Experts weigh in on Canada’s first Indo-Pacific strategy

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Canada announced its first Indo-Pacific strategy on Nov. 28, with a focus on expanding trade, security and building a green future with the region’s 40 nations that include China, India and Japan and total nearly $50 trillion in economic activity.

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The much anticipated strategy pledges $2.3 billion over the next five years to deepen Canada’s ties with a region that’s projected to host a third of the world’s middle-income population by 2030 and half of the global gross domestic product by 2040.

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A major portion of the strategy focuses on how Canada will negotiate with China, the largest trade partner for most of the countries in the region, at a time when Western nations, including the United States, Canada, and Europe, are looking to shift their industries’ supply chains away from the Asian giant towards more friendly nations.

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Here’s what the government and trade experts are saying about the strategy’s commercial goals:

Mary Ng, trade minister 

On trade with China

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“I will continue to support businesses that are operating in China, but we also want to diversify our supply chains. Our trade commissioner service is going to be focused on making sure that Canadian businesses get sort of the right advice about doing business in China, but we are also going to position our Canadian tools to help businesses diversify. Frankly, I want to grow trade,” Ng said in an interview.

On trade missions

“As far as trade missions, it’s incredibly important for us to take the Team Canada set of missions out there and I think in the region, what you are seeing is this collaboration where I as the trade minister will be able to do trade diplomacy at the same time opening up those doors for businesses who want to operate in the region. So it’s very complementary. Yes businesses can go on their own, but I really want to increase the impact of Canadian businesses going into the region and supporting that effort in an aggressive way.”

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On trade with India

“The approach that I have taken this time around under our government is a little different. I am working on an early progress agreement … but what you will also see in this strategy is the creation of an India desk. It’s a big economy. Helping us get our businesses into that market and having sort of our capabilities there on the ground to facilitate that is also something we are doing.”

On a Canadian trade gateway in Singapore

“In addition to the trade gateway, we are going to appoint Canada’s first Indo-Pacific trade representative. This is about having a greater presence in Asia and this is Canada’s front door. We want to make sure that Canadian businesses that are looking to access that market have a base to operate from in Southeast Asia. But it’s also a door … that swings both ways. I want them to also look at Canada and the investments that are possible.”

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Omar Allam, managing director, Deloitte Canada

“The strategy is a good start and positive signal that Canada is serious and committed for the long-term,” Allam said in an email.

“Canada has a real opportunity to recapture lost ground and seize an opportunity to attract new foreign investment and rebuild export muscle that was lost in recent years with trading partners across the Indo-Pacific region.

“Against competitors such as China, India, Germany, the United States, and the U.K, it’s unrealistic to assume that Canada can tap into foreign investment and know-how to build a powerful, export-oriented economy and rapidly expanding middle class if we simply run a few plays, no matter how well designed.

“We (Canada) need to play to our strengths and set out a more aggressive approach to winning the best export deals and attracting foreign direct investment projects across key sectors of the Canadian economy. For instance, we need to leverage more government-to-government (G2G) arrangements with foreign buyers and enhance strategic `pull trade’ financing solutions to help Canadian businesses compete against rising competitors. These instruments and tools can’t be overlooked.

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“Building off this regional strategy, now is the time to map out the rest of the world. Canada needs an updated and equally balanced Canadian international trade and investment blueprint so we can win the best export deals and attract high value inward investments, while managing rising geopolitical risks. This needs to be a priority.”

Carlo Dade, trade director, Canada West Foundation

On China

“They (the federal government) got the big things right and they missed some of the small things,” Dade said in an interview. “The biggest thing was obviously dealing with China, they got this largely right, I would give them an ‘A’ on China.

“The point about China is even if you try to run away from China, you run into China. They got it right in that China is important and has to be at the centre of the strategy but by centre we don’t mean the old way of thinking about these things like it’s at the centre, so we are going to try and sell more or we are going to try and devote all our resources to dealing with China. ‘At the centre’ means, China is the dominant economic influence, so you have to understand how that impacts the countries you are trying to trade with.

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“China is literally building the roads on which our Canadian goods will travel in the region, it’s building the ports through which our goods are going to go through the region.”

On utilizing offices of provinces in the region

“The provinces who are in these countries are huge and getting the provinces to do more can do a lot more for the strategy as well.”

On Canada’s reputation abroad

“Our reputation globally is that we show up and disappear. There’s a change in government in the provincial capital, in the federal capital, and we tend to disappear. So, for this strategy to be taken seriously, there has to be indication that they will outlast changes in government at the provincial and federal level.

“Our reputation is like Casper the annoying ghost, we show up and disappear …  so the perception in the region is going to be, ‘Look who finally bothered to show up. I wonder how long they are going to stick around this time.’ So, we have to dig ourselves out of the hole that we have dug in the region.”

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Eric Miller, president of Rideau Potomac Strategy Group

On natural gas exports

“Fundamentally when you look at the natural gas picture in particular, all of the estimates (suggest) new demand for natural gas over the years to 2040 will come from Asia,” Miller said in an interview.

“A big part of the challenge of laying all of this out is that the government would have to say that, ‘Yes, we believe in the long term, not only potential, but reality of Canada’s LNG export industry,’ and candidly, they would need to say that we think it is good for the world for Canadian LNG to be exported.

“In time we will be able to develop more clean hydrogen but as you see from the case of Europe, transforming the energy system overnight where they were getting significant amounts of their energies … from Russia and that’s dropped off but trying to replace all of that has meant a number of perverse consequences. At least five countries in Europe have either restarted or extended use of coal-fired power plants. People are worried about deforestation. And so, would we not be better off to supply Germans with natural gas than have them burn coal?”

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Goldy Hyder, president of the Business Council of Canada

On trade missions

“For a business, it’s a lot easier to partner with government heading into new markets in Asia than it is to try and do it on your own,” Hyder said in an interview. “It’s always easier if you have good robust partnership with the government.

“I think the resources that the minister has put behind this, particularly for knowledge development and how it is that markets work — Indonesia is not the same as Vietnam or India and China, so how do we make sure that we have local understanding, expertise.  As much as politics is local, so too is all business. So that’s an important investment being made here.”

On trade with China

“What she (Minister Mary Ng) has said to the business community is that you need to be very pragmatic. You need to be clear-eyed about entering into a market where there are risks and our response is, ‘Well, business is in the business of managing risks.’ We know how to do that and we will do that. We will calculate and make decisions based on that calculation, but we are glad that nobody said, ‘Don’t do businesses in an x, y or z country.’ I think that would have been counterproductive and harmful to our customers.

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“This was a mature response to an emerging power.”

On liquefied natural gas (LNG)

“The big miss here is on LNG. The entire document, which is very detailed, fails to mention the LNG Canada project … which is going to be functional in the year 2025 and will be able to get the LNG to the Asian market and Europe.

“In my opinion, doggedly stubborn in wanting to not leverage such a tremendous resource and something that is in global demand. Having been to Korea, Japan and others, they basically say it’s a shame that you can’t get us your resources because it is forcing us to buy those resources from autocratic countries.

“That’s a blemish on us and we should be more mature about how it is that the energy transition is abetted by our capacity to provide markets LNG to help them decarbonize effectively off coal because that’s what many of these countries are returning to.

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“I think the prime minister and deputy prime minister both have said that they need to identify and expedite projects to get resources to markets to help other countries decarbonize and get off autocratic oil and gas, this was a chance to send that message and it failed to do so. So it is a huge miss.”

Perrin Beatty, chief executive, Canadian Chamber of Commerce

“The single largest immediate contribution Canada can make to the Indo-Pacific is to develop a comprehensive strategy to export far greater quantities of food, fuel and fertilizer to the region,” Beatty said in a statement. “We welcome the opening of the first Agriculture and Agri-food Office in the region as a first step.

“In addition to increasing our presence in the region, much of the important work that needs to be done is here at home … the rapidly-growing communities of Canadians who trace their roots to the region provide a much-underutilized source of people who speak the languages, understand the cultures and have networks of family and friends in the region and who could help to strengthen our trade and investment ties.

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“Because the region is both large and diverse, one size definitely does not fit all. Canada’s priorities will need to be very nuanced both between and within countries. We look forward to receiving further information about the government’s approach to Canada’s relationship with the highlighted countries but also with others, including Indonesia, Pakistan, Australia and New Zealand.”

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David Mulroney, former ambassador to China:

“The (government) discovers Asia every five to 10 years,” Mulroney tweeted. “There’s no reason to believe the expenditures they announced will enable them to chart their way through Asia or anywhere else.

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“But they do want us to believe that our focus should be out there in the Indo-Pacific, rather than back here in Canada. They’ve got no plan to combat increasingly sophisticated Chinese interference. Just the desire to get it out of the headlines.”

Meredith Lilly, former trade adviser to Stephen Harper:

“No mention of friendshoring,” Lilly tweeted. “If anything, the strategy offers a rebuke, proposing greater diversification and doubling down on adherence to rules as resilient responses to protectionism.

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“Overall first impressions: Despite unacceptably long delay (followed by today’s politically expedient release), I’m pleased with the stated priorities and overall seriousness of tone.”

Paul Samson, president of Centre for the International Governance Innovation

On trade with India

“India likely represents both the crown jewel and wildcard within the strategy. The potential for economic, trade, environment, immigration and security co-operation is enormous. But there is also a risk of a failure-to-launch in at least some areas where India’s domestic focus may keep some opportunities with Canada on the back burner. Completing a comprehensive trade agreement between Canada and India will remain tough.”

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On trade with China

“The tone on the China section of the strategy is not nuanced … the strategy appears to acknowledge that this approach could increase the risk of economic disputes between the two countries. The strategy also makes it clear that Canada’s approach to China will be nested within the Indo-Pacific strategy as a whole. This raises interesting questions about how policies on ‘friendshoring’ might evolve in the region. Is it clear which countries would be ‘friendly’ enough? The answer is likely to be a broader set of countries rather than a narrower one.”

• Email: nkarim@postmedia.com | Twitter: naimonthefield