum autonomy for themselves and agency to determine their affairs without undue external pressures.

The fourth and final point is that ASEAN and Southeast Asia matter for Canada's Indo-Pacific ambitions, obviously, or else we wouldn't be here. I don't want to oversell Southeast Asia. The region is complicated. Engaging it has risks. However, there's also significant potential as an economic and strategic partner for Canada. That's especially as tensions with China and India remain high and there are concerns about protectionism in the U.S., the European Union posting slow growth rates, and so on and so forth.

There's a foundation for Canada's engagement with the region. Canada has been active in Southeast Asia since the 1950s. Brand Canada is generally well recognized and well received, but—I'm just reflecting views from the region here—Canada has also developed a reputation since the 1990s as being something of a fair-weather friend by being less present in the region than other middle powers that have a history of engaging the region.

[The Chair, Liberal, Ken Hardie]

Professor Ostwald, we'll call it time for now, and maybe you can work in your final points in answers to some of the questions. If you could, please, that would be great.

We now go to Professor Alice Ba from the University of Delaware. Professor Ba, you have five minutes or less.

[Professor Alice Ba, Professor, International Relations and Comparative Politics, University of Delaware, As an Individual]

Thank you, Mr. Chair.

I echo some of the remarks that Professor Ostwald also made, and I will focus my five minutes on three sets of points.

First, why should Canada care about ASEAN and Southeast Asia? First and foremost, ASEAN serves regional stability. Within Southeast Asia, ASEAN helps to stabilize once-contentious bilateral relations and also, in the broader regions, ASEAN platforms, despite challenges, offer increasingly rare neutral arenas for informal and formal exchange among states, including those with challenged relations.

Further, given heightened U.S.-China competition, ASEAN continues to offer its member platforms for omni-engagement, which serves states' desires to not choose one power over another and to deny any one the ability to make Southeast Asia its exclusive sphere of influence. Engaging a range of major and middle powers also means diversified partners, which supports states' interests and strategic autonomy.

I think, for outside actors like Canada, ASEAN is additionally valuable because having ASEAN support lends legitimacy to one's initiative and regional order priorities.

Then, finally, Southeast Asian economies are part of larger regional economic networks, including, most notably, the Regional Comprehensive Economic Partnership, which is based on ASEAN's free trade agreements with dialogue partners.

Second, what are the challenges Canada should be cognizant of? I emphasize three. For one, ASEAN is an intergovernmental organization, as was noted, of 10 states of varied sizes, levels of development and global relations, that operate on consensus. These inter-ASEAN differences are not eased by current conflicts. Similarly, the omni-engagement that typifies ASEAN's larger frameworks means a diversity of partner interests as well. Certainly, ASEAN initiatives are often less decisive than some actors would like, so we also need to be realistic about ASEAN's limits.

Another consideration is specific to Canada. Canada's renewed attention to Southeast Asia in ASEAN takes place against the context of its relative absence. Despite its earlier remarkable engagement, regional states are aware of the fact that Canada is nearly the last of ASEAN's dialogue partners to seek a strategic partnership. The value of strategic partnership does offer an important signal, even if belated, of Canada's commitment. It also offers a forward-looking framework by which to regularize and expand relations. This said, what the partnership means in practice remains to be seen, and ASEAN and Canada will have a role to play in this, but in practice ASEAN's strategic partnerships offer ASEAN partners considerable room for initiatives, so there's definitely opportunity here for Canada if it wants to take it.

The timing of Canada's renewed interest, however, does raise the question of, “Why now?” This leads me to a third consideration and concern. I think it's important not to make Canada's engagement of ASEAN purely a function of its China or U.S. policy. To do so plays to Southeast Asian questions about the content and durability of Canada's commitment. More importantly, it misunderstands some of the predominant regional thinking among its member states. Despite their diversity, ASEAN states tend to share three points of agreement. One is that domestic economic security matters most. Two, China's a geographic and economic reality for those residing in Asia. For all Southeast Asian states, China is a critical economic partner, especially in trade but also in other areas, and geographically also China is a permanent resident power, and this means, strategically and economically, the priority is co-existence, even among those most concerned about China. Finally, there is a common concern for national and strategic autonomy. For Southeast Asian states this means it's best not to rely on any one country, whether it is China or the United States. If Canada or any partner is to be relevant in Southeast Asia, policy has to be cognizant of the three points I just mentioned.

This now leads me to my third point: Where are the opportunities? I emphasize two for Canada.

The first is that Canada is an actor that is not the United States and not China, and so that widens opportunities to carve out different kinds of options. Both United States and Chinese initiatives have become quite politicized in Southeast Asia. The engagement of other actors, like Canada, helps to generate other options and pathways that are seen as less divisive and destabilizing. This interest in alternative third ways is also evident in ASEAN's own regional initiatives. Professor Ostwald already mentioned the ASEAN outlook, but we can mention the Regional Comprehensive Economic Partnership as also an alternative third way in response to U.S. and Chinese initiatives.

The second opportunity for Canada is in trade leadership, and this is all the more important now, given uncertain U.S. trade commitments and policies as well as the priority that Southeast Asian states attach to trade as the basis for comprehensive security. Canada has opportunities to also play a leading role in trade.

[The Chair, Liberal, Ken Hardie]

Thank you very much, Professor Ba.

We now go to Mr. Stephens for five minutes or less.

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

Thank you, Chair, for the invitation to appear on this subject.

It's now approximately 18 months since the Indo-Pacific strategy was launched in November 2022, so it was conceived more than two years ago and a lot has happened since then, some of which will inevitably shape how it needs to be delivered. In my view, the strategy had and has two principal objectives, although thematically it's divided into five components for delivery.

The first objective is to position Canada to take advantage of and participate in the growth and strategic importance of the Indo-Pacific region, one of which, of course, is ASEAN—South Asia—which is essentially but not exclusively India and the North Pacific, Japan, Korea, Taiwan and, of course, China.

The second, albeit unstated, objective is to deal with Canada's so-called “China problem”, a problem that, if anything, grew because of the work of the foreign interference commission. Thus, in some ways, we have two strategies bolted together: One is essentially defensive and reactive in regard to China, and one is more forward-looking and positive in terms of developing closer relations with the rest of the region.

The IPS document states that our approach to China is “inseparable from our broader Indo-Pacific Strategy”. This suggests, then, that we are using the IPS and its focus on strengthening relations with the region as a key element in dealing with China.

The strategy also says, “Canada's approach is aligned with those of our partners in the region and around the world.” That statement, frankly, is a bit of a stretch, especially with regard to ASEAN, as was pointed out by the other speakers. The countries in the region—including, in particular, the ASEAN states—have their own complex interrelationships and dynamics in terms of relationships with China, and just as Canada has a different degree of co-operation and ties with individual states within the region, so too do they have their own web of interrelationships. China is a factor in all of these, especially for the individual ASEAN countries and for ASEAN as a whole. I think Canada needs to be clear that it values building relationships with regional partners as an end in itself, which could also include insurance against an increasingly unpredictable United States market, but not as a remedy to our “China problem”, and that's been one of the challenges in explaining the policy to partners in the region so far.

Now, the IPS got off to a slow start, but it had some successes, for sure, in its initial rollout. There's been a welcome increase in the presence of ministers in the region, the most recent being Minister Blair's taking part in the Shangri-La Dialogue in Singapore this past weekend. There have been announcements of senior appointments, the planned opening of new offices in various regional capitals and progress towards an Asia Pacific Foundation office in Singapore. The conclusion of a strategic partnership with ASEAN has been announced, and there has been an increase, of course, in our naval presence in the region.

Offsetting this has been a substantial delay in launching programs that involve non-governmental entities in Canada such as the regional engagement initiatives. Potential partners in Canada are impatiently waiting for details. I understand that RFPs for some of these programs will be released in September, which is almost two years after the announcement of the strategy.

Delay caused by the perhaps necessary bureaucratic approval process for funding and staffing is one issue. The other is the changing background since the IPS was announced. To cite a few examples, there is the crisis in our relations with India, so we have an Indo-Pacific strategy virtually without India; the evolution of AUKUS, of which Canada is not yet a member, but there is talk about some form of association; the U.S. launch of its own Indo-Pacific framework; of course, continued aggressive behaviour by China toward Taiwan and the Philippines; allegations of Chinese electoral interference in Canada; the U.S.-China tech war; China’s economic slowdown; and even, indeed, our own defence challenges.

Nothing remains static. As a result, the IPS, which was conceived back in 2021-22, cannot be static either.

Let me just point out three or four areas where I think renewed effort would be helpful.

The first would be to speed up and clarify the process for access to funding for Canadian NGOs. This would go a long way toward building institutional and people-to-people ties, but the funds need to flow.

The second is with regard to trade and trade leadership. Canada is the chair of the CPTPP process this year. There are three ASEAN states that are members. Canada, I think, has an important opportunity and role to play in providing strong leadership for the agreement's updating and for opening up and dealing with the accession process.

We should continue to push negotiations for a Canada-ASEAN FTA, building on the partnership that's been announced.

As part of this—and I know it's not related directly to ASEAN—I believe it's important to strengthen non-diplomatic ties with Taiwan, which could include a high-profile trade mission and dealing with the issue of Taiwan's and China's CPTPP membership, where there is a logjam and it's up to Canada, I think, to help move things along.

Finally, and always important, is keeping open dialogue with China, as is now being done, because, whether we like it or not, China will always play an outsized role in the region.

Ultimately, we need to present the Canadian value proposition of why Canada is important to the region and why we matter.

I'd be happy to respond to questions on those points.

Thank you.

[The Chair, Liberal, Ken Hardie]

Thank you, Mr. Stephens.

We'll get right to the questions now.

Mr. Kmiec, you have six minutes.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Thank you, Chair.

My first question will be for Mr. Stephens.

You mentioned the CPTPP, Canada's role as chair of the organization and that three of the 10 members of ASEAN are members of both entities.

What do you think Canada should do during this year that it chairs it? That's specifically on Taiwan and then, beyond Taiwan, what else it should do.

[Hugh Stephens]

I think it's important to remember that the CPTPP, like ASEAN, is a consensus-based organization, so, as chair, there is a limit to what we can do. Nonetheless, as chair I think there are some things that we can do in terms of providing leadership.

We're already almost halfway through our chairmanship.

There are two big issues for the agreement. One is to update it. It was signed back in 2018, and some of the terms and conditions could be looked at. We have a new member, the United Kingdom, that has almost been ratified.

The other really important issue is the accession question. It's a real asset that Canada is a member. It's the only regional trade organization of which we are a member, but if the new TPP is to really sing and live and move along, the membership question needs to be addressed.

There are six aspirant economies that have gone through the formal process of indicating that they would like to join. Some are more serious than others. The first two were China and Taiwan, within a week of each other. There are obvious questions around both. One is with regard to China, if China is really serious and why it has applied. Is it simply to act as a spoiler, or does it want to change the rules? There are all these sorts of questions. Nonetheless, China's application needs to be taken seriously, as does Taiwan's.

There is a lot of speculation that China would like to block Taiwan. China is not a member. A non-member cannot set forth conditions to other non-members. It really should be based on the ability to meet the terms of the agreement. Clearly, Taiwan and perhaps one or two others do.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Mr. Stephens, I want to get in another question.

You mentioned the PRC, but I asked specifically what Canada should do. Should Canada, as chair for the next stint, perhaps kick off talks with Taiwan to at least include it—to have some of the provisions of the CPTPP extended to it in order for it to be able to start participating on an equal footing with other members of the group?

If you keep your answer short, I want to follow up on your idea of a Canada-ASEAN FTA.

[Hugh Stephens]

There are six applicants. I don't think Canada can single out one particular applicant, but it can help move the process along. There needs to be agreement on how all the applicants could be dealt with. Are they going to be dealt with as groups in terms of readiness? Doing that would deal with the Taiwan problem.

I hope that answers your question.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Thank you.

Why can't Canada single out one particular state in order to participate? Is there anything in the rules that says we can't pick a state to prioritize over others?

[Hugh Stephens]

What Canada can do is engage in the preliminary discussions that are part of the accession process.

Right now my understanding is that applicants are encouraged, before the formal accession process begins, to have informal talks with all the current members. My understanding is that Taiwan has been unable to do that, because the response has always been, “Well, there is no consensus.”

In fact, there is no requirement for consensus for individual countries to begin these informal consultations. That is certainly one thing that Canada and other countries could do.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Thank you, Mr. Stephens.

I'm going to ask Professor Ba the following question.

Professor, you mentioned that ASEAN builds regional stability. Can you comment, then, on the South China Sea conflict? Many of the members of ASEAN have territory that is being actively claimed by the PRC. It seems to me that what's been happening is that a slow-moving organization can't respond to this very aggressive step that the PRC has taken.

Can you comment on that? Is that an image of ASEAN's ability to build regional stability? It seems to me that it's doing nothing while allowing the PRC to continue expanding and building bases in territorial waters or economic zones that are claimed by other countries, some of which are ASEAN countries. I'd like to hear your commentary on that.

[Prof. Alice Ba]

Yes, I think that's a good question. I think it requires thinking about what ASEAN's limitations are and what it does.

I think what ASEAN does not do is resolve conflicts, so even within its own organization, it actually has challenges in resolving conflicts.

What it does do is keep dialogue open. The South China Sea has become a very complicated issue, partly because it also involves other major powers. The South China Sea is one of the most complicated disputes in the world, given the number of actors and the variations in terms of the types of claims that are made. The South China Sea is an especially challenging dispute to handle, so ASEAN is very challenged in terms of handling that.

What ASEAN does do for Southeast Asian states is provide mechanisms that allow for states to continue a dialogue on issues, including maritime questions with China as well as with the United States. In that sense, it is helping to maintain relations, but your point about it not being solved is certainly a fair one.

[The Chair, Liberal, Ken Hardie]

Thank you very much, Mr. Kmiec.

We will go to Mr. Fragiskatos for six minutes.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much to the witnesses tonight. It has been really interesting testimony.

I want to build upon this point on the South China Sea and maritime disputes. I look at it as a question that cuts straight to the issue of cohesiveness within ASEAN. No organization that includes a collection of states is going to have unanimity on issues. I'm not making that point at all, but I do note that there are differences in perspective on this issue, so I wonder if each of you could touch on this point. Canada is looking at this, understanding that we have to engage in an Indo-Pacific strategy with China that is very different now from what it was a few years ago. If we're going to be moving closer to ASEAN, how prominently does this divide within the organization figure, and what would you advise us as a committee because of that?

Perhaps we'll go with Mr. Ostwald first, and then we'll continue through.

[Kai Ostwald]

Thank you. That's an important question.

I think it's important to point out that there are differences in perspective across Southeast Asia on what to do about the South China Sea, but there are commonalities as well. I think the uniform position across all of Southeast Asia is that respect for territorial integrity is absolutely critical, so the question isn't so much whether China has a right to be more assertive in the South China Sea and make claims but what to do about it. I think that has to be understood in the context of Southeast Asian states not having the capacity militarily to form a real challenge against China.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Professor Stephens, we'll go to you.

[Hugh Stephens]

I think that Canada's position has always been one of respect for international law. I think maintaining adherence to those principles is extremely important.

As you have mentioned, different ASEAN countries have different stakes in this. They all have a relationship with China, but some have a greater stake in the South China Sea issue than others. I think the best thing Canada can do is continue to maintain respect for the international order, which, by the way, clearly supports the freedom of navigation through that area and has certainly not endorsed the Chinese position on their nine-dash line.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much.

Please, go ahead.

[Prof. Alice Ba]

I'm going to answer this question a little bit differently from others. Southeast Asia policy should not be the same as South China Sea policy. If we also look at what states are most concerned about—and you see this in various polling as well as surveys in the region—the South China Sea is not ranked high. It's not the top concern. The concern is economics and health, so it's about other kinds of questions. That would be my way to respond to that.

I'll leave it at that for now.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much.

Professor Stephens, if I could go back to you, during your testimony you wrapped up by providing the committee with a set of recommendations for Canada. One of those was to maintain an open dialogue with China—I think that's the exact phrase you used, in fact. Do you have any advice, not just for the committee but for the Government of Canada, on how best to do that, on which issues to continue to focus on with respect to keeping that dialogue open, as you said?

[Hugh Stephens]

Well, even the IPS identifies one or two areas that are likely to be areas of mutual concern. That includes climate change, for example, migration and those kinds of issues, but I think we need to move beyond that. There are clearly issues of technical development.

There are.... I know the government has made an attempt. It's extremely difficult to engage with China. There are a lot of challenges, and China has not been an open and willing partner in many areas, but I think any diplomacy starts with planning an area you can have dialogue on and agree on and moving outward from there. Probably the common areas of climate change and decarbonization would be a good area to start.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much.

I have one minute left, and I suppose I'm putting both of you in a difficult position, but would you agree with what you just heard, or would you add to it in any way? Maybe you disagree entirely.