UK and Canada and BREXIT

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Inexperience of British trade team created ‘frustration’ during early talks for a potential Canada-U.K. pact, experts say

By NEIL MOSS      
Rideau Potomac Strategy Group’s Eric Miller says ‘a number’ of Canadians have been offered positions on the British team, but turned them down due to the inadequate salary being offered.

Before Canada-U.K. preliminary trade talks cooled, the inexperience of the British negotiation team complicated the discussions, observers say.

“They have never done this before,” said Eric Miller, a former senior policy adviser to the Canadian Embassy in Washington, D.C., and current head of the Rideau Potomac Strategy Group.

The United Kingdom has not negotiated a trade deal since it entered the European community in the 1970s, and with a potential hard Brexit nearing, a group of inexperienced trade negotiators have to complete trade deals with numerous countries, including Canada.

“They’ve been desperately trying to put together a trade negotiation infrastructure. … It’s not that they don’t have smart people or capacity—they’ve got plenty of that—it’s just trade negotiations are their own distinct beast and having a mechanism to advance them is something that is developed over time,” he said.

Anthony Cary, who served as British high commissioner to Canada from 2007 to 2010 and now heads the annual Canada-U.K. Council, said the experienced negotiators that Britain does have who worked for the European Commission might not be viewed favourably by the current government.

“The U.K. does have experienced negotiators who have been working in Brussels, but they might not be welcome in Whitehall at the moment, even if they were prepared to help deliver a policy that most of them deplore. The neutrality of the British civil service is under intense pressure. Ministers and their political teams give [the] impression [that] they value True Belief over expertise or impartial advice,” he said in an email.

The inexperience has frustrated the now-halted early talks, trade observers say.

Canada entered exploratory talks with Britain over a potential free trade deal for when the U.K. makes it long-delayed departure from the European Union in 2017, but those talks have since slowed. Formal trade discussions can’t take place until Britain officially leaves the EU. The discussions cooled after Britain released a “temporary list” on March 13 in which it was reported any country could have 87 per cent tariff-free access to the British market for products on the list without any need for equal tariffs cuts.

Jason Langrish, executive director of the Canada Europe Roundtable for Business, said there was “frustration” on the Canadian side due to the inexperience.

He said the lack of experience can “grind negotiations to a halt,” due to unfamiliarity with managing political masters, and the lack of structures for interdepartmental co-ordination.

Mr. Cary said the inexperience gap can be “frustrating” for both sides, with misunderstanding and small issues being blown out of proportion and becoming “major sticking points.”

Brian Kingston, vice-president of international and fiscal policy at the Business Council of Canada, said that Britain was hampered by then-Secretary of State for International Trade Liam Fox’s “extremely ambitious” plan to roll over 40 trade deals the “second after” Brexit.

Canadian negotiators are typically focused on one agreement at a time.

“You can dedicate all your time to it, and you can make sure that you are fully cognizant of everything that’s happening,” Mr. Kingston said, adding that it created a capacity issue for the Brits, when they were having trade talks with Japan, Korea, and others, at the same time they were holding preliminary trade discussions with Canada.

A U.K. Department for International Trade spokesperson said Canada and the U.K. have agreed to work towards a “seamless transition of [Comprehensive Economic and Trade Agreement] CETA,” and the U.K. is committed in doing so.

“We are continuing to work on securing continuity with other countries. Last month, we reached agreement in principle with Korea and a continuity trade agreement was signed on July 18 with six Central American countries. Once the Korea agreement is signed, we will have agreements with countries covering 64 per cent of our trade for which we are seeking continuity,” the spokesperson said.

Boris Johnson became the newest British prime minister on July 24. He has promised that the U.K. will leave the EU after Oct. 31, even if there is no deal.

Britain’s new Secretary of State for Foreign and Commonwealth Affairs Dominic Raab reiterated Mr. Johnson’s stance while speaking to reporters in Toronto on Aug. 6 alongside Foreign Affairs Minister Chrystia Freeland (University-Rosedale, Ont.), but added that having a withdrawal agreement would be preferable.

Colin Robertson, middle, says Global Affairs’ trade team is ‘an area of Canadian competence and expertise.’ The Hill Times file photograph

British cabinet minister Michael Gove—responsible for preparations for a potential hard Brexit—is blaming the EU for refusing to negotiate, according to the BBC. A European Commission spokesperson in Brussels responded that the EU is open to talks, but its position hasn’t changed, Bloomberg reported.

A hard Brexit would create uncertainty for Canadian exports to Britain.

The terms of a Canada-U.K. trade pact would be influenced by the terms of a withdrawal agreement, a Global Affairs Canada spokesperson told The Hill Times. If a withdrawal agreement was reached, Canada would allow the U.K. to remain party to CETA. Even if there is no transitionary trade deal, Canada has been promised custom-free access to 95 per cent of all tariff lines, the spokesperson said.

A lack of ‘continuity’ defined early trade talks between Canada and Britain

Colin Robertson, a former diplomat and trade negotiator on the Canada-U.S. Free Trade Agreement, said British negotiators gave Canada some attention, but would then would disappear.

The situation was being compounded, as Britain’s best negotiators were preoccupied with the Brexit negotiations, Mr. Robertson said, and some of the British negotiators who may have been present at a meeting with Canadian officials disappeared to focus on another country or Britain’s EU exit.

“The continuity wasn’t there,” Mr. Robertson said.

The inexperience of Britain’s trade negotiators is highlighted when compared to the Canadian team—led by chief negotiator Steve Verheul—that has negotiated CETA, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the new NAFTA deal, among other smaller free trade deals. Doug Forsyth, a director general of market access co-ordination at Global Affairs Canada, will take the technical lead in future talks with Britain, trade observers say. Mr. Forsyth was previously a director of trade negotiations at Agriculture and Agri-Food Canada.

“What Canada has done since the late ’80s is invest in having a cadre of very smart [and] knowledgable people on all aspects of trade,” Mr. Miller said.

This is an area of Canadian competence and expertise,” Mr. Robertson said. “And in tough negotiations, I do think that makes a difference.”

Mr. Miller said “a number” of Canadians have been offered positions on the British team, but turned them down due to an inadequate salary being offered. Mr. Robertson said Britain tried to hire one of Canada’s “most senior” trade negotiators.

Other prominent Canadians have publicly offered their assistance to the British government. Former prime minister Stephen Harper tweeted on June 29 that he would be “willing to assist whoever serves as the next leader of the UK Conservative Party on trade matters, should they wish. There is a lot to learn from Canada’s strong record in this area.” Former interim Conservative Party leader Rona Ambrose also said she was ready to help, after British media reported that she was among those recruited by U.K. Conservative leadership hopeful Jeremy Hunt.

Crawford Falconer has been Britain’s chief trade negotiation adviser since 2017. He previously served as New Zealand’s chief negotiator.

Mr. Cary said compiling a “battalion” of trade negotiators can’t be done in short order, and in the meantime they have brought in “expensive trade consultants.”

Peter Clark, a trade-focused consultant at Grey, Clark, Shih, and Associates and a former trade official for the Canadian government, said using the inexperience of the British side would be an “easy excuse” as to why talks have been slow to develop.

He added that it doesn’t matter how experienced a trade team could be if the politicians get involved.

“When we did NAFTA 2, we had really, really experienced people and the shots were being called by the politicians, and we got a pretty lousy deal,” Mr. Clark said.

He said if both sides of a trade teams are experienced, it is easier procedurally to negotiate a deal. If one side is more inexperienced it will take more time to educate the other.

“It’s not pulling the wool over their eyes.”

China: Mary Ng, Guy St. Jacques and David Mulroney

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Given the deep and tense chill in the Canada-China relationship, it seems a bit incongruous for a cabinet minister visiting Beijing to tweet about ice cream.Yet that’s just what Small Business and Export Promotion Minister Mary Ng did at a World Economic Forum meeting in early July. There was no public comment about China’s trade embargoes, which have kneecapped our canola, beef and pork industries; nothing about democratic rights in Hong Kong; nothing about Michael Spavor and Michael Kovrig, the two Canadians who have now spent seven months in jail in China, ostensibly in retaliation for Canada’s arrest of Huawei executive Meng Wanzhou.

Now come revelations that a senior Global Affairs Canada official, reportedly at the instigation of the Prime Minister’s Office, asked our former ambassadors to clear their public commentary with the department. When opposition parties called for parliamentary hearings into the allegations, the Trudeau government used its majority to vote them down.

The federal government looks committed to hearing no evil, seeing no evil and doing nothing on the China file, for fear of further upsetting Beijing. That is no policy for Canada.

Without parliamentary hearings, questions remain. The PMO has denied the allegations, but if the request did emerge from the PMO, was it initiated by the Privy Council Clerk, as head of the public service, the national security adviser or the deputy ministers at Global Affairs?

With a federal election just months away, this only feeds the Conservative impression that the public service leans Liberal. Worse, it’s a sign that Justin Trudeau’s government seems to be learning all the wrong things from the Chinese. The guardrails between our politicians, public service and judiciary are fundamental to democracy, and this is a norm that needs to be respected by all parties. One would have thought the government had learned from recent controversies, too: Ignoring norms has already cost the government a clerk of the privy council, a national security adviser and an unfairly keelhauled vice-chief of the defence staff.

We need a realistic, not a romantic, China policy. It should start with the recognition that China is an authoritarian state, a strategic competitor and systemic rival. It will never follow Western democratic norms because that would destabilize the Communist Party – the root and base of the People’s Republic of China.

We have to contain what even Mr. Trudeau acknowledges is China’s “aggressive” and “assertive” behaviour. We need to deter Chinese efforts, as reported by our intelligence agencies, to destabilize our democratic elections. We need to engage, not just for trade and investment, but to ensure peaceful co-existence and detente. Otherwise, China will continue to turn the screws: seafood may be next.

For self-respect – we are, after all, a Group of Seven and Group of 20 country – we need to push back.

First, we should launch an appeal to the World Trade Organization over China’s illegal actions against our canola, beef and pork. We need to encourage like-minded countries to join us, starting with the United States, which got us into this mess by asking us to arrest Ms. Meng.

We should also support Taiwan in its application to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Keeping the vibrant democracy out of international institutions just because China wants it that way no longer makes sense.

Let’s also put the spotlight on China’s abysmal human-rights record, starting with Hong Kong. Canada has one of the world’s largest diasporas of Hong Kongers, many of whom sought Canadian citizenship after the Tiananmen Square massacre. We invested in Hong Kong’s democratic institutions and we need to do so again. We helped organize the Lima Group, to tackle the crisis in Venezuela. We’ve hosted a conference focused on democratic reform in Ukraine. Why can’t we do something similar about China’s incursions?

And then there are the million-plus incarcerated Uyghurs in China. While we practise reconciliation with Indigenous people, Beijing enforces re-education. We are committed to multilateralism, so why not take advantage of multilateral institutions such as the UN Human Rights Commission?

We need to hit those calling the shots in the Communist Party. We should lift the visas of Chinese students in Canada who are related to party officials. A Canadian education is a valued commodity in China.

A strategic approach to China means thinking about the long game. Where do we want to wind up? What are our assets and vulnerabilities, our overriding objectives and goals? Where do the pieces fit together? Engagement, containment and deterrence should be the guiding principles. Trying to muzzle our China ambassadors – foreign policy experts – is not the way to achieve a better way forward.

The controversy over phone calls made to two former Canadian diplomatsasking them to “check in” with Global Affairs before commenting on China policy reached its inevitable conclusion Tuesday, when the Liberals used their majority to vote down the Opposition’s call for Parliamentary hearings into the affair.

The Conservatives and other critics saw the calls as attempts to silence David Mulroney and Guy Saint-Jacques, both of whom served as Canada’s ambassador to China and are regularly called upon by the news media to comment on this country’s frozen relations with Beijing.

It was a clumsy move on the part of the Trudeau government, one that preserved its losing streak when it comes to exerting pressure on the wrong people.

But Global Affairs has since apologized and said its intention was never to muzzle the diplomats. Foreign Minister Chrystia Freeland has also apologized, at least to Mr. Saint-Jacques. In the absence of parliamentary theatrics, let’s move on to the main event.

What remains, and is the critical issue here, is the fact that Ottawa doesn’t have a visible policy for dealing with China in the wake of the arrest of Meng Wanzhou in Vancouver last December. The Chinese businesswoman is currently out on bail and living in a mansion in Vancouver while fighting an extradition request from the United States.

Beijing responded to Ms. Meng’s arrest by jailing two Canadian citizens on bogus national-security charges, moves that amount to political hostage-takings. China also retaliated by suspending all canola imports from Canada, as well as beef and pork imports.

To date, the Trudeau government’s response has been to protest the arrests and seek moral support from allies, including the less-than-reliable Trump administration in the United States. But Ottawa hasn’t taken any retaliatory measures, which has left a void for commentators to suggest actions that would show a little spine.

Mr. Mulroney, for instance, advised against non-urgent travel to China and suggested Canadian tourists avoid “a repressive detention state” – a phrase accurately describing today’s China, but which was raised in his unwelcome phone call from Global Affairs.

Another former diplomat, writing in The Globe and Mail this week, said Ottawa should consider withholding visas for students related to members of China’s ruling Communist Party, among other get-tough measures.

And then there’s the fact Canada imports at least twice as much, in dollar terms, from China as it exports to it. China, in fact, buys only about 5 per cent of Canada’s exports, the vast majority of which – 76 per cent – go to the United States.

In other words, Canada has the leverage to ban targeted Chinese imports that might sting the leadership in Beijing the same way Beijing’s carefully targeted bans on Canadian canola and meat are making the Trudeau government wince.

That’s precisely what Ottawa did after U.S. President Donald Trump put tariffs on Canadian steel and aluminum in 2018; it retaliated with tariffs on products, such as bourbon and prepared foods, made in key Republican states.

It’s odd that Ottawa was more willing to play hardball with its biggest trading partner and most important ally, while it treats China with unexplained deference and caution.

This could well be because, in spite of all of Mr. Trump’s many flaws, his country is not an amoral and authoritarian prison state that is entirely detached from the rule of law. The United States largely follows the rules, and it has independent courts where complaints can be heard.

China, on the other hand, has no limits on government power, no law and no compunction about hurting smaller countries that displease it. As an opponent, it outmatches Canada in every category. It is a grizzly bear to our field mouse.

It may be that Ottawa has chosen not to poke the bear while it negotiates in the background. In doing so, the Trudeau government has correctly stuck to its guns about arresting Ms. Meng, and has not given in to calls to summarily overturn the rule of law and let her leave Canada.

But in the absence of any outward signs of progress, that policy is under fire from those experienced in Chinese relations, who think more can be done, and from Canadians who don’t like seeing their fellow citizens being held hostage.

It would be useful to know whether the Trudeau government is playing its hand well, or simply playing dead.

Saskatoon / 650 CKOM

11:00 – Is Canada’s federal government taking a page out of China’s playbook and blurring the lines between politicians, the public service, and the judiciary? After the Trudeau government was accused of trying to muzzle former diplomats and voted down an investigation into the matter, former diplomat Colin Robertson says yes. Robertson also says Trudeau’s inaction on our trade dispute with China is no kind of long-term strategy, and we need to push back. He joins John now to talk about how Canada should be tackling our dispute with the Asian superpower.

LIVE: Colin Robertson, former diplomat and a vice-president and fellow at the Canadian Global Affairs Institute.

Trudeau and the G20

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Is Canada back? Next week’s G20 summit in Osaka, Japan, will measure Justin Trudeau’s weight and influence on the international stage.

The tests for the Prime Minister won’t be in the plenary session, in which leaders must come to grips with “intensifying” trade protectionism, but in what happens in the corridors and pull-aside meetings.

The first test will be whether Mr. Trudeau can convince Chinese President Xi Jinping to let up on Canada. We want our hostages freed, the canola embargo lifted and no more harassment of our meat and pork shipments. The Chinese want Meng Wanzhou returned and telecommunications giant Huawei eligible for our 5G procurement.

Improving relations will require creativity. Why not appoint former prime minister Jean Chrétien as a special envoy, as Brian Mulroney has proposed? The Chinese trust his straightforwardness. Get some “track-two” dialogue going through alternative, but reliable conduits such as the University of Alberta’s China Institute and the Asia Pacific Foundation. Chinese ambassador Lu Shaye was a problem, and when he departs later this month, both countries can name new ambassadors to restart the meetings between ministers and senior officials, a process that has been reportedly stalled.

Let’s also look for areas where we can work together. Climate is an obvious one. Another less evident one is through sports diplomacy, which appeared fairly effective during the South Korean Olympics in 2018. The Chinese want to do well at the 2022 Winter Olympics in Beijing, and our “Own the Podium”is a model that has gotten proven results. The Chinese are also devoting more attention to those with disabilities, and they can learn a lot from Canada’s approach.

Mr. Xi was one of the first leaders that Mr. Trudeau met when he made his international debut as Prime Minister. That meeting, at the G20 summit in Turkey, set into motion what was to become a framework agreement for closer economic relations. But Chinese Premier Li Keqiang subsequently rejected Mr. Trudeau’s progressive trade agenda. Mr. Trudeau should speak to Mr. Chrétien and Mr. Mulroney about working successfully with the Chinese.

The second test for Mr. Trudeau will be how well our trade goals can be advanced.

He needs to secure a commitment from European leaders that CETA member-state ratification is a priority. With the new Trans-Pacific Partnership now in effect, he needs to sell the world on Canadian food and services. We also need buy-in for the Canadian-led initiative to reform the World Trade Organization. The United States has blocked the appointment of new judges to the WTO because they believe – with some justification – that the current system is slow, capricious and unfair. We need better rules on state subsidies, state-owned enterprises and intellectual property.

The G20, as the designated “premier economic forum for international economic co-operation,” is the place to sell these proposed reforms. G20 nations represent 80 per cent of global output. But there is now a real danger that the trade wars will lead to trade blocs and to a breakdown in global trade that has lifted billions from poverty and into the middle-class jobs sought by Mr. Trudeau and his fellow leaders.

A third test for Mr. Trudeau will be whether he can persuade U.S. President Donald Trump to live up to his promises of closer North American co-operation, which were raised at the last G20 and reiterated by Vice-President Mike Pence during his recent Ottawa visit. Now that the U.S. threat of tariffs on Mexico has been suspended, the three countries need to move in tandem on legislative ratification of the new NAFTA.

Mr. Trudeau should corral Mr. Trump and Mexican President Andres Manuel Lopez Obrador for an informal Three Amigos mini-summit to discuss the U.S.-Mexico-Canada Agreement, as well as Venezuela; Mr. Trudeau should speak on the useful work of the Lima Group. That multilateral coalition could also provide assistance in Central America, as flight from countries such as Honduras, Guatemala and El Salvador is the primary cause of the latest U.S.-Mexico border crisis, and it deserves the kind of constructive hemispheric attention that the Lima Group could provide.

Finally, there will need to be close scrutiny of the collective security of the Indo-Pacific democracies. We’ve recently strengthened ties with Korea and Japan, but we need to do more. In the Indo-Pacific, this means contributing more naval power.

And then there are the Prime Minister’s signature themes: climate change, inclusive growth, gender equality and empowering women. His tireless championing of these issues is moving the yardsticks forward. But it’s a meaner and messier world. There are now as many G20 leaders who are autocrats – real or instinctive – as there are liberal democrats. Mr. Trudeau will be judged not on his demonstrated capacity to sprinkle stardust, but on the realpolitik of hostages, tariffs, displaced persons and disintegrating rules-based norms.

Canada -China and Lu Shaye departure

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China-Canada differences go beyond Beijing’s critical, outgoing envoy: Carr

OTTAWA — Canada’s trade minister is downplaying the forthcoming departure of China’s outspoken envoy to Ottawa, saying differences between the countries stretch beyond anything at the ambassador’s level.

OTTAWA — Canada’s trade minister is downplaying the forthcoming departure of China’s outspoken envoy to Ottawa, saying differences between the countries stretch beyond anything at the ambassador’s level.

In an interview Wednesday, Jim Carr said the federal government is awaiting China’s decision on its replacement for outgoing ambassador Lu Shaye, who has had harsh words for Canada during a tenure that began in 2017.

“I don’t think that personalities are what would be at the centre of the issue here,” Carr said when asked about Lu’s past criticisms.

“The job of the ambassador is to express the view of his government. I would only assume that whatever is being spoken by the Chinese ambassador to Canada has the full support of the government, so this is an issue that goes beyond the ambassadorial level.”

Sources say Lu, who appeared to be more comfortable speaking French than English, will leave his Ottawa post in the coming weeks for a new position in Paris. Lu, 54, has also served as China’s ambassador to Senegal and as a counsellor for its foreign service in France, according to a biography on the embassy’s website.

His departure comes at a time, as Lu himself described in an interview Tuesday, of “serious difficulties” between the two countries.

Canada’s relationship with its second-biggest trading partner has deteriorated rapidly since the December arrest of a senior Huawei executive in Vancouver following an extradition request by the United States.

China was outraged by the arrest of Meng Wanzhou and has since detained two Canadians on allegations of espionage, sentenced two Canadians to death for drug-related convictions and blocked key agricultural shipments such as canola.

Lu has used strong words when talking about the relationship — for example, he has called Meng’s arrest the “backstabbing” of a friend and evidence of white supremacism.

He also warned of unspecified “repercussions” if the federal government bars Huawei from selling equipment to build a next-generation 5G wireless network in Canada.

Lu was critical of Canada before Meng’s arrest. Soon after arriving in Canada, Lu said he was struck by the negative view of China that he saw taking shape. In a 2017 interview, he blamed the Canadian media for disseminating a negative portrait of his country that depicted it as an abuser of human rights and of lacking democracy.

He said Canadian politicians sometimes had to “bow before media.”

In Lu’s interview Tuesday with The Canadian Press, he said China was not to blame for the ongoing dispute.

“But the Chinese government is waiting to make a joint effort with the Canadian side and meet each other halfway,” he said without specifying the necessary steps toward a resolution.

When asked about the possibility of freeing Michael Kovrig and Michael Spavor — the Canadians detained in China on espionage charges — Lu said their fates are in the hands of Chinese authorities. On China’s rejection of Canadian canola imports over Chinese allegations of pests, he considers the matter closed.

Carr said the Liberal government still hopes to solve the bilateral differences by engaging China on many levels, not just through an ambassador.

“We will reach out to whomever is in that place and make the same arguments to him or her that we’re making now,” Carr said before leaving for Japan on a trade mission to find new markets for Canadian products, including canola.

Carr said Canada is still keen to send government inspectors to China to explore evidence of pests in the canola shipments. But, he added, China has not invited Canadian experts to do so, and there has been no high-level engagement on the matter despite Canada’s efforts.

This week, China increased inspections of Canadian pork products over its concerns about smuggling and African swine fever — an illness that can be devastating among pigs. It came in addition to previously stated Chinese complaints over the labelling of Canadian pork.

Asked Wednesday if the inspections were a sign the dispute had reached a new level, Agriculture Minister Marie-Claude Bibeau declined to speculate and said: “I don’t want to escalate the situation.”

Word of Lu’s departure comes at a time when Canada does not have an ambassador in Beijing. Last winter, Prime Minister Justin Trudeau fired Canada’s ambassador, John McCallum, for going off-script in the government’s efforts to win the release of Kovrig and Spavor. Before his posting to Beijing, McCallum was a longtime Liberal MP and cabinet minister.

Former Canadian diplomat Colin Robertson, who is now vice-president of the Canadian Global Affairs Institute, said Lu’s departure presents an opportunity to reset the relationship.

“We need to find a way to engage,” he said. “Not having ambassadors who are reliable or trusted is a major handicap.”

Lu did a good job of publicly reflecting the Chinese government’s positions and “seemed to take relish in putting it to us,” Robertson added.

“His words aggravated the situation. Behind closed doors ambassadors are also expected to find solutions and try to nuance divisions. Here I see no evidence of serious effort by Lu Shaye.”

Andy Blatchford and Mike Blanchfield, The Canadian Pres

Canada-USA Relations

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Upgrading Canada’s Foreign Policy Calls for Better Cooperation With US

Canada should exclude Huawei from 5G based on US advice, says former diplomat
June 5, 2019


Canada’s foreign policy faces stiff tests on several fronts, and the way forward begins with a better appreciation of the United States, according to former Canadian diplomat Colin Robertson, vice president and fellow at the Canadian Global Affairs Institute.

“We’re moving into a different kind of global situation,” Robertson said.

Canada has benefited from a rules-based global system, which has allowed it to participate as a middle power. It has always placed value in multilateral fora, but going forward, alliances with heavy U.S. involvement will be invaluable for Canada in achieving its foreign policy goals, says Robertson. These include North American Aerospace Defence Command (NORAD), the Canada-United States-Mexico-Agreement (CUSMA), and the Five Eyes intelligence network.

For Canada, the immediate foreign relations problem stems from an angry China after the lawful arrest of Huawei executive Meng Wanzhou last December in Vancouver in response to a U.S. extradition request.

Just after U.S. Vice President Mike Pence visited Canada’s Prime Minister Justin Trudeau on May 30, China’s foreign ministry warned Canada to “take immediate actions to correct its mistakes” and not to assist the United States.

In a move widely seen as retaliation for Meng’s arrest, the Chinese regime has arrested two Canadians—Michael Spavor and Michael Kovrig—for allegedly threatening its national security. It has also restricted Canadian exports of canola and pork and is warning of further consequences.

“Focus should be squarely on securing maximum US assistance on China,” tweeted David Mulroney, former Canadian ambassador to China, on May 30,

Intelligence Alliance

The challenge currently facing the Five Eyes—composed of the United States, Britain, Australia, New Zealand, and Canada—is achieving consensus on Huawei technology in their 5G networks.

The United States is steadfast in warning its allies not to use Huawei infrastructure for their 5G networks, fearing that the Chinese communist regime could spy on them, which would also put the United States at risk if it kept sharing intelligence. The Canadian government has so far said it is waiting for the conclusion of a national security review before making a decision.

Robertson disagrees with the Canada’s approach.

“Because the United States has taken a categorical position on this, it is more important for us to maintain that relationship with the United States, and so therefore I say [the government should] exclude Huawei,” Robertson said.

The lure of Huawei is that it is less expensive than offerings from other providers. But at what cost if national security is compromised and if the infrastructure then needs to be dismantled and rebuilt? In addition, for Canada, it is about maintaining access to Five Eyes intelligence.

Philip Lind, vice chairman of Canada’s biggest telecom company Rogers, agrees that Huawei is a threat to Canada and should be banned from supplying infrastructure for 5G networks.

“It’s not worth the money because we will lose so much more in terms of access to U.S. markets, U.S. intelligence, and the whole security world,” Robertson added. “I’d say, because of the national security argument, we should go along with the U.S. on this.”

Friends to the South

Canadians like to think they understand Americans and vice versa, but both are wrong, says Robertson, adding that there aren’t many experts on the United States in Canadian research institutes or universities who can provide advice.

About 75 percent of Canada’s trade is with the United States, but the reverse is less than 20 percent, so the relationship is asymmetric; however, the volume of trade is incredibly important to both nations.

Trade ties between Canada and the United States are improving after the elimination of steel and aluminum tariffs, but ratification of the CUSMA remains up in the air.

“It is in the national interest of the U.S. to have access to Canada and Mexico,” said Robertson, who believes that the required number of Democrats needed to pass the bill will eventually be reached. “The economics are very clear.”

The CUSMA would solidify the ties between Canada and the United States, which Canada seeks, along with international support, in the face of China’s aggression.

“We have our occasional differences, but at our core, both of our nations share a love for freedom,” Pence said during his visit to Ottawa. “The U.S. has stood strong with Canada on the unlawful detention of the two Canadians. The prime minister and I spoke about it extensively.”

Some pundits have opined on how Canada should stand up to China, and others have been criticized for suggesting that Canada should appease China. Regardless, it is in Canada’s best interest to be a reliable partner to the United States and its international allies, says Robertson.

Defence Spending Falls Short

With aggressive intentions from nations like Russia, North Korea, Iran, and China, national security and defence are becoming vital. The United States is letting Canada know it. Foreign policy experts say Canada has had a free ride for decades. Robertson says it is in Canada’s best interest to spend more on defence.

The United States has made it clear that it has done more than its fair share of carrying the load. It easily has the highest military spend of all countries in the world and is among the leaders in military spending as a percentage of GDP. Its 3.2 percent of GDP is more than double Canada’s 1.3 percent of GDP.

With military spending comes credibility. Regarding the Arctic, the United States would not question Canadian sovereignty if Canada backed its claims more seriously, says Robertson.

“Americans keep telling us this: If you claim sovereignty, then exert it,” he said, adding his voice to those who say Canada should establish naval bases up North.

More Action, Less Talk

The art of foreign policy is about knowing where, as a middle power, Canada can make an impact and where it should not sermonize. It has made notable contributions, like taking a leadership role in the Lima Group to push for legitimate rule and democracy in Venezuela in the face of the Maduro socialist regime, and working for reform of the World Trade Organization dispute settlement mechanism.

Canada has to “find niche areas where we, in concert with like-minded countries, can effect changes which serve the national interest but also serve the collective interest of the like-minded,” Robertson said.

“We’re very good at words. We’re not so good at putting money where our mouth is.”

Scheer and Trudeau and Foreign Policy Speeches

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Tweets and soundbites are the fast food of communicating policy. Like news releases, they are frequent but mostly shallow, narrow-cast, and platitudinous. There is not a lot of “there” there, so a well-prepared speech, especially on foreign policy, deserves digesting.

Speaking recently in Montreal, Conservative leader Andrew Scheer gave what diplomats call a “meat and potatoes” speech – effectively a full-course meal.

Mr. Scheer’s uncosted promises included new jets, new submarines, ballistic missile defence and a robust cyber-command. There will be work for all of our shipyards and more attention to the Arctic. He pledges that all-party involvement will take the politics out of procurement. He gave a Churchillian defence of democracies. He would establish closer relations with India and Japan, do a reset with China, stand up to Russian aggression and terrorists, and move our Israeli embassy from Tel Aviv to Jerusalem.

Four years ago, Justin Trudeau gave his own pre-election foreign policy speech – a nouvelle cuisine version that focused on North America. He committed to more attention to Mexico and subsequently lifted the visa requirement for Mexican visitors.

But they shared one major, unsurprising thread: the need to repair the U.S. relationship.

How to manage Uncle Sam has been a constant challenge, one that’s existed even before Confederation. Mr. Trudeau criticized Stephen Harper’s “hectoring belligerence” and for making the Keystone pipeline the litmus test of the relationship. Mr. Scheer says he could have gotten a better deal on renegotiating the North American free-trade agreement. He may still get his chance if he were to become prime minister, although the lifting of the retaliatory steel and aluminium tariffs makes it more likely that all three countries will now pass the new agreement’s implementing legislation.

Mr. Trudeau embraces multilateralism. His signature themes are climate, gender equality and reconciliation with Indigenous peoples. His UN General Assembly speeches were essentially one-plate affairs addressing migration, then reconciliation, with climate as a side dish for both.

But the defining speech of Mr. Trudeau’s foreign-policy vision so far came from Foreign Minister Chrystia Freeland, when she spoke to the House of Commons in June, 2017. Erudite in its defence of liberal internationalism, the rules-based system and robust collective security, Ms. Freeland pulled no punches. Describing the United States as the indispensable nation, she recognized that it was tired of carrying the burden. Canada and its allies had to step up to deter aggressors like Russia. The speech sparkled, but Canada has yet to deliver on defence and development promises.

With an election five months away, these “turbulent times”, as Mr. Scheer described them, should mean more focus on Canada’s global affairs.

As the pair head into an election, they need to be wary of three temptations.

First, doing foreign policy on the cheap. It’s a meaner and messier world. It is going to cost us more for defence, diplomacy and development.

Championing the cause of the Rohingya, participating in the Lima Group’s efforts on Venezuela, and working to improve the WTO’s dispute settlement are examples of constructive diplomatic entrepreneurship. Using Canada’s globally sought expertise in democratic governance is a no-brainer. Why do we give much more funding to foreign entities than to Canadian NGOs such as the Parliamentary Centre, a non-profit which offers support to parliaments around the world. Why wouldn’t we benefit from the Canada brand?

These initiatives require a dedicated prime minister, an energetic foreign minister, and, perhaps especially, a foreign service at the top of its game. There are no guarantees of success. Not everything endures, including the progressive trade agenda and the UN-mandated Responsibility to Protect. We need to focus, recognize limitations and decide what best serves Canadian interests. That will mean hard choices and hard questions: Why are we involved in peace operations in Mali? Why not more in Haiti or in Central America?

Second, playing diaspora politics hurts national security and bilateral relations, as Mr. Trudeau learned during his magical mystery tour of India.

Third, avoid smugness and the tendency to preach. Virtue and apologetic sanctimony are qualities adored by the converted, but they won’t win Canada a UN Security Council seat. Humility, being constructive and paying our way represent better examples of statecraft.

Tangles with Saudi Arabia and China demonstrate that we have fewer friends willing to visibly stand with us than we thought. The United States is a less reliable partner to us today.

Canada is a blessed nation, in its resources and in its people. We need government, including vigorous policy debates. As we approach the fall election, there will be more speeches bristling with ideas, initiatives and their costs – and Canadians would be well-served by listening closely to what these words really signal.

Positioning Canada in a Messy World

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Positioning Canada in a Messy World


Image credit: U.S. Department of State


by Colin Robertson
CGAI Vice President
May 2019


Table of Contents


Canadians live in a messy world. A three-ring circus of disruptive powers, drifting multilateralism and transnational threats requires diplomatic care and the attention of leaders. The statecraft will have to be tailored to individual circumstances. For the disruptors – China, Russia, Iran, North Korea et al – it is engagement, containment and deterrence. Multilateralism needs reinvigoration and reform of its institutions especially those responsible for trade and security. The transnational threats – climate, nuclear proliferation, migration, pandemics, terrorism – are probably a chronic condition but they can be curbed, controlled and mitigated.

Positioning Canada in this changing environment will take skill, strategy and investments in security and diplomacy. Both the nature of power and relative power among nations is changing. Global power is no longer homogeneous. Borders are back. So is nationalism. In the absence of the guard rails that the United States provided during our lifetime, a world in disarray risks descending into chaos and conflict. Constructive powers – big, middle and small – need to stand up regardless of when, whether or how the U.S. re-engages.

Changing circumstances mean that the free ride Canadians enjoyed with the end of the Cold War now requires investment in dollars, people and kind starting with our armed forces and diplomatic service. Smart power blends hard and soft elements. Smart power, for Canada, also means active multilateralism and constantly looking for niches where we can play a constructive role. Canadians expect it. Our self-identity draws from how we are perceived abroad. As a nation, we will always depend on talented settlers.

When it comes to relationships providing trade and security, for Canada it is still the U.S. and then the rest. We can’t change our geography, nor would we want to. Notwithstanding its increasingly polarized politics, the U.S. remains the innovation nation and robust economically and militarily. We need to invest more in understanding the U.S. We also need to recognize that its changing domestic circumstances – currents of nativism, protectionism and isolationism – make it, for now, a less reliable partner.

Pollsters find the global public, including Canadians, have grave doubts about the future. It is small wonder that many feel adrift in uncharted waters. As we grasp for hope, there is a hankering for simpler times and strong leaders who say they can fix things. Whether traditional or new age, faiths that give comfort and meaning have increased appeal even when rooted in intolerance.  Where once the main political divides were between the right and the left, the new divide is more about systems that are open versus those that are closed.

Ours is a world filled with both “known unknowns” and “unknown unknowns”. Our digital age, on the cusp of broadly applied artificial intelligence enabled by Big Data and quantum computing, brings new meaning to complexity. These are areas where Canadian know-how and technological skill must be applied, not only for our own interests but also because know-how in the new domains of space and cyber-space gives us a place at the tables where decisions are made.

While the losses are still shallow compared with the gains in the 20th century, Freedom House has recorded a decline in global freedom for 13 consecutive years. The decline is recorded in longstanding democracies like the U.S. and through the consolidation of authoritarianism in China, Russia, Turkey, Hungary and elsewhere.

This decline is accompanied by an increasing loss of popular confidence in the ability of liberal democracies to solve problems. Citizens feel that the next generation will be worse off than they are. They blame growing inequality, seemingly uncontrolled migration, terrorism and climate change. These are the factors that fuel populism, nativism and protectionism and the appeal of strong men with simple solutions.

The world as we knew it is changing. History suggests we have the capacity to find a way out of our problems but the challenges, especially around climate, are daunting and time is not our friend. Global complexity is increasingly overwhelming. There may be no winners but there could be lots of losers. In this new era we need realism, a sense of history and humility.



America First

For Canada, it is America first – first for our trade, first for our security, first for stewardship of our shared environment and first for people-to-people connections in everything from business to popular culture. We are different but close enough that Americans always rate Canadians as their favourite nation. That they like us more than we like them is something we under-utilize.

Life with Uncle Sam is never easy, especially with President Donald Trump, but we have preferred access to the U.S. market – still the biggest in the world – and thanks to our NORAD alliance, the U.S. military provides our default security umbrella.

If Trump has taught us anything, it is that Canada needs to mount a permanent campaign to remind Americans of our mutually beneficial commerce.  American jobs and prosperity depend in part on trade with Canada. We think we know everything there is to know about Americans. We are wrong. We need a better understanding of our neighbour. Understanding starts with the U.S. Constitution – its checks and balances and separation of powers. It is shocking that we have no significant research institutions devoted to the study of the U.S. We need to pay more attention to Congress and the states. We should have someone – consul, honorary consul or representative – in every state. Better understanding also means links to the various interests and institutions that fund the U.S. system and provide it with ideas.


Great Arsenal of Democracy

U.S. presidents since Franklin Roosevelt persuaded Congress and Americans to step away from tariffs, to embrace large standing military organizations, to surrender some elements of sovereignty, to give up their aversion to permanent international arrangements and to carry the burden when others fell short. The U.S. became the “great arsenal of  democracy” dedicated, as Roosevelt proclaimed, to the four freedoms: freedom of speech and expression, freedom of worship, freedom from want and freedom from fear. The U.S. shouldered the burdens that brought peace and prosperity. Its security blanket, especially protection of the sea-lanes, made possible a globalization that lifted billions from poverty and created a global middle class.

The U.S.’s military alliances – notably NATO – bolstered this outward-bound approach. This new strategy formed the foundation for the post-Second World War operating system that was liberal in its economic orientation and rules-based.  It provided stability, relative peace and rising prosperity. Its economic performance stood in contrast to the statist command-and-control communism of Maoist China and the post-Stalinist Soviet Union with its satellites in the Warsaw Pact. Its advantages – open markets and freedom of choice – increasingly drew in the non-aligned. After 1989, most of the former Soviet satellites in Eastern Europe scrambled to join the European Union and NATO. The exuberant application of the Washington consensus saw its deregulatory flaws revealed in 2008-2009 and subsequent recession but capitalism, in its variant forms, enjoys global embrace. As Deng Xiaoping famously said, it doesn’t matter if a cat is black or white, so long as it catches mice.


And Then Came Trump

American ascendancy after the end of the Cold War was supposed to usher in the triumph of democracy, or as political scientist Francis Fukuyama  put it “not just … the passing of a particular period of post-war history, but the end of history as such: that is, the end point of mankind’s ideological evolution and the universalization of Western liberal democracy as the final form of human government.” But it did not work out that way. 9/11, the wars in Afghanistan and Iraq and the great recession shook American self-confidence, and in 2016, Trump became president. His words and actions are radically different from those of his postwar predecessors. Despite record low unemployment and a buoyant economy, Trump appeals to populism, protectionism and nativism. Daily, through tweets, speeches and statements he vindicates those in the Republican foreign policy establishment who warned of his recklessness and declared him unfit for office. His actions on his signature themes have worsened the immigration crisis, disrupted trade and poisoned alliances.

Speaking for the first time to the United Nations, Trump told the General Assembly that the sovereignty, security and prosperity of the American people are his sole objectives, and that these – not world order, not human rights – should also be other nations’ priorities. Trumpism was perhaps best expressed by then-national security advisor H.R. McMaster and national economic director Gary Cohn (both of whom have since left the administration) when they wrote that for Trump “the world is not a ‘global community’ but an arena where nations, nongovernmental actors and businesses engage and compete for advantage” and that the U.S. would practise “reciprocity in trade and commerce. Simply put, America will treat others as they treat us … America First signals the restoration of American leadership and our government’s traditional role overseas – to use the diplomatic, economic and military resources of the U.S. to enhance American security, promote American prosperity, and extend American influence around the world.”

Americans tell pollsters that they are tired of foreign adventures with their cost in blood and treasure. Reform of the health system – the most expensive in the OECD – continues amid controversy. Other well-documented problems include obesity and the opiate crisis, gun violence and continuing racial tensions.

Will a post-Trump U.S. return to its role as champion of liberal democracy and internationalism? It is unlikely.

Canada and the allies should strive to be reliable partners to the U.S. As former Defense secretary James Mattis wrote in his resignation letter: “the US remains the indispensable nation in the free world, we cannot protect our interests or serve that role effectively without maintaining strong alliances and showing respect to those allies…the armed forces of the United States should not be the policeman of the world. Instead, we must use all tools of American power to provide for the common defense, including providing effective leadership to our alliances. NATO’s 29 democracies demonstrated that strength in their commitment to fighting alongside us following the 9-11 attack on America. The Defeat-ISIS coalition of 74 nations is further proof.”

But even when a president is prepared to lead, unless it is an attack on the homeland, there will be countervailing pressures in Congress and among the American people. Reliance on the U.S., as John F. Kennedy proclaimed, to “pay any price, bear any burden, meet any hardship, support any friend, oppose any foe, in order to assure the survival and the success of liberty”? Those days are done.


The Disruptors

Even if no one else can match the U.S. for power and reach, a resurgent China and revanchist Russia are disrupting the global operating system and challenging its norms and mores. The Russians and the Chinese are different in background, history and culture. They think differently. Both resent the West. Situated in the middle of a great plain, the Russians are conscious of threats from the West. To be safe, they extend their frontiers as far west as they can. For the Chinese, the “century of humiliation” at the hands of the West and Japan is current history and thus they are pushing their boundaries to the traditional Middle Kingdom, including the South China Sea and Taiwan.


Source: Angus Reid 2018

China will be the strongest competitor and the U.S.-China relationship in the 21st century will be the most consequential global relationship.

There will be intense competition, brinksmanship and tension especially in the Indo-Pacific, likely centred around the South China Sea. Unless there is miscalculation, violent conflict – the Thucydides trap – probably can be avoided. For now, China’s aspirations are essentially regional.

The cultivation of aggressive nationalism and identification of foreign threats are part of Chinese and Russian statecraft. Their behaviour encourages others who emulate it – Iran, Saudi Arabia, North Korea and other authoritarian leaders who see the opportunity for regional gain and to solidify their power.

Presidents Xi Jinping and Vladimir Putin claim that the current system is tilted against them and does not serve their interests. They want a system based on a concert of great powers, each with hegemony in its own neighbourhood – complete with vassal or tributary states.

For Xi, it is all about the stability of the People’s Republic of China, based on an order that the Chinese Communist Party (CCP) has directed and led since 1949. For Xi and the CCP, the state is indivisible from the party and the party’s job is to ensure the state’s stability.

For Putin, the “greatest geopolitical catastrophe” of the 20th century was the collapse of the Soviet Union. Putin would like to re-establish a greater Mother Russia, positioning himself as champion of the revived conservative and nationalist Russian Orthodox Church. He prefers stealth and subversion, but he will also employ force, as demonstrated in Georgia, Crimea and eastern Ukraine. Russia is upgrading its armed forces and weaponry – nuclear, conventional and unconventional (“little green men”). Using artificial intelligence and machine learning, Russia has developed hybrid capacities which it employs to disrupt democracies, especially their elections.

Both Russia and China have problems. Russia suffers from a sclerotic petro-based economy. It has an aging population with a high rate of alcoholism. China’s population is also aging. Despite abandonment of the one-child policy, the ethnic Han Chinese population is in decline.  China is dependent on imports of food and energy, and its Belt and Road initiative is designed to create a secure land and sea supply chain.

Chinese and Russian leaders rely on a pervasive internal security apparatus. They are betting that the bulk of their citizens prefer stability and rising economic standards to nebulous democratic rights. They may be right. Increasingly, they think their security-state model is ready for export into the Middle East, Asia, Africa, Latin America and Eastern Europe.

Canadian relations with both China and Russia are currently in the deep freeze. Just because these countries are big does not give them a pass on bad behaviour. Whatever our economic interests, they must also reflect core values, notably human rights. Canada sanctioned Russia for its occupation of Crimea and continuing incursions into Ukraine. Targeting the responsible individuals rather than nations, as we do through the Magnitsky Act sanctions for human rights abuse, is smart diplomacy. We are applying sanctions against the Russians and Venezuelans. Sanctions should also be applied against those Chinese officials responsible for keeping Michael Kovrig and Michael Spavor hostage in inhumane circumstances.

We should, nonetheless, look for areas to engage – with Russia, for example, on Arctic safety and environmental protection. With China, we need to keep the lines open through the annual heads-of-government and ministerial meetings and through co-operation on issues like climate change and containing pandemics.

Astute diplomacy should be able to contain or constrain China’s rising power. But it will depend on robust alliances – an expanded NATO, for example – and a continuing strong U.S. naval presence in the Indo-Pacific. Asia is America’s to lose, not China’s to win. It will take a lot for China to disrupt this, although Trump’s cavalier rejection of the Trans-Pacific Partnership was a strategic unforced error.

Russia is a power in decline. This makes it more dangerous, especially because it has weapons of mass destruction. There must be continued vigilance and deterrence through a reinvigorated NATO alliance.


Three Cheers for Multilateralism

The international system – liberal and multilateral – is shifting and drifting. If we are not careful, like Humpty Dumpty, it is headed for a very big fall.

Created by the U.S. and its allies after the Second World War, the system has overseen an extraordinary period of global peace and prosperity. This operating system is characterized by freer trade and the market economy, alliances of representative governments and rules-based international institutions with multilateral membership. Although imperfect, it is better than previous systems and there have been continuous incremental improvements.

Multilateralism, the means by which medium and small powers level the field against big and super powers, is the greatest diplomatic innovation of recent times. Born out of Wilsonian idealism, its first manifestation in the League of Nations was handicapped from birth when the U.S. Senate rejected involvement. Franklin Roosevelt and Winston Churchill’s Atlantic Charter gave multilateralism new life that was elaborated at the Quebec conference hosted by Mackenzie King. It took form in the Bretton Woods twins – the International Monetary Fund and World Bank – then the United Nations and its alphabet soup of agencies and, later, within the Geneva-based World Trade Organization.


Prime minister William Lyon Mackenzie King (foreground centre) confers with U.S. president Franklin Roosevelt and British prime minister Winston Churchill at the First Quebec Conference in August 1943.

Multilateralism has been at the core of Canadian foreign policy since the Second World War. It serves Canadian interests. Canada and other constructive powers must keep these institutions relevant and efficient through constant vigilance. This means permanent efforts to cut waste, check corruption and streamline the tendency to mind-numbing bureaucracy.

There are other ideas on how to fix multilateralism. Ivo Daalder (now CEO of the Chicago Council on Global Affairs) and James Lindsay (Council on Foreign Relations) argue in their book, The Empty Throne: America’s Abdication of Global Leadership (2018) and in their recent Foreign Affairs article, “The Committee to Save the World Order,” that we need to turn to some of the bigger countries to lead. While their analysis is excellent, I think their prescription is too narrowly based.

The Germans and the French are planning to launch an alliance for multilateralism which will include Canada, at the UN General Assembly this fall.  Its intent is to create a “global network of like-minded states which are convinced that pursuing legitimate, national interests and protecting the collective property of humankind are fully compatible, not mutually exclusive.” It deserves three cheers.

Just as in 1945, when 40+ future members of the UN contributed to creating it and its functional agencies, so today, liberal democracies, regardless of size, need to stand up and make functional contributions. The functional principle – nations contribute based on competence and capacity – rather than on sheer size, guided Canadian policy-making at that time.

Multilateralism is imperfect. It has not met the ambitiousness of its original design. It often limps along and disappoints. But that is the reality in a world order where great powers will always play a disproportionate role and where there is a trapdoor for the superpowers, especially in advancing their own interests. The wonder is not its flaws, but that it operates as well as it does.


Essential Relationships

The essential relationships for the West in the 21st century span three oceans. There is the traditional transatlantic relationship of the U.S., the EU and Canada and now the transindo-pacific relationship of these nations with Japan, Korea, Australia, New Zealand and like-minded liberal democracies in Asia and the Americas. With global warming, a fourth ocean, the Arctic, may come into play.

Both NATO and the G7 are open communities of shared democratic scope. NATO membership should be broadened to include partner countries, starting with Japan, Korea, Australia and New Zealand. The G7 should broaden its membership to include India and Mexico and, in time, Brazil. Membership in NATO needs a litmus test to weed out the authoritarians. The G7 booted out Russia when it invaded Crimea. Should Turkey and Hungary be suspended from NATO until they clean up their acts?


More Attention to India

From a liberal democratic perspective, the India relationship could become indispensable in the pivotal Indo-Pacific region, with India becoming another anchor nation along with Korea and Japan in the northeast Pacific, and with Australia and New Zealand to the south. India is embracing the digital economy, revitalizing its military and will soon surpass China in population. India lives in a nuclear neighbourhood. Borders with China and Pakistan are contested. India is cacophonous, unruly and as much riven as united by its colourful diversity. But as the “great game” enters a new chapter, India matters.



Adam Smith is Still Right

Trade, the lifeblood of globalization, is being blamed for de-industrialization in the U.S. and Europe, even though the economic evidence points to technological innovation and automation as the real reasons. However, there is no doubt that a significant percentage of manufacturing jobs in traditional industries like steel, textiles and household appliances have moved to Asia, especially to China.

Nearly half of Canada’s national income depends on trade. With the Canada-U.S. FTA and then NAFTA, trade-led growth has generated continuing prosperity for Canadians, notwithstanding internal trade barriers that remain the unfinished business of Confederation.

While trade helped to lift a billion people from poverty in Asia, it contributed to unemployment in the West at the same time that companies restructured to shed costs like pensions and health benefits for their employees. Trade, which led global economic growth, has slowed in recent years and there are counter-forces – in-shoring, piracy, protectionism – that threaten to upend global supply chains.

This has particular implications for Canada as more and more of our manufacturing trade is in what economists call intermediate goods – the parts, for example, produced by Canadian auto parts champions like Magna, Linamar and Martinrea, that move back and forth across borders.

With global trade talks (Doha round) going nowhere and the WTO dispute settlement approaching impotence as the U.S. withholds agreement on the appointment of new judges, global trade policy will go into limbo. Trade will be managed more through quotas, voluntary restraints and other mechanisms. Future progress will depend on and take place within groupings of like-minded nations.

For Canada, regional trade blocs, like the Comprehensive Economic and Trade Agreement (CETA), the Canada-United States-Mexico Agreement (CUSMA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) are the best option to keep trade flowing. This is where new standards on intellectual property and e-commerce, and disciplines of state-owned enterprises, will be developed and then tested.


The China Problem

There is a genuine problem with China. It is a highly non-transparent and less-than-free market economy. Its accession to the WTO was dubious. It was given privileges on intellectual property and industrial policies without any enforcement mechanisms. These things continue to violate the understandings that make the trading system’s political economy work.

Can China and the U.S. work out their differences on regulating state-owned enterprises, intellectual property and technology transfers? Will China recognize the value of protecting its own intellectual property?  Self-interest would suggest an eventual deal, especially if China is to succeed with its 2025 Made-in-China initiative. If this happens, there will likely be a critical mass to restore a rules-based global trading system because China will have skin in the game. For now, it’s a messy world.


The Democratic Deficit

While the losses are still shallow compared with the gains in the 20th century, Freedom House has recorded a decline in global freedom for 13 consecutive years. The decline is recorded in longstanding democracies like the U.S. and through the consolidation of authoritarianism in China, Russia, Turkey, Hungary and elsewhere.

This decline is accompanied by an increasing loss of popular confidence in the ability of liberal democracies to solve problems. Citizens feel that the next generation will be worse off than they are. They blame growing inequality, seemingly uncontrolled migration, terrorism and climate change. These are the factors that fuel populism, nativism and protectionism and the appeal of strong men with simple solutions. There are a host of international organizations – America’s  National Democratic Institute and International Republican Institute, the  German stiftung  and Canada’s own Parliamentary Center – that do good work in  helping to build and nurture democratic norms and institutions. It’s a smart investment.


Protest for Change

Democracies and autocracies throw up movements that can change the current social, economic and political trajectories. As the third ring in the global operating system, they are increasingly empowered by social media, and social movements are phenomena that can effect major change. They often blend into transnational issues – inequality, climate change and non-proliferation. A multilateral approach is usually the best way to deal with them, as demonstrated through global efforts on controlling and curbing pandemics, international crime and terrorism.

Since the Second World War, these global efforts have included the peace movement (first nuclear disarmament and now anti-war) and democratic movements (as in Eastern Europe in 1989 and then the Arab Spring). They also include civil rights (initially for African-Americans but now for all dispossessed groups – the Occupy movement, Idle No More and #MeToo – with branching out into abortion, LGBTQ rights, marijuana, same-sex marriage, privacy, consumer rights and diversity), and the environment (banning DDT, acid rain, ozone and climate change).

Lack of confidence in leadership translates to growing defiance against elites and established institutions, including government, Big Business, the church and unions.

Social change appears to follow a pattern. Local and subnational governments respond to a movement, and then a key event – often a court decision or a grassroots campaign – triggers a rush of activity that ultimately leads to change embodied in national or international law. Social media are helping to speed the pace of change and in democracies, to accelerate the defeat, even the demise, of traditional parties and the rise of new ones. If these movements are mostly positive, those in reaction to globalization – anti-trade, anti-migrant, intolerant religious fundamentalism – are dangerous and feed a perverse nationalism that encourages authoritarianism. Democratic governments are grappling with this challenge. With citizens’ rights in the areas of privacy and surveillance, it’s no easy task.


Addressing Inequality

The middle class feels it is slipping. A small percentage has moved upwards to enjoy Chardonnay and foreign chateaux, but the larger percentage of what used to be the middle class is drifting downwards into a precarious blue-collar existence that is one or two misfortunes away from poverty. They are employed, but their lives are full of worries: aging parents, insufficient pensions, inadequate health care and education. Most are pessimistic about the prospects for the next generation.

Meanwhile, public trust in government remains at near historic lows. Democracies are particularly vulnerable because of growing polarizationand the time it takes to get stuff done. The safety nets that government is expected to provide – public education, public health, pensions – are fraying because there is also a growing allergy to taxation (always the case in the U.S.) and because of the growing perception that special interests like Big Business get their way.


Big Business’ Reputational Problems

Big corporations – Boeing, Monsanto, Goldman Sachs, Wells Fargo and SNC Lavalin – are increasingly perceived as corrupt and their products and services as rotten, if not dangerous. There is also a perception that they have undue influence on governments.

Companies need to take social responsibility seriously, starting with their own employees. The balance between workers and shareholders is seen to have skewed too much toward investors and the investment class.


Climate Change

The science is unambiguous globally and in Canada. Global warming also contributes to inequality with hotter, poorer countries becoming less productive, while cooler, wealthier countries have benefited.

Carbon mitigation is complicated. Environmentalists with an understandable impatience for action want governments to act now. Governments employ various strategies: mitigation through housing and transportation codes, research into carbon sequestration and battery storage, a shift to renewables and nuclear power, and taxing pollution. It’s all about getting the right balance so as to carry the public with them.

For a brief moment, Canada looked like it had its act together. Alas, a combination of stupidity, shrillness and politics has left us in a mess. Swedish schoolgirl Greta Thunberg gets it right when she says: “Since our leaders are behaving like children, we will have to take the responsibility they should have taken long ago.”



Loose Nukes

Climate change may have replaced nuclear winter as the existential threat of our time, but nuclear proliferation kept every previous postwar American president awake at night. Three-D printed weapons could mean the end of non-proliferation, which is yet another reason the Bulletin of the Atomic Scientists has reset the Doomsday Clock at two minutes to midnight.

Arms control is heading south as the Russians and the U.S. set aside the INF treaty and reinvigorate their nuclear capacities, as others are doing. Pakistan, India and China are adding stock and North Korea’s Kim Jong-un has demonstrated his new capacity in spectacular fashion. With the Iran deal in jeopardy, Saudi Arabia wants nuclear capacity. Reinstituting the regular Obama-initiated nuclear security summits would be a worthwhile Canadian initiative.

An even more useful initiative: Kazakhstan, Australia and Canada account for more than two-thirds of global uranium production. What if the three agreed to become permanent stewards of used uranium products? They would permanently “own” their uranium and ensure that its waste, including radioactive and fissile material, was properly disposed of, perhaps in mines no longer in production. While this doesn’t solve the problem of existing nuclear waste, it would control most new supply. The International Atomic Energy Agency would provide on-site accounting oversight and supervise the transportation of all uranium. Rates would reflect risks to make it commercially and politically viable. Given their secure geography, Canada and Australia would have to take the lead in long-term global disposal.



Digital Conflict

The new warfare is already in use. China, Russia, North Korea and Iran regularly apply hybrid tactics and cyber-sabotage. They subvert our democracies and can disrupt our critical infrastructure. The U.S. has argued for closer collaboration among allies to “name and shame” and make it clear that the costs of such actions outweigh the benefits for the perpetrators. This should be a priority at the next NATO summit.

We need commonly agreed-upon standards on hybrid and cyber-warfare. Should we negotiate a Geneva convention with our adversaries on cyber-weapons? World leaders did it on the use of chemical and biological weapons after the First World War and while there have been violations, it has mostly endured.


Things that Go Bang in the Night

Terrorism is a scourge as old as recorded history. It’s a chronic condition but not an existential threat as long as intelligence services and police can keep weapons of mass destruction – chemical, biological, nuclear – out of their hands. What the police and security services can control and curb, soft power must try to convert the indoctrinated recognizing that not all are convertible, which is why we need Special Forces to manage evil-doers.


Safe, Orderly and Regular Migration

Not since the Second World War have there been so many displaced persons. The UNHCR and refugee agencies mitigate but the Global Compact on Migration gets it right when it argues for migration that is safe, orderly and regular.


Water Wars?

What oil and gas were to the 20th century, water will likely be to the 21st century. Participants at Davos this year ranked the threat of a water crisisas the biggest single risk facing North Africa and the Middle East. Former ambassador to the U.S. Gary Doer has warned that water diplomacy with the U.S. will make the debates on Keystone “look silly”.  As reservoir to about one-fifth of fresh water, Canada is blessed, but we should become experts on water efficiency, technology and recycling.




Former president Barack Obama was close to the mark when he wrote in 2016: “If you had to choose any time in the course of human history to be alive, you’d choose this one. Right here in America, right now.” Most of the world is at peace and people are living longer. In the U.S., crime, poverty and unemployment rates are at all-time lows.

Multilateralism is still working. The UN Millennium Goals achieved many of their objectives. The proportion of people who can read and write is about the proportion that could not 200 years ago. While the emancipation of women still has miles to go, especially in the Middle East, Asia and Africa, smarter national leaders are beginning to acknowledge that educated and liberated women mean more productivity and better educated children. While there are more displaced persons than at any time since the Second World War, there is a global migration compact aimed at safe, orderly and regular migration. Even if Trump took the U.S. out of the Paris Climate Accord, there is growing global action on climate.



…So What Does All This Mean for Canada?

Every prime minister’s desk has three permanent files: national security and well-being, national unity and Canada-U.S. relations.

The nation’s security and well-being depend on managing the economy and attending to defence and security needs. This means prudent fiscal stewardship and monetary oversight, investments in public infrastructure, open trade, a skills-based migration policy and ensuring the provinces have sufficient funds for education and health. All of these contribute to generating national income. National security means investments: in vigilant border security; in NORAD and our air and maritime defence; and in hardening cyber-defences for critical infrastructure – transportation, electricity and energy, and banking. Given the changing security environment, it should also mean investment in ballistic missile defence through NORAD.


A Clubbable Country

Canada belongs to almost every multilateral club, be it economic, security, general or specific purpose in creation. On balance this is a good thing, but prioritization of attention and resources is overdue. The first tier would include Five Eyes, NORAD and CUSMA. The second tier would include the G7, G20, NATO, CETA, CPTPP and the Pacific Alliance. The UN, OECD, APEC, the Commonwealth and the Francophonie would be the third tier.

We should also invest more in some of our relationships. If the future is Asia, then India, Japan, Korea and Indonesia should be priorities. And the entrée into the Americas is Mexico.



When George Hees was Canada’s minister of Trade and Commerce, he had cufflinks and tie clips prepared for his trade commissioners, who in this earlier age were all men. The cufflinks were initialled YCDBSOYA: You Can’t Do Business Sitting On Your Ass. The motto should be resurrected for today’s trade commissioners and engraved on the backs of their iPhones or BlackBerries. The same should be done for the prime minister, his cabinet and Canada’s premiers and trade ministers, as this needs to be a Team Canada Inc. effort.

While we have done a good job in opening the doors to trade, we need to generate more trade deals. This is hard in a nation with a few big enterprises and lots of SMEs. There is no magic formula. All levels of government need to work with local business to identify opportunities. We could learn from Asian nations – Hong Kong, Taiwan, Korea and Japan – in their ability to aggregate capacities and then bid on big projects.

Canadians are skilled at the extraction of minerals and growing and harvesting food from land and sea. We are not so good at getting our products to market. “Build Canada” should be a Team Canada Inc. project.  Stranded assets shortchange the nation and ignore its geopolitical value.


Attracting Talent

Our skills-based immigration program has netted us a lot of talent. Expanding the annual target to about one per cent of our population makes sense. Canada’s birth rate does not replenish our population.

Our refugee policy is generous, but Canadians expect people to play by the rules. Enforcement, including deportation of queue-jumpers and those found inadmissible, is necessary to sustain public confidence. It is also vital to preserving U.S. confidence that Canada holds up its end in a perimeter approach to who and what come into North America. The 9/11 Commission report worried about Canadian immigration, especially from North Africa (the Millennium Bomber, Ahmed Ressam, was from Algeria) and it has remained a recurring American worry.

Canada needs a global education strategy. More Canadians should be encouraged to study abroad. Canada does well in attracting foreign students, but we could do better. Foreign students and foreign studies not only make our universities more cosmopolitan but they are also potential future talent for Canada. Those who return to their native lands are usually very positive about their Canadian experience and they become valuable bridges between our countries.


More Navy

Canada needs to embrace digital sea power and be better prepared in the Indo-Pacific and Arctic.

By harnessing technology and the application of Big Data, we will create the next generation of surface and underwater naval combatants. Manned and unmanned, these warships and submarines are the weapons necessary to meet traditional and grey-zone threats

What the Atlantic was to the 19th century, the Indo-Pacific will be to the 21st century. Canada needs to re-imagine our naval base in Esquimalt and our air base in Comox. Roughly 80 per cent of global trade is transported by sea. Sixty per cent of maritime trade passes through Asia, with the South China Sea carrying an estimated one-third of global shipping. Annual defence spending in the Indo-Pacific has doubled since 2000 to $450 billon – more than $200 billion of that by China – and the region is forecast to surpass the U.S. as the world’s biggest spender on weapons by 2029. By 2035, half the world’s submarines will patrol Indo-Pacific waters, according to Australia’s 2016 defence white paper.

While we take justifiable pride in our armed forces, the U.S. bears the burden of continental defence (through NORAD) and collective security (through NATO). Successive presidents have complained about sharing the burden. Trump doesn’t like multilateralism, nor will he underwrite the allies.

Self-interest and self-respect should oblige Canada to invest more. This means air defence – satellites, drones and fighter jets – but the focus should be on our naval forces. We are ringed by three oceans. This means completing the promised Arctic patrol ships, icebreakers and new surface combatants. It means commissioning the next generation of submarines and more multi-purpose ships.

The Americans regularly remind us: if you claim sovereignty in the Arctic, then exercise that sovereignty. We need an Arctic naval base – the Harper government proposed Nanisivik, Nunavut – and search-and-rescue posts. If the Russians can do it, so can we.


Keeping it Together

National unity is not easy in a nation that, by comparison to Europe or Asia, is new, covers more time zones than any mainland nation but Russia and aims to make a virtue of its diversity.  Canadians are progressive but prudent. The challenges of geography and climate mean that we also understand compromise. Unlike Americans, who run the attitudinal gamut from A-Z, the Canadian spectrum would be F-M.

For the poet-philosopher Frank Scott, the mantra of our longest serving prime minister, Mackenzie King, was “do nothing by halves that can be done by quarters.” Scott feared it encouraged mediocrity, but for a nation in continuous development, initiatives like reconciliation with First Nations take time and patience. In contrast to the American mantra of “life, liberty and the pursuit of happiness,” Canadians are well served sticking with “peace, order and good government.”


Managing Uncle Sam

Life with Uncle Sam is never easy. Former prime minister Brian Mulroney’s advice stands: “The golden rule of Canada-US relations is very simple. We can disagree without being disagreeable. The Americans are very important to us. We know they are, notwithstanding the differences, our best ally, our closest neighbour, our biggest customer. There is also a rule of global politics – Canada’s influence in the world is measured to a significant degree by the extent to which we are perceived as having real influence in Washington.”

The coda to the golden rule is that serious Americans (not Trump) appreciate the insights and intelligence our foreign service can bring to the table. This is why we need ambassadors in Tehran, Riyadh and Pyongyang. Diplomatic recognition is not a “Good Housekeeping” seal of approval. It’s how we conduct business and protect Canadian interests.  It’s also why we need to invest in our diplomatic service and develop expertise and empathy in foreign cultures.

This also means making investments and sharing the burden. A 2015 study for the Canadian International Council concluded that “Canada’s engagement is so low that today it meets the statistical definition of an international ‘free rider.’” Is Canada really back? If you want to play, you have to pay.

Former Foreign Affairs minister John Manley observed that as the waiter bringing the tab approaches the table, the Canadian tendency is to head to the toilet and leave the bill to others (usually Uncle Sam). We still fall short (1.23 per cent of GDP) of the NATO target of two per cent GDP on defence spending. Our international development assistance (0.26 per cent GDP) remains well short of the 0.7 per cent endorsed by the G7. If the British can manage it, why can’t Canada?



Avoid Temptations

Canadian leadership needs to avoid three temptations:

First, avoid smugness and the temptation to preach. In former U.S. secretary of state Dean Acheson’s memorable phrase (recalled  from William Wordsworth’s poem  Ode to Duty) , Canadians have a tendency to act like the “the stern daughter of the voice of God.” Virtue is a quality but it won’t win us a UN Security Council seat. Humility, being constructive and paying our way is better statecraft.

Second, recognize our limitations.  Championing the cause of the Rohingya, participating in the Lima Group’s efforts on Venezuela, hosting meetings on North Korea and working to improve the WTO’s dispute settlement are examples of constructive diplomatic entrepreneurship.  But we can’t fix everything. Canadian achievement:  Louis St. Laurent and Lester Pearson and peacekeeping in 1956;, the Brian Mulroney-Joe Clark work on South Africa and German reunification;, the Jean Chrétien-Lloyd Axworthy security agenda that produced the Ottawa Treaty banning landmines, and the International Criminal Court; Stephen Harper’s work on maternal  health and John Baird’s ‘girls not brides’ initiative –   came about through a confluence of time and events.  They cannot be planned and even then, they require strong leadership – a dedicated prime minister and energetic foreign minister and a foreign service at the top of its game. There are no guarantees of success. Not everything endures, as we have learned with Responsibility to Protect. Thus the need to focus and decide what best serves Canadian interests. It means hard choices and hard questions: Why peace operations in Mali?  Why not more in Haiti or in Central America?

Third, playing diaspora politics hurts national security and bilateral relations. Prime Minister Justin Trudeau learned this during his magical mystery tour of India.

With one in five Canadians born abroad, including half of our biggest city, Canadians are the people of the world. The Aga Khan set up his centre for pluralism in Canada because he thinks we get it right in how to manage diversity. Canadian citizenship is like winning the lottery, but sometimes it is taken a bit casually. We are more than the “greatest hotel on Earth.”


Looking Forward

Canada is a blessed nation – in its neighbour, in its resources, in its people. This good fortune can be sustained through prudent but progressive policies at home and constructive internationalism abroad.

In a messy world, providing good government and managing diversity at home will make Canada a country from which other nations can learn.  Canada must always look outwards. Internationalism and multilateralism serve the national interest. These were the principles behind  the speech that defined Canadian postwar policy. Delivered by Louis St. Laurent in January 1947, it still resonates. National unity, political liberty, values and “the acceptance of international responsibility.” These principles still justify an active Canadian role in international affairs and “every international organization which contributes to the economic and political stability of the world.”

As a middle power, we accomplish more when we work with other constructive nations This means reinvigorating our shared multilateral  institutions to set and enforce the rules that level the playing field. It means finding niches where helpful fixing and diplomatic entrepreneurship can be constructively applied. It also means investing money and muscle in our alliances. But we must do this always, always with recognition of our limitations and a realistic appreciation of the world as it is, not as wishful thinking imagines it to be. The arc of history may bend towards justice but human nature being what it is we need checks and balances to support the better angels and contain the dark side.


R.: Hon. Paul Martin, Hon. Lester B. Pearson and the Rt. Hon. Louis St. Laurent at Ottawa after Pearson’s return from Norway with the Nobel Peace Prize. 


Further Reading

Robert Kagan’s The Jungle Grows Back: America and our Imperiled World argues that the world is inching closer to a dark jungle of competing interests, clashing nationalism, tribalism and self-interest. Two other Brookings scholars’ books are Stewart Patrick’s The Sovereignty Wars: Reconciling America with the World and Thomas Wright’s All Measures Short of War: The Contest for the 21st Century and the Future of American Power. In a similar genre are Ivo Daalder’s and James Lindsay’s The Empty Throne: America’s Abdication of Global Leadership and Michael Mandelbaum’s The Rise and Fall of Peace on Earth.

Gideon Rachman’s Easternization: Asia’s Rise and America’s Decline from Obama to Trump and Beyond argues that Asian nations’ growing wealth is a trend that will only continue, challenging Western power and influence. Parag Khanna’s The Future is Asian: Commerce, Conflict and Culture in the 21stCentury argues that the Asian century is dawning as Asia becomes more than the sum of its parts (and he argues the Belt and Road Initiative has done this). Kai-Fu Lee, in AI Superpowers: China, Silicon Valley, and the New World Order, says that China will soon overtake the United States as the world leader in innovation.  For a harsher view on China, read Michael Pillsbury’s The Hundred-Year Marathon: China’s Secret Strategy to Replace America as the Global Superpower and for another provocative view, read Kishore Mahbubani’s Has the West Lost It?A Provocation.

Hal Brands and Charles Edel, in The Lessons of Tragedy: Statecraft and World Order, take the long view of history.

Graham Allison’s Destined for War: Can America and China Escape the Thucydides Trap? argues that in 12 of 16 cases over the past 500 years, things have ended badly, often for both nations. When the parties avoided war, it required huge, painful adjustments in attitudes and actions, not only on the part of the challenger, but also the challenged.

J.D. Vance’s Hillbilly Elegy: A Memoir of Family and Culture in Crisis is a riveting account of the forces that Trump channels.

If you despair, reach for Steven Pinker’s Enlightenment Now: The Case for Reason, Science, Humanism, and Progress.

For annual global threat analysis, look to the Council on Foreign Relations’ annual Preventive Priorities Survey  and the Munich Security Report’s aptly named “The Great Puzzle: Who Will Pick up the Pieces?” The New America Foundation’s Peter Singer has a very good essay entitled Insurgency in 2030.

As for Canada: Randolph Mank asks whether Canada needs a foreign policy review, in a CGAI policy paper (2019). Roland Paris’s letter to the prime minister, “Time to Make Ourselves Useful,” in the Literary Review of Canada (2015) has continued relevance, as does A Global Positioning Strategy for a Networked Age, by Edward Greenspon of the Centre for International Governance Innovation (2012).

China Kovrig and Spavor

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Surviving a diplomatic brawl with China takes patience, discretion: Japanese ambassador

‘Canada is not the only country whose nationals are detained in China’ – Kimihiro Ishikane


The arrest and detention of two Canadians by China late last year was an event that looked eerily familiar to Japan. It is, for the government in Tokyo, part of a pattern they have had to contend with over the last few years.

China’s detention of Canadians Michael Kovrig and Michael Spavor — allegedly in retaliation over Canada’s arrest of Huawei executive Meng Wanzhou for extradition to the U.S. on fraud charges — shocked the general public in this country and left federal policymakers reeling.

For Japan, however, such conflicts are just a basic feature of its relationship with an enormous and powerful neighbour — something to be handled with extraordinary delicacy.

Which is why Prime Minister Justin Trudeau can be expected to compare notes with his Japanese counterpart, Shinzo Abe, when the two meet this weekend.

“Canada is not the only country whose nationals are detained in China,” Kimihiro Ishikane, Japan’s ambassador to Canada, told CBC News. “A certain number of our nationals are also detained in China.”


Japanese Ambassador Kimihiro Ishikane speaks to CBC News on April 24, 2019. (CBC News/Andrew Lee)

Since China updated its national security laws in late 2014, nine Japanese citizens have been jailed or detained in China on espionage-related charges.

Some have been held for up to three years, while at least one recently received a 12-year jail sentence for spying last July.

There is a long history of diplomatic tension between Tokyo and Beijing, but it was rekindled in 2012 in a dispute over eight uninhabited islands — little more than hunks of rock — in the East China Sea.

Both countries lay claim to the islands, which are known as the Diaoyu islands in China and as the Senkaku islands in Japan.

They’re important economically because of potential mineral reserves and fishing rights in the surrounding seas. Their strategic military value comes from their proximity to nearby shipping lanes.

Japan recently deployed ground forces and missiles near the islands, where Chinese warships frequently sail.

The takeaway for Canada from this long-running saga, said Ishikane, is that managing and resolving a dispute with China requires patience, stamina and consistent messaging.

“We have to be very, extremely cautious in how we convey the message,” he said. “How we convey the message, who conveys it, at what time and how.”

Canada hasn’t exactly excelled in its message management since the Chinese detained Kovrig and Spavor late last year. Early this year, Trudeau fired his then-ambassador to China, John McCallum, after the ambassador appeared to be stepping offside with the Liberal government in controversial remarks about Wanzhou’s extradition case.

Since then, the diplomatic brawl with the Chinese has spread to the canola fields of Western Canada, where a move by China to block shipments of canola seed has producers looking anxiously to planting season

Prime Minister Justin Trudeau walks with Prime Minister of Japan Shinzo Abe before a family photograph during the G7 leaders summit in La Malbaie, Que., on Friday, June 8, 2018. (Justin Tang/THE CANADIAN PRESS)

Ishikane said Abe and his country’s foreign minister have picked their moments to make their points with China.

“Sometimes we need to say it in public, and many times we need to do that in a very discreet manner,” he said.

Relations between Japan and China did warm up following Abe’s trip to Beijing last fall. Chinese President Xi Jinping is expected to visit Japan for this year’s G20 summit in Osaka.

The gathering of world leaders is also something Abe and Trudeau will talk about — but the matter of the detainees feeds into the important, big-picture questions the two prime ministers will have to consider this weekend, said Ishikane.

“How to interact with China? How to have a constructive relation with that huge country is an area where we can really compare notes,” he said. “China is an opportunity, but could be a challenge.”

Colin Robertson, a former diplomat and vice-president at the Canadian Global Affairs Institute, said China has been playing hardball with Canada and the Liberal government should push back more forcefully, even at the risk of further retaliation.

“The Chinese will continue to ratchet up the pressure. I think they truly believe — they’re convinced — that if they put enough pressure on us we will free Meng Wanzhou,” he said.

Beijing has “the weight and they’ll swing it and they do it in part to demonstrate” that to other nations, he added.

Robertson said the Trudeau government should recognize that it is dealing with an authoritarian regime which takes “hostages” to secure leverage — which should come as no surprise, since China was using it as a part of its statecraft during the Cultural Revolution of the 1960s.

Take Advantage of CETA

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Canadian businesses not seizing on CETA as much as Europeans, need a culture shift, say analysts

By Neil Moss      
The feds hope small- and medium-sized businesses take advantage of new export opportunities, but transportation costs may deter many.
International Trade Diversification Minister Jim Carr says the government’s plan to increase overseas exports by 50 per cent by 2025 is rooted in the ‘art of the possible.’ The The European Union’s ambassador to Canada says though it’s been more than a year and a half since the two sides’ trade deal largely came into effect, EU companies have been more aggressive exploring new opportunities in Canada than Canadian companies have in Europe.

While the Canadian government has touted such deals in its desire to diversify Canadian trade, experts say a trade deal can only go so far, and there needs to be a culture shift to get Canadian businesses to think beyond the United States, Canada’s largest trading partner.

In the first year since the Comprehensive Economic and Trade Agreement (CETA) between Canada and the EU was 98 per cent provisionally implemented in September 2017, there was an increase of 4.5 per cent in bilateral trade. EU exports to Canada have risen nine to 10 per cent, Peteris Ustubs told reporters on April 12, but Canadian exports have been largely flat. Twelve of 28 EU countries have ratified the deal, but all must do so for the sweeping deal to be fully permanently in force.

“I think Canadian enterprises should discover more [about] Europe,” he said. “And diversifying its exports all across [the] European Union and [making] sure that CETA is used by all sizes of enterprises,” whether they’re big business or small- and medium-sized enterprises (SMEs).

But it’s up for debate if SMEs will ever look to Europe in large numbers, say trade analysts.

“l believe the government is doing as much as government can do. At the end of the day, it’s up to the businesses to be able to step up and take the risk and invest the time and the money and the blood, sweat, and tears to go into new markets,” said Adam Taylor, president of Export Action Global. “Governments can only do so much.”

SMEs make up of the vast majority of Canada’s private sector with more than 90 per cent of the workforce, and 95 per cent of net job creation, according to the Canadian Chamber of Commerce. Approximately 25 per cent of Canada’s exports are from small- and medium-sized businesses, but the great majority are sent to the United States.

In the 2018 fall economic statement, the government set a goal to increase overseas exports by 50 per cent by 2025 as part of its Export Diversification Strategy. The strategy allotted $1.1-billion for improvements in trade infrastructure, as well as resources for exports, including $184-million for the Trade Commissioner Service.

EU Ambassador Peteris Ustubs says EU companies have been more aggressive than their Canadian counterparts in exploring new export opportunities. The Hill Times file photograph

Mr. Taylor—who was a former senior adviser to then-international trade minister Ed Fast during the CETA negotiations—said it is the “ultimate Canadian challenge” to convince Canadian businesses to look away from the American export market.

During the CETA negotiations, Mr. Fast launched the Global Markets Action Plan that targeted SMEs to look beyond the American market, as statistics pointed that if the number of small- and medium-sized businesses that looked at emerging markets doubled, tens and thousands of jobs would be created, Mr. Taylor said.

“[It’s] a real true culture shift or transformative move to look beyond the U.S. market and look to markets where you just don’t have a natural … easy geographical place to go,” he said, “and that’s a real challenge.”

International Trade Diversification Minister Jim Carr (Winnipeg South Centre, Man.) told The Hill Times CETA is “progressing well,” citing increases of merchandise exports to the EU of 4.4 per cent and service increases of 6.4 per cent. He also said exports subject to duty to countries under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) have increased by 20 per cent.

Mr. Carr noted the goal to increase overseas export by 50 per cent isn’t “pure science,” but it is based in the “art of the possible.”

He added that is in the national interest of both the government and exporters to diversify and expand their trading markets.

Conservative MP Randy Hoback (Prince Albert, Sask.) said it’s tough for Canada to compete on the global trade market due to high taxes, which will prevent Canada from reaching its increased export goal.

Carlo Dade, director of the trade and investment centre at the Canada West Foundation, said it’s up to individual companies to decide if it makes sense for them.

“Time and time again, [Canadian companies] will not look beyond the U.S., and that’s just an intransigence at that level that is incredible hard to move,” Mr. Dade said, adding that success from the trade diversification strategy is not going to be a massive shift, but “a modest bump” in companies looking at other markets.

Mr. Dade said he is optimistic as some companies have been thinking about the EU market, and out of those he expects a “handful” to make the move towards the new market opportunities.

“At least for the first time, they’re asking questions,” he said.

The many trade support services can confuse and scare small businesses as there can be 10 to 12 agencies, and Mr. Dade said business owners are unsure which one is meant for them.

Corinne Pohlmann, senior vice-president of national affairs and partnerships at Canadian Federation of Independent Business (CFIB), which represents SMEs, said the federal Trade Commissioner Service (TCS) can be helpful if a business is in one of the sectors the government has targeted for export growth.

Ms. Pohlmann added that many small businesses don’t know about the TCS.

“They don’t know they exist and they don’t know what they do,” she said, adding she has spoken to a couple of small business owners who didn’t think the TCS would deal with them as they are too small.

Around one-quarter of CFIB members export, and the “vast majority” export to the United States, she said, while only about five per cent ship to Europe. Ms. Pohlmann said one of the biggest barriers to greater exports is transportation costs, which will always make the United States an attractive export market.

“Most” of the trade promotion funding allocated by the government was aimed at SMEs, Mr. Carr told The Hill Times.

Businesses want ‘lion’s share’ of focus to support Canada-U.S. trade, says NDP MP Ramsey

NDP MP Tracey Ramsey (Essex, Ont.), her party’s international trade critic, said she has heard a common complaint from businesses that there is inadequate support systems to help them export.

“I would like to see more people in the Trade Commissioner Service to be able to help SMEs,” she said.

Canadian businesses that have spoken to NDP MP Tracey Ramsey have told her that they want the ‘lion’s share’ of Canada’s trade agenda to be focused on improving Canada-U.S. trade, she said. The Hill Times photograph by Andrew Meade

Ms. Ramsey said many of the services, like the TCS, as well as the Business Development Bank of Canada (BDC) and Export Development Canada (EDC), are set up to serve large companies.

As vice-chair of the House International Trade Committee, Ms. Ramsey said she has heard from SMEs and big companies that they want the “lion’s share” of Canada’s trade agenda to be focused on improving Canada-U.S. trade.

“The other deals are … things very far down the road potentially in the future, whereas our trade with the United States is very tangible and real to them,” she added.

The United States-Mexico-Canada Agreement (USMCA), replacing NAFTA, has been signed, but has yet to be ratified as U.S. Democrats in the House of Representatives have raised concerns over labour and environmental provisions.

Jason Langrish, executive director of the Canada Europe Roundtable for Business, said trade trouble with the United States doesn’t directly correlate with a company’s desire to diversify.

He said trade disputes have to get pretty bad before companies look to other markets, and for many Canadian companies their position with the U.S. hasn’t reached that level. Mr. Langrish added that some companies may be looking at the EU and not seeing the type of “home runs” they have gotten through exporting to the United States, and without that opportunity, companies have been hesitant to invest the energy into penetrating a new market.

There has also been a level of risk aversion for Canadian companies, Mr. Langrish said, as they look at the trade uncertainty due to Brexit in the United Kingdom, Canada’s largest European trading partner.

Colin Robertson, a former diplomat and trade negotiator on the Canada-U.S. Free Trade Agreement, said it will take a while before a noticeable increase in Canadian exports to the EU, requiring hard work that will take time. Mr. Robertson said it usually takes two or three years before results of any trade deal are seen.

“I think [it’s] true of all governments, whether it’s Conservative, Liberal, and NDP … [they] sometimes get taken up with rhetoric and forget about the absolute real hard work that has to go into actually turning an opportunity into profit,” the former Canadian consul general in Los Angeles said.

Aside from the overall export numbers associated with CETA, there are signs of “really strong growth,” said Brian Kingston, vice-president of international and fiscal policy at the Business Council of Canada. He said sectors that had tariffs cut by one per cent or more by the deal experienced 21 per cent growth in 2018.

Both Mr. Kingston and Mark Agnew, senior director of international policy at Canadian Chamber of Commerce, said that now is the time for businesses to take advantage of the market access opportunities, as they are in a preferred position compared to American companies, and that likely will end some time in the future.

Prior to the election of U.S. President Donald Trump in 2016, the United States and the EU were in the midst of free trade negotiations, but they were halted by the Trump administration.

“This isn’t a permanent advantage that we have, there is a relatively short window that we should be taking advantage of right now to the max,” Mr. Kingston said.