A. APEC Defined

B. APEC’s History and Achievements

C. The 1997 Vancouver Summit: What Legacy Can Canada Provide?



A. APEC Defined

The Asia-Pacific Economic Cooperation (APEC) forum has emerged as the Asia Pacific region’s leading intergovernmental vehicle for liberalizing trade and investment, facilitating business, and stimulating economic and technical cooperation. APEC has evolved into an institution through which all members can enhance their economic and human ties within this dynamic region. It serves also useful roles in fostering a trans-Pacific relationship for North America and in providing an important multilateral forum in which the "three Chinas" (China, Hong Kong, and Chinese Taipei) can discuss economic and political matters. In the case of China and Taiwan -- the latter referred to in APEC as Chinese Taipei -- it has become the only official venue for such consultation.

APEC should not be confused with free trade areas such as NAFTA, where the resulting agreements are derived from usually intense negotiations. Instead, APEC can be categorized as providing a softer form of trade liberalization, in that decision-making is undertaken on a consensual and voluntary basis. Any trade liberalization undertaken by APEC economies will be done on a most-favoured-nation basis, meaning that any benefits from tariff reductions will be extended to all WTO members. That way no trade walls are erected around the region.

As is the case with any organization, APEC has not been without its critics. Some are skeptical of APEC’s ability to undertake meaningful trade liberalization, arguing that the organization is a slow-paced consultative forum which has no formal negotiating agenda. Others highlight "the social and environmental costs of the free flow of market forces. They (the critics) focus on growing regional inequality, issues of human rights, unfair labour employment practices, and ethnic and native people rights...."(31)

Notwithstanding the economic successes that many APEC countries have achieved, a number of development challenges will have to be addressed successfully if the region is to maximize fully its continuing growth potential. These challenges include: lowering existing tariff and non-tariff barriers to trade; clarifying current regulations; harmonizing regulatory standards and government practices in the region; and improving the existing level of market information. The APEC forum has been designed specifically to address these and other topics.

From a Canadian perspective, APEC provides a tool through which this country can further develop its trade and business opportunities in its fastest growing offshore market. Apart from benefiting from APEC’s trade and investment liberalization agenda, Canadian business stands to gain from the contacts made with other business and government officials in the region. Over time, it also stands to profit from greater economic and technical cooperation in such diverse areas as telecommunications, tourism, human resources development, energy, and the environment.

Canadian firms are particularly well suited to respond to the region’s growing infrastructure requirements. The rapid economic growth within Asia Pacific has outdistanced these economies’ capacity to replenish their infrastructure, causing problems such as road congestion, power shortages, and improper water supply and waste treatment. Before this infrastructure gap can be bridged, however, private capital must be mobilized and restraints to foreign investment lessened.

Apart from the important economic ties which membership in APEC can offer, Canada’s participation in the organization also enhances the linkages between individual Canadians and citizens of other members. Cross-cultural ties are becoming increasingly significant, as the recent growth in immigration into Canada and the greater presence of Asian students in this country can attest. A principal benefit of APEC membership is that it provides a useful forum in which Canada can advance these important human linkages.

As was noted in a preceding section, APEC contains all the region’s principal economies as well as many of the world’s fastest growing ones. In addition, they represent an increasingly significant factor in Canadian trade relations, taking in one-half of all Canadian exports to non-U.S. countries and providing 11 of Canada’s top 25 export markets. APEC members have also become leading sources of new technology and foreign direct investment in Canada.

The APEC membership currently consists of the three NAFTA partners (Canada, United States, and Mexico), Chile, Japan, the six original members of ASEAN (Brunei, Malaysia, Indonesia, Philippines, Thailand, and Singapore), the "three Chinas" (China, Hong Kong, and Chinese Taipei), South Korea, and Australasia (Australia, New Zealand, and Papua New Guinea). A number of other economies would like to join, but no decisions on membership extension have yet been reached.

As one can see from the list, the organization consists of a relatively large number of economies, in many instances displaying few common characteristics. However, two common threads stand out: first, APEC’s commitment to trade and investment liberalization; second, the establishment of economic and technical cooperation links geared towards achieving sustained economic growth.

APEC, reflecting its distinct private sector orientation, is not an administratively top-heavy organization. While it does make use of a permanent secretariat located in Singapore, the officials there are typically seconded from member countries, making the secretariat small and efficient. The secretariat’s primary purpose is to manage the APEC central fund, which provides financial support for projects initiated by APEC working groups (described below). The responsibility for undertaking most of APEC’s work is vested in the individual members themselves.

APEC conducts an annual set of Ministerial and Leaders Meetings, for which preparation is coordinated through quarterly Senior Officials Meetings. Senior Officials are also responsible for supervising the work programs agreed to by Ministers and Leaders, which have led to collaboration among APEC members in a number of areas including telecommunications, transportation, fisheries, energy, environment, tourism, and human resources. These programs are undertaken through the joint efforts of the Committee on Trade and Investment, the Economic Committee, ten sectoral working groups, and occasional meetings of experts.

To help address the economic interests of its members, APEC has established ten Working Groups covering both sectoral and broad topic areas. These groups, in which Canadian firms are generally quite active, include: Transportation; Telecommunications; Tourism; Energy; Fisheries; Human Resources Development; Investment and Industrial Science and Technology; Marine Resources Conservation; Trade and Investment Data Review; and Trade Promotion. APEC is also receiving advice from three ad hoc experts groups on small and medium enterprises; agricultural technical cooperation; and environment/sustainable development.


B. APEC’s History and Achievements

APEC’s history can be traced back to 1989, when a small and informal dialogue group was established in response to the desire of Australian Prime Minister Bob Hawke to promote cooperation in an increasingly interdependent region. The group was officially inaugurated at the organization’s first Ministerial conference, held in Canberra, Australia, in November 1989. This conference was followed up by the second Ministerial Meetings, hosted by Singapore in July 1990.

At the third Ministerial Meetings, held the following year in Seoul (South Korea), APEC members formally agreed to work toward regional trade liberalization; greater economic cooperation; an expansion of investment; and a strengthening of the multilateral trading system. Also in evidence was a formal recognition of the critical contribution of the private sector to the dynamic state of member economies, of the need for greater involvement of private sector participants in APEC activities, and of the need for APEC to enhance the role of the private sector and to adopt free market principles.

Annual Leaders’ meetings have been held since 1993, all in November. At the inaugural 1993 meeting near Seattle, the assembled heads of government agreed on the need to promote freer trade and investment within APEC. They also recognized the necessity for greater interaction and cooperation.

The following November, in Bogor (Indonesia), APEC Leaders pledged to remove all barriers to unrestricted trade and investment between and among member countries. Two target dates were established, taking into account the differing levels of economic development among member economies: 2010 for developed economies, which combined accounted for 85% of total trade in the region; and 2020 for developing economies. It was further agreed (a) that industrialized members would provide opportunities for the developing economies within APEC to enhance their economic growth and development; and (b) that developing economy members would strive to achieve high economic growth rates.

At the 1995 annual APEC Meeting, held in Osaka, the Leaders agreed to implement a comprehensive, two-part Action Agenda to achieve the targets set out the previous year. Part I establishes a framework for trade and investment liberalization in all economic sectors, designed to meet the agreed timetable. It details APEC objectives and new undertakings in thirteen specific policy areas, including tariffs, non-tariff barriers, trade in services, liberalization of investment regimes, standards and conformance, customs procedures, intellectual property rights, deregulation, rules of origin, dispute mediation, business visas, Uruguay Round implementation, and business facilitation. At the Osaka meeting, APEC members also publicly outlined the initial steps that each was taking to liberalize trade and investment flows.

Part II of the Action Agenda deals specifically with economic and technical cooperation among APEC members. Detailed objectives are proposed for cooperation in such areas as energy and transportation; infrastructure; small business; and agricultural technology.

A major APEC goal is to increase private sector involvement in the organization. Given that APEC’s principal focus is on the enhancement of business opportunities in the region, it is worthwhile noting that the November 1995 meeting resulted in a formal incorporation of the all-important private-sector perspective in APEC’s activities and structure. To help ensure that the organization continues to be private-sector oriented, APEC Leaders established the APEC Business Advisory Council (ABAC) as a permanent channel for delivering private-sector advice to both Ministers and Leaders. This Council is made up of at least three business leaders from each APEC economy. To further facilitate business input into APEC decision-making, the organization continues to convene workshops and symposia on a wide range of relevant subjects.

To meet the above-mentioned deadlines for eliminating existing trade and investment barriers, and to increase economic and technical cooperation with other countries, the heads of government agreed at Osaka to develop concrete Action Plans in time for the November 1996 Manila meeting. These efforts were guided by two APEC Committees (the Committee on Trade and Investment, and the Economic Committee), which advise APEC Senior Officials on the key factors affecting regional economic growth. It was agreed that the implementation of the Action Plans would commence in January 1997.

At the fourth APEC Leaders’ Meeting, agreement was indeed achieved on the members’ Collective and the 18 Individual Action Plans. Whereas the latter represent voluntary submissions made by member economies, the collective plans have been agreed to, by all members, through APEC’s consensus building process. All the plans are formally outlined in the Manila Action Plan for APEC (MAPA).(32)

Through this Action Plan, APEC Leaders have undertaken commitments to dismantle structural barriers to trade in goods and services and to liberalize investment. They have also pledged to lower the costs of doing business by striving for greater consistency of standards in the region; by simplifying visa arrangements for business travellers; by identifying best practices in regulatory reform and cooperating on competition policy; by simplifying and harmonizing customs procedures (by 1998); and by striving to achieve a paperless customs system by the year 2000. Ensuring an effective implementation of intellectual property rights was also stressed. These are important initiatives, and all of them will require eventual strengthening. It should be noted that MAPA typically contains commitments to be undertaken primarily in the short-term. As such, the MAPA document should be viewed as part of an evolutionary process of plan review and improvement.

In addition, the Leaders adopted a framework of principles for economic cooperation and development, designed essentially to lessen economic disparities between countries in the region. In so doing, they established six priority areas for strengthening cooperation (investment in human capital, sustainable growth, the greater use of emerging technologies, small and medium-sized enterprises (SMEs) development, infrastructure development, and the establishment of efficient capital markets), with these to be implemented in partnership with the private sector. The relative lack of infrastructure and the need for work on sustainable growth were two areas given additional attention at the Manila meeting.

Also at Manila, the Leaders had their first meeting with the private sector advisory group, ABAC. On the basis of ABAC’s first report on expanding trade and investment,(33) Ministers have been instructed to act on five important ABAC challenges:


C. The 1997 Vancouver Summit: What Legacy Can Canada Provide?

Canada, an important Pacific nation, will chair the 1997 APEC forum. This gathering, to be hosted by Vancouver in November, will attract many government and business leaders from across the Asia Pacific region. On the Vancouver agenda are the APEC Leaders’ Meeting and the foreign affairs/trade Ministerial Meeting. In addition to the Vancouver meetings, Canada will host a number of other Ministerial Meetings dealing with certain specific issues: trade (Montreal in May); environment (Toronto in June); transportation (Victoria in June); Energy (Edmonton in August); and small business development (Ottawa in September). A number of working group meetings will also be held in Canada.

As the 1997 Chair, what legacy can Canada provide? As the officials from the Department of Foreign Affairs and International Trade (DFAIT) told the Committee, one must distinguish between APEC’s "built-in" agenda and the special interests that Canada would like to pursue. We now turn to each of these.


1. APEC-Driven Agenda

This year represents a turning point for APEC. With the Manila Action Plan now complete, the focus has turned away from establishing goals and Action Plans and towards the achievement of concrete results. By far the major challenge for Canada will be to monitor the implementation and improvement of APEC’s trade and investment liberalization agenda and, simply put, to move forward the agenda agreed to at Manila. It is extremely important that implementation of the new Action Plans produce early results; otherwise, the business community may lose confidence in the APEC process. It was with that in mind that APEC members agreed to identify sectors where early voluntary liberalization would have a positive impact on trade.


a) Trade and Investment Liberalization

If the 2010/2020 trade and investment liberalization targets are to be met, both the Collective and Individual Action Plans must be rigorously scrutinized and strengthened. Senior officials must work diligently to compare the commitments the various countries have agreed to; thus, any "laggards" can be identified. Regarding the Collective Action Plans, also agreed to at Manila, sectors for early voluntary liberalization will be identified by trade Ministers during the year and reported to APEC Leaders at their November meeting.

As a recent analysis of MAPA illustrates, APEC economies are "all well on track" in terms of achieving the 2010/2020 Bogor objective and, in fact, have exceeded Uruguay Round commitments.(34) However, it would be helpful if commitments of a longer-term nature than those contained in the Action Plans would be entered into. It strikes Members of the Senate Foreign Affairs Committee that the establishment of well-defined targets and timetables would be a valid objective, especially useful in avoiding the potential problem of "backloading," where much of the liberalization action is taken in the years just before the selected deadlines. (35)

APEC is making progress in addressing these concerns. First, Members have agreed to continue to strengthen and improve the individual Action Plans and to establish an effective means whereby these ongoing trade and investment liberalization commitments will be periodically assessed and reviewed. Second, in order to advance the pace of liberalization and to reduce the potential for "backloading," APEC has identified fifteen economic sectors for early voluntary liberalization. Proposals for freeing up trade in these sectors are to be presented to APEC Leaders at the Vancouver Summit in November 1997, a full two years ahead of the original APEC schedule. To ensure that this progress is sustainable, the Committee recommends:


Recommendation No.1

That, as the host for APEC activities in 1997, the Government of Canada use this status to continue to strengthen the members’ trade and investment liberalization commitments. Firm targets and timetables for future liberalization initiatives should be adopted at the November 1997 APEC Leaders Meeting in Vancouver.


Indeed, the Committee thinks that Canada should attempt to use APEC in a direct and aggressive way to advance its own trade agenda. APEC should be used as a forum in which to move forward the Canadian agenda to obtain agreement at the WTO to eliminate tariffs in five sectors of key importance to Canada: oilseeds and oilseed products; non-ferrous metals; wood and articles of wood; fish and fish products; and electronics products.

The MAPA analysis also noted that while the tariff reductions committed to by APEC members generally exceed commitments under the Uruguay Round, (36) progress with respect to the reduction of non-tariff barriers (NTBs) had been more difficult to assess. Many APEC members have pledged to undertake progressive liberalization in this area, without any details on actual measures to be taken beyond their commitment at Osaka. For their part, Canada and the U.S. stated that they would implement only their Uruguay Round commitments. The report called for a number of actions to be taken, including (a) the reduction and elimination of core NTBs; (b) a diminishing of the use of NTBs in certain sectors such as agriculture; and (c) the establishment of a timetable for NTB removal.(37)

Further action in this area is urgently required. It seems appropriate that Canada take steps in 1997 to attempt to persuade APEC to define such barriers more clearly, and to achieve concrete targets and timeframes for their removal. The Committee therefore recommends:


Recommendation No. 2:

That Canada, as Chair of APEC for 1997, take every step possible to encourage APEC members to make concrete, long-term commitments to reduce non-tariff barriers as well as tariffs.

Still another area of weakness regarding the Individual Action Plans made public in Manila involves the dismantling of barriers to investment. A number of member economies continue to impede two-way flows of foreign direct investment, through the use of licensing and screening mechanisms, high levels of taxation, discriminatory subsidies, and local content regulations, to name a few. Reflecting on these obstacles to investment, the Canadian Chamber of Commerce argued that "liberalizing investment rules must be a top priority. The longer term objective of Canadian companies remains a predictable and agreement-based investment regime with rigorous protection and investment rights built into a fully transparent investment code" (18:9-10). According to the Chamber, APEC’s current non-binding investment code needs considerable tightening. In attempting to justify the need for relaxation of investment restrictions, the valid point was made that with trade now following investment, it was "in the best interests of host countries in the Asia Pacific to provide a receptive environment for foreign direct investment" (18:10).

In particular, there needs to be a greater recognition on the part of Asia Pacific countries of the key national treatment principle contained in APEC’s own set of investment principles. Simply put, this principle would have host countries treat incoming investment in a manner no different from investment of domestic origin.

If the 2010/2020 deadline in the area of investment is to be met, acceleration of the liberalization effort will be required. Again, targets and timetables would be helpful. The Committee recommends:


Recommendation No. 3:

That the Canadian government purposefully guide APEC towards the establishment of targets and timetables for the near-term elimination of barriers to investment in the Asia Pacific region.


Recommendation No. 4:

That, to enhance investment and investor certainty in the Asia Pacific region, Canada urge other APEC economies to work together to achieve a substantial tightening of APEC’s existing non-binding investment code.


b) Business Facilitation

It is important to distinguish between the removal of obstacles to the free movement of goods, services, labour, and capital across national boundaries (trade and investment liberalization) and the elimination of factors causing the cost or difficulty in conducting business to rise (business facilitation). With trade liberalization receiving much of the public attention, the DFAIT officials appearing before the Committee have rightly categorized the ongoing work being done to facilitate business in the Asia Pacific region as the "unsung hero" of APEC.

The most complete inventory of impediments to business made available to the Committee was presented in the form of testimony by the Canadian Chamber of Commerce. Principal barriers of concern to the Chamber, distilled from surveys and direct contact with member firms, include:

The work currently underway within APEC in such areas as intellectual property, competition policy, regulatory reform, and customs, is noted. It is critical that the goal of achieving greater business certainty be attained. In performing this work, APEC needs to take into account and respond to the following priorities identified in the 1996 ABAC report: the use of business visas; the establishment of a registry of trademarks and patents; the development of professional standards for providers of business services; the harmonization of product standards; and the improvement in customs administration.


c) New Directions for Economic and Technical Cooperation

Common directions for APEC’s economic and technical cooperation work will also need to be set. Canada has been charged with the responsibility of implementing the APEC decision to focus on six priorities for its economic and technical cooperation activities. These include: human capital development; achievement of efficient capital markets; development of infrastructure; integration of emerging technologies; sustainable development; and enhancing the growth of SMEs. To this end, Canada intends to provide the working groups dealing with economic and technical cooperation with a clear, more structured focus for their work. All areas of activity not included in the six priorities will be either eliminated immediately or phased out. Criteria with which to rank suggested projects must be established.

In 1997, Canada will focus on a number of horizontal themes, with infrastructure (especially telecommunications, transportation, and energy) financing and investment selected as the leading one. Given the strong private-public sector financing links, it is critical that APEC respect ABAC’s desire to have the private sector involved in infrastructure planning and development.

Sustainable development is another theme which Canada will promote. DFAIT officials told the Committee that the issue will be a centerpiece of the environment Ministerial Meeting. Issues such as the achievement of sustainable cities, the development of clean technologies, and marine protection are to be explored at that time.

APEC Leaders have requested that the members of the organization continue their work on the impacts of economic and population growth on energy use, food demand, and the environment. With Canada being charged with the task of coordinating these efforts in 1997, a symposium of academic, government, and business leaders is to be convened (Saskatoon in September) to deal with this mandate. The linkages between the above variables will also have been touched on at the energy and environment Ministerial Meetings held earlier in the year. A comprehensive report is to be delivered to the Leaders in Vancouver in November.


d) Increased Business Participation in APEC Activities

Further development of the contribution and role of the private sector in APEC activities will be stressed. A three-pronged strategy has been adopted. First, Canada will focus on increasing business participation in APEC’s ten working groups. To further the dialogue between APEC and the business community, Canada will also ensure that each of the above-mentioned Ministerial Meetings hosted here will include a private-sector component, such as a symposium, open forum or trade show as well as the opportunity for dialogue with Ministers. Third, business participation will be an integral objective of the September Ministerial Meeting on SMEs.

Now that ABAC has reported, it is important that the recommendations contained in that report be seriously reviewed for implementation purposes. A response to the ABAC report is expected to be presented at the Vancouver meetings. DFAIT officials told the Committee that additional ABAC input would be sought on (a) the priorities for Individual Action Plans and (b) the identification of new sectors for early voluntary liberalization. A report card on APEC’s work will be produced by the APEC Business Advisory Council (ABAC) at the same meetings.


e) The Membership Issue

Given that as many as 11 countries wish to become participating members, the membership issue must be resolved. According to DFAIT officials, the priority for 1997 is to put in place the criteria with which to decide on the new membership. Once this has been achieved, the selection of new members could be announced in 1998.


2. Other Canadian Priorities

Deviating from the APEC’s built-in agenda somewhat, it is Canada’s intention in 1997 to open the APEC process to the public at large. This it hopes to do by involving youth, women’s groups, and non-governmental organizations (NGOs) in decision-making. To this end, the federal government is (a) involving youth in APEC sectoral Ministerial Meetings and a special Youth Summit, (b) providing analytical and logistical support for an APEC People’s Summit to be held concurrently with the APEC meetings in November, and (c) contributing over $200,000 for conferences organized by NGOs throughout 1997.

The witnesses from DFAIT mentioned that the Canadian government had encountered some resistance from other APEC members regarding the engagement of NGOs into the process. However, the Canadian government believes that federal policy-making has historically benefited from open exchanges with NGOs. It is urging APEC partners to help involve these groups in the APEC agenda.


3. China’s Accession to the World Trade Organization

An important issue which was brought to the Committee’s attention is China’s potential accession to the WTO and whether or not APEC can be of any assistance in influencing decision-making on this point. Mr. Wenguo Cai (Research Associate, Centre for Trade Policy and Law) pointed out that China’s membership in the WTO would be extremely influential in integrating that country into the global trading system. Such an accession, he claimed, "would consolidate China’s economic reform towards a market economy, and substantially decrease the potential for destabilizing the world economy, since China is a big country. China’s membership in the WTO would also increase China’s willingness to work with the international community on other issues, including environment, security and human rights issues" (12:5).

In his testimony, Mr. Cai called for Canada to use its influence as the 1997 APEC Chair in "furthering China’s membership in the WTO." The Committee, mindful of the growing importance of China within Asia Pacific and the need to bring China under multilateral trade disciplines, finds this suggestion highly commendable. However, China should have to undertake minimum requirements in order to become a WTO member. Once China is accepted as a WTO member, it should be given transition periods to comply fully with certain requirements where such special transition arrangements for developing countries already exist in the WTO. The Committee advocates that discussions on accession not become part of APEC’s formal agenda, but rather be undertaken informally. The Committee therefore recommends:


Recommendation No. 5:

That Canada, in its role as current APEC Chair, caucus with APEC members on increasing the probability of an early and positive decision on China’s accession to the WTO.




This interim report has discussed some of the issues raised during the Committee’s hearings. In respect to APEC, it makes recommendations which would advance the trade and investment liberalization agenda by encouraging members to establish long-term commitments to reduce trade and investment barriers. We believe that it is essential that Canada, as Chair of APEC in 1997, ensure that APEC’s core issues of trade and investment liberalization, business facilitation, and economic and technical cooperation are adequately addressed. Otherwise, the danger exists that APEC could devolve into an ineffectual international "talk shop".

In order to assess more thoroughly the results achieved by APEC so far, the Committee has commissioned a study by the Centre for Trade Policy and Law (CTPL) that will evaluate APEC’s Collective and Individual Action Plans in relation to existing WTO obligations and commitments. It will assess whether APEC’s unilateral, voluntary approach to trade and investment liberalization is likely to produce substantial tangible results. Concerns will be discussed about how regional trade and investment liberalization under APEC would mesh with Canada’s other regional, bilateral, and multilateral efforts. The CTPL study is to be available in late summer 1997.

Subject to Senate approval, the Committee intends to return, in the fall of 1997, to the study of Canada-Asia Pacific relations in order to explore several issues which require further examination. One area that the Committee will revisit is APEC. After November 1997, the results of the Vancouver meetings will be available for review and study by the Committee. Another issue stems from evidence the Committee received about Canada’s loss of market share in East Asian markets. Business representatives emphasized to the Committee the difficulties they face penetrating East Asian markets, problems which include fluid business contracts, inadequate trade financing, high transportation costs, and uneven trade promotion. Other witnesses suggested that Canada might attract more foreign investment if the country were properly promoted abroad, and local and provincial regulatory processes were streamlined.

The issue of human rights in the Asia Pacific region received a great deal of attention during the Committee’s hearings. Some witnesses cited human rights violations. Attention was drawn to the need to ensure that Asia Pacific countries adhere to international human rights treaties which they have signed and ratified. Others have questioned the promotion of trade and investment with countries that have poor human rights records. Some witnesses, equally forcefully, told the Committee that the concept of human rights and democracy are defined differently by Asian countries than by developed western nations. At a minimum, they suggested, more time should be allowed for Asian countries to reform their systems.

The need for the rule of law, transparency, reliable enforcement of agreements, and effective and enforceable "dispute resolution mechanisms" was also cited. Certain witnesses suggested a need for an International Code of Conduct for businesses and governments involved in international trade and investment activity. The Committee, in its final report, intends to continue to explore thoroughly human rights issues in the Asia Pacific.


As now envisaged, the Committee’s final report will address security issues in the Asia Pacific region. Business leaders have identified political instability as one of their major concerns when deciding whether to invest in the region. Regional instability can arise from many different sources. A militarily strong China willing to flex its muscles would be one possible source of increased tension in the region. Territorial disputes, such as those over the Spratly Islands and the Diayou (or Shenkaku) Islands, provide other potential sources for international conflict. In North Korea, the economy is melting down, heightening potential instability on the Korean peninsula. In other countries, political difficulties resulting from regional or ethnic differences and from problems of leadership succession may produce regional instability.


Finally, the Committee intends to examine the human dimension of Canada-Asia Pacific integration. In recent years, the large number of Asian immigrants, investors, students, and tourists have changed dramatically Canada’s multicultural mosaic, especially the character of Canadian cities. Despite the growing importance of Asian culture in this country, Canada has not been able to capitalize on this "hidden advantage" to develop stronger commercial links with Asia Pacific. What should be done to improve cross-cultural linkages between Asian and non-Asian Canadians?

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