Proceedings of the Standing Senate Committee on 
Foreign Affairs and International Trade

Issue 4 - Evidence - Meeting of January 30, 2014


OTTAWA, Thursday, January 30, 2014

The Standing Senate Committee on Foreign Affairs and International Trade met this day at 10:30 a.m. to study security conditions and economic developments in the Asia-Pacific region, the implications for Canadian policy and interests in the region, and other related matters.

Senator A. Raynell Andreychuk (Chair) in the chair.

[English]

The Chair: The Standing Senate Committee on Foreign Affairs and International Trade is studying security conditions and economic developments in the Asia-Pacific region, the implications for Canadian policy and interests in the region and other related matters.

Today, by video conference, we have with us Professor Shaun Narine, Department of Political Science, St. Thomas University; and, from the Centre for International Governance Innovation, Mr. David Dewitt, Vice-President of Programs, and Mr. David Welch, Senior Fellow, and CIGI Chair in Global Security, Balsillie School of International Affairs, University of Waterloo.

Gentlemen, welcome to the committee. We have already started our study. We have heard from many witnesses on their perspectives of Canada engaging in the Asia-Pacific, and we look forward to your contributions today. I trust that you will be available for questions from our senators.

I will start in the order that I introduced you, if that is all right. I'll turn to Professor Narine for an opening comment.

Shaun Narine, Associate Professor, Department of Political Science, St. Thomas University, as an individual: Thank you. I was asked to speak about ASEAN, and I assume that means you want some background on ASEAN, how it's formed and what its coherence is. I'll speak to that and hope that I'm not repeating anything said already by other speakers.

ASEAN's background is that it was created as a regional non-aggression pact in 1967. It became more active in the late 1970s and 1980s when it was primarily motivated by its opposition to Vietnam's invasion of Cambodia and occupation of Cambodia.

In the 1990s, with the end of that occupation and the end of the Cold War, ASEAN began to focus on finding new purposes. It pursued deeper economic integration and created the ASEAN Regional Forum to address Asia-Pacific security issues. The ASEAN economic crisis of 1997 to 1999 was a regional wake-up call. ASEAN found itself unable to respond to that crisis and also, at the same time, the vulnerability of regional states was revealed by the events of the crisis.

ASEAN's development today is in direct response to what happened in 1997 to 1999. They are trying to re-establish their ASEAN standing, but they're also trying to find ways to keep the organization relevant.

In 2003, ASEAN declared its intention to create an ASEAN community by 2015. This community has three pillars: an ASEAN economic community, an ASEAN political and social community, and an ASEAN socio-cultural community. ASEAN is in the process of implementing these three pillars. In 2007 it also signed the ASEAN charter, which is presently the guiding document for the ASEAN community.

From the perspective of regional multilateralism, ASEAN is essential. It's at the core of most of the important regional structures, especially the ARF, the ASEAN Regional Forum; the ASEAN Plus Three; and the East Asia Summit. I would say the ASEAN Plus Three is probably the most important.

It's important to attach two major caveats. First, in my opinion, ASEAN is not a coherent institution, despite its efforts to appear otherwise. It has a weak sense of regional identity and trust between its member states, and these states are very much focused on pursuing their own narrow national interests. ASEAN has worked hard to keep itself at the centre of regional institutionalism, but much of its success in doing this is because it's been the best option by default. The big powers of the region don't trust each other and are also not trusted by the smaller states. They cannot spearhead their own institutions.

Having said that, let me make the point that ASEAN is probably as coherent and as highly institutionalized as it can be; as realistic. Southeast Asia is an enormously diverse region. States are at all level levels of development and there are many different political systems, ethnic groups and religions at work.

Many of the issues of internal instability that motivated ASEAN's creation in 1967, I would argue, are still at work today. In terms of Canada and multilateralism in Asia, Canada has largely been absent from the region for the past several years. It needs to show up, obviously. Building relationships is particularly important in the Asian context, but it's also the essence of diplomacy anywhere. This isn't particular to Asia. Showing up for Canada does mean engaging with ASEAN in some important way. We're already a member of the ARF, so there's that. But in general, I think our presence needs to be felt more than it has been for the past decade or longer. Frankly, just being present to offer ideas puts us at the table in a way that we haven't been and that has an influence that allows us to be heard well beyond our actual objective strength and size.

I'll stop there and entertain any questions or open the floor.

The Chair: Thank you, Professor Narine.

I will turn now to the Centre for International Governance Innovation. I'm not sure, gentlemen, who will be addressing the Senate, or both of you.

David Dewitt, Vice-President of Programs, Centre for International Governance Innovation: It will be both of us. Thank you for inviting us. It's a pleasure to see you again. It's been a number of years since you and I and the late Tom Bata and the late Tom Delworth sat together on the Canadian member committee for the Council for Security Cooperation in the Asia Pacific. I'm thrilled to see your continued engagement on things having to do with Canada and Asia.

I thought that I would really try to do two things in my brief set of opening remarks, based on the background information that the committee clerk provided me when I received the invitation last week, and I had a chance to briefly review some of the proceedings. You had expert witnesses who drilled down into especially trade and economic issues. That's not my area, so I won't go there, but I will make reference to some of it.

I wanted to do two things in my opening remarks: make some comments about Canada and Asia and make some comments about Asia and the context, particularly the political security arrangements, as well as the economic.

In terms of Canada-Asia, in general, I'd say that there was a great deal of optimism following the end of the Cold War, led by then foreign minister Joe Clark, that Canada had an opportunity to engage Asia, particularly Northeast and Southeast Asia, in new and innovative ways. There was a real need for efforts to more effectively manage bubbling conflicts, some of which held out very serious threats. For instance, the Canadian government sponsored a track-two dialogue called the North Pacific Cooperative Security Dialogue. The Canadian government was also a principal sponsor with Indonesians of the South China Sea Working Group, which made a major contribution in trying to bring the principal parties together.

It's interesting to note that both those areas of contestation, the Korean Peninsula and the South China Sea, remain areas of concern. Indeed, just for information for the senators, the most recent edition of a Canadian magazine called Diplomat & International Canada, which many of you may receive, has in the centre a series of maps on political and security and economic risks. If one looks at that map, Asia in particular, you will see that with the exception of Japan, Australia and New Zealand, they're all seen either as very high risk, high risk or medium-high risk. That suggests the continuity of the unresolved issues that occur in Asia.

I'd also suggest, however, that over the last two decades, Canada has suffered from what I call unfulfilled expectations or unfulfilled promises. On the unfulfilled expectations, many within the Canadian community, both economic and political, have anticipated Canada seeing Asia as a much more important part of our international affairs, our foreign relations on economic, on political security, on diplomatic areas. That has yet to be fulfilled.

In terms of the failed expectations, on the other side there has been an unfortunate history of tremendously interesting Canadian proposals, innovations, suggestions for various kinds of activities which, time and time again, have been unfulfilled, so that our Asian partners have come to question the extent to which Canada truly is committed to engage in Asia in a serious and sustained way.

I'd also suggest, in particular, that Canada has continued to miss strategic opportunities in what were considered our special relations with Japan, Korea, in the Asia-Pacific, possibly with China and India as well. There may have been also a stretching of our assumption that our so-called special relationship with the United States would continue to open doors and carry us into various parts of Asia. That has lost its credence, its weight, and so we have to rethink our approach. Ultimately, the areas where we were innovative, areas that are now called Track Two and Track One and a Half Diplomacy, which helped buttress and open doors and opportunities, in these areas we have really stepped aside and we are no longer seen not only as a leader, but we're not even present in a serious and sustained way.

That's one set of general concerns.

Let me turn briefly to views on Asia as a region. Shaun has given you a sense of ASEAN. I suggest that ASEAN still provides an arena of tremendous opportunity. Indonesia, for example, is going through remarkable and stable growth; 5 per cent per annum. It has expanded its manufacturing sector considerably, is resource rich and it is eager to explore strong opportunities with Canada. The way Indonesia goes is the way much of ASEAN will go. ASEAN is important not only because it has been the most creative negotiator in regionalism in Asia-Pacific — Shaun mentioned the number of regional institutions — but on top of those institutions are new initiatives in which ASEAN plays a critical role. There's the Regional Comprehensive Economic Partnership and the Comprehensive Economic Partnership for East Asia, just two that have emerged in which ASEAN, though much smaller than India or China, plays an important role.

China clearly is an emergent power. We all recognize that. Some economists predict that even if there's a modest slowdown in the economic growth rate of China, we can see a thirty-fold increase in economic capacity in China by 2050. The extent to which that demands commodities, resources and energy, obviously is an opportunity. To the extent that also imposes challenges on the Government of Canada that professes to put values and principles up front, it might clash with interests. That's something that obviously is being managed, but I'd say it's being managed belatedly, just as our efforts with the TPP are a Canada-come-late story.

Perhaps the last, most important point in an overview of all of this is the question of the United States. Everyone has been fascinated by what was announced as the pivot. Now there is some reconsideration of whether that pivot is perhaps stalled or turning back. There are commentaries about the fact that some of the senior American advisers on Asia have been replaced by others and that the United States is focused on the Middle East rather than Asia. I think that may be part of a public perception. My sense is that it's not very deeply true; that the commitment to Asia by the United States remains very solid. While it may be true that the Chinese are ramping up in their military technology, the United States remains foremost in the area, indeed globally. I think the Americans, for both economic interests as well as political security and diplomatic, will remain actively engaged in Asia. Let's not forget that they retain a considerable role in terms of the security arrangements with Japan, with South Korea, and with a number of the ASEAN states.

Let me stop there for now and invite my colleague, David Welch.

David Welch, Senior Fellow, Centre for International Governance Innovation, and CIGI Chair in Global Security, Balsillie School of International Affairs, University of Waterloo: Thank you very much for the opportunity to speak. I just returned Tuesday night from three weeks in Japan. I have learned a great deal about what the Japanese are thinking and feeling about security issues in the region and economic issues in the region and also what the Japanese think about Canada and its potential role. In the fall, I had opportunities to engage with colleagues and officials in Korea and China as well. I'd like to supplement what my colleagues David and Shaun have already said with a few remarks about Northeast Asia in particular. I would like to second everything that my colleagues have said — uncharacteristic for an academic, but I don't disagree. The only thing I would qualify is that while most people have been understandably focusing on the growth of China and the rise of China as a fundamental future fact about the Asia-Pacific, relatively few people have focused on the possibility that China will be experiencing great internal difficulty and will not rise. We need to think seriously about the implications both of a rising China and of a China that stalls. We've done a better job about thinking about contingencies for the former than the latter.

Northeast Asia is an extraordinarily dangerous place at the moment. It's dangerous not because there is any desire for conflict and not because anyone's interest is served by conflict. Everyone agrees that economic harmony and good, stable relations between states are vital for the region and for the global economy. Nevertheless, there are significant risks. The risks stem from the fact that, in effect, the countries of the region have not managed to put their enmity, their historical animosity behind them, and history is still very alive. History is an open, raw wound and it's now playing out in territorial disputes, maritime disputes, and disputes over the wartime activities of Japanese soldiers in Korea and China, for example. History is very much a problem that continues to plague the region, and a recent development that is very worrying is that while history was always something in the background of Northeast Asian relations, now it has surfaced to become a matter of public concern. Governments of the region have essentially lost control of these particular issues and are now in effect beholden to activated public opinion, which is highly emotionally charged. The polling trends are very negative. Publics in all three major countries in Northeast Asia are increasingly thinking negatively about their neighbours, and the danger of misperceptions, accidents and inadvertent conflicts triggering an unwanted war is significant.

Where does this leave Canada? As my colleagues have said, Canada has essentially been absent for quite some time. Whenever I travel in Asia, I hear lamentation about this. The Asians would like Canada to be more active in Asia in security matters. They don't necessarily have high expectations about what Canada can bring to the table in terms of hard power assets. They understand that's not something we have traditionally done, although we have done it on occasion in the past, and very effectively. Countries of the region are grateful for that.

The one thing Canada has been able to bring to the region recently is some fresh ideas about how to break some of the logjams that have developed in the relations of states. Here at the Centre for International Governance Innovation, we have just begun a three-year project which is intended to help try to find ways to reduce the overestimation of threat. My view would be that at the heart of these conflicts in Northeast Asia lie a series of egregious overestimations of threat. In a context when people misperceive threats or overestimate them, the lack of trust results in an increased likelihood of conflict.

We are attempting to find a way to help people and leaders of the regions understand each other a little better in this regard. With a little cultivation of empathy, I think it would not be too difficult for people in the region to understand that everyone is overestimating the threats posed by others.

Canada can play this role precisely because we have a little distance. We are a Pacific country. Everyone acknowledges that. We're not an Asian country — not geographically, anyway. The fact that we have one foot in the door gives us entry; the fact that our other foot is not in the door means that we have some objectivity. Canada still enjoys a relatively high level of goodwill among the governments and peoples of the region. That's something we could leverage. We used to leverage it a great deal, very effectively. That was back when Canada had an established foreign policy brand. At the moment we do not have an established foreign policy brand. Countries of the region would like to see one so they can better think about how Canada can contribute. We are attempting to do what we can here in our own small way at the Centre for International Governance Innovation, but of course it would be highly desirable if it were a whole-of-Canada approach to bringing Canada back into the fold.

The Chair: Thank you to all of you. You've certainly covered a lot of territory. I do have a list of questioners. Since this is via video conference, I would ask the senators to identify themselves. That gives some time to connect.

[Translation]

Senator Fortin-Duplessis: First, let me introduce myself. My name is Suzanne Fortin-Duplessis, and I am a senator from Quebec. Thank you for your very interesting presentation before our committee.

My first question is for Mr. Narine. In reading your resume, I believe I understood that you wrote a doctoral thesis on the development of the ASEAN.

What is your opinion on Burma's chairing the Association of Southeast Asian nations in 2014? Do you think that that international role will have a positive effect on the development of the democratic reforms undertaken by Burma?

[English]

Mr. Narine: Actually, I finished my doctorate quite a few years ago, just so you know.

I think for one thing, the fact that Burma is taking over the chairmanship of ASEAN is already a gesture of faith in its commitment to democratic reform, and I think this encourages it. In a sense, it is a reward for Burma living up to certain standards or ideas, so I don't think it can hurt.

As you probably know, Burma's human rights record, which was the major reason it was such a pariah state for so long, remains highly questionable in many ways. At the same time, the human rights records of many ASEAN states are highly questionable, so you can't necessarily hold Burma to a different standard in that respect.

It's an encouraging sign for the Burmese government to continue down the path that it's on. As long as it gains something from remaining on that path, it will give it further motivation to continue the way it is. Overall, it is a positive thing for Burma and also for ASEAN because in the past, when Burma's time to be chair had come up, ASEAN found ways to reject that, which certainly complicated relations within the organization itself. This way at least they're able to continue along a path that demonstrates that if Burma follows certain policies, it will get certain rewards as a result.

[Translation]

Senator Fortin-Duplessis: Could you tell us a bit more on how Canada can interact with the ASEAN? You said a few words about it, but in what ways could we do so specifically?

[English]

Mr. Narine: That is a difficult question to answer because ASEAN is a self-contained entity, in a sense. Canada's engagement with ASEAN has been as a dialogue partner and then, of course, as a member of the ASEAN Regional Forum. David Dewitt and David Welch have addressed this, in a sense.

Our biggest contribution to the organization itself is through the ideas that we put forward and our ability to maybe mediate certain kinds of conflicts, if possible. I believe that Canada is involved with the ARF Peacekeeping Working Group, as an example. This is one area where Canada is seen to have particular expertise, where it's able to share that expertise with other countries in the region who might eventually be involved in peacekeeping. At least, that's presumably the idea behind it. That would be a specific example.

Now, are we able to do much more than that? I'm not actually certain. It depends on the extent to which you find diplomacy in and of itself to be something valuable. As I have said before, a lot of diplomacy is about simply showing up, being involved and participating, and in doing so, creating a presence and a certain amount of respect for your presence.

[Translation]

Senator Fortin-Duplessis: My last question is for Mr. Dewitt and concerns security. Mr. Dewitt, as you know, there are some important security challenges in the Asia-Pacific region. It is the most populous region of the planet and some of the countries there have nuclear arms, and others are thinking about acquiring them.

Recently we saw that there were military manoeuvres in China. Tensions between Japan and China have resurfaced. The situation is stable now but could become more worrying; what role could Canada play to diminish these tensions in the Asia-Pacific region?

[English]

Mr. Dewitt: Thank you, senator. That's a challenging question. The easy answer, but certainly the insufficient one, is that we have strong bilateral relations with each of the principal states that are involved in these contested situations. Through those channels, we should obviously be able to bring reason and facilitate dialogue, but that is insufficient.

We found back in the early 1990s through our North Pacific Co-operative Security Dialogue effort, the NPCSD, that one had to reach beyond simply the bilateral. These conflicts are located within that regional dynamic that makes things so much more complex.

Emerging from our NPCSD initiative came the six-party talks that the Americans and the Chinese co-chair, and which Canada was not invited to participate, but we actually created the foundation for those. These talks haven't been terribly successful yet on diffusing relations between North Korea and the surrounding states, but at least it opened up opportunities.

So there is a capacity in Canada, if we were to put our very modest resources towards identifying some areas where we indeed have expertise. It could be on aspects of nuclear, it could be on confidence and security building measures, and it could be the work that David Welch and his colleagues are leading on empathy and trust, getting people to have a better appreciation of the impact and the legacy of history.

There can certainly be a dramatic increase in the commitment of Canada to provide various kinds of exchange opportunities, not just between elites but in terms of those who are moving into elite positions, such as university students who have an opportunity to experience a democracy of diversity as in Canada.

These cultural changes, which ultimately are needed to address the bedrocks of conflict, take time, but there are specialized areas. We did something once on the law of the sea and the islands. David Welch and his colleagues at CIGI have a project on that. We could get back into that if that was an area of advantage.

Shaun referred to our once-recognized expertise in peacekeeping. That has deteriorated considerably, and it's questionable whether we could ramp up again. Over 15 years ago, the Indonesians approached Canada to launch a Canada-ASEAN peacekeeping training centre. They are interested in that again. Could that be an avenue of opportunity?

We don't have a lot of hard assets, but we do have a lot of soft power if we were to apply it in a sustained, realistic way.

Senator Johnson: I'd like to talk about the Global Markets Action Plan that was introduced and had six priorities to increase Canada's economic and political engagement in Asia. The plan consists, in part, of focusing on efforts in specific markets, including emerging ones in the Asia-Pacific region: Indonesia, Malaysia, Singapore, South Korea, Thailand, Vietnam and Burma. These markets combined have given us broad Canadian interests and specific opportunities for Canadian business there and established markets in Japan, Australia and New Zealand. But the plan emphasizes economic diplomacy as the driving force behind this network to advance our business interests internationally.

Could you each comment on the strengths and weaknesses of our Global Markets Action Plan? I have one more question following that.

Mr. Narine: I actually do not have much to say about that. I don't know much about the plan, so I'll pass the question on to my colleagues.

Senator Johnson: Thank you.

Mr. Welch: I will say that the reaction in the region to Canadian diplomacy has been noticed. It's very heavily economic in its orientation, and the interpretation is that it's very self-interested. In Asia, if you want to do business on a significant scale, you have to be willing to engage with Asia on the full range of issues. So we have to be an active security partner, even if it's not a major role, in order for Asia to look at us more seriously as an economic partner. That's point number one.

Point number two: Asians do not really understand the ins and outs of Canadian politics and have difficulty understanding, for example, why it might take a very long time for Canada to have the capability of selling oil sands products to the Pacific. They don't understand the politics of pipelines. They don't understand provincial jurisdictions. They certainly don't understand First Nations' treaty rights and their role in decisions about things such as building pipelines.

Asia is looking around the world for stable access to energy supplies and important commodities. They think Canada is potentially a source of these things. Canada has been telling Asia that we are potentially a source of these things, but there is a lack of understanding that our capacity to deliver in some respects is going to be limited in the short term and possibly even in the long term.

There is a danger of false high expectations on the Asian side, resulting in disappointment with Canada as an economic partner.

Mr. Dewitt: I would concur with everything that David said, and I would add the following few observations.

As he said, not only do you have to be there if you have economic interests, but you have to be there in the full range of human relations. A number of Asian countries define their security in terms of what they call comprehensive security, and that is an acknowledgment that socio-economic and political issues go hand-in-hand and that security means the development and upward movement of the capacity of the country, not just defending one's borders. Economics and economic opportunities are intimately intertwined with the full range of political interests. Therefore, to see a country such as Canada that is viewed as very narrow in its outreach to Asia is troubling.

Second, while some of the Asian countries might have some sort of what we would call a federal structure, they don't appreciate the differential roles in Canada between provinces and Ottawa. That, of course, affects some of the issues that David Welch mentioned.

Third, while Asia is presented as a tremendous opportunity for Canadians, in most Asian markets, we're actually rather marginal. They have much more substantial relations with other parts of the world. They see Canada coming on the scene rather late, very narrow in its sector of interest, late to the TPP and hesitant to address free trade issues that would block some of their concerns and their interests. Therefore, while it would be nice, I can't think of an Asian country that would put, at the moment, Canada's economic interests or an economic partnership with Canada very high up on its agenda.

Senator Johnson: That's very interesting. You made the comment that we are narrow in our outreach to Asia. Can you elaborate a bit on that? How might we increase this? How should that be put into place over the next little while? Is it possible?

Mr. Dewitt: Well, the narrowness is probably easily summed up in terms of the focus on that which would come out of Alberta in terms of the tar sands, the oil sands and China.

There have been opportunities for beef exports. At one time we had lumber exports that were significant and grain exports that were significant, but they do seem to be limited. We, of course, import textiles, finished products, electronics and other kinds of manufactured goods. Should it be broadened? I would expect so. Is there a Canadian capacity to broaden the opportunities? I'm sure there is. I think that would be enhanced by the fact that the demography of Canada has so dramatically changed in the last three decades, where such a large part of the new Canadians come from across Asia, from South Asia, Southeast Asia and Northeast Asia. They have interests. There is an effective and important diaspora that we could take advantage of in a positive sense of building bridges.

A sector, for instance, that we have not done well in compared to either the Americans or Australians and even now I think the Europeans, is education. In terms of an education sector, we have, value for dollar, probably the best higher education system in the world, but we have not done a very good job of providing opportunities, access and encouragement for Asians to come here. Why that is important for economic development is because those people will be the next leaders of the Asian countries; even if only 30 or 40 or 50 per cent of them return back to their homeland, they will have ties, they will have knowledge, and they will appreciate what Canada is and what it can offer. We've not done a very good job of taking advantage of that absolutely natural, organic opportunity.

Senator Johnson: Thank you for mentioning the educational aspect. I know my colleagues will follow up with that.

Senator Demers: Good morning. Those were great presentations. We learn a lot every day in this committee.

How do Canada's priorities and resources compare with those of others that have an active interest in the region, in particular, Australia, New Zealand, United States, Russia and the European Union?

Mr. Narine: First off, my understanding is that Canada's trade with Asia constitutes less than 1 per cent of overall Asian trade. In fact, we're not really in the same league as countries like Australia or the United States or others, which simply trade far more. Obviously with Australia, it's right in the neighbourhood; its major customer is China and its major exports are natural resources.

As David Dewitt and David Welch have indicated, Canada has its own natural resources. Certainly, we have been playing up the idea that we're going to be selling those resources to China and other Asian countries, but we haven't done very much with that yet.

To put it concisely, we don't compare very well with these countries. We may say we have the priority of expanding towards Asia. I think we've been saying that for a very long time, though. One of the reasons I became interested in Asia was because of the fact that it was seen as a place of considerable interest to Canada, in part for the reasons that David Dewitt mentioned. Ethnically, we're changing enormously, but Canada as a country, for at least two decades now, has not pursued its full potential in this area.

Mr. Welch: I don't dispute anything Shaun has said. I would stress that Australia frankly considers Canada as a potential competitor in the region economically and isn't particularly enthusiastic about our engaging more. For that reason, Australia isn't particularly enthusiastic about us engaging more on the security side because that would be the first step to being more of an economic presence. I think Australia is not entirely on side with Canada on this issue.

I don't think Europe is a competitor in most respects because European exports to Asia tend to be high value-added goods, and our exports tend to be commodities and low value-added goods. There's not a big conflict there, but as Shaun alluded to, there is a huge-scale mismatch.

I think New Zealand would love the opportunity for Canada to be engaged in the Pacific in a more comprehensive free trade way if that opens up our markets to their goods, specifically dairy and meat products. Of course, we understand the sensitivities of dairy markets in Canada, and I will be very interested to see where the TPP negotiations go on that. Frankly, my expectations are not high. I don't think we'll have a very interesting or comprehensive initial agreement, if we have one at all. This remains to be seen.

Mr. Dewitt: I have three quick points. I think David is absolutely right in everything he has said. I would add that Australia sees us as a direct competitor because that which they export is what we would export, with the exception that we would also be interested in the oil and natural gas kinds of things, which they don't have an equivalence of.

The difference with the Europeans is that they offer the Asians a very considerable market for Asian goods, so there's an opportunity to have a much more interesting valued exchange than there is when you compare it to Canada.

The last point I'd make that hasn't been mentioned is not to forget the dramatic growth in the last decade and a half of intra-regional trade. If you look at the major trading activities and the dollar value of exchange within Southeast and Northeast Asia, it is between those areas. Intra-regional trade is where the large increase in volume and dollar value is really seen.

The Chair: As a devil's advocate, I want to follow up on the Australia-Canada situation.

I recall in the early 1990s that Australia put its emphasis on the Asian geographic area and put a lot of resources into that market and those relationships. At the same time, however, not having full resources at their disposal, they had to make choices, so they chose Asia. But I think they dampened their initiatives in other areas, most notably Africa, closing most of their missions and focusing on Asia, and it has paid off. However, the world has moved on, and they've now re-engaged very aggressively with Africa, I would say.

Canada has done the same sort of thing, engaging where we think we have an opportunity going into Central and South America, then refocusing on Europe.

It seems to me the conundrum is how we look at global marketing and engaging, as China and everyone is doing. I think we're struggling to find new trade mechanisms and new diplomatic mechanisms we can use to maximize our advantage wherever we go because of technologies. One company from Saskatchewan may be going to Africa; another from Manitoba may be going to China. It's about getting into those, particularly with the small- and medium-sized businesses. How do you maximize their advantages? How do we balance all of that?

Certainly Australia is our competitor and we're their competitor in some ways, but we're allies in other ways. If it was complex before, it's certainly more complex now. How do we stickhandle that and make some recommendations?

Mr. Dewitt: Madam Chair, I'm not enough of an economist to speak with authority. I can recommend a number of people you should speak to on that.

My one comment would be that the Australians, when they make those choices, they make them with a full toolkit of commitments. So when they defined Asia, they defined it in terms of their knowledge mobilization, their educational outreach and programs, their foreign direct investment and partnership with Asians, their trade initiatives, their expansion of their diplomatic capacity and a clear messaging and branding that Australia was there to stay as a serious partner in Asia and a full partner across the realm of economic, diplomatic, military and security aspects.

If you look at Australia, they get involved in assisting Southeast Asian countries in their defence plan. They provide support and participation in military exercises. They're one of the major Track Two diplomacy activists in an area we used to dominate, the Asia-Pacific Roundtable. The Australians, along with the Americans, are the non-ASEAN states that lead.

They see it as a full commitment, not a narrow sector, and I expect that provides enormous advantages to their small- and medium-sized enterprises because when they try and access, they have name recognition, they have brand recognition and they have a full suite of services in-country to support their efforts. I don't think you'd find that if you looked at our missions in Asia.

Senator Ataullahjan: I'm Salma Ataullahjan, and I represent Toronto. We know it's challenging to link human rights with trade, and Canada can use its economic platform to raise these issues, but we should do so in a non-confrontational manner. Would you like to comment on this? Is there a way to ensure that human rights are not violated when we sign on to treaties?

Mr. Narine: I don't think there is, to put it quite bluntly. I think your initial point was correct. I'm not saying that human rights and trade should not be linked under certain circumstances, but frequently, it's a very blunt and ineffective instrument.

If we go back to the Burma case, for example, it's not apparent to me that the various sanctions Burma faced actually caused it to change its behaviour. They might have had some impact, but frankly, the most important issue was that Burma itself decided to change for its own reasons, which had to do with its desire not to be completely dependent on China.

At the same time, the ASEAN countries were also pursuing the policy of engagement with Burma. Frankly, that policy often didn't work. As I said, at the end of the day, if we look at the Burma example specifically, Burmese change came about because of factors internal to Burma.

The human rights issue is a very complex and controversial one. I would say that you should make human rights an issue in situations where you genuinely have leveraged use, where, for whatever reason, it can truly make a difference. That often has more to do with issues of politics and culture than it does specifically with economics.

Mr. Welch: Here is a case where I could disagree. In my view, if Canada takes human rights seriously, then we should have a human rights policy, and it should be clear, consistent and articulate. It's a mistake to try to use economics as a wedge, as a lever on human rights issues, or vice versa, because frankly, we're simply going to fail. We're not big enough and important enough to the countries of the region to have that kind of influence.

So if we want to have a human rights policy, we should do so out of a sense of self-respect, not necessarily out of any aspiration that we'll actually achieve a great deal all by ourselves; in concert with others, perhaps.

One of the difficulties Canada has had branding itself in the region is our inconsistency on the human rights file. In recent years, we have had a reputation in the region as being both very strong and insistent on human rights and absent on human rights. It's difficult for the countries of the region to decode our commitment to human rights and even to take it seriously because they don't see it consistently implemented.

I think we should have a human rights policy. I think that's who we are as a country. But I don't think we should expect it necessarily to be that effective all by itself, and I don't think we should pretend that we can use it and tie it to trade in any effective way, either for trade or for human rights.

Mr. Dewitt: Yes. I think this is a very difficult area in which to play linkage politics. More effective might well be the kinds of things that either have occurred in the past or are occurring now.

In the past, for those of us who were involved in Canada-Asia activities 20 years ago, one would often hear comments such as, "Human rights with Chinese characteristics." That was not uncommon, just as it wasn't uncommon when you dealt with the Soviet Union during the Cold War. There would be an effort to try to say: We acknowledge how you define human rights and its Western legal context. We also have it in the context, perhaps, of social development in other kinds of criteria. Not necessarily satisfactory, but it was an effort at an early stage by these countries to at least acknowledge that human rights was a universal issue, it was emerging as a universal language, and, over time, they needed to engage it.

A more recent and positive effort, though inconclusive, is the ongoing Human Rights Commission in ASEAN. That's been going on over a decade, in which the Philippines, Singapore, Indonesia, Thailand and Malaysia, have been involved in trying to sustain an ongoing discussion with the expanded full ten of ASEAN, now including, of course, Burma, what it means to inculcate human rights within not just the norms but within the legal structure of the state. It's a difficult thing, because ASEAN, not surprisingly, has among its many principles the notion of non-intervention, though it also has, from the old days when Burma was not part of ASEAN, the notion of constructive engagement.

If we are to make a contribution, it's to keep the issues alive, to make sure that they have an improved or increased and enhanced appreciation of the complexities of human rights, and to recognize, as David has suggested, that we're very seriously concerned about human rights in all kinds of ways, and that means employment issues and labour standards, whether it's in Dhaka, Bangladesh, and textile workers, employment issues and labour standards in Cambodia or Vietnam, where it's consistently violated in various ways, and, of course, in Burma and China, where there continue to be major issues of human rights.

I don't think, however, we should be linking it directly to economic opportunity or prosperity. We need to link it to open doors so we can have influence. If we're not at the table, they will not hear us or care about what we have to say.

Mr. Welch: There is an alternative, indirect way to try to move human rights forward, and that's through the concept of human security. Human rights and human security are two different things. Rights are a set of philosophical and normative entitlements, and security is an empirical condition. But to the extent people do enjoy security, ipso facto, for the most part, they are also enjoying human rights. There is a connection between the two.

Canada used to be considered one of the world's foremost proponents of human security and, indirectly, human rights — Canada, Japan and Norway. We had one important Asia-Pacific partner of ours on that particular file, Japan, and a northern European country. We have given that up. We have essentially backed away from the human security business. We did it for straightforward, internal domestic political reasons. I know the Japanese and the Norwegians were puzzled and disappointed by that, and other countries in the region were also disappointed by that. When you use the words "human rights" in Asia, you get people's backs up; but when you use the words "human security," they listen and they're interested in hearing what you have to say.

Mr. Dewitt: What's interesting about that, if you think about human security in the brief phrase of "freedom from fear and freedom from want," it's a nice encapsulation of core aspects of human rights, and it's enshrined within the UN system, in which they all want to be seen as being a legitimate participant. It's actually a very interesting suggestion that David puts forward.

Senator Oh: Thank you, gentlemen, for being here with us. I want to touch on human rights, which you mentioned just now.

The human rights problem has improved significantly in the ASEAN countries and the Pacific region. I think it is due to the economic boom and the stabilized political situation, which has improved over the last 35 or 40 years. I think it's important for us to help those countries. We've stabilized the political situation and economic improvement to maintain a better human rights situation.

I think our exports to the Asia-Pacific region are pretty low. Do you think the Government of Canada should step up to be more engaged with our presence in the Asia-Pacific region, as we already have a lot of missions set up for many years in ASEAN countries that are ready to move, and Canada's presence there has always been shown as a welcome, friendly country? Do you also think the investment climate now is secure in the Asia-Pacific region?

Mr. Narine: I'll speak to the human rights question briefly, or the question of economic change in the region, bringing about changes in human rights.

I agree, in general. I think the human rights situation across Southeast Asia and the Asia-Pacific as a whole has improved. At the same time, it probably is, at least in part, largely due to economic improvement.

I think we also have to appreciate that the relationship is more complex than that, because economic changes also bring about social changes and can also bring about social disruption.

For example, if you look at the situation in Thailand, here is a country that is struggling with becoming a democratic state, and this is largely due to social changes brought about by economic and related disruptions. Back in the late 1990s, Thailand was one of the countries at the forefront of trying to expand ASEAN's ability to intervene in the affairs of its member states. I would expect today that it would not support that kind of policy at all.

If you look at Cambodia right now, one of the things causing disruption in that state is the demand of workers of a better working, living wage. That's a demand that came about through economic prosperity, or increased economic prosperity.

There's a complex relationship. Economic change brings about social and political change, and we will be seeing disruptions and movements back and forth along the line of countries that are stable and not stable. Thailand was a more stable country a decade ago than it is now.

I think it's a complex relationship. These countries are still very much in the process of dealing with these new forces.

To get to your second question about investment opportunities, that will depend, at least in part, on the stability of the countries you're looking at. Yes, some countries have certainly improved in terms of investment opportunities; others are still going through this process of change.

Looking at China, I'm not quite sure what to say there. On the one hand, as David Welch was talking about earlier, China is growing at an enormous rate, as it has been for the past two decades. At the same time, many people fear that it has been running just ahead of social disruption on a massive scale for the past two decades, and eventually that might catch up with it.

Overall, I would say the picture in Asia is very complex. Economic changes bring about social changes and instability, which eventually may ride out and bleed to new kinds of stability and political evolution, but it's all part of the process.

Mr. Welch: The country in the region that has absolutely the worst human rights situation is North Korea. We haven't talked about North Korea. North Korea is important not just as a human rights story but as a security problem.

I don't know if you've had people speaking to you about North Korea. I would say that is a very dangerous country, precisely because we don't really understand much about what goes on in the country, what's happening in its leadership, or what will happen in the next month or two months or year.

It's a country that blows hot and cold in terms of professing a desire to be on good terms with its neighbours, but there's a serious risk, as everyone recognizes, of the country simply collapsing because the economic system doesn't work and the political system is corrupt and in shambles.

I don't know any particular role Canada can play vis-à-vis North Korea, but I will say that I think it's tragic and unfortunate that so many countries, in Northeast Asia at least, are focusing their energies on fighting minor battles among each other based on largely irrelevant historical misunderstandings and are not cooperating effectively in planning for what might happen in North Korea. Perhaps we could put more focus there.

Mr. Dewitt: Canada may well have an opportunity. We were early at the table at the end of the Cold War in addressing North Korea. We led an effort to bring North Korea into a regional dialogue. Some of us went to North Korea a number of times. We briefed Canadian parliamentarians on North Korea, and then we stepped aside. While we have a diplomatic relationship, we've obviously put that on hold.

As David said directly on this one, the North Korea situation is both tragic and complex, and it's located in a context in which we need the regional partners. The Chinese are very concerned about the issue of North Korea because they perceive that they would be in a position of having to bear the brunt of any deterioration in the situation in the Korean Peninsula.

Senator D. Smith: On the Korea issue, I've been there about 10 times but never went across the bridge. The Chinese government really is the only government that can rein them in. On earlier trips to China, you would find out very quickly that there were certain subjects you just couldn't have a serious conversation about, like Taiwan or Tiananmen Square or the Dalai Lama or Tibet. Korea was always one of those in that category.

The last time I was there and met with Chinese senior foreign affairs officials, I brought up the subject of Korea. What was interesting to me was for the first time they didn't say anything. They didn't say a word, but there was body language. Do you think they're at the point where they're prepared to really do something serious and try to rein them in, or do you think they just grin and bear it?

Mr. Dewitt: That's an interesting question and an appropriate observation as well, senator.

I had the opportunity not only to be in North Korea a number of times but to spend a lot of time in China dealing with this issue. It was a few years ago, so I recognize that the context may have changed a little bit. I think we, outside of the immediate region, assumed for far too long that the Chinese did actually have a lot of influence over the North Koreans.

There's much to suggest now that that was a very effective way for the North Koreans playing China against Russia and the legacy of that, and it had to do with the North Korean need not only for hard currency but also for technology and assets and the kind of bartering system that went on to sustain their struggling economy.

One of the things that certainly kept coming up — and we had quite regular and open access to very senior Chinese experts on North Korea who would speak quite effusively about their frustrations with North Korea — was that there was a misperception by the West that China really was able to influence.

My own sense is that actually perhaps right now the Chinese may have more influence, not less, because the Russians have not been in the game for a very long time, and the Chinese and the Americans have, for some time now, for at least a decade, been trying to contain the issue of North Korea.

One of the interesting things that happened with the vice foreign minister in North Korea was that in a session he said to my colleague and me, "You know, we are strongly opposed to the American arms on the Korean Peninsula. We want the Americans to fully withdraw from South Korea, but we don't want the Americans to go too far. We want them over the horizon, because only the Americans can manage and contain the ambitions of either South Korea or Japan."

I say that because I think, again, it's a very complex puzzle. As unpleasant a situation as it is, that makes it all the more necessary we shouldn't be turning our backs, we should actually find new and innovative ways to engage the North Koreans.

I think the Chinese are prepared to work with us. I think the Americans would like to find a way. The Western Europeans, in particular the Scandinavians and Germans, for far longer than we, have had deep connections into the North Korean leadership. They know a lot about it. They're Korean experts.

I think there is an opportunity, but Canada has been nowhere on the scene, either as a participant or as an initiator in further discussions. I think that's long overdue.

Mr. Welch: There is some indication that the Chinese were caught by surprise and very distressed when Kim Jong-un had his uncle killed, because he was their main man in Pyongyang. There is a certain amount of confusion in Beijing now, according to my understanding, about what this means and how to deal with North Korea.

Even the Chinese, I think, at this point are frustrated and a little bit disoriented. The fact that the United States and China have both agreed that it is imperative that North Korea denuclearize, and the fact North Korea appears to believe that its security depends fundamentally on not denuclearizing, means we may be headed for a confrontation down the road once North Korea finally does figure out how to build a decent nuclear weapon and missile. That is probably several years down the road. It will take time, because they don't have the resources or the technical capacity to do these things well. The longer the regime is in place, unmolested, the more likely it is they will have a significant nuclear capability at some point.

Senator D. Smith: The new guy seems like a Rambo.

Senator Housakos: I have a couple of observations, comments and questions.

Clearly, the Asia-Pacific region is one of the most militarized regions in the world, and when it comes to political diplomacy, security and military issues, there certainly are better players on the world scene than Canada to delve into that and play significant roles.

One of my observations, looking at the Asia-Pacific market, is that sometimes there's a tendency from experts, consultants, organizations and associations to try to engage in areas that you're not necessarily well equipped to engage in. Canada is a trading nation. We have commercial interests that I think we need to pursue and expand. We have to sometimes stay focused.

I was in business for many years prior to coming to the Senate. There has always been a principle I lived and died by, and that is when you're going to engage in business, you're going to engage in the elements that you're the best at. Because if you try to diversify too much, you tend to get into areas that will take up a lot of investment, a lot of time and energy, and not bear a lot of fruit.

Canada in the Far East has had a lot of success in selling commodities, as you pointed out in your presentation. We've been effective in doing that in Asia countries and all around the world. We haven't been effective, for example, in performing and being competitive in the service industries and the manufacturing sector compared to the trading relationship we have with other partners. We haven't had that much success.

I don't know if you will agree with my observation, but there might be an emphasis on trying to get into areas and trying to carve out niches in the Asia-Pacific economies that we're not particularly equipped to do.

I have two questions. What sectors are the fastest growing in the Asia-Pacific region, and what countries in particular do you think are best suited for Canada to exploit the areas that we are good at? What we're good at is selling our commodities, but maybe we haven't looked at what more we can do to sell our commodities.

What more can we do to attract capital from the Asia-Pacific countries to Canada in the commodity sector? In the last few years, China has accumulated capital, which is important, and they're starting to invest worldwide in areas of interest to them; they are starting to invest in Canada in the mining industry, for example. What other areas in the commodity sector have they not exploited that we can create partnership arrangements where we can use their capital to further expand our resources that would be of benefit to both countries?

The Chair: Those are quite a few questions and comments. We'll go in our usual order, and you can choose what you wish to answer.

Mr. Narine: Well, I'm not an economist either, so I will have to say I'm not entirely certain which areas in Asia are growing fastest, or at least not on the spur of the moment.

To turn it around a little bit, I certainly understand the idea of Canada specializing in what it does best, which is selling our commodities to people. On the other hand, Canada has also been called the most developed Third World country in the world, precisely because we spend all our time selling natural resources to countries. So there is an issue here as to whether or not we should be thinking about diversifying ourselves for the long term, because a natural resource-based economy ultimately has no place to go but down. We're sort of relying on Asia to be this eternal sponge that will suck up all of our commodities once we have the ability to send it to them.

One point I want to make about this, particularly when it comes to things like oil and gas, is that Asia is facing an environmental crisis. In China people can't breathe the air. The Chinese have said they want to have green, environmental economic development; it's not happening, but they're giving it their best. If we believe that crisis ultimately makes people most effective at coming to terms with dealing with whatever is causing the crisis, then the Chinese and the Asians have very powerful incentives to come up with other ways to spur their own development.

This is to say that from a Canadian point of view, we should be thinking about diversifying our own economy, interests and activities in Asia beyond simply this question of selling natural resources. Presumably Canada has that capacity. We do have high-tech sectors and other areas of economic endeavour that, for whatever reasons, we have not developed particularly well. If the Canadian government wanted to follow a long-term policy of doing that, that would seem to me to be a wiser course over the very long term.

For the Asians, this may be an issue that for them is a short-term problem, because at the end of the day, if you can't breathe your air or drink your water, you have a problem that you can't ignore any longer.

That's my two cents.

Mr. Dewitt: For a real expert, I would suggest you invite John Whalley, who is a senior professor of economics at Western University in London, Ontario. He has spent a large part of his career addressing some of the issues you just raised.

I would presume that as a non-expert, from what I see in financial services, insurance services, environmental technologies, the Koreans are way ahead on green technology, yet we are starting to enter into some interesting partnerships. In the Kitchener-Waterloo area, where CIGI is located, we receive delegates every week from China, Japan, Korea and elsewhere in Asia, and now increasingly from Africa. They visit not just CIGI, because of their interest in what we do, but actually come to Kitchener-Waterloo because of the knowledge industries, especially in R&D and in high-tech innovation, start-up enterprises. This being the Silicon Valley of the north, we are known.

But the extent to which we either penetrate Asia or we see Asian investment, because the investment climate in Canada is not appropriate and the instruments perhaps are not there, those are things that you have to speak to tax experts and others about.

In mining technology, of course, we're a leader. Just look at Mongolia. Our penetration of that country is substantial in terms of their mining and now their interest in environmental issues.

Mr. Welch: The only thing I would add to what my colleagues said is that Canada is fairly good at some high-value niche products, and some of these will have a good future in Asia, owing to the demographics. For example, we're quite good at a number of medical technologies and medical software, and the populations of these Asian countries are aging extremely rapidly. That is one area where there are certainly opportunities for Canada.

Also transportation: Bombardier is our national champion on air transport and rail, and I think with a decent push from the federal government, in partnership with relevant provincial governments, we could do a better job of securing market share for some of the best rail and air products in the world in Asia.

Senator Housakos: Thank you for your answers. I do agree with you that Canada has to diversify, and I think we continue to try to do that. But there has to also be a receptiveness on the part of the marketplace for what you are trying to diversify in. Our manufacturing sector does very well when it comes to selling our products to the United States. Certain service sectors have really prospered in selling our products to the United States and to Europe and even to South and Central America. We have had a hard time penetrating the Asia-Pacific market. As a result, if you look at those two particular sectors, they're discouraged.

You mentioned technological exchanges. Prior to coming to the Senate, I ran a small composting company out of Montreal where we spent tons of money in developing our technology and selling our technology. In that industry, right across the country, I've heard complaints from people saying that when the Asia-Pacific countries want Canadian and American technology, they just send out a sea of Chinese and Japanese students to American and Canadian universities to study our technology and our proprietary knowledge of things. They bring them back home and manufacture in a cheaper fashion. They take the benefits of our technology, without there being mutual cooperation.

That is a challenge we facing in the Canadian technology sector. How do you suggest we overcome that?

I don't want to be a pessimist, but I'm outlining some of the difficulties we have faced. It's important that we have solutions to those difficulties before we ask Canadian companies to invest hundreds of millions of dollars to pursue a market where there might not be the potential that we theoretically think there is.

Mr. Narine: I'm just speculating, but it seems to me that Canada has a very large Asian population, which presumably would have connections and ties to the home country. I wonder if we are mobilizing that population to the proper degree. I would tend to think that business connections between, for example, Chinese-Canadians and Canadian businesses might be a profitable way to go about trying to develop the sorts of linkages you're talking about.

The Chair: Is there any further response?

Mr. Welch: I will only add that the last point the senator mentioned is a valid one, and Asian countries are still ramping up their respect for international copyrights, and the more we can encourage consistency in IP practices and policies, the better the Canadian companies will be protected.

The Chair: Thank you. That's a very diplomatic answer. I appreciate that.

We've covered many fields. It has certainly been helpful in our study. We are looking at economic and other tools, but it's in the context of foreign policy, so you have given us a lot of areas to pursue, and you have shared your expertise as usual.

I thank you on behalf of the committee for all of your suggestions and your input, and I hope that in our report you will see echoes of what you have said.

(The committee adjourned.)