Canada flag as puzzle piece

Strategic Reflections: APF Canada Analysis of Canada’s Indo-Pacific Strategy One Year After Implementation

This series has been updated (May 9, 2024) to reflect the addition of four new pieces from our networked experts. 

An introductory note from Vina Nadjibulla, Vice-President Research & Strategy, APF Canada

Vina Nadjibulla headshot
Vina Nadjibulla

To mark the one-year anniversary of Canada’s Indo-Pacific Strategy (IPS), the Asia Pacific Foundation of Canada (APF Canada) is launching a new series of reflections from our network of experts on the implementation of the strategy and its impact on Canada’s presence, reputation, and influence in the region.

The contributions below are part of APF Canada’s Strategic Reflections series, with additional reflections in the coming months on China-Canada relations, Canada’s deepening engagement with South Korea, Japan, and Taiwan, and efforts to bolster Canada’s peace and security initiatives in the Indo-Pacific. The aim of this ongoing series is to present a variety of views and perspectives from APF Canada-affiliated scholars and experts, highlighting early successes and challenges in Canada’s efforts at becoming a more reliable and engaged player in the Indo-Pacific. APF Canada does not take institutional positions on specific elements of the IPS’s implementation, and the views expressed are those of the authors.

The reflection from Fen Hampson considers the implications of U.S. politics and that country’s upcoming presidential election on the success of Canada’s IPS. Julia Bentley explores the importance of Canadian academic and research collaboration in the Indo-Pacific. In his latest reflection, Patrick Leblond focuses on digital trade and infrastructure in the context Canada’s IPS. The reflection from Paul Meyer explores the important cybersecurity dimensions of the IPS.  reflection from Kai Ostwald focuses on the IPS’s impact in Southeast Asia, an area of growing importance to Canada and critical to the overall success of the strategy. The contribution from Patrick Leblond focuses on the second pillar of the IPS, which deals with trade, investment and supply chain resilience, where arguably Canada has made the most strides since the launch of the IPS. Karthik Nachiappan looks at Canada-India relations and the impact of the recent diplomatic crisis between the two countries on the overall implementation of the strategy. Bart Édes’ reflection highlights what Canada must do to build on the modest successes it has achieved in the Indo-Pacific to date. Finally, Deanna Horton’s reflection makes important linkages between Canada’s Indo-Pacific and Artic strategies and how to leverage complementarities between the two given resource and partnership constraints.

This Strategic Reflections initiative builds on earlier work from APF Canada, where we solicited analysis from our Distinguished Fellows and Canada-Asia Young Professionals Fellows following the November 27, 2022, announcement of Canada’s Indo-Pacific Strategy.

Fen Osler Hampson: Don’t Let Canada’s IPS Suffer the Same Fate as the ‘Third Option’

Fen Hampson headshot
Fen Osler Hampson, Professor of International Affairs, Carleton University

When Canada’s new Indo-Pacific Strategy (IPS) was launched with much fanfare in November 2022, the noted Quebec journalist André Pratte mused it stood a good chance of suffering the same fate as the “Third Option” of a bygone era. 

In 1972, Minister of External Affairs Mitchell Sharp announced that Canada would seek to reduce its cultural and trade ties with the United States by diversifying its relations with other countries. Trade and investment ties with the U.S. had deepened in the 1960s following the signing of the Canada-U.S. Auto Pact. And nationalist, anti-American sentiments were running high in Canada at the time. 

Despite the subsequent signing of a “contractual link” with the European Economic Community in a bid to strengthen Canada’s trade and investment ties and a series of domestic economic reforms, which included the creation of Petro-Canada and the Foreign Investment Review Agency, Canada’s ties with the U.S. only deepened in subsequent years, culminating in the North American Free Trade Agreement, driven by the inescapable powers of attraction of the world’s biggest and most powerful economy in the world. The Third Option died on the vine.

Today, the imperative to diversify Canada’s trade and investment ties with the Indo-Pacific could not be more urgent. Canadians must understand that although our economic fortunes will continue to be closely tied with the U.S., we are now experiencing declining marginal gains from trade and amplified political risk in our economic relations with the U.S. 

Unlike the “Third Option” of yesteryear, when trade with the U.S. was on the upswing, we are now on the downswing. The proposition that the U.S. market will continue to pay limitless and ever-increasing dividends to the Canadian economy has been sorely tested by the actions of successive U.S. administrations — Republican and Democrat — over the past three decades.

The first significant disruption to the relationship came in the aftermath of the 9/11 terrorist attacks on the U.S. Despite efforts by the Canadian and U.S. governments to manage the border co-operatively, many of the initiatives introduced to manage border security had the opposite effect — the border became sticky and thick, as red tape and other kinds of restrictions took effect. 

In the years that followed, the aggregate flow of goods and people across the Canada–U.S. border never returned to their pre-9/11 levels — despite a near parity exchange rate in 2011.

By the end of the first decade of the 21st century, China replaced Canada as the leading merchandise supplier to the U.S. (and became the second-largest supplier to the Canadian market); as unit labour costs in Canada rose, Canadian manufacturers lost their competitive edge. 

In the energy sector, which accounts for almost a quarter of Canada’s trade with the U.S. and roughly 10 per cent of Canada’s GDP, U.S. policies have been increasingly inimical to Canadian interests as environmental and other groups mobilized to stop the construction of pipelines on ecological grounds. And that is not going to change as the U.S. make deals with Venezuela to buy its oil and ignores Canada. 

Although we have won a few victories, on electric vehicles for example, the absence of a carbon tax in Biden’s new climate plan puts Canada at a competitive disadvantage, as do U.S. public procurement policies. 

Protectionist impulses run wide and deep with both U.S. political parties and will not change any time soon. 

If Donald Trump wins the next presidential election, we should brace ourselves for a profound change in the tone and direction of Canada-U.S. relations.

On the campaign trail, Trump has threatened to slap a 10 per cent tariff on all of America’s trading partners, including Canada. He has mused about his intention to escalate a trade war with China, suggesting tariffs in the order of 60 per cent. Such a move would disrupt China’s trade with the U.S., and Canadian trade with China would also be impacted.

Trump has also vented his frustration with Canada and Mexico, which he believes are not living up to their commitments in the Canada-US-Mexico Free Trade Agreement (CUSMA), which was negotiated during his presidency. 

Mounting protectionist pressures and growing political uncertainty south of the border underscore why Canada needs to put the proverbial pedal to the metal on deepening its ties with the Indo-Pacific. Our future growth and prosperity depend on diversifying our trade and investment ties with the fastest-growing economies in the world and what is now the world’s biggest cohort of middle-class consumers. 

We cannot let a U.S. election year suck the oxygen out of Canada’s Indo-Pacific Strategy. It will take a lot of heavy lifting from our political leaders and the business community to continue building our relations with key countries in the region while charting our own course to secure Canada’s future. 

Julia Bentley: Deepening Canada’s Academic and Research Collaboration with the Indo-Pacific

Julia Bentley headshot
Julia Bentley,Canadian Diplomat (Rtd)

In November 2022, Foreign Minister Mélanie Joly announced Canada’s Indo-Pacific Strategy (IPS), which included an Indo-Pacific Engagement Initiative (IPEI) worth C$40 million over five years. 

The IPS’s February 2024 Update highlights, under the section on Investing in and Connecting People, (1) People-to-People Ties; (2) Civil Society Engagement, and; (3) Development and Education. 

The only element listed in the Update specifically involving academics is APF Canada's Canada-in-Asia Conference held in Singapore in February 2023, but it is silent on detailed plans for implementing the IPEI. 

Details on how the following initiatives will be implemented are eagerly awaited:

  • A “Regional Connectivity Envelope” to support joint activities by non-government organizations in Canada in partnership with organizations in the Indo-Pacific (such as workshops, conferences, and field research, budgeted at C$20,000 to C$50,000 per activity);
  • Indo-Pacific Scholarships and Fellowships for Canadians to travel to the region (expected to include 45 graduate scholarships at C$30,000/year and 10 fellowships at C$75,000/year);
  • Commissioned research on regional trends and policy developments — specifically, short-term, evidence-based research projects on a fast turn-around basis — for internal use by Global Affairs Canada;
  • An “Asia Competency Initiative” to strengthen regional expertise within Canada’s public service;
  • A “Regional Engagement Envelope” to support public diplomacy aligned with IPS themes, such as speaker series and hosting of events to raise the visibility of Canada’s engagement in the region or in events of regional importance. 

GAC anticipates launching a request for proposals by summer 2024 for the two initiatives of direct interest to academics: the Regional Connectivity Envelope, and for an implementing agency to administer outbound Indo-Pacific Scholarships and Fellowships. To maximize impact, the application process for these scholarships needs to be less administratively cumbersome than is the process for Canada-ASEAN Scholarships for Educational Exchange and Development (SEED). 

Indo-Pacific Scholarships and Fellowships can help address the pressing need for cultivating Canadian expertise on Northeast Asia, South Asia, and Southeast Asia. For the IPS to have a real impact on deepening this Canadian expertise, Canadian students and faculty must be incentivized to choose less commonly targeted destinations within the Indo-Pacific, beyond Australia, New Zealand, and Singapore.

Regional Connectivity funding should encourage Canadian academic institutions to convene events with regional partners on themes of vital importance to the Indo-Pacific, such as climate change and maritime security. Academic institutions will also be essential for the Asia Competency Initiative to offer professional development for Canadian public servants, for example, through courses taught at the Canadian Foreign Service Institute or the Canada School of Public Service. How nimble those two government training institutions will be in terms of collaborating with academics to uplift Asia competencies within the public service remains to be seen. 

While the intent of Regional Engagement is primarily Canadian government-initiated public diplomacy, there may be scope for academic engagement, for example in providing a platform for speakers from the Indo-Pacific region such as scholars and policymakers, or hosting events on Indo-Pacific themes.

Four additional elements would complement what has been announced so far. These could be undertaken either under the purview of GAC’s Indo-Pacific Engagement Initiative, or by APF Canada through its forthcoming regional office in Singapore (whose programming has yet to be announced).

1. A Canadian policy network on the Indo-Pacific, similar to the Canadian Consortium for Asia Pacific Security (CANCAPS) and the Canadian Consortium on Human Security, which were actively supported and funded by our foreign ministry and administered by a consortium of Canadian universities. 

These networks fostered collaboration and dialogue among Canadian academics, graduate students, practitioners, and officials with shared interests in policy engagement. An Indo-Pacific policy network could do the same, cultivating expertise and rejuvenating collaboration between Canadian academics and officials. 

This network would also support the long-pending resumption of Canada’s active participation in the Council for Security Cooperation in Asia Pacific, the only regional multilateral Track Two security dialogue in the Indo-Pacific. APF Canada is well-placed as a knowledge hub to partner with GAC to create and sustain this network.

2. A co-ordinated speaker series to bring at least 12 experts each year from Asia to Canada to address strategic themes consonant with the IPS. This could include speaking engagements at multiple universities and with specialized audiences across Canada. This would help to compensate partially for the absence of a flexible and reliably funded mechanism for public diplomacy, which many other countries have at their disposal, to bring foreign public intellectuals and experts to their home country to deepen mutual understanding and shared interests. 

GAC’s public diplomacy reach has diminished since 2012, and Canada needs to find ways now to overcome this gap in the Indo-Pacific; this proposal would provide a modest start for that. 

3. Fellowships for established Southeast Asian academics to teach at Canadian universities and deepen the expertise of Canadian faculty and the next generation of Canadians. This could be modelled on the visiting chair in Southeast Asian Studies funded by the Canada-ASEAN Centre in the 1990s, which brought scholars from Southeast Asia to teach for an academic year in Canada, rotating among universities with strong Asian studies programs. 

Visiting Southeast Asian academics were based at a Canadian university and encouraged to visit other universities, attend national conferences wherever they were being convened, and go to Ottawa to engage with Canadian officials.  

This proposal could fill a lacuna in the SEED Program and Indo-Pacific Fellowships, the latter being intended only for outbound Canadians. 

4. Funding for 5-6 Canadians to participate in the annual Asia-Pacific Roundtable in Malaysia, a prestigious regional dialogue that includes China and other “non-like-minded” countries whose perspectives are important for Canadians to hear

Although the Canadian International Development Agency was an early financial supporter of the Roundtable, giving Canada significant visibility, Canadian participation has since been sporadic, and Canada has been eclipsed by other countries with a more active presence. 

Consistent greater Canadian participation would complement Minister Joly’s interest in increasing Canadian focus on Indo-Pacific security and would connect Canadian participants to leading security experts from the region. 

Patrick Leblond: Digital Trade and Canada’s IPS

Patrick Leblond headshot
Patrick Leblond, CN-Paul M. Tellier Chair on Business and Public Policy and Associate Professor, Graduate School of Public and International Affairs, University of Ottawa

One of the objectives of Canada’s Indo-Pacific Strategy (IPS) is to promote trade, investment, and resilient supply chains. Overall, the implementation of this objective has been impressive, albeit against rather low expectations. 

However, upon reading the IPS when it came out in November 2022, I was surprised to see that the economic funds focused mainly on promoting the export of natural resources and agricultural and agri-food products. While such an approach is very good, as it takes into account Canada’s economic (“natural”) advantages, it is an economic view rooted in the 20th century. Why not focus instead on the digitization of the economy and anchor the economic dimension of the IPS in the 21st century?

According to a recent study, the Indo-Pacific is the world’s most dynamic region in terms of technology and digital commerce. For many Canadian companies, especially small and medium enterprises (SMEs), digital trade could be one of the best ways to do business across the Pacific. 

After all, digitization enables companies to increase their scope and geographical reach. It also lowers their costs and facilitates supply chain adaptation. How does the IPS promote digital trade and innovation? According to the strategy’s text:

  • “Canada will increase funding to support inclusive economic growth and start new partnerships to promote trade and develop technologies
     
  • “Canada will strengthen our supply chains through new and existing trade and investment agreements; investments in domestic infrastructure that increase trade flows and facilitate stronger business-to-business relationships” 
     
  • “[Canada will] work with partners to develop digital infrastructure, promote interoperability and promote coherent regulations affecting the Internet, the digital economy and trust and security in the use of information and communications technology.” 
     
  • “Canada will increase its engagement in regard to the shaping of international standards and norms, particularly in the technology sector” 
     

Concrete measures are needed to expand digital trade for our SMEs. These measures should address digital infrastructure and capacity, reducing non-tariff barriers, and importing knowledge and digital technologies from the region.

When it comes to digital infrastructure, the focus should be on high-speed internet access and international digital payment systems. In both cases, access and user costs need to be competitive (that is, at a good price!). We also need to encourage Canadian businesses, especially SMEs, to adopt digital technologies on a much larger scale. This applies to the management and development of production and logistics chains in Canada and internationally.

We should help SMEs make optimal use of these chains, which means developing entrepreneurs’ and workers’ technological, administrative, and marketing skills. We also need resources dedicated to promoting Canadian digital trade with the economies of the Indo-Pacific region. This includes, for example: 

  • The federal Trade Commissioner Service and its provincial counterparts;
     
  • Presence on trading platforms operating in the Indo-Pacific (e.g. Alibaba, JD.com, T-Mall, Lazada, Tokopedia, Shopee, Tiki, Sendo, etc.) and; 
     
  • Exploring possible partnerships between our companies and Australian, Japanese, Korean or Taiwanese companies, among others, to penetrate and develop markets in ASEAN countries.
     

Reduce — or eliminate — tariff and non-tariff barriers to international digital trade
 

The moratorium on digital trade customs duties at the World Trade Organization (WTO), which was extended for two years at the ministerial meeting in February, must be made permanent. However, WTO Director-General Ngozi Okonjo-Iweala says this is probably the last time it will be renewed.

The IPS focuses primarily on “cooperation on standards, norms and regulations that will benefit Canada, the Indo-Pacific region and rules-based trade.” In this area, Canada is already very active in the Indo-Pacific in terms of digital trade governance.

  • It has applied to join the Digital Economy Partnership Agreement (founded by Chile, New Zealand, and Singapore) alongside China and Korea. 
     
  • Canada became a founding member of the Global Cross-Border Privacy Rules Forum, which was launched by the U.S. as part of its own Indo-Pacific strategy, and which aims to remove these rules from the Asia-Pacific Economic Cooperation (APEC) forum to shield them from China’s direct influence. 
     
  • Canada is a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which includes a chapter on digital trade.
     

But more needs to be done. For example, Canada should be a leading partner in the International Chamber of Commerce’s Digital Standards Initiative. This Singapore-based initiative aims to develop international standards for the digitalization of supply chains.
 

Leverage local knowledge and technologies
 

The IPS is rather a one-way street: it emphasizes selling Canadian products and services to the region’s economies but says little about the technological innovation taking place in the region that could benefit Canadian companies. It is as if importing products, services, and ideas from the Indo-Pacific doesn’t fit in with Canada’s vision for the region. 

Yet Canada has much to learn from Indo-Pacific researchers and companies. We need to avoid the neo-colonial attitude that “we” have nothing to learn from these “people” because we are more economically developed in general.

The IPS plans to “strengthen Canada’s Science, Technology and Innovation partnerships with key economies, including Japan, the Republic of Korea, India, Singapore and Taiwan, to support international co-innovation projects and commercialization-oriented research and development partnerships for Canadian small and medium-sized business with Indo-Pacific partners.” Why not also partner with “less key” economies in the region? Don’t they have anything to offer? Quite the contrary!

The IPS is an extraordinary achievement. It had been more than 30 years since Canada articulated a strategy or vision for its engagement in the Indo-Pacific. But Canada will be judged by its actions. From an economic point of view, the implementation of the IPS since the end of 2022 is in line with the commitments made.

But we need to go further. We now need to put into action the more strategic (as opposed to tactical) elements and bring the IPS and Canada into the 21st century, notably, on issues related to digital technologies and trade.

Paul Meyer: The Cybersecurity Dimension of the IPS

Paul Meyer headshot
Adjunct Professor of International Studies and Fellow in International Security at Simon Fraser University

Concern over security threats and the need for Canada to do more to counter them is a prominent theme in the federal government’s Indo-Pacific Strategy (IPS). Although the strategy is thin on details, an emphasis was placed on an increased naval presence in the region — a very traditional form of power projection.

Cybersecurity, a more contemporary challenge, is also acknowledged, albeit in a truncated fashion. With respect to the “disruptive power” of China, the strategy foresees Canada “pushing back against any form of foreign interference on Canadian soil and strengthening our cyber security systems.” Little light is shed on how Canada is to defend itself against cyber operations of an espionage or military nature. The protection of critical infrastructure would seem a priority, especially given the attention U.S. officials are paying to this potential vector of attack. According to a recent statement by FBI Director Christopher Wray: China was increasingly inserting “offensive weapons within [U.S.] critical infrastructure poised to attack whenever Beijing decides the time is right.”

Although the IPS claims that Canada will “take a leading role” in combating cybersecurity threats such as disinformation and ransomware, how exactly this role will be undertaken and the implications of dealing with more damaging cyber assaults are not elaborated on. Beyond bolstering our own cyber defences, there is an opportunity for Canada to play a constructive role in assisting Indo-Pacific states and especially ASEAN countries to enhance their cybersecurity posture.

This will require a focused effort to operationalize the positive declaratory policy outlined in the IPS. With respect to ASEAN, the strategy confines itself to a pledge to strengthen Canada’s diplomatic presence and increase security co-operation. There is a brief reference to Canada increasing “intelligence and cyber security investments” and a few government agencies are mentioned (namely CSIS, CSE, CBSA, and RCMP) as working to “detect and respond to increasing cyber security threats.” These threats are described as “online disinformation” and “online attacks targeting civil society and human rights defenders.” These problems warrant attention of course, but they do not address the threat originating with foreign states’ penetration of computer systems for espionage and/or sabotage. 

The diplomatic dimension of international cybersecurity policy is not really addressed by the strategy. Global Affairs Canada is not given a role here, although there are indications that GAC will deploy, this year, five “cyber attachés” to missions in the region. If realized, this could prove a valuable contribution to improving the region’s cyber defences as well as providing assistance in developing cyber diplomatic capacity. 

To be effective, it would need to be designed to complement the well-developed ASEAN cybersecurity strategy. Among attractive options for Canadian input would be offering cybersecurity “flying squads” to assist individual states in countering cyberattacks. Canada could also assist with the implementation by ASEAN states of the 2015 UN-agreed normative framework for responsible state behaviour in cyberspace. In addition, Canada could offer to work with interested ASEAN states on its suggestions on norm implementation and the fostering of a gender-sensitive approach to cybersecurity. 

Such an engaged input by Canada would not only help build local capacity but also would permit ASEAN states to play a more substantial role at multilateral forums like the UN where the norms of responsible state behaviour in cyberspace are being developed. Canada and its allies need greater engagement with regional states if diplomatic constraints on malicious cyber activity are ever to be agreed upon. 

Paul Meyer is Adjunct Professor of International Studies and Fellow in International Security at Simon Fraser University. He is a Senior Advisor to ICT4Peace, an NGO promoting a “peaceful environment” in cyberspace.

Kai Ostwald: Canada and ASEAN: The inaugural IPS year

Kai Ostwald Headshot
Director, Institute of Asian Research, University of British Columbia

Canada is one year into its ambitious Indo-Pacific Strategy (IPS), which calls for a “generational” response to the growing economic and geopolitical importance of the Indo-Pacific. Southeast Asia—also referred to as the ASEAN region in recognition of its regional association—lies at the heart of the Indo-Pacific and features centrally throughout the IPS. 

There is a rich history of engagement between Canada and Southeast Asia that stretches back to the 1950s. Canada’s development assistance over several decades brought it extensive goodwill and the formal designation of Dialogue Partner for the Association of Southeast Asian Nations (ASEAN) in 1977. Its standing remained strong until the late-1990s, when Canada’s engagement became more episodic and narrowly focused on economic interests. From that followed an unfortunate—and unfortunately sticky—reputation as a fair-weather friend, prone to abrupt policy reversals as domestic political winds shifted.

This legacy has implications in that Canada must contend with a degree of skepticism in the sincerity of its Indo-Pacific ambitions and make up ground vis-à-vis other global actors whose presence in the region was steadier over the past decades. 

The IPS’s inaugural year had clear positives. Both Prime Minister Justin Trudeau and Foreign Minister Mélanie Joly made symbolically important visits to the region, punctuated by headline-worthy statements about Canada’s aspirations for the relationship. Canada’s elevation to a “Strategic Partnership” with ASEAN in September is symbolically meaningful as well, even if the substantive implications are unclear. Progress on Canada-ASEAN free trade agreement (FTA) negotiations and several high-profile events, including APF Canada’s inaugural Canada-in-Asia Conference, further boosted Canada’s visibility in the region.

Positive as these developments are, they are preliminary signals rather than clear responses to lingering questions about Canada’s role in the region. Indeed, ambiguities abound. Southeast Asia remains apprehensive about the Indo-Pacific framework, given the region’s vulnerability to fallout from great power tensions. That leaves little interest in such things as “picking sides,” “decoupling,” “like-mindedness,” or other concepts that imply the inevitability of U.S.-China conflict. Given a choice, the region seeks broad-based engagement—including with China—that prioritizes development and avoids conflict. How will Canada balance those preferences with pressure from the U.S. to close ranks in response to China’s rise?

There is no clear answer, partly because it also remains ambiguous whether Canada aspires to the role of semi-autonomous middle power, or integral component of a grand U.S.-led initiative. Features of the two can be blended to some extent, but perceptions matter, and Canada will struggle to credibly occupy both profiles over the long run. As important is a related question on the minds of many in the region: why Canada? Southeast Asia has no shortage of potential partners looking to leverage the region’s strategic and economic opportunities. Canada can stand out from that crowd, but it has yet to articulate the coherent value proposition that makes clear how.

At least in Southeast Asia, Canada’s Indo-Pacific era is off to a promising start. To sustain this initial momentum, Canada must continue to show up in ways that boost its visibility across the region. Moreover, as the wave of forward-looking Indo-Pacific announcements gradually makes way for the new era’s quotidian reality, Canada must also begin to address the aforementioned ambiguities, lest its counterparts fall back on Canada’s reputation to fill in the blanks. There is, in short, little space for complacency.

Bart W. Édes: Canada’s Indo-Pacific Strategy: How to bounce back from a rough first year

Bart Edes headshot
Professor of Practice, McGill University

It’s been a tough first year for Canada’s IPS, as relations with India took a steep nosedive. Canada is now burdened by simmering diplomatic tensions with Asia’s two giants, casting a pall over the overall strategy. Yet this difficult period must not halt efforts to reinvigorate areas of mutually beneficial co-operation with China and India, both on a bilateral basis and in a multilateral context. While Ottawa has paused trade talks with New Delhi, Canadian subnational governments, businesses, and educational institutions should continue to interact actively with the South Asian nation, which is Canada’s leading source for students and immigrants.

The successful conclusion of the 15th Conference of Parties (COP) to the UN Convention on Biological Diversity in December 2022 received less attention than it should. The COP was hosted in Montréal due to COVID restrictions in China, which nonetheless retained its role of chair. The resulting Kunming-Montréal Global Biodiversity Framework is a global success and came about in part due to close collaboration between Canadian and Chinese authorities. On the other hand, in June 2023, Canada halted all government-led activity at the Beijing-based Asian Infrastructure Investment Bank (AIIB). Disengagement with the institution harms Canada’s interests in the Asia Pacific region, where the AIIB finances projects in areas important to Ottawa, like climate change mitigation.

More positively, talks on trade and economic accords are proceeding apace with willing partners in Indonesia (individually) and ASEAN (including Indonesia). While the negotiations are very challenging, they are worth pursuing. ASEAN is on track to become the world’s fourth-largest economy by 2030. In 2022, merchandise trade between Canada and ASEAN reached C$40.7 billion. The agreement on an ASEAN-Canada Strategic Partnership in September 2023 was a significant milestone. Canada already has free trade agreements with some ASEAN states via the Comprehensive Progressive Agreement for Trans-Pacific Partnership. Ottawa must do more to gain greater benefits from this important accord, for which it will serve as chair in 2024.

The IPS expanded the geographic remit, and boosted the paid-in capital, of Canada’s development finance institution, FinDev Canada, so that it could support infrastructure development in the Indo-Pacific region. Today, FinDev boasts of a portfolio worth C$1.14 billion realized through signed commitments with 42 clients. Yet not one of these is based in Asia or the Pacific. The DFI needs to move faster to realize its expanded mandate.

Canada should capitalize on positive relations with Japan and South Korea to further develop economic ties and other areas of co-operation. In addition, as a complement to the IPS, intensified engagement should be sought with Central Asia, which has witnessed significant political and market reforms in its two biggest economies, Kazakhstan and Uzbekistan. Both welcome a diversification of their economic relationships to reduce dependency on China and Russia. There are opportunities in the region for Canadian firms in sectors such as mining, metallurgy, energy, and agriculture.

Yet, to realize the ambitions of the IPS, Canada must invest more resources into its implementation, continue to expand its regional presence, and be more active in Indo-Pacific forums and networks.

Patrick Leblond: Meeting the IPS’s objective on trade, investment and supply chain resilience: So far, so good

Patrick Leblond headshot
Patrick Leblond, CN-Paul M. Tellier Chair on Business and Public Policy and Associate Professor, Graduate School of Public and International Affairs, University of Ottawa

Canada’s Indo-Pacific Strategy (IPS) includes an objective of expanding trade, investment, and supply chain resilience. To do so, the IPS lists a number of initiatives and commitments. Overall, implementation of this objective has been impressive so far.

However, some of the initiatives described below, in fact, pre-date the launch of the IPS, thus making it difficult to ascertain to what extent progress can be directly attributed to the strategy. Nevertheless, we can confidently presume that the IPS gave these activities additional momentum.

On matters related to trade, in February 2023, Mary Ng, Minister of Export Promotion, International Trade and Economic Development, announced that the federal government was investing C$24 million to establish the Trade Gateway to Southeast Asia, which will be based in Singapore. That same month, she led the first Team Canada trade mission to the Indo-Pacific, also in Singapore, and in October and November, she led a second mission to Japan. In December 2022, one month after the IPS was published, Canada enhanced support for women entrepreneurs when Minister Ng participated in the Asia Pacific Foundation of Canada’s second women-only trade mission to Japan. These efforts at increasing trade with the Indo-Pacific are being bolstered by the appointment in September of Paul Thoppil as Canada’s new Indo-Pacific Trade Representative. He will be based in Jakarta.

At the APEC meeting in November 2023, Canada and its CPTPP partners agreed to the Terms of Reference for the CPTPP’s General Review, “a process meant to assess and improve the implementation and effective functioning of the Agreement.” In 2024, Canada will chair the CPTPP Commission, the body that governs the Agreement. At the APEC meeting in November 2023, Minister Ng launched the Indigenous Peoples Economic and Trade Cooperation Arrangement Partnership Council. Canada is still waiting for the U.S. to accept its request to join the U.S. Indo-Pacific Economic Framework for Prosperity (IPEF).

Canada has also improved market access through new comprehensive free trade agreements and new or modernized foreign investment promotion and protection agreements. In September 2023, Canada and ASEAN signed the aspirational ASEAN-Canada Strategic Partnership, which, among other things, calls for the “timely conclusion of an ASEAN-Canada Free Trade Agreement” (2025 is the target). When the IPS was launched, Canada and ASEAN had held two rounds of negotiations (August 2022 and November 2022). Since then, they have conducted three more rounds. Beyond ASEAN, Canada completed the negotiations of a foreign investment promotion and protection arrangement with Taiwan in October 2023.

The IPS includes several initiatives to strengthen the presence of Canada’s agriculture and agri-food sector in the Indo-Pacific region. One of these initiatives is the Indo-Pacific Agriculture and Agri-food Office (IPAAO). In December 2022 and January 2023, Marie-Claude Bibeau, then Minister of Agriculture and Agri-food, met with industry associations to “help inform [the IPAAO’s] early-stage planning and implementation.” On June 7, 2023, she announced that the IPAAO would be based in Manila and supported with C$31.8 million in federal government funding. In April 2023, Minister Bibeau also led a trade mission to Japan and Singapore.

On the digital front, the IPS calls for Canada to join the Digital Economy Partnership Agreement (DEPA) between Chile, New Zealand, and Singapore, following Minister Ng’s announcement, in May 2022, that Canada had submitted a formal request to launch accession negotiations. In August 2022, the DEPA Joint Committee “decided to commence the accession process for Canada.” Negotiations are still underway.

In the area of investment, FinDev Canada was given additional capitalization worth C$750 million to expand its activities in the Indo-Pacific. FinDev Canada focuses on sustainable infrastructure, agribusiness and forestry and associated value chains, and financial services. In May 2023, it signed a memorandum of agreement with the Asian Development Bank “to cooperate on sustainable and inclusive private sector investments that promote sustainable development in Asia and the Pacific.” As of November, it appears that FinDev had yet to make any investments in the Indo-Pacific.

Finally, on matters of strengthening supply chain resilience, Canada strengthened its science, technology, and innovation partnerships with Japan, signing two memoranda of co-operation: on Industrial Science and Technology and on Battery Supply Chains during the visit by Japan’s Minister of Economy, Trade and Industry, Yasutoshi Nishimura, to Ottawa in September 2023.

From the above, we can conclude that the Canadian federal government has been making good on its IPS commitments related to trade, investment, and supply chain resilience. As noted, some of these initiatives were underway prior to the IPS’s release and may have happened anyway. Nevertheless, the IPS might have given them greater impetus by making them more prominent in the public eye. The IPS certainly makes it easier to hold the federal government to account, regardless of when a particular commitment was launched.

Deanna Horton: Canada’s IPS and the Arctic

Deanna Horton headshot
Senior Fellow, Munk School of Global Affairs and Public Policy, University of Toronto

Canada’s Indo-Pacific Strategy (and that of the U.S.) is seen to be inextricably linked to its Arctic Strategy, both of which address regions of great strategic opportunities.

In an economic sense, apart from each other and Mexico, Canada and the U.S. are more intertwined with the Indo-Pacific than with any other region. Canada touts its membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a free trade agreement among 11 nations (12 including the U.K.) that does not include China or the U.S. However, neither Canada nor the U.S. (nor India, for that matter) are members of the behemoth Regional Comprehensive Economic Partnership (RCEP), an economic grouping hovering at just under one-third of the global GDP and population. The Indo-Pacific Economic Framework (IPEF), an American initiative, has won adherents despite some criticism in Washington and in trade policy circles for its lack of market access to the U.S. Although Canada initially played down the IPEF’s relevance, of course, it has subsequently worked to gain entry.

On the Arctic front, Canada has its 2019 Arctic and Northern Policy Framework (ANPF).  However, despite the Arctic’s importance to Canada, many Canadians – including many Canadian governments – do not view its governance and protection as a priority. As with the Indo-Pacific, Canada’s prioritization of the Arctic has fluctuated over the years, and government spending on the Arctic does not reflect the significance of the Northern Passage to Canadian sovereignty.

In 2013, the Arctic Council granted observer status to China, India, Japan, Singapore, and South Korea. These states have rapidly expanded their Arctic presence through unilateral, bilateral, and multilateral engagement, although less so in the case of India. These developments have added a new dimension to the concept of a “global Arctic” and shifted the Arctic’s strategic centre away from the region itself and toward the Indo-Pacific. With these five states developing Arctic capacities and interests, Canada and the U.S., among other Arctic nations, can no longer overlook non-Arctic Asian actors in their strategic approach to the region.

For Canada, while the IPS and ANPF are concerted efforts involving coalitions of government ministries and a co-ordination of these ministries’ strategic views, the limited resources that have been allocated for each means that the ultimate test of Ottawa’s willingness to make a meaningful contribution, gain the trust of regional partners, and bring about its Indo-Pacific and Arctic visions, will be in the implementation. For that, Canada will have to leverage its limited impact by maximizing complementarity with its partners.

Karthik Nachiappan: An ‘Indo'-less IPS

Karthik Nachiappan
Research Fellow, Institute of South Asia Studies, National University of Singapore

India featured prominently in Canada’s Indo-Pacific strategy (IPS). Unlike the Indo-Pacific strategies produced by Canada’s G7 partners, however, India did not feature as a geopolitical asset in which to invest. Rather, its importance to Canada was depicted as largely economic, as a thriving, rising Asian market. In other words, India was seen as representing an economic, not strategic, opportunity for Canada.

But this was a bet made on shaky political ground, given differences in characterization of the activities of Canada’s Sikh diaspora that have marred bilateral ties for decades. That bet, and possibly Canada’s IPS, now appear rudderless after Ottawa alleged the Indian government had a role in the killing of Hardeep Singh Nijjar in British Columbia. The murder and the unfolding crisis have dealt the relationship and the IPS a mighty blow.

Why did India feature heavily in the IPS? Western powers view India’s growing economic heft and military capabilities as integral to their efforts to balance and restrain China’s growing ascendance. Regardless of whether New Delhi can credibly deter Beijing, Canada’s allies all appear unified in strategically enabling India so they can lessen their burdens vis-à-vis China while also forging closer economic ties with India for their own domestic and strategic reasons. An economically dynamic India can also serve as an attractive long-term market while helping New Delhi finance its military capabilities to manage regional security challenges.

Similar logics could have influenced how Canada sought to engage India through its IPS, even if that engagement retained a heavy emphasis on economic matters. For Ottawa, increased trade with India would amplify and complement Canada’s robust pension fund investments. More trade would intensify links between highly innovative Indian and Canadian firms, creating networks of capital, ideas, and skilled professionals. Forging and deepening trade, however, hinges on a stable political compact, which the two countries lacked. The current crisis has laid bare the flaws of having a one-dimensional economic focus on India and not nesting that pillar within a strategic framework driven by shared interests and values.

The failure to craft a bilateral strategic framework with India before unveiling the IPS left the strategy open to the vagaries of the rocky relationship, namely fractious diaspora politics. Unsurprisingly, the first casualty of the current crisis was the talks that were meant to lead to an early progress trade agreement (EPTA). Ensuing diplomatic expulsions and withdrawals, moreover, have imperilled the burgeoning people-to-people ties through academic, cultural, research, and scientific exchanges. The lack of trust will inevitably defer bilateral discussions on shared challenges like supply chain resilience and climate change, both of which are key IPS priorities tied to India.

That said, it’s vital to see this seemingly generational impasse (perhaps a necessary one) as an opportunity to have the hard conversations that will help place the relationship on a sounder footing and keep it relatively immune from political irritants. That rapprochement could reinvigorate Canada’s IPS and enable it to tackle bilateral and regional priorities given India’s rise and size, its solid economic and critical military positions, and the faith Canada’s allies have in New Delhi as a balancer in the Indo-Pacific. A potential thaw, however, depends on what direction the Nijjar investigation takes and how New Delhi responds. Notwithstanding that outcome, it's unquestionable that Canada and India share interests, values, and the desire to collaborate in a fluid and volatile Indo-Pacific. It’s politics that gets in the way.

The views expressed here are those of the authors, and do not necessarily represent the views of the Asia Pacific Foundation of Canada.

Fen Osler Hampson

Fen Osler Hampson, Chancellor’s Professor and Professor of International Affairs, Normal Paterson School of International Affairs, Carleton University

Fen Osler Hampson is Chancellor’s Professor and Professor of International Affairs at the Normal Paterson School of International Affairs (NPSIA) at Carleton University in Ottawa. The former Director of the Norman Paterson School of International Affairs (2000-2012), Professor Hampson served as Director of the Global Commission on Internet Governance and is the President of the World Refugee & Migration Council. 

He holds a Ph.D. from Harvard University where he also received his A.M. degree. Hampson also holds an MSc. (Econ.) degree (with distinction) from the London School of Economics and a B.A. (Hon.) from the University of Toronto. A Fellow of the Royal Society of Canada, he is the author or co-author of 15 books and editor or co-editor of 32 other volumes, with expertise in Canadian foreign policy, internet governance, international organization and negotiation, and conflict resolution and analysis.

Julia Bentley

Julia G. Bentley served in the Canadian foreign service with distinction for 32 years, occupying several senior executive positions at Global Affairs Canada related to Northeast Asia, Southeast Asia, and South Asia.

She also served as Canada’s High Commissioner in Malaysia (2017-2020) and previously at the Canadian Embassy in Beijing (twice), the Canadian High Commission in Delhi, and the Canadian Trade Office in Taipei.

A Distinguished Fellow with APF Canada, Julia holds degrees in East Asian Studies from Princeton University and the University of Toronto and was a Canada-China Scholar in modern history at Nanjing University. She is a Senior Fellow at the University of Toronto’s Munk School of Global Affairs and Public Policy and an External Research Associated of the York Centre for Asian Research.

Event Summary: Building on Canada-ASEAN Security Co-operation: Furthering Strategic Partnership in the Indo-Pacific

Patrick Leblond

Patrick Leblond is CN-Paul M. Tellier Chair on Business and Public Policy and Associate Professor in the Graduate School of Public and International Affairs at the University of Ottawa. He is also Senior Fellow at the Centre for International Governance Innovation (CIGI), Research Fellow at CIRANO, and Affiliated Professor of International Business at HEC Montréal.

Dr. Leblond is an expert on economic governance and policy. He has published extensively on banking regulation, financial and monetary integration, international investment, international trade, and business-government relations. Before embarking on his academic career, he worked in accounting and auditing for Ernst & Young as well as in corporate finance and strategy consulting for Arthur Andersen & Co. and SECOR Consulting in Montreal.

Paul Meyer

Paul Meyer is Adjunct Professor of International Studies and Fellow in International Security at Simon Fraser University. He is a Senior Advisor to ICT4Peace, an NGO promoting a “peaceful environment” in cyberspace.

Kai Ostwald

Kai Ostwald is the Director of the Institute of Asian Research at the University of British Columbia. He is also Associate Professor in the School of Public Policy and Global Affairs, and the Department of Political Science. His work focuses broadly on politics and development in Southeast Asia, and has been published in leading disciplinary and area studies journals. Kai has also been involved in policy and development work for a range of organizations including the World Bank and the International Development Research Centre. He holds additional research appointments at ISEAS in Singapore and the Penang Institute in Malaysia, and was previously VP of the Canadian Council for Southeast Asian Studies.

Bart W. Édes

Bart Édes is a policy analyst, commentator, and author of Learning From Tomorrow: Using Strategic Foresight to Prepare for the Next Big Disruption (2021). An APF Canada Distinguished Fellow, he focuses on developing Asian economies, international development, cross-border trade and investment, innovation, social policies, and transformative trends reshaping the world.

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Patrick Leblond

Patrick Leblond is CN-Paul M. Tellier Chair on Business and Public Policy and Associate Professor in the Graduate School of Public and International Affairs at the University of Ottawa. He is also Senior Fellow at the Centre for International Governance Innovation (CIGI), Research Fellow at CIRANO, and Affiliated Professor of International Business at HEC Montréal.

Dr. Leblond is an expert on economic governance and policy. He has published extensively on banking regulation, financial and monetary integration, international investment, international trade, and business-government relations. Before embarking on his academic career, he worked in accounting and auditing for Ernst & Young as well as in corporate finance and strategy consulting for Arthur Andersen & Co. and SECOR Consulting in Montreal.

Deanna Horton

Deanna L. Horton is currently a Senior Fellow at the Munk School of Global Affairs and Public Policy at the University of Toronto, a Global Fellow at the Wilson Center in Washington, DC, and a Fellow at the Canadian Global Affairs Institute. At the Munk School, Ms. Horton has undertaken research focused on Canadian company locations in Asia, based on data collected for an interactive map. 

In her diplomatic career, Ms. Horton served as Canada’s Ambassador to the Socialist Republic of Vietnam, as Minister (Congressional, Public and Intergovernmental Relations) in Washington, and a total of twelve years in Japan culminating in her appointment as Deputy Head of Mission. She was a negotiator on the original North American Free Trade Agreement, and then spent four years in Washington following the NAFTA and WTO legislation through U.S. Congress. In the private sector, Ms. Horton was Vice-President (Investor Relations and Corporate Affairs) at Sherritt International, a diversified resource company.

Ms. Horton has a Diploma in International Studies from the Bologna Center, Johns Hopkins University School of Advanced International Studies; M.A. (International Affairs) from Carleton University Norman Paterson School of International Affairs; B.A. (Hons) McGill University. Ms. Horton also spent two years at the U.S. State Department Foreign Service Institute in Yokohama, Japan.

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Karthik Nachiappan

Karthik Nachiappan is a Research Fellow at the Institute of South Asian Studies, National University of Singapore and Non-Resident Senior Fellow at the Macdonald-Laurier Institute (Ottawa). His research focuses on India's geoeconomics, how issues like trade, technology, and climate change affect Indian foreign policy and how India's positions on these issues shape Indo-Pacific security dynamics. He is the author of Does India Negotiate? (Oxford University Press, 2020).