FAAE Committee Meeting

    I call this meeting to order.

    Welcome to meeting number 31 of the House of Commons Standing Committee on Foreign Affairs and International Development.

     Pursuant to Standing Order 108(2) and the motion adopted by the committee on Thursday, February 12, 2026, the committee is meeting for the review of Canada's Indo-Pacific strategy.

     Today's meeting is taking place in a hybrid format, pursuant to the Standing Orders.

    I would now like to welcome our witnesses. For the first panel, appearing as individuals, we have Kai Ostwald, associate professor at the Institute of Asian Research at the University of British Columbia, and Dr. Ari Van Assche, full professor at the department of international business at HEC Montréal, who is joining us by video conference.

     Up to five minutes will be given for opening remarks, after which we will proceed to the rounds of questions.

    I now invite Mr. Kai Ostwald to make an opening statement.

    Thank you, Mr. Chair.

    I thank the members of the committee for their invitation.

    I'm very happy to be here today.

    I want to open with three observations and draw out a few implications for the review and update of the Indo-Pacific strategy.

     To begin, the Indo-Pacific strategy as written gets a number of things correct as basic statements of fact. The Indo-Pacific region, Asia, is already the global epicentre of economic dynamism by many measures. If the trends continue as they are, that will only increase in the generation to come. It's also the centre of geopolitical challenges globally, whether that's because of rising powers or, of course, specific security flashpoints.

    All of these things affect Canadian interests deeply, so I think the call to prioritize attention and resources to position Canada to meet these challenges in the generation ahead is correct. I would add that the U.S. disruptions have accelerated the rationale for many of the elements that the Indo-Pacific strategy calls for.

    The Indo-Pacific strategy, since its launch, has produced a number of positive outcomes. Canada's presence in the region has increased in a number of ways. One is in the form of high-level visits from the Prime Minister or the ministerial level. Trade delegations have gotten traction and increased awareness of opportunities in engaging Canada in the region. People-to-people ties have clearly increased as well.

    In terms of trade architecture, there are a number of advancements. The Canada-Indonesia agreement is one of them. Progress on the Canada-ASEAN free trade agreement and discussions with the Philippines and Thailand are all important steps forward that should be recognized.

    On the security front, there is more co-operation. There is a greater Canadian presence in the region, whether it's in the form of cyber-collaboration or a naval presence. There are also a number of game-changers. The collaboration with the Philippines on dark vessel detection has really increased Canada's presence in the region and goodwill towards Canada.

    If there is a silver lining from some of the disruptions from Trump, it's that there is more interest in engaging Canada now than I have ever experienced before in my career. That takes many dimensions. I think this is a unique opportunity, and a unique moment as well, but those positives have to be positioned against a realistic assessment of Canada's baseline.

    From my perspective, Canada has underinvested in Asia and the Indo-Pacific for a number of decades. It was a late mover in articulating a strategy towards Asia relative to a lot of its counterparts. I think that's left Canada with three major deficits vis-à-vis the Indo-Pacific.

     The first deficit is in capacity and knowledge. The Indo-Pacific is a highly complex region, as we're all aware. I don't think there is sufficient familiarity, knowledge, expertise or language capacity in key sectors in Canada, whether they're in the private sector or large parts of the public sector, to effectively leverage Canadian opportunities. To provide an anecdote, UBC, where I'm a faculty member, is arguably the most Asia-facing university in Canada, but it has not offered a Southeast Asian language as a foreign language in over a decade.

    Second, I think Canada has some deficits in its network. Getting things done across the Indo-Pacific requires personal connections and trust. The period of underinvestment has left Canadian networks thinner on the ground across Asia than those of many counterparts. That requires sustained engagement to overcome.

    Third, I would say there is a reputational deficit to address as well in Asia on the part of Canada. Canada has been seen as a fair-weather friend to some extent in appearing in the region and engaging the region, but when political dynamics in Canada shift, it's retreating to some extent. That has major implications for the Indo-Pacific and an update to it.

    First and foremost, from my perspective, Canada is, by population, a relatively small country with a giant neighbour to the south that will always occupy a good portion of our bandwidth. The pressure to increase defence spending will mean that there's more competition for finite resources. In short, if Canada is to meet the generational challenge that a rising Indo-Pacific and Asia present, the region has to be a true priority in the share of attention it receives and the share of resources it receives in order to risk not falling behind further.

    Expectations need to be calibrated correctly. Of course, we should expect real progress over the course of one, two or three years, but this is a generational challenge. We'll see progress more in blocks of five or 10 years than we will in blocks of one or two years.

     Second, of the five pillars the original Indo-Pacific strategy articulates, it's quite clear that trade and security have become the most important. That may be warranted, but effectively delivering on both of those pillars requires, again, adequate human capacity and strong networks. It is not possible to build them without investments in people-to-people connections, a diplomatic presence and a range of other factors beyond purely security and trade—

    I have to stop you. We're way over the time. Thank you for your statement.

    I now invite Dr. Ari Van Assche to make an opening statement of up to five minutes, please.

    Mr. Chair, honourable members, thank you for the invitation to contribute to your review of Canada’s Indo-Pacific Strategy.

    I will be giving my introductory remarks in English. I would be pleased to answer your questions in French or English.

    My central message this afternoon is straightforward. The global geopolitical context has evolved significantly since the strategy's launch in 2022. Today, the resilience of Canada's economy more than ever depends on its ability to reduce overreliance on major economic powers, especially China and the United States, through deliberate and strategic trade diversification. The Indo-Pacific strategy can be a powerful vehicle to help achieve this objective, but it must be deployed more deliberately and more assertively as an instrument of economic statecraft.

    Let me be clear. This is not to diminish the strategy's early achievements. Over the past four years, Canada has meaningfully strengthened its trade and investment presence in the world's most dynamic economic region through an expanded diplomatic footprint, new trade agreements and deeper political engagements.

    Notwithstanding these gains, the strategy would benefit from a sharper and more disciplined articulation of the national-interest outcomes it seeks to achieve—one that is more tightly aligned with Canada's trade diversification strategy and broader economic security priorities. In my view, advancing this perspective requires three fundamental shifts in thinking.

    First, we need to go from export expansion to value chain positioning. Rather than treating export growth to the Indo-Pacific as an end in itself, the strategy should focus on securing more resilient and strategically anchored positions within global value chains. The objective is not simply to export more, but to reduce Canada's critical dependencies on both the import and the export side. This shift requires asking more targeted questions: Which trade dependencies expose Canada to the greatest economic security risks, and how can a more focused Indo-Pacific engagement help build resilient value chain positions?

    The second shift is from broad-based engagement to sector-selective focus. Rather than engaging equally across all industries, the strategy should prioritize sectors that are central to Canada's economic security. Not all sectors carry the same economic security risks. Industries such as defence, pharmaceuticals and semiconductors are far more exposed to disruption and coercion than non-strategic sectors like Christmas lights, and they therefore require more coordinated state intervention. This implies a more selective industrial policy posture in the Indo-Pacific strategy and raises two questions: Which sectors should Canada designate as strategic, and how can Indo-Pacific engagement be leveraged to reinforce domestic capabilities and international collaboration in these sectors?

    The third shift is from diffuse regional engagement to targeted strategic partnerships. Rather than treating the Indo-Pacific as a single, uniform region, the strategy should focus on building deeper partnerships with a limited number of countries that are most aligned with Canada's economic security objectives.

    Not all partners offer the same level of reliability or strategic complementarity. Countries such as Japan, South Korea, India and key ASEAN members each bring distinct strengths in areas like critical minerals, advanced manufacturing and clean technologies. These partnerships should therefore be tailored, sector-specific and strategically prioritized. This, again, leads to two questions: Which partners are best positioned to support Canada's objectives in strategic sectors, and how can we deepen these relationships to build trusted and resilient economic ties?

    Let me briefly conclude with implementation. To operationalize these shifts, in recent work I've proposed a simple 5P framework. The five Ps are, one, pursue trade expansion in non-strategic sectors; two, protect against choke points in strategic sectors; three, promote domestic strong points in sectors that are strategic for other countries; four, partner with trusted Indo-Pacific allies to build shared economic security; and, five, pinpoint emerging risks through strong economic intelligence.

     To conclude, revisiting Canada's Indo-Pacific strategy requires a more security-driven approach—a whole-of-government strategy that aligns trade diversification toward the Indo-Pacific region with economic security and industrial policy goals.

    Thank you.

    I look forward to your questions.

    Thank you very much for your opening remarks.

    I will now open the floor for questions, beginning with MP Ziad Aboultaif.

    You have six minutes.

    Thank you, Chair.

    Thanks to the witnesses. Mr. Ostwald and Dr. Van Assche, you both highlighted some very key elements of this study and what we need to do.

    Mr. Ostwald, you listed the deficits we have. One of them is capacity and knowledge, and then there are network and reputation. I am one of the members of Parliament who are aware of our deficits in trade not just with the Indo-Pacific, but also in general, due to my life experience before politics.

    Here is a question for both of you, just to make sure I understood correctly. We need to focus on the market we're going to. It doesn't just have to be China, as the largest Indo-Pacific economy. We also need to choose which products we can push into these markets, because we are way behind in getting to them. We need to start somewhere, at least to give ourselves breathing space until we become ready. Then we have to look internally to see how we can be ready as a market to make sure we have the products needed, to be thrown into chosen markets.

    In order to do that, how do you assess the situation in Canada as far as our readiness is concerned, and which sectors do we need to push? For example, do we need to focus on oil and gas, on energy sectors, which is something we have that is in high demand? How can we do that at a time when we know other markets are way ahead of us and the competition is ahead of us, and we know that we're not ready? Basically, we made ourselves unready to supply these markets.

    Professor Van Assche and I seem aligned that it is important for Canada to be strategic in directing its resources and attention. This means focusing on specific sectors and specific opportunities. I would add that on top of pursuing exports, there is a lot of demand for Canadian expertise in the region as well, and that should be an important part of the conversation.

    Dr. Van Assche.

    Canadian firms are generally ready to internationalize, and they've been doing this very successfully for many years. Of course, there are still lots of hurdles they are facing in all kinds of sectors, either strategic or non-strategic.

    Canada, for many decades already, has been helping Canadian firms going abroad. Right now, as we are looking at some of the bigger concerns and problems we're facing, one of the issues is that in many sectors—or in some, at least—we are overly dependent on specific countries. As a result of that, there is a need for us to reflect on what we can do to make sure our companies can get stronger in other sectors.

    In non-strategic sectors, the most important thing is to continue reflecting on which countries we can develop trade agreements with and how we can use our diplomatic corps to help our companies internationally in these countries, but ultimately, we simply need to support market mechanisms. Then there are other strategic sectors, and maybe there is more of a need for us to reflect on industrial policies if it is going to help us reduce overly strong dependencies on specific countries that could conduct coercive actions against Canada.

     That would be my answer to your question.

    In the situation we are in, the first thing you would think of is the low-hanging fruit that we need to focus on, at least to start. Would you both be able to list three examples of low-hanging fruit—products that we could lead with in those markets?

    I'm not an expert on trade, so I won't presume to have the answer, offhand.

    One of the major challenges is that the awareness in Canada's private sector of opportunities in the Indo-Pacific is limited. There hasn't been sufficient contact, and the trade missions are geared toward addressing this. The Canada-ASEAN Business Council and other business councils have done a lot of important work here, but there's a lot more work to do to align supply on the Canadian side with the demand on the Asian side to identify exactly where the low-hanging fruit is.

    I defer to my colleague on the specifics.

     The low-hanging fruit question is always tricky.

    If we're looking at what is going on right now, we know there is a desire in the defence industry, for example, to make sure we are less reliant on specific countries to obtain our military products. That is a good area where we could, on both the export side and the import side, ask, “Can we, through collaboration with certain Asian countries, make sure we have more diversified sourcing or exporting of defence products?" That is one example.

    Another example is clean energy technologies. If you look at electric vehicle batteries or solar panels, one country is the biggest source of these products, and it's China. For our clean energy transition, it's not bad to get cheap products from China, but being overly reliant on this one country can at certain moments lead to certain dangerous, coercive actions. That's another area where we could say that maybe we should be diversifying a bit.

    The final thing I'll say, and this is more on the export side, is about critical minerals. We have an incredible wealth in critical minerals in Canada. This is something the U.S. is looking for, but a lot of other Asian countries, such as Japan and Korea, are also looking at sourcing critical minerals. That gives us a bit of leverage to find ways we can diversify our trade and ensure that our strong points in trade can help in our negotiations.

    Thank you very much.

    We will go next to MP Steven Guilbeault.

    You have six minutes.

    Thank you, Mr. Chair.

    Thank you very much for joining us, gentlemen. The committee appreciates your participation and your testimony.

    I have a question or two about trade and another on a somewhat broader topic.

    What we hear a lot, particularly from small and medium-sized businesses, is that it is very easy to trade with the United States, given the common language and geographical proximity, of course. The costs of exporting or importing, as the case may be, are lower than when trading with a more distant region, for obvious reasons.

    What advice do you have for us? Mr. Ostwald, you mentioned certain associations that are doing the necessary work to help, at least in terms of knowledge and contacts. That said, what would your recommendations be for the government? What other steps can we take to try to lower the barriers?

    Thank you for the question.

     I would start by saying that awareness is really key here. The more awareness there is of opportunities and the more contact there is between Canadian firms and markets in Asia, the more evident it becomes where the opportunities really are.

    The obstacle of the world's biggest market, just south of the border, which speaks the same languages and is culturally very familiar, is, of course, difficult to overcome, and it's difficult to convince the private sector to put in the work to identify opportunities abroad.

    Consistently, the story of economic development and growth in Asia is largely a result of the region being very committed to development and being, on the whole, quite business-friendly. I think once work has been done, the opportunities will be evident. There are a number of success stories of Canadian companies, both larger and smaller, that have very effectively expanded into the Indo-Pacific.

    The framework for doing this, the groundwork, has been done by the trade commissions, for example. The trade missions are important. The business councils are all standing by and ready to work. It is fundamentally a matter of awareness as well, though, and the messaging needs to be made more clearly that there are a lot of opportunities for Canada's private sector in Asia and that there are a lot of resources already available to support that transition.

    Mr. Van Assche, would you like to add anything?

    Yes, absolutely. Thank you very much for your question, Mr. Guilbeault.

    I agree with my colleague’s comment. Indeed, it is much easier for small and medium-sized businesses to do business in the United States than in Asia. Expanding into Asia entails higher costs for businesses.

    Of course, Asia offers many opportunities. It is the world’s most economically dynamic region, which means that market opportunities are also greater there.

    Indeed, among the important things, we must first help our companies understand where the opportunities lie. Second, we must reduce costs for our companies going to Asia. Third, having senior trade representatives is obviously very important as well.

    Naturally, as soon as our companies start doing more business there, they begin to integrate into business networks, and as soon as they start entering those networks, suddenly the costs of doing business there also begin to decrease.

    Indeed, we should start participating, doing more there, and further integrating our activities in that region. Gradually, this could really allow us to reduce the costs associated with operating there, in addition to increasing business opportunities there.

    I have two more questions, and I’ll ask them one after the other.

    We’ve talked about critical minerals and the growing demand for them from several countries that also want to diversify their supply rather than rely primarily on China, for example.

    That said, if we only export natural resources, aren’t we at risk of continuing to have an economy based on natural resources, rather than on the added value these products could provide us? How can we attract the interest of these economic partners, such as South Korea, Japan and India, whom we have discussed? How can we encourage them to invest here, with us, so that there is added value in the development of critical minerals?

    Excuse me, this is a long question.

    I have another question that might be directed at you, Mr. Van Assche, because I know you have worked specifically on the China file and on sustainability issues.

    Some have criticized what could be described as a recent rapprochement between Canada and China. In your opinion, when it comes to issues like nature, biodiversity, or climate, isn’t it necessary for a country like ours—or for any country interested in these issues—to work with a giant like China on these matters, as we did at COP15 in 2022, for example?

    Thank you very much.

    We will go next to—

    Do they not have time to respond?

    No.

     Oh, I'm sorry.

    It's because there was a long comment. Maybe they can respond in the next round.

    We will go next to MP Brunelle-Duceppe.

    You have six minutes.

    That's too bad, Mr. Chair, because my colleague was asking some excellent questions.

    I'm going to ask you the same question, Mr. Van Assche, but in a different way.

    We are talking about the possibility of engaging with China more on issues such as the environment. In your opening remarks or perhaps in response to my colleague's question, you talked about China's clean energy industry, solar panels and such. Since the beginning of the meeting, however, I haven't heard anyone mention the allegations of forced labour, especially in the production of solar panels.

     It's one thing to say we need to engage more with China on certain environmental issues, but if products that are good for the planet result from supply chains that use forced labour, isn't that a good reason not to seek closer ties to China?

    Is the question for me? I can answer it.

    Yes.

    Thank you, Mr. Brunelle‑Duceppe.

    You're right that doing business with China comes with a lot of challenges.

     First, as Mr. Guilbeault mentioned, doing business with China opens up opportunities. Yes, being able to import cheaper energy products benefits consumers and the green transition. Conversely, we have to be careful, because an overreliance on certain countries brings economic security risks.

    On top of that, of course, we always have to be mindful of the fact that products imported from China, but also elsewhere, may result from supply chains that involve forced labour.

    I don't think we should be naive in our relationship with China. We have to be careful. In fact, we already have legislation in place to ensure that Canadian businesses that do business in places like China are not importing products made from forced labour. We have to be careful that we're not creating more economic security risks, either.

    You mentioned forced labour legislation. I imagine you bring it up because you're familiar with the forced labour law in place in Canada. Nevertheless, as far as I know, only one ship has been detained since the legislation prohibiting the import of goods made from forced labour came into force, and that ship was ultimately allowed to leave and sell those goods here, in Canada. So far, Canada's forced labour legislation has not led to the seizure of any products, in contrast to the regime in the U.S.

     Shouldn't respect for international human rights take precedence in international trade?

     In your opening remarks, you talked about turning to trusted allies. When it comes to human rights, do you really think that China is a trusted ally and that Canada should continue down this path?

     Shouldn't we instead amend Canada's law and replicate the regime in the U.S. in order to make a real difference when it comes to forced labour?

    Those are very good questions.

     First, when I was talking about China as a potential ally, it was in reference to economic security. In many sectors, that doesn't present a major challenge, so continuing to do business with China isn't a bad thing.

    However, it's important to be careful in certain sectors where China is very dominant and could use coercive tactics. Of course, Canada's legislation to prohibit the import of goods produced using forced labour is a first step, and it relies mainly on due diligence reporting. Europe is moving in that direction. I think Canada should continue working with Europe and other countries to develop a better joint understanding of how to implement due diligence processes in this area.

    That said, not all products imported from China involve the use of forced labour, so we have to be very pragmatic in how we approach the issue.

    Sorry, Mr. Ostwald, I am going to come back to you, but this is a great discussion with Mr. Van Assche.

    One of the things that came up was the recent agreement with China on electric vehicles, and we know that in China, private businesses aren't responsible for forced labour. Forced labour is basically state-sponsored. Sheffield University did an excellent study showing that China's electric vehicle supply chain involves forced labour. There is a reason why the vehicles cost $35,000, including the cost of shipping them from China to Canada.

     Should Quebeckers and Canadians be encouraged to buy $35,000 EVs, because it's good for the environment and the pocketbook, to the detriment of those forced to work in concentration camps in Xinjiang?

    I appreciate that it's difficult to say. It's not difficult for me, but for a lot of people, it seems to be. I'd like to hear your view on it.

    Please give a very brief answer. Unfortunately, we are over time.

    It's up to Canada to work with other countries to make sure it has better legislation to keep forced labour out of global supply chains.

     At the same time, we need to keep engaging with China in a balanced way, which is not to say that we should let goods made using forced labour into the country.

    Thank you very much.

    We'll start the next round of questions with Madame Rood.

    You have five minutes.

     Thank you very much.

    Thank you, witnesses, for being here.

    Mr. Ostwald, you have called for a rethinking of like-mindedness in the strategy and stressed ASEAN's preference for inclusive dialogue with China. Given Beijing's aggression in the South China Sea and toward Taiwan, in your opinion, has this approach left Canada weak and deferring to a body that refuses to confront coercion while our like-minded allies, such as Japan, Australia and the U.S., actually deliver results?

    I made the call to rethink like-mindedness in a particular sense. It is important for Canada to think of its interests and of countries that share particular interests, in a broad sense. This means looking for other countries that value sovereignty, agency and a predictable international framework and order, especially on trade. There are a number of partners in Southeast Asia that are not fully autocratic or fully democratic that share those values. I see a lot of opportunity to connect with those countries on those particular fronts.

    On the China question, I take cues from Southeast Asia, which has a long history of and a lot of experience dealing with their regional giant. What we find consistently in a number of academic studies that assess elite preferences and perspectives in Southeast Asia on China is a recognition that China is a strategically vital country that deeply affects the interests of those countries, and that it has a substantial trust deficit vis-à-vis many other countries. There is very little trust that China will do the right thing on a number of fronts.

    Of course, this has caused friction with virtually every country in Southeast Asia. The Philippines is the most obvious example with the South China Sea, but all other countries in the region have their versions of this. Where they differ is in the response. The Philippines has been very vocal and very public about its disagreements with China. Other countries have handled those disagreements in quieter ways without using a megaphone.

    I am not sure it is as simple as saying that one country got it right and another country got it wrong. I think all countries are figuring out how to work with and respond to a rising China.

     Dr. Van Assche, Canadian supply chains remain dangerously exposed to China in critical areas like semiconductors, rare earths and pharmaceuticals. What concrete failures in the current Liberal strategy have prevented real de-risking and friendshoring with trusted partners like the U.S., Japan and India?

    The main issue has been that any kind of market economy can lead to specialization, which can sometimes go a little too far. We used to have a bit more of a stable international order, wherein most countries at most times were hesitant to take advantage of their dominance in a certain sector to pressure other countries geopolitically. This is no longer the case right now. We are seeing this from our southern neighbour. We are seeing this from China on occasion as well.

    Ultimately, this was a reality that we felt was very comfortable before. Now, on occasion, you might find out that one country is responsible for 80% of vehicle battery assembly. Suddenly, it ends up being a bit more dangerous and a bit less comfortable. This is the reality we have right now. We cannot fall back on regular systems to prevent countries from doing this.

     In an era of geopolitical choke points and strategic interdependence, does the current approach adequately protect Canada from Beijing's weaponization of trade, or do we need far tougher investment screening and export controls and a sectoral decoupling from the CCP?

    That is a great question.

    First of all, what we need to do is identify in which strategic sectors the choke points are. In reality, there are not thousands of choke points in the global trading system right now. It's much more limited, but we don't always know what they are. We have to identify them. Once we identify them, we can take actions to de-risk from them.

    Right now, we're often acting very reactively. We see that in semiconductors and pharmaceuticals. There is a choke point and we try to de-risk against it afterwards. We can do more to identify them in advance.

    Thank you very much.

    Next we go to MP Oliphant.

    You have five minutes.

    Thank you, Chair.

    Thank you to both witnesses for being here today.

    I'm going to be asking three questions.

    The first is on the degree to which you might believe or not believe that Canada's IPS has penetrated the consciousness of the areas you are interested in.

    In line with the theme we've been on today, the second is on moving away from China and India and into ASEAN and other markets—into larger players in the southeast, including Malaysia, Indonesia, Thailand, Vietnam and the Philippines—as great economies. I would like to hear a little about that.

    The third is on the role of government versus the entrepreneurial spirit of businesses and how they can work together—because government can set the table, but businesses have to eat.

    The first question is with respect to the degree to which you think the IPS has penetrated the consciousness of anyone who is the object of our affection.

    Maybe Professor Ostwald can go first.

    As I alluded to in the opening statement, I think Canada is a more present and active partner in the Indo-Pacific now than it was five years ago, and certainly more than it was 10 years ago. To the extent that the IPS—which I see as one component of a Canadian recognition of the importance of this region—is responsible for this, then it has.

    I have not witnessed in the course of my career as much interest in having Canada at the table and having Canada as an engaged country in the Indo-Pacific as has been the case over the last year.

    Professor Van Assche, do you have any comment on that?

     Yes. We're certainly more active in the Indo-Pacific region. That's a really good thing, but we're not the only country that is more active in the Indo-Pacific region. As a result of that, we might be fighting harder against other hard-fighting countries. We have to be cognizant of that. Nonetheless, being present is really good.

     The second area, which we've already been getting into, is that this is the Indo-Pacific strategy; it's not the China strategy. It's not the India strategy; it's Indo-Pacific. At times, it feels like we focus a lot on China and India. I want to pull us down to the southeast.

    What would you perceive to be our best opportunities, both geopolitically and economically?

    Perhaps you could answer first again, Professor Ostwald.

    The focus on Southeast Asia is vital. It is a region that often gets overshadowed by India and China. Southeast Asia, we should be reminded, is a region of 700 million people. It's not trivial, and I think it has the major advantage in some respects. The politics may be contentious, but they're not confrontational in the way that we have seen with China and India over the last number of years.

    Canada has a long legacy in Southeast Asia. It's recognized as a middle power that shares many of the same geopolitical realities that countries in Southeast Asia do. The middle class is growing rapidly. As an economic partner, it's vital. Also, I think it's an area where a lot of Canadian expertise in navigating the type of geopolitical and geo-economic challenges that middle powers face is valued.

    It would be like a parent picking their favourite child. However, in your work, are there countries that you think would be the easiest for Canada to be targeting at this time?

     That needs to be broken down by sector. In terms of trade, obviously the larger economies or the larger markets, like Indonesia, the Philippines and Vietnam, all matter. Thailand is a large economy as well. In terms of a lot of Canadian expertise in tech, Singapore is a key partner. On AI, Malaysia is emerging as one of the chief hosts of farms. It should be noted that it is the second leading producer of chips behind Taiwan...on a number of key technologies. On naval and maritime issues, obviously the Philippines has been a very valuable partner on DVD.

    It really depends on the issue area we're talking about.

    I want to go to Professor Van Assche for a moment.

    Do you have any comments on what encouragements or enticements we get for diversifying our trade at the business level? Big companies like bigger countries, and maybe small companies do well in small countries. Do you have any advice for us on that?

     Give a 10-second response, please.

     We need to really think about strategic and non-strategic sectors very differently. Non-strategic sectors are where businesses should be able to do as usual, and we should be helping them. In strategic sectors, maybe industrial policy will be a bit more important.

     Thank you very much.

    We go next to Monsieur Brunelle-Duceppe for two and a half minutes.

    Thank you, Mr. Chair.

    Criticizing us for talking too much about China when it comes to Canada's Indo-Pacific strategy is like criticizing the Liberal government for talking too much about the United States when it comes to renewing the Canada-United States-Mexico Agreement by saying that it includes Mexico. I think it just makes sense.

    Mr. Ostwald, you talked about semiconductors. Let's say that Taiwan were taken over by a Chinese military action tomorrow morning. It is likely; we've been talking about such an action for a long time. What would be the result of such a Chinese offensive on Taiwan if all Taiwanese semiconductor production fell into the hands of the current regime in Beijing? Wouldn't that be an absolute global catastrophe?

     This is not an area of my expertise, but I think we can all agree that an invasion of Taiwan would be catastrophic on many fronts. Taiwan is integral to global supply chains, not just on chips, but on many other fronts as well.

    That's not just because of the direct effect. The second-order effects of an invasion like that would deeply shake supply chains and confidence in the security of supply chains across the Indo-Pacific.

    Isn't that another reason to strengthen our ties with Taiwan, to ensure that Taiwan is not subject to such a military offensive, and in particular to reassure our Taiwanese friends? Taiwan is a fairly important middle power. I believe it has the 16th highest GDP in the world. Isn't that the main reason that we should have even stronger ties with Taiwan and provide reassurances for its security?

     There are many arguments for building stronger ties with Taiwan. They go from tech over to security.

     Of course, if I'm just speaking anecdotally about my experiences at the university, interests in Taiwan are very high among the younger generation. I don't know whether Canada has the ability to provide meaningful deterrence for Taiwan, but providing the support that it can, through economic exchange, the strengthening of economic ties and the sharing of expertise, is very sensible.

    Signing the agreement with Taiwan that was approved a year ago would send an important message because it is an opportunity for Canada to have strong economic ties with Taiwan. It would send a message to Beijing. As it stands, Canada is not signing that agreement.

    Give a very brief response, please.

    Again, there are a lot of arguments to make for strengthening ties with Taiwan.

    Thank you very much.

     We go next to MP Michael Chong.

     You have five minutes.

    The government released the Indo-Pacific strategy in November 2022. Do both of you, as witnesses, agree that it's a good idea to have a written foreign policy on the Indo-Pacific region in a single document?

     I would certainly say that there are a lot of advantages to that. It does a number of things. It signals—

     Do you agree that it's a good idea?

     It signals that Canada does prioritize the Indo-Pacific. It also—

    Here's the question I'm asking. We've been told by the government in testimony this past week that they're not going to update the document. There have been changes to the Indo-Pacific strategy since it was originally published in November 2022. Those changes include the Prime Minister's announcing in Asia last year that Canada wants to expedite Canadian oil and gas to the region, wants to turn Canada into an energy superpower and wants to export far more quantities of oil and gas to the region. I think the Prime Minister made reference to doubling Canada's natural gas exports from the about 50 million tonnes a year expected by 2030 to 100 million tonnes by 2040.

    When I asked the minister about updating the strategy to reflect this—because the words “oil and gas” do not appear in that strategy—she indicated that she had directed officials to update the strategy, which I took to mean to update the document. Now we find out that the document is not going to be updated in a singular fashion and may be updated through a speech the minister gives or in other ways.

     We're back to the situation we were in prior to the Indo-Pacific strategy being published, and we're not clear on what exactly the government's policy is in the region. I am trying to get your views on whether this is a good thing or a bad thing.

     I can't speak to the government's decisions on whether or not to—

    The question is whether or not it's a good idea to have a single published document that contains the government's foreign policy for a particular region. Many other countries do this. I believe France has a written document that's updated every five years. I think the United Kingdom also has a written document for its foreign policy that's updated through a regular process. The U.S. government's position on various regions of the world is clear through their publication of documents.

     We now have a situation where it's not clear what exactly the policy is. The department has 13,000 people or so. If you want to coordinate the department and the whole of government, having a single guiding document seems to me to make a lot of sense.

     Communication is key, and clearly communicating that the Indo-Pacific matters and what Canada's approach is to the Indo-Pacific is critical. I don't know whether that will be in the form of a fully updated document or written notes that articulate how Canada's thinking is now different from the original strategy in 2022, but I would agree that communicating how Canada sees the region and that Canada sees the region as critical is important.

    I personally think they should be updating the document. I think that would be a good recommendation of this committee when it's completed its review of the strategy, but if experts don't feel like that's the case, it's more difficult to make that recommendation.

     Is our online witness here? Dr. Van Assche.

    I can be very quick.

     I think it would be very good to update the Indo-Pacific strategy to reflect the new reality we're facing. Of course, it would have to be very general. Not all of the details have to be presented, but indeed, as Minister Anand has already indicated, we are in a new reality, therefore the Indo-Pacific strategy should be changing. It's good to write that down.

     Thank you.

    I have no further questions.

    Thank you very much.

    We go next to Anita Vandenbeld. You have five minutes.

    Thank you, Mr. Chair.

    I have a number of questions, but on what my colleague Mr. Chong was saying, I did not hear the officials say there would not be a written strategy. I think it was just premature to say what form it was going to take. I think we have to be careful not to put words in people's mouths.

    I want to address some of the things you said, Mr. Ostwald, because I was very interested in your comment about language, teaching Indo-Pacific Asian languages here in Canada and the level of knowledge. The obvious question becomes, what about the role of diaspora communities? I know a lot of the business that is happening. You have a large, very diverse community with links to the whole region, with the language skills and with the knowledge.

     I wonder if you could comment a bit on that.

    The diaspora plays a role in this. Of course, the diaspora should be seen as an important resource for Canada. It strengthens people-to-people connections and lays out networks. I see the diaspora as part of the solution, not as a primary solution.

     I'll answer that through an anecdote. I teach a class on Southeast Asian politics. A good portion of my class is Canadians with Southeast Asian heritage. Typically, they know one country well culturally. Maybe they have language skills for one country. Often, they have not been to the region at all, or if they have, they've been to that one country. It's a large region.

     I think the diasporic connections, while they're important, do not replace systematic training across the board.

    Thank you very much. I think that's duly noted.

    In 2018, when I was on this committee before, the committee travelled to the region. We chose to go to Japan, South Korea and the Philippines. We found the same thing at that time as you were saying. There was a tremendous desire, willingness and openness to have more of Canada and to build those relationships.

     I'd like to ask specifically about South Korea and Japan. Strategically, security-wise, there are a lot of shared perspectives. What do you see as some of the opportunities?

     If we could save some time for Mr. Van Assche on the same question, that would be great.

    Go ahead.

    You can go straight to Mr. Van Assche as well.

    Mr. Van Assche, if you want to start, go ahead.

    There are a lot of opportunities for collaboration with Japan and Korea, and they're already starting to go on. We have things to offer to Korea.

     This goes back to the question of Monsieur Guilbeault. It's not only critical minerals. We are also very strong in artificial intelligence and many other services sectors that we often forget about. Korea has been very good in developing a supply chain early warning system that allows it to identify where potential choke points are. I've written a piece with a Korean colleague on trying to think about how Canada and Korea would be able to collaborate on developing a more advanced supply chain early warning system. This is a very good example.

     It is the same thing with Japan. When we think of clean energy technologies, we are always worried about the dominance of China, for very good reasons. If you start looking at where we can diversify, the two countries that really jump up are Korea and Japan. Again, there is a lot of interest for us to start looking at these countries, which are very natural allies, to reflect on a joint economic security strategy and also as a part of our trade diversification strategy.

     We would be very interested, as a committee, in getting a copy of that article you wrote about the supply chain early warning system.

    Are there other examples like that in the region, where there are things that could be shared across in terms of some of the strategies?

    There are many examples of this. As we're thinking of engaging more with ASEAN, just to give an example, it's actually very natural to do this right now, because China is getting expensive. Doing assembly in China is not something that a lot of companies are looking at. Automatically, we're already starting to look at Vietnam and maybe Malaysia and other countries. Ultimately, focusing on these other countries and the strong points they have that we can develop complementarities with is what we should be doing as we're trying to develop a richer Indo-Pacific strategy.

    Thank you very much. You're right on time.

     I want to thank our witnesses for appearing before the committee and for their testimony. We really appreciate it.

    We will now briefly suspend in order to prepare for the next panel.

     Thank you.

     I call this meeting back to order.

     I would now like to welcome our witnesses for the second panel. We have Dr. Stephen R. Nagy, professor at the International Christian University and China policy project lead and senior fellow at the Macdonald-Laurier Institute, joining us by video conference, and Cleo Paskal, non-resident senior fellow at the Foundation for Defense of Democracies.

    Unfortunately, Mr. Berkshire Miller, senior fellow at the Macdonald-Laurier Institute, who was going to join us by video conference from Budapest, was not able to do so because he had technical issues with his headset, so we have two witnesses for the second panel.

    I now invite Dr. Nagy to make an opening statement.

     Thank you very much, Chair.

    It's a great pleasure to share some ideas with this committee on Canada's Indo-Pacific strategy going forward. I'd like to break down my ideas into four points that focus on Canada's national interests in the Indo-Pacific and five points in terms of our strategic approaches to be able to achieve these national interests.

    First, in terms of national interests, I think our Prime Minister said it very well. Maybe he quoted me, from one of my earlier papers, but we need to be “at the table, not on the menu” in terms of being on every single agreement within the region. I say that in good humour, but we need to be at that regulatory table for AI development; for technology and energy security; for how we deal with sea lines of communication, defence, regional security and disinformation; as well as for economic security.

    Second—and I think this is really important—as we think about where Canada should be, we are clearly interested in preventing traditional and non-traditional security issues from emerging. Traditional securities could be a Taiwan contingency, the proliferation of weapons of mass destruction on the Korean peninsula or some kind of incident in the South China Sea. All of these have severe implications for Canada in terms of the economy. In the previous panel, when we talked about the Taiwan Strait, most estimates are between $10 trillion U.S. and $15 trillion U.S. in damage to the global economy in the case of some kind of contingency. I'll come back to that. In terms of non-traditional security issues, they're quite clear. They're about climate change. If we think about the Pacific Islands, about the maritime environment in the South China Sea and how this could affect food security in Southeast Asia, this will have spillover effects in Canada.

    Third, I want to talk about preventing the emergence of a regional hegemon. In this case, there's only one country that would like to be the regional hegemon, and that's China. If China is the regional hegemon, this is going to affect Canada's access to trade agreements. It's going to affect Canada's access to sea lines of communication, and it's going to affect how regional agreements emerge, whether they're trade, AI or technology.

    Fourth, and most importantly in the Canadian context, we need to plan beyond political cycles. When I come to Canada, I see this fixation on the United States, but in the next four or five years, we're going to see a change of power in Russia, China and India, as well as the United States. In Russia, we expect a more ultra-nationalist country. In China, when Xi Jinping steps down—or we don't know what will happen to him—we will see a blank in leadership from China. This has happened in the past. We have seen China disappear for three or four years.

    What does this mean for our engagement within this region? What does it mean for those traditional and non-traditional security issues? Most importantly, what does it mean for Taiwan? I want to reassert this.

    When we think about India, Prime Minister Modi has brought stability, but he has also brought Hindu nationalist behaviour. We know that India killed a Canadian of Sikh background in Canada. What happens if a more nationalist India emerges?

    Last, of course, is the United States. We don't know how the MAGA movement will mutate in the future, but we need to think beyond the news cycles of today and what our southern neighbour's president will be saying. I can't emphasize this enough. This is Canada's national interest.

    In terms of our strategic approach—and this will be controversial—I believe that we need to anchor our Indo-Pacific strategy within the region by having the strongest relationship with the United States, meaning that means we are the indispensable partner for the United States. We are an asset economically, technologically and strategically. We need to continue to invest in the United States, despite the difficulties. As I mentioned, Trump will be gone and MAGA will change, but the United States' geographic, institutional and legal realities that connect Canada to the United States will remain.

    Secondly, we need to develop bilateral and minilateral relationships. Both of the previous witnesses mentioned this, and I'm so glad they talked about Japan and South Korea as dependable partners, as well as Singapore. We need to develop new dependable partners. They may not look like us politically, but I think Vietnam and Indonesia are important partners to invest in as we think about how to cultivate strong and enduring relationships with trade partners in Southeast Asia that also share our interests in the region.

    I know one of the committee members talked about values. I appreciate the emphasis on values, but if we focus only on values, we're going to alienate key partners that I think are really important, such as Vietnam, Indonesia and, frankly, India. This is going to be important.

     We also need to think about minilateral relationships. This echoes a little bit our Prime Minister's comments about middle power coalitions, although I think about this very differently. We need to have functional partnerships that are focused on problem-solving. Our efforts in terms of illegal, unregulated and undocumented fishing are a very good example of that.

    We need to leverage—

    Thank you.

    Could you quickly conclude?

     Lastly and importantly, we need to strengthen Canada at home. If we are not strong at home, if we're not integrated at home, and if those interprovincial barriers are not broken down, we're not going to be a strong, competitive and productive economy that can engage in the Indo-Pacific. We're not going to be an attractive partner that attracts Indo-Pacific partners to engage with Canada and the North American market.

    Thank you.

    Thank you very much.

    I now invite Ms. Paskal to make her opening statement for up to five minutes.

    Mr. Chair, members of the committee, thank you very much for inviting me.

     Given the committee’s depth of knowledge, I'm going to focus on areas that are easy to overlook, which is why I gave you a map.

     The first is strategic geography. Indo-Pacific plans often take for granted a continuation of access. For example, U.S. planners assumed the ability to freely use the critical American base on Diego Garcia in the Indian Ocean for the Iran operations. However, not only did the U.K. initially deny the U.S. permission to use the base, but the U.K. was also on the cusp of handing the Chagos archipelago, including Diego, to Mauritius, a country with close ties to China. It’s possible that, had the Iran war not happened, the strategic implications of the proposed U.K.-Mauritius deal would not have reached the Oval Office, and the U.S. defence posture in the Indian Ocean region would have been seriously undermined. I’m not sure that we have planned for that.

     From a Canadian perspective, the situation is even more acute in the Pacific. If you've been to Japan or the Philippines, you know how long the flight is. Now imagine that by ship, which is how most of our trade travels.

    Since the end of World War II, the Central Pacific has been peaceful, and unfettered east-west travel between Asia and the Americas has been the foundation of a free, open and increasingly prosperous Indo-Pacific. That was not an accident. Imperial Japan controlled a section of the Central Pacific almost the size of the continental United States from 1914 until it was dislodged by American troops 30 years later in World War II. It took the deaths of 100,000 Americans who died fighting on islands like Peleliu and Saipan before Washington could work up the infrastructure to liberate the region. After the war, it worked with islanders to set up unique structures to try to ensure the critical Central Pacific would stay free.

    The entire region was offered to become part of the United States. The Northern Mariana Islands voted in favour and became the newest part of the U.S. in 1976. The other islands divided into three new independent countries, Palau, the Marshall Islands and the Federated States of Micronesia, or FSM. On the map, they're the east to west countries in the middle. That zone bridges the maritime space roughly between Hawaii, the Philippines and Guam.

     U.S. ties with these three countries are unlike anything the U.S. has with anyone else. They are beyond a doubt America's closest allies. Their citizens can live and work freely in the U.S., something Canadians cannot do. They can serve in the U.S. military. They receive a wide range of U.S. federal government services. The U.S. is responsible for their defence. Defending Palau, the Marshall Islands and the FSM means ensuring a hostile foreign power can't block the east-west flow between Asia and the mainland U.S.A. or Canada.

    This leads to a second point. We shouldn't be taking this for granted. Whenever anyone talks about China taking Taiwan, as we have heard several times today, operationally that means China, at the very least, neutering the U.S. in these islands and taking off-line the U.S. territories of Guam and the Marianas. Beijing is currently actively trying to do that, and locals know it. One of the preferred tools is corruption.

     In 2023, the then president of the FSM, David Panuelo wrote, “We are bribed to be complicit, and bribed to be silent.” He went on, “The practical impact of this is that some senior officials and elected officials take actions that are contrary to the FSM’s national interest, but are consistent with the PRC’s national interest.” He wrote this when he was a sitting president. The intention was to pull the FSM “very close into Beijing's orbit, intrinsically tying the whole of our economies and societies to them.”

    The U.S. has been countering this, but until recently, the U.S.'s definition of defence has been largely kinetic, for example, $2 billion in announced military infrastructure investments in the FSM alone. If Beijing pays off the right low-level environmental officers, let alone members of the FSM government itself, the implementation will get bogged down while Chinese companies move in, and the U.S. could be building infrastructure China will end up using.

    What does all this mean for Canada? Given our limited resources, I would suggest an element of the renewed strategy be to identify strategic geography that underpins a free and open Indo-Pacific, and then work smart with a block-and-build approach. That means help block what the Philippines calls China’s illegal coercive, aggressive and deceptive operations, which corrupt local societies, politics and economics, and at the same time build real resilience.

    For example, for blocking, Palau would like access to Canada’s dark fleet detection technology. It would help. For building, one example of effective people-to-people work is that of Métis innovator Bruce Hardy, who is leading indigenous-led food and energy resilience work incorporating first nations communities in Canada and the Pacific.

    The U.S. is starting to test this approach. Agreements signed with Palau in December will result in the U.S. sending investigators to help with corruption cases, foreign investment screening and border security—that's blocking—while at the same time funding a new hospital—building. The just-announced 4,000-acre Pax Silica-related U.S. economic security zone in the Philippines is another example.

    The Indo-Pacific is off balance. We need to block and build in key locations to maintain balance. At this stage, sending investigators and lawyers to support partners fighting corruption can have a bigger real effect than sending a few extra delegates to yet another multilateral cocktail party.

    Thank you.

     Thank you very much for your statement.

     I will now open the floor for questions, beginning with MP Michael Chong.

     You have six minutes.

     I'd like to ask Madam Paskal about her opening statement.

    Could you elaborate a bit on the corruption that the PRC is promulgating throughout Palau, Micronesia, the Marshall Islands and globally? Could you get into further detail about that?

    Secondly, could you then make recommendations to this committee about the role Canada could play in providing lawyers and capacity-building to fight that kind of corruption?

     China will often come into countries like this and present what looks like the sort of commercial support they really need. In the case of Palau, for example, China says it's going to help them build up their tourism sector. Then once it's got them, it then uses that economic leverage to, in the case of Palau, literally crash the economy. It pulled out all the tourists at once, because Palau is a country that recognizes Taiwan. China said that unless they de-recognize Taiwan or recognize China, the tourists aren't coming back, but that was after it had built up the economic dependency.

     At the same time, there was major Chinese organized crime operating in Palau. This is a country of less than 20,000 people, and there were triad operators like Broken Tooth operating there. The reason is that as the money comes in, you have this commercial face with a strategic component to it, but the third element of the braid is always corruption. There's always a corruption element, and it's sometimes put on steroids by Chinese organized crime. That is a weak point for the Chinese.

    If you take away the corruption, their investments look a lot less attractive. The obviousness of the strategic element is there.

    Very quickly, just to get this on the record, we know the 2017 National Intelligence Law requires all Chinese individuals and organizations to support Chinese intelligence efforts, as you've said yourself. This is the sort of thing that we need to incorporate into the assessment of any Chinese engagement in the region. What should we do? We should put in place extremely strong domestic Canadian FARA regulations to begin with, and make sure we're not living in a glass house while we're throwing stones.

    The Foreign Influence Transparency and Accountability Act is being implemented as we speak.

    What specifically could Canada do in these islands to help people, like the president you quoted, with fighting corruption?

     Unfortunately, President Panuelo wasn't re-elected. That's another thing that happens: If you stand up against China in the region, you end up being targeted.

     I would say that in the case of countries like Palau, Marshall Islands and Tuvalu—countries that already recognize Taiwan—security and law enforcement infrastructures are highly targeted by China. They really want to resist China, so it's investigators, specialists in money laundering and specialists in how to track illegal money flows. Then, say stuff. The U.S. recently designated the president of the Senate of Palau for taking Chinese money and being corrupt.

    In other words, help build the independence of their judicial system and help to train law enforcement to prosecute these kinds of crimes.

     They don't actually need more workshops. They need people to come and do the work. They are very much open to having people come to do the work.

    I would also argue that this area is unlike any other area that we're talking about. It would make sense to shift that area to Canada's embassy in Japan. Japan has much closer ties to the region. They're tracking this more closely. Canada can start working with the Taiwanese in countries that recognize Taiwan to help—

     Which embassy currently has this responsibility?

     They're mostly sitting in Canberra.

    They are just lumped in with “the Pacific Islands”. We set up an embassy in Fiji, but this is a whole different strategic environment.

     Dr. Nagy, do you have any comments on this?

     I think Ms. Paskal's comments really are spot-on. We see corruption throughout the region. It's an area that we have, as Canadians, actually worked on in the context of the South China Sea in helping to bolster the Vietnamese legal thinking so it can better defend how it positions itself vis-à-vis China and the South China Sea.

    Again, how we provide some legal training to the islanders may provide some assistance in dealing with corruption and preventing corruption from emerging. This is a soft contribution to the region, but I think it's a meaningful contribution that can help us deal with corruption and Chinese influence within the Pacific Islands.

    Should that be the priority of our foreign aid policy in the region?

     Ultimately, Canada has limited resources, Mr. Chong. In that sense, we may want to outsource some of these activities to countries that are closer to the Pacific Islands, primarily Australia and New Zealand. We could provide assistance.

    As we think about the size of the Indo-Pacific, there are priority partners that we need to develop, such as Japan, South Korea, Indonesia and Vietnam. We may need to pick and choose where we're investing resources. We have huge financial problems back at home. We have to pick and choose and build momentum in our Indo-Pacific policy.

    While I think this is an important initiative, again, I'm in favour of choosing priority partners that are big enough to provide some momentum for Canada's permanent engagement in the Indo-Pacific.

    Thank you, Mr. Chair.

    Thank you very much.

     Next we go to MP Rob Oliphant for six minutes.

     Thank you, Mr. Chair.

    I have three questions I'm going to try to address with the witnesses.

    The first has to do with the north Pacific, particularly looking at Japan and South Korea as strategic partners. The second would be lessons learned from Australia and New Zealand. On the third one, I'm going to push a bit more on the Pacific Islands as a place of real interest.

    As to the north Pacific, Professor Nagy, you're in Japan. You've had a career there. Can you talk a bit about where Japan is vis-à-vis Canada? We've had recent high-level visits. We have a relatively new government in Japan. How do you see the Canada-Japanese bilateral relationship evolving over the next few years?

    That is a super question.

    I look at Japan as the canary in the coal mine in terms of how to deal with the challenges within the region, in particular China, and how to not only manage engagement, but also build resilience into the relationship and deterrence. At the same time, Japan has the most nuanced policies towards Southeast Asia.

    In the context of how Canada engages with Japan, there are some real opportunities to learn from Japan. We can build some synergies into our policies of how we engage with Southeast Asian countries bilaterally but also through ASEAN.

    In Southeast Asia, a country-by-country approach is important, but we have to recognize that ASEAN moves as a whole. If we want to have credibility, we have to recognize ASEAN centrality within the region.

    Japan has done this exceptionally well, and they do it through soft means of building infrastructure, connectivity, business investments and trade agreements. It's a really good platform for how we're engaging within the region.

    I have met with China. It's not a zero-sum relationship with China. They engage. They have a $300-billion trade agreement every year. It's by and large equal. They have huge difficulties as well, but they're wise enough to try to balance. We can learn from how Japan is managing.

    Where do we head in the next four or five years? I see stability in the Japanese political system. I see that they are willing to invest in defence, in resilience and in partners that want to build strong ties. Energy security and critical minerals security are going to be huge places for Canada and Japan to build synergies. Our government has already been doing this, but there's a lot more that we can do in terms of Japan and Canada.

    Mr. Oliphant, it's too simplistic—

    I want to push a bit on—

     Can I just finish?

    No, it's my time.

    I also want to push a bit on South Korea.

    Sure.

    Only Canada and South Korea have really identified the north Pacific as an area. What does that signify in terms of a regional approach?

    I'm glad you said South Korea, because as we think about energy security and critical minerals, it's not just Japan that's going to be our partner. We should work with South Korea as well.

    On the north Pacific side, this nomenclature is not actually recognized outside the region. When I first read it in the Indo-Pacific strategy, I wasn't sure what it meant. I work with many people at GAC and Defence. I understand they want to link the Arctic, but it's not a terminology that has currency within the region. If we want to get more Canadian contributions in the region and to be taken seriously, we need to speak the currency of the region. That means talking about northeast Asia rather than the north Pacific.

    Still, South Korea shares many national interests with Canada. Importantly, it shares values with Canada. It's a clear partner for helping us engage with China, Southeast Asia and the broader region.

    Talking about Australia and New Zealand for a moment, my concern with the South Pacific Islands is that if you take Papua New Guinea out, which is 10 million people, and you take Fiji out, you're left with a number of countries with 20,000 or 25,000 people. How does that possibly relate to our work in South Korea, Japan, China even, Indonesia and Malaysia? I'm wondering if Ms. Paskal can talk about where that's coming from. We have Commonwealth ties already, so you're saying to cut Canberra out, but we are related quite profoundly to them through the Commonwealth. Our Commonwealth instincts should be there. We're not Americans; we're Canadians, so the Commonwealth is important.

     Of course, the Commonwealth is important, but you meet people where they are at. Would you interact with Vietnam through Canberra? These countries are not part of the rest of the Pacific.

    On the point about Australia and the bang for the buck you get in the Pacific, if we engage with Japan, at best we could be the eighth or ninth most important trading partner of Japan. If you're in the Pacific, which costs a lot less and is highly strategically important, you can be the point person for other people who want to come in and understand the Pacific, including the EU. There are areas, for example, that speak French, like New Caledonia and French Polynesia, where Canada's bilingual profile could be particularly value-added.

    New Caledonia is having a lot of problems. They have 20% of the world's nickel. When you're looking at how important these locations are, I would not go by population. One hundred thousand Americans died during World War II because of the strategic importance of the locations. We're looking at deep-sea mining. If you're looking at just resources, for example, you have situations like, again, New Caledonia.

    It's so important for stability in the South Pacific.

    With all due respect to my Australian friends, they have messed up so badly that we now have to look at the situation. The corruption of Pacific island leaders, in many cases, especially in the South Pacific, gets laundered through Australian banks and real estate, and they never do what the U.S. just did in designating illegal partners.

     Thank you very much.

    We go next to Mr. Brunelle-Duceppe.

    You have the floor for six minutes.

    Ms. Paskal, that was really an extraordinary answer to a question that didn't require an answer like that. I commend you for that.

    Ms. Paskal, we haven't talked about the Solomon Islands yet. I think it's important to talk about them since, obviously, China has intervened in this territory, which is also strategic.

    Can you outline what's happening there?

    I believe you met Daniel Suidani. His is a very sad case.

    I'm going to explain this in English because this is actually a little emotional and breaks my heart.

    He was the premier of Malaita Province when the Solomon Islands switched from Taiwan to China. The thing about the Pacific Islands is that if you understand how China operates in the Pacific Islands, it's like a mini version of how they operate globally. It really helps you understand the mechanisms that China uses.

    In 2019, when the Solomon Islands switched from recognizing Taiwan to China, he stood up for his people and said that he did not want Chinese companies operating in his province, and they targeted him as a result. He came to the U.S. to try to gain an understanding. He also came here and met with members like you.

    I don't know if you know what happened to him. They hounded him through lawfare. He became very ill. This was just last summer. He had kidney failure and went to the hospital in Honiara. The only dialysis machine in that hospital was donated by China. The person who decided who would get medical care was a Chinese person who answered to the embassy. Daniel Suidani did not get medical care and he died.

    We're increasingly starting to see across the Pacific Islands the use of medical care by China to export the social credit system to exert leverage on locals.

    Thank you so much for mentioning Daniel Suidani and his fight, which I hope will continue.

    You talked about the diplomatic space that Canada should be occupying in the Indo-Pacific. Nothing has been confirmed, but there are rumours that, as a result of the current cuts in various departments, including Global Affairs Canada, Canada could close diplomatic representation in certain places. There are two places that come up often: Auckland, New Zealand, and Osaka, Japan. I'm referring to the consulates.

    In the context of the Indo-Pacific strategy, wouldn't it be a considerable loss if those two consulates were closed? If you agree, I'd like to know why.

    I'm never going to say something should be closed. As part of the Five Eyes though, I wonder what is really being done in Auckland. If it's not a strategic location for the protection of information, I would say that the consulate is less important than the one in Osaka.

    The war is going to be in the central and north Pacific. The other thing about the Solomon Islands is that this is the site of the Battle of Guadalcanal, and the Chinese are currently rebuilding. They're involved in putting in infrastructure at Henderson Field, where a lot of Americans died. They have studied the World War II map, and they're replicating it.

    Do I have any time left, Mr. Chair?

    Yes. You have two minutes and 23 seconds.

    Fantastic.

    Mr. Nagy, you talked about relations with the United States. You told us that, in three, four or five years, there would be changes in the leadership of the various administrations. I agree with you 100%. I have confidence in the democratic, judicial and legal institutions of the United States.

    What we have to remember is that the Chinese Communist Party will probably still be there in 50 years. Doesn't that raise significant concerns considering our diplomatic and trade rapprochement with China right now?

    As to our relationship with the United States, shouldn't we include the United States in Canada's Indo‑Pacific strategy?

    Thank you for the question, Mr. Brunelle‑Duceppe.

    It's really important. You're right. The Chinese Communist Party will be around for the next 20 or 30 years, and we need to ensure that we are creating a broader strategy with that in mind.

    As for the United States, we've seen oscillations in the United States' power. It does become unpredictable, but at the same time, we have a geographic, institutional, legal.... Let's not forget the millions of families that have connections within the United States. I continue to advocate for building with the United States an indispensable relationship of concrete measures for dealing with foreign interference seriously and dealing with Arctic security seriously.

     Also, it's important for us to continue to have a strategic vision of how we're going to engage with the Indo-Pacific with the United States as a key partner, but that doesn't mean we have the same policy as the United States. We are Canadian. We can engage with the region through Canadian interests, but we will never be able to have an effective policy with the Indo-Pacific without having the strongest and deepest relationships with the United States.

    We should remember that Indo-Pacific countries, whether South Korea, Japan or Southeast Asian countries, look to Canada, and they understand that we are close to the market in North America and the United States. We share many institutions and laws. We share respect for the rule of law. We have strong cross-state partnerships, and despite the challenges in the relationship today, we'll continue them three or four years from now.

    We need to continue to invest, and not just in Washington. Canadian leaders need to visit all 50 states to build the strongest of partnerships that advocate for Canada's interests. Some leaders are doing this, but we need to do much more, because the United States is not going away and neither is our geographic relationship.

    Thank you, Mr. Brunelle-Duceppe, for a great question.

    Thank you very much.

    We go next to MP Kramp-Neuman.

     You have five minutes.

    Thank you, Chair.

     Thank you, Madame Paskal and Professor Nagy, for your expertise and perspectives today.

    I'll start with a first question in regard to how the government has painted the Indo-Pacific strategy update as more of an evolution than a new document. Given the government's shifting position on China and given the immense weight the nation plays in the Indo-Pacific, I have a first question for Madame Paskal. Is there any concern that this signals a fundamental change in the approach to the region?

     Do you remember the old TV show and the old ads about “Miss Cleo”? On this one, I don't know. All I can do is go by actions, and I suspect that one of the reasons that maybe they're not.... The Indo-Pacific strategy, when it came out, was pretty good, and it got a lot of positive attention across the region. I suspect that anything new would be somewhat watered down and would invite criticism from a lot of different sides, so why do it, I guess, if you're the government?

    That's as good as I can get. I'm sorry.

    That's fair.

    Earlier this year, I had the privilege of visiting Taiwan with a Canadian delegation and speaking with leadership there, since they are extremely concerned about how Taiwan fits into the revamped Indo-Pacific strategy from our government, which has made it clear that they are seeking closer economic ties with China.

    What messaging does this send to our allies in the region? Further, what message does it send when two government MPs were sent home from Taiwan when we were there?

    It's not good, but I wouldn't overestimate how much people are looking at us.

    In preparation for this hearing, I asked friends across the region—Americans, Indians, etc.—what they thought about Canada's Indo-Pacific strategy. My American colleague, who was in charge of planning for the Indo-Pacific at Camp Smith in Hawaii, said, “That's like a Trivial Pursuit question.” Our profile is not that high, which is why identifying niche areas—dark vessel technology is great—or specific countries, like those in the Pacific Islands, or the Francophonie push.... Identifying places where we can stand out would make people care more.

     Do you believe the Canadian government runs the risk of signalling to our Indo-Pacific allies that we're ceding soft power to Beijing? Further to that, are there domestic economic security concerns if we make stronger trade ties with China?

    Yes, and I would also note that the language around the U.S. is generally not light. You have countries like the Philippines putting their neck on the line with radical transparency and things like that, and to hear Canada harping about.... This new piece of strategic economic infrastructure the U.S. is putting into the Philippines is basically going to be sovereign U.S. territory within the Philippines to set up the Pax Silica and AI stuff. Canada should be part of that, but the way we're talking about our neighbour, which we obviously have the right to do, does not necessarily get heard the way we think it gets heard by the frontline states.

    That's fair.

    The strategy itself recognizes China as “an increasingly disruptive...power”. Do you agree with that analysis? Also, I'm curious. Has your organization, or you as an individual, been consulted in the revamping of the strategy?

    I have not, except for you guys. Thank you.

    The way the revamp should be done is how you're doing it.

    Also, I'll quickly jump to a side topic about the U.S. There's going to be a new census in 2030. That's going to affect the apportionment of seatings. States like Florida and Texas are going to get a lot more seats. As you put together conceptualizations of how things will be, going forward, understanding how the census will affect politics in the U.S. in 2030—because the strategy has a long-term time frame—would be helpful.

    My last question is for Professor Nagy.

    In your opening remarks, you acknowledged that, within five to six years, we'll potentially have leadership changes in Russia, China and the U.S. Despite the challenges we're currently enduring, you also acknowledged being “strong at home”.

    Indeed, we have a geographic connection to the U.S. In order for us to establish and then continue long-term security and prosperity in the Indo-Pacific...how do you see that playing out? Could you elaborate a little more on that?

     Give a very brief response, please.

     I believe in leveraging our comparative advantages in terms of geographic proximity and access to the United States' market. Our institutional overlap can be a window for Indo-Pacific countries to enter through Canada—to invest in Canada and the United States. We need to continue to be a bridge that benefits the United States, the Indo-Pacific countries and, most importantly, Canada and Canada's prosperity.

     I'll go next to MP Steven Guilbeault, who is sharing his time with MP O'Rourke, I understand.

     You have five minutes.

    Thank you to the witnesses.

    Since I don't have much time, I would like to talk to you about climate change. You both talked about that. Canada's Indo‑Pacific strategy also mentions it. It's a very important issue in that part of the world because of the impacts of climate change, obviously.

    We are coming to the end of the cycle of our five-year investment period under the Paris Agreement on climate finance. We have funded development and capacity-building projects as well as partnerships between Canadian universities and research centres in that region. We are preparing to renew our next five-year commitment period for climate finance.

    My question is for both of you, Professor Nagy and Ms. Paskal. What would you recommend to the Canadian government in this regard?

    Thank you very much, Mr. Guilbeault.

    Climate change is going to affect different parts of the Indo-Pacific differently.

    If we look at the South China Sea area, the Mekong delta will probably be salinized. This will affect the food security of Southeast Asia—Vietnam, Cambodia and Laos. It's hard to imagine this not cascading into a refugee crisis or instability.

    When we think about Canada's investment in a place like the South China Sea and dealing with climate change, of course there's a global approach, but we ultimately have to work with partners on the ground to try to deal with the challenges they're facing domestically. This is not necessarily a big expenditure. It could be something as simple as education. It could be as simple as NGOs helping the local communities deal with local environmental problems. I think there are many different levels.

    If we go to the Pacific Islands, these countries may not be around in 20 or 30 years. Of course, it will affect these people, but it will also affect how the United Nations works. These countries will disappear. How will they be affected? How will they be susceptible to corruption? As Ms. Paskal mentioned, their lives are on the line, and this will make them susceptible.

    As we think about climate change, it's not as simple as thinking about it in terms of dealing with carbon. We must think about how we can change what's happening on the ground in these communities to prevent climate change from really damaging these countries and perhaps making them disappear.

    There are a lot of things that Canada can do. Ultimately, if we are damaging our economy for the sake of climate change, that is probably an ill-considered strategy. We need to take the right balance, and everything is the right balance. How can we be prosperous, but how can we also deal with climate change in the short, mid and long term?

    Thank you for the really thoughtful question.

    Go ahead, Madame O'Rourke.

    Thank you, Mr. Chair.

    Dr. Nagy, I have a quick question.

    Canada is signing an increasing number of trade agreements in the Indo-Pacific, including with Indonesia, which is the world's fourth-largest economy, and has a clean energy partnership and an MOU on AI safety with Australia, to name just a few.

    Our Prime Minister has been very—

    I'm sorry, but I can't hear Ms. O'Rourke. Is there a volume issue on my side or your side?

    The mic is on.

    Can you hear me now?

    I can hear you now. I apologize.

    All right. Thank you.

    As you know, our Prime Minister has been very aggressively signing trade deals globally, including a comprehensive economic partnership with Indonesia, and we have a clean energy partnership and an MOU on AI safety with Australia. With all these trade and defence partnerships in the region, are these actions in line with the substance you were calling for during your appearance before the Canada-China relations committee in 2022?

     As I think about how our new Prime Minister—he's not so new anymore—is engaging in the Indo-Pacific, I can't help thinking that he brings dignity, thoughtfulness and technocratic skill to the prime ministership.

    At the same time, as we think about diversifying our trade towards India and Indonesia and building clean-air partnerships with Australia, are these the best uses of our comparative advantages to tackle the real challenges in the region? The real challenge from my standpoint is, again, China's pursuit of what we call hegemony in the region—dominating and reshaping the region. If it reshapes the region along rules that show preference to China, this will obviously negatively affect Canadian interests.

    As I watch the Prime Minister, I think the engagement with China needs to be thoughtful. As he says, the guardrails need to be high. We need to be very realistic about China's willingness to use force against Taiwan, which will fundamentally disrupt the global economy, and about its interest in dominating what we call the Indo-Pacific. This would fundamentally affect trade agreements, AI regulation and how we use sea lanes of communication.

    In this case, the priorities of the Prime Minister should be focused on understanding these issues and building relationships through trade agreements, energy agreements, critical mineral agreements, security agreements and disinformation agreements that actually tackle those issues, which I think are the priority for Canada and Canadian interests.

    Thank you very much.

    We go next to Monsieur Brunelle-Duceppe.

    You have two and a half minutes.

    Thank you, Mr. Chair.

    Dr. Nagy, I asked this question of the previous witness group and I'd like to hear your thoughts on it as well.

    Everyone is talking about a possible Chinese military offensive, especially after the various abuses that have taken place at the Central Military Commission, where Xi Jinping has cleaned house.

    Clearly, there are issues. If Beijing gets its hands on the production of 90% of the best semiconductors in the world, that means it will have control over artificial intelligence, among other things, not to mention the fact that we will no longer have access to those products.

    How important should it be in Canada's Indo-Pacific strategy to keep that in mind? How important is the defence of Taiwan and its democratic environment going forward as it relates to Canada and Quebec?

    Thank you for your question. That's great.

    As I think about Taiwan, I want to put it in a perspective that we can understand very clearly.

    A conflict across the Taiwan Strait would cause between $10 trillion and $15 trillion U.S. in damage to the global economy. It would devastate the production networks in China. It would dramatically and negatively affect Southeast Asia and India. Southeast Asia and India's biggest FDI providers are Taiwan, China and Japan, the economies that would be devastated.

    This is not to mention, as you said, the damage to semiconductor supply chains, as well as control of the first island chain, which would basically allow China to put submarines along the trench, keeping the United States, Canada and any other countries out of the Indo-Pacific region to ensure that those sea lanes are open for trade and energy. This is a priority, but as Canada thinks about the Taiwan issue, we should continue to invest in Taiwan as an international public good.

    Avoid the “one China” question. What happens to Taiwan matters to Canada, matters to Germany, matters to Palau—it matters to every single country on the planet. We need to invest our diplomatic resources from that perspective to build alliances and partnerships that have a similar thinking about Taiwan as an international public good.

    We also want it to have peace and stability, and we want to make sure that whatever happens to Taiwan is decided by the Taiwanese people. I want to reiterate this: Avoid talking about Taiwan through how China talks about Taiwan. Let's talk about Taiwan on our terms, and I think the terms we should be using include thinking of Taiwan as an international public good. We should invest our resources there, just as we invest in the Great Barrier Reef or invest in other international public goods.

    Thank you very much for the question.

    Thank you to the witnesses.

    Thank you very much.

    Madame Paskal, would you like to make any concluding remarks? We skipped over you twice.

    Quickly, there's a lot of talk about multilateral organizations, and we should be aware of how successfully China has gamed multilateral organizations, including the Asian Development Bank and the World Bank. When you're talking about infrastructure projects in places like the Pacific Islands, you'll often see China winning the bid, but it's effectively subsidizing the belt and road initiative, or the BRI, which I like to think of as the “bribery and repression initiative”, because that's functionally what's being spread out along the BRI.

    Before you go jumping fully into the multilateral organizations, it's useful to do a risk analysis of exactly how much they have been gamed by China, to make sure that Canada isn't actually funding Chinese operations.

    Thank you very much for your remarks.

    Thank you to both witnesses for your statements, presence and testimony.

    Colleagues, our next meeting will be this Thursday, with the appearance of the Canadian ambassador to the United States, Mr. Mark Wiseman.

    Yes, Mr. Brunelle-Duceppe.

    I just have a quick question.

    First of all, I'd like to thank the witnesses. It was an amazing panel.

    Mr. Chair, will Mr. Wiseman be joining us in person or by video conference?

    He will be here in person.

    That's perfect. Thank you.

     Thank you very much.

    Is it the will of the committee to adjourn the meeting?

    Some hon. members: Agreed.

    The Chair: We are adjourned.