Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 9 - Evidence - Meeting of April 3, 2014
OTTAWA, Thursday, April 3, 2014
The Standing Senate Committee on Foreign Affairs and International Trade met
this day at 10:34 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.
The Chair: Honourable senators, the Standing Senate Committee on
Foreign Affairs and International Trade is continuing its study on security
conditions and economic developments in the Asia-Pacific region, the
implications for Canadian policy and interests in the region, and other related
matters. We have before the committee today Rear-Admiral David Gardam, Director
General International Security Policy from National Defence.
I welcome you to the committee, as I'm sure you've done this before. We are
studying Asia-Pacific, and we are homing in to the countries of Myanmar,
Philippines, Singapore, and Indonesia. We are interested in security issues and
initiatives that Canada may be concerned about or undertaking in the area, so
anything you can do to add to our study would be helpful.
We'll ask for your opening statement and then we'll go to questions as usual.
Rear-Admiral David Gardam, Director General International Security Policy,
National Defence: Thank you very much. I'll start with my opening statement,
and hopefully it will whet your appetite for questions.
Thank you very much, senators, for having me before the committee today to
speak on this very important topic. As a Pacific country, Canada's
people-to-people and socio-economic ties to Asia are growing, making them
integral to our identity, prosperity and security.
From 1981 until 2011, the percentage of Asian Canadians has tripled. In B.C.,
25 per cent of the population is ethnically Asian. In Ontario, this number is 18
per cent. These numbers will only grow. Immigration is Canada's largest source
of growth and currently 48 per cent of new Canadians come from Asia.
Trade with Asia is also growing. China is our second largest trading partner
after the United States. Asia as a region captures the largest proportion — 41
per cent — of non-U.S. Canadian imports. The government is working to expand and
build on these connections by pursuing initiatives such as the Trans-Pacific
Partnership free trade agreement negotiations and other bilateral initiatives.
While there are numerous opportunities associated with Canada's increasing
connections to the Asia-Pacific region, the region's complex security
environment poses risks to these interests.
A shift in the balance of power away from the United States and its allies
towards China has resulted in increasing tensions and uncertainty in the
regional security environment.
Several outstanding boundary disputes, particularly in the maritime area,
could escalate into open conflict due to misunderstanding, miscalculations and
inflexibility caused by nationalistic audiences. In North Korea, the erratic
behaviour of the leadership and its pursuit of nuclear weapons, as well as the
technologies to deliver them, pose a grave threat to the region.
The region also faces security challenges related to piracy, illegal
immigration, resource pressures and natural disasters. A major task in this
region, with increased military expenditures and evolving multilateral security
architecture, will be to reduce friction and confrontation and promote
As part of the Government of Canada's overall focus on the Asia-Pacific
region, the defence team is committed to defence and security cooperation to
ensure that peace and stability are maintained in a region which is integrally
connected. Our objective is to contribute to the evolution of an Asian security
environment that is stable and in which disputes are managed according to
international norms and laws. This is important for Canada for a number of
reasons. For example, 65 per cent of the world's container traffic originates
from Asia. The issue of maritime traffic is something that we will need to focus
on because it's going to matter in the next coming decades.
For Canada, 48 per cent of the Port of Halifax's cargo originated from Asia
in 2012. And for the Port of Vancouver, it is booming based on Asian trade.
Therefore, we have a direct interest in maintaining the security of the area's
sea lines of communication.
Contributing to regional security requires the development of a comprehensive
strategy. Many of our friends and partners have similar concerns and are
undertaking similar processes. Sharing information and coordinating responses
with them can only strengthen our respective approaches.
Indeed, we are already actively working toward these objectives. In this
regard, the Defence team will, as a first step, work with whole-of-government
partners and like-minded countries to explore approaches and develop plans that
will take us in this direction. This was the impetus for the Canada-U.S.
Asia-Pacific Defense Policy Cooperation Framework recently signed by our
minister and the U.S. Secretary of Defense at the Halifax International Security
However, identifying the requirements to develop strategies and plans does
not mean that Defence is not active within the region. The Canadian Armed Forces
has been a contributor to the United Nations Command Military Armistice
Commission in Korea since 1953, and it's there today. The Defence team also
contributes to the mitigation of several regional security challenges through a
number of other important activities, such as participation in the multinational
investigation into the North Korean sinking of the South Korean ship Cheonan,
which occurred in 2010; and numerous DART deployments — Disaster Assistance
Response Team — to Sri Lanka, Pakistan and the Philippines, most recently in
In addition to operations, the Canadian Armed Forces are stepping up
participation in regional military exercises. After the United States, Canada
has been the largest contributor of troops to many of the main exercises on the
Korean Peninsula for a number of years. Other exercises include Rim of the
Pacific, the ASEAN Regional Forum's disaster relief exercise DiREX, and as an
observer with Southeast Asia's largest multilateral exercise, Cobra Gold.
Developing relations with regional countries through our Military Training
Cooperation Program has also been a strong diplomatic tool. It allows Canada to
share experiences and expertise with new partners by building capacity and
forging new bilateral defence relationships. Eleven ASEAN countries participate
in this program, and over the last fiscal year, more than 150 officers from
member countries received training sponsored by the MTCP in language, peace
support, military staff and professional development programs. Canada has also
sponsored several high-profile seminars in Indonesia through MTCP, one of which
just completed last month, which was a peace support operations seminar.
We will focus our engagement in priority areas by focusing on key bilateral
relations, continuing participation in the ASEAN Regional Forum and pursuing
membership to the ASEAN Defence Ministers' Meeting-Plus.
ASEAN institutions provide important opportunities to work on defence and
security-related issues and strengthen cooperation in the region. We must also
make contributions where we believe we can add value. These include areas such
as maritime security, military medicine, humanitarian assistance and disaster
In sum, if the government's objectives and ambitions in the Asia-Pacific
region are to be fully realized, defence engagement must remain a priority, with
a coherent whole-of-government effort.
In a region of dynamic growth and complex challenges, our status and
interests as an Asia-Pacific country require us to contribute to security and
establish our security and defence relationships for the long haul. We take our
role as an Asia-Pacific country seriously, and we are committed to contributing
to ASEAN security. This will help Canada will realize broader aspirations in
this dynamic region.
Thank you, and I now anxiously wait your questions.
The Chair: Your comments are very useful because you've covered a lot
of areas of activity. When we look to Asia-Pacific, we know of the Korean
conflict and we know of North Korea's nuclear ambitions. We're still questioning
China, cyberspace and their initiatives. We are not sure how the countries
relate to each other — sometimes with a frosty attitude and sometimes with a
friendly atmosphere. I note that as historical background.
More recently, as we work economically in the area, you're talking about
piracy, illegal immigration, resource pressures and natural disasters as being
other security issues. I see one of the other security issues as being that
there is no security framework. It's not like working in the Atlantic, where you
know exactly what the players are doing and what the framework agreements are.
Are we in a process now of trying to get framework agreements, or are we
still identifying the policy issues that need to be addressed?
Rear-Admiral Gardam: That's an excellent question. If I might, I'll
start at a very high level, strategically, on the frameworks that currently
exist and where Canada is engaging, because I think that you'll find actually we
are quite well engaged in some of these forums.
The first is the ASEAN Regional Forum. The ASEAN Regional Forum, as you're
aware, would be Brunei, Cambodia, Indonesia, Laos, the Philippines — it's the
southern region. Their focus is on maritime security and defence. There are
three words I use when I talk about this region: peace, stability and
prosperity. It's all about prosperity, and in order to have prosperity, you have
to have a group such as ASEAN that is able to bring like-minded countries
together to discuss issues such as piracy. In the ASEAN region over the last
three years there has been a dramatic decrease in piracy because of the
cooperation of countries such as Indonesia and Malaysia, working together with
their coast guards, to combat piracy.
A broader defence and security initiative is the ASEAN Defence Ministers
Meetings-Plus, which includes all the membership of the ASEAN region. Canada is
not a member, but we are seeking membership by working with close colleagues
such as South Korea. We're also working with the United States, Australia and
others to try and become a member.
We have learned over the last three years, in terms of Confucius, that face
time matters. This is not something we're used to in Canada. We're used to
Western transactions when it comes to business. It is not the same in Asia. You
have to have a consistent approach and leadership, and your position matters.
For example, our minister will go to the Shangri-La dialogue. It is composed
of key ministers and chiefs of defence from the region. This dialogue allows a
broader discussion to occur on things like how we would resolve a potential
dispute at sea between, say, China and another country. These are mechanisms we
actually had in the Cold War between NATO and Russia. We're now bringing them
forward into a new dialogue, which is the ADMM-Plus.
There are also expert working groups in which Canada is becoming a member.
There are working groups in humanitarian assistance and disaster relief. Another
area where Canada participates is in information fusion because we have an
ability to do that.
However, we have to manage our appetite carefully. As you all very much
appreciate, the region is vast, Canada is small, and the distance is great. So
we are working with our partners, particularly the Five Eyes community, plus
others in the region, to help us in our engagement plan.
I would say we are now becoming much smarter on how we engage.
Senator Downe: Who are the current members of the ASEAN Defence
Rear-Admiral Gardam: Allow me to refer to my notes because I want to
make sure I'm able to give them. It's the ASEAN members, as I mentioned, plus
two different groups. There's the Plus Three, which includes China, Japan and
Korea, and then the ADMM-Plus is Australia, India, New Zealand, Russia and the
United States. It's that meeting that Canada is trying to become a member of.
Senator Downe: Why are we not a member? Why were we not invited when
the Australians and the New Zealanders joined?
Rear-Admiral Gardam: Because regional interests matter. We are not an
active player, such as Australia and New Zealand are, within the region. When we
did our DART operation, for example, we had to fly a C-17 16,000 kilometers the
other direction, so space and time matter. What's key here is that we have a
consistent application so that we become members.
A very good example of a springboard opportunity is what just happened,
through unfortunate circumstances. The terrible tragedy in the Philippines has
allowed us this year to leverage that and say, "Canada matters; we came to your
aid and were the second country there, ahead of anyone else." It's using those
opportunities strategically that will allow us to become a member, but we're
just not there. We're becoming more and more a presence because we know it's all
tied to trade and prosperity.
Senator Downe: What would be the benefits of membership for Canada?
Rear-Admiral Gardam: One of the biggest benefits is being able to
manage the maritime security issues. If you have not got a secure framework to
have your global commerce on the high seas move from A to B to C, the economy
will come to a grinding halt. Our ability to be a member will help allow us to
help develop some of those mechanisms to, if not resolve disputes, at least keep
a lid on a simmering pot.
Senator Fortin-Duplessis: Welcome, Rear-Admiral Gardam. I just want to
set things up before I ask my first two questions, which will be brief.
For the Rim of the Pacific Exercise, RIMPAC, which Canada participates in,
what can you tell us about the extent to which Indonesia, the Philippines and
Singapore participated? I am talking about the last time the exercise was held,
which was in 2012, I believe.
My second question is, during the 2012 exercise, were the Canadian Armed
Forces in direct contact with the Indonesian, Filipino and Singaporean forces?
Rear-Admiral Gardam: Those are two excellent questions. With regard to
the three countries you mentioned and Canada's participation and work with them,
we actually work actively with those three countries. It's navy to navy. I would
like to give a quick history lesson on the navy and where we've been for the
last three decades.
The Royal Canadian Navy has been in this region for over three decades. We
have been working very closely with the Philippines, the Malaysians and the
Indonesians, and we do it navy-to-navy by entering ports and having port visits.
Port visits are very much strategic engagement opportunities where our heads of
missions, our ambassadors and trade shows focus around those port visits. We
work hand in glove with Foreign Affairs to ensure that our two programs are
The Rim of the Pacific exercises, as you're aware, comprise 14 different
nations. They are the largest maritime exercises of their type in the world. The
three countries you have mentioned are actively engaged in that.
Our closest relationship actually is with Singapore. We have many technical
arrangements with Singapore. Our navies work quite often together on what we
call PASSEX, which is an opportunity for navies at sea to exchange ideas,
exchange watchkeepers and to work together. We are actively involved with those
Senator Fortin-Duplessis: You talked about exchange and cooperation in
your introduction. Do you exchange officers with Singapore, the Philippines and
Rear-Admiral Gardam: I know that we have military training cooperation
that is going on, which is not exchanges but it's actually where we are training
officers from various countries, including two of the three you mention. I am
not aware of exchanges that we have. I'll have to actually take that question
back. I know that we do have defence attachés, who are a credit to that region,
but it's not an exchange.
Senator Johnson: Since 2008, sir, there have been a number of visits
to Canada by high-level Chinese PLA officials. While we understand a lot of the
content of this dialogue is confidential, what have been the fruits of these
conversations, if you can say, and do you feel the Chinese are serious about
maintaining peace and stability in the Asia-Pacific?
Rear-Admiral Gardam: Those are two great questions.
On the first question, yes, there has been a lot of engagement between China
and, most recently, starting with Minister MacKay, with our military. I will
only concentrate on the military. I will not look at Foreign Affairs or any
We recently signed a cooperation framework initiative between China and
Canada. That will allow us to work at exchanging information where it makes
sense. One area where we work together is education. We are also potentially
looking at sharing lessons with regard to disaster relief.
One thing we have noticed with China is that when we open our door a bit,
many come in, so it's very much about a reciprocal, enduring, but also
manageable relationship with China. In comparison to China, we are a fairly
small interest to China. So it's very much when we look at our engagements with
China, it's what do we want out of this? That's the most important part.
I was just in Russia a few months ago. I never would have guessed where we
are currently today with Russia. It was the same process with Russia. What do we
want out of it? What we want out of it is to always keep a door open for
dialogue. That is the best we can hope for.
As we develop deeper and deeper relationships, it will be about prosperity.
It will always be about money. Defence relationships often open the door where
other doors are not open because we have a common understanding, in particular
from a maritime perspective, of what it is to operate on the sea. We have a
common framework to have a dialogue.
I forgot your second question.
Senator Johnson: Do you feel the Chinese are serious about maintaining
peace and stability in the Asia-Pacific?
Rear-Admiral Gardam: I will characterize this by saying that, for
China, it's all about prosperity, all about economic development, and it is very
much about how they manage their burgeoning middle class. For China, it's about
securing their own influence, their own security, before they move forward.
There's an expression, "China will grow old before China grows rich." That
means that because of the single child policy, China is aging. It's a rapidly
aging country. As that aging occurs, social unrest is occurring. With China, it
is absolutely important that they are able to feed their economy, to satiate
that appetite, to satisfy that appetite for that growing middle class and the
poor who are moving up. China will do everything in its power first and foremost
to maintain control of China; in other words, internal control of China. When we
look at China we need to understand, I believe, what the internal issues are in
order to actually understand how we can work with them externally. They have a
lot of issues.
The Yangtze River, which is fed by the Himalayan ice cap, is almost dry. That
has another clear environmental destabilizing impact upon China.
China needs natural resources to continue to move forward. China just had a
yellow alert in pollution. We have never seen that before. The environmental
issues of China are staggering. Anything we do to help China develop is in our
interest and in their interest.
I believe we need to work closely with everyone, whether we agree with their
politics; we must work closely with China. That is why Canada is now getting
much more synchronized in how we are doing our engagement with China, not just
military or foreign affairs but trade in all the other lanes we work with to
ensure we have a common framework moving forward.
Senator Johnson: They must be a bit frantic about their environment
and trying to manage it. We have to have a manageable relationship with them, of
course, but how can they possibly manage this? Every time you read about it, it
is getting worse.
Rear-Admiral Gardam: It is a problem of absolute significant
importance and national imperative.
Think back to the U.K. and the Industrial Revolution. I am a history and math
major, so I want to give another vignette. When the Industrial Revolution
happened in Europe, we had absolute environmental disaster initially. Remember
the coal clouds in London. You could not see anything. It wasn't until London
was able to move up the evolutionary chain technologically that they were able
to get a handle on pollution.
China is in the same position. It has to move up that chain, and we need to
Senator Johnson: That is what I was asking.
Senator D. Smith: The committee members have heard this, before but I
was first in China 40 years ago when Mao was still living; and I have been there
10 or 12 times since. The changes are incredibly dramatic. One thing I note is
that there were certain things you could not talk to them about, like Taiwan,
Tibet and Tiananmen Square.
Rear-Admiral Gardam: The three Ts.
Senator D. Smith: There is one thing where there's been little change.
I was at a dinner party with the Chinese ambassador about three weeks ago. As
well, the MP from Vancouver South had a lunch last week, and the ambassador was
there. I said to him that the only country that can help to bring North Korea
into the real world is China. "Are you up for it?" We didn't used to be able to
talk to them about it.
Two years ago, at an event in Beijing, I raised this subject with some
foreign affairs officials. It was interesting because they did not say anything
but their body language responded. You could not quote them.
Do you have any sense about that? The ambassador said, "We do not believe in
countries interfering with other countries." The body language was that this guy
is crazy, but I don't think we can do anything about it. What is your view on
Rear-Admiral Gardam: North Korea is a great irritant to China.
Senator D. Smith: Yes, you can tell that.
Rear-Admiral Gardam: I will go back to peace, security and prosperity.
China desperately wants that within the region because it is about money. When
you have North Korea acting in erratic, irrational ways, it does not help that
situation. China clearly sees it has a role to play in trying to moderate that
dialogue, however it may come out.
It is interesting when you look at the Koreas, two countries with
constitutions fundamentally driven to unification but each by different means:
South Korea through peaceful embracement of North Korea; and North Korea through
conquer. When you have two fundamental differences in a constitution and how
they're driven, you're bound to have regional concerns.
China is absolutely watching this. It is something that I think we all need
to watch in the coming months and years to see how this develops.
Senator D. Smith: They aren't doing much.
Rear-Admiral Gardam: China is doing a fair amount in the background
because what you haven't seen is a regional conflict.
Senator D. Smith: That is true.
Rear-Admiral Gardam: Obviously I can't guess, but I can tell you what
I know; and I know China is working as hard as they can to try to moderate this.
Senator Ataullahjan: I will continue with the topic of China. China
has vastly increased its spending on the military, specifically on the
sophistication of its navy. It has territorial claims in the East and the South
China Sea. Many Asian countries consider it a threat. What has been the Canadian
response with regard to China's build-up in defence? Has there been or will
there be momentum toward a regional security arrangement?
Rear-Admiral Gardam: What you are talking about, Senator, is the
nine-dash line, which is South and East Asia, which is steeped in history. In
answer to this, it is all about the past. China has certain claims, whether they
are valid, to the south and east ASEAN region; as do other countries within that
China, through its navy and the PLA, has been working actively to show its
claim. We can remember the Spratly Islands. There is a picture of a young
soldier carrying what looks like a rifle, sitting on a lawn chair. Territorial
imperative: If someone from another country is there and is claiming it, that
carries weight in the international court; and that's what China is doing.
When it comes to managing those disputes, the maritime piece is so important.
The dispute mechanisms for that have to be managed through international law.
The Canadian military does not take one side or the other on this dispute
because it is not ours to take. What is ours to do is to work with other
like-minded mechanisms to find mechanisms help resolve those disputes.
ASEAN is a regional forum looking at that. The ASEAN Defence Ministers
Meetingis also a regional forum. Some of the expert working groups are forums
also looking at things such as how to resolve possible conflicts at sea between
warships before a gun is fired. Understand that if naval ships get into an
at-sea battle, it is traditional warfare. That is well beyond a regional
conflict. The goal is to prevent that. That is what Canada is actively involved
in — the Rim of the Pacific exercises that we have been engaged in for over two
decades. The exercises themselves are not complex, but it is all about
relationship building. You heard the list of characters. Russia, China and India
are all there. These are countries we work with but not traditionally; but now
we are working with them more and more. The more we work with them, the more we
understand and the better we have a chance of resolving those issues. However, I
would say we have a long way to go yet.
In the Cold War we had clear mechanisms; it was binary. It's not binary now
because it's multilateral.
China, as you may or not be aware, does not like to work multilaterally.
China works bilaterally, one country at a time, because they can wear down a
country. Multilaterally, which is where Canada is, working our Five Eyes
partners, working with China and with Korea, we are all pushing with common
messaging and it's the common messaging saying that that is not acceptable, if
it comes from all of our lips, whether it's foreign affairs, trade missions or
the military, we need to have common messaging and synchronize that with all of
our allies. Because Canada is relatively small in population, we need to engage
in the region intelligently, which means talking with our allies and asking
where Canada will make the biggest impact. Then we need to concentrate on that
because we can't take a shotgun approach and do a bit here and there.
To go back to my comment on Confucius, if we do that, we will fail
significantly. We have to have engagement that is consistent and enduring, with
the correct representation.
Senator Downe: I'm assuming the Asian countries must have much more
interest in Canada because of the Northwest Passage that will now affect their
trade, which relates to your comments on prosperity. Would this be a chip for
Canada to play, that our importance is greater than our military contribution at
this stage because of the northern passage through the Arctic?
Rear-Admiral Gardam: Thank you for that question. I just happened to
have done my masters on the Northwest Passage, but I will not talk about my
thesis. What I will talk about is the importance of the northern sea route via
The northern sea route is the route off Russia's coast. It has been actively
open for many years. Russia is an Arctic nation. They live and work and operate
in the Arctic. That's a 400-series highway. The Northwest Passage is a country
road. I've been there. The Northwest Passage is filled with treacherous
navigation, many shoaled and dangerous waters; weather that changes frequently;
small bits of ice called bergy bits and growlers that will hull a ship; and poor
visibility. Also, our requirements through the Arctic Water Pollution Prevention
Act of 1985 means that if you're going to travel our waters you have to be
double-hulled, have very high insurance, and you cannot release any effluents
into the water, which means it's not a panacea; it's more a destination. The
real route is a northern route off of Russia, where they don't quite have the
same environmental concerns that we do.
Senator Downe: Three or four years ago, when China sent a ship across
for the first time, I believe, my understanding is that it was the first time
they sent a ship through to Iceland. Did they notify Canada? I assume they
notified us but did not seek permission. Did we monitor if they met any of those
conditions you outlined, such as double-hulled, pollution and so on?
Rear-Admiral Gardam: I cannot comment on the China one because I'm not
familiar with the case. I can comment on how it works globally.
The Arctic Water Pollution Prevention Act is a voluntary compliance act that
has certain stipulations. There have only been a couple of times where we have
not been asked directly. One of them, in arrears, was the Manhattan. We
granted them permission after they had gone through.
Senator Robichaud: We escorted them, didn't we?
Rear-Admiral Gardam: We did. The framework itself works because if
something happens, for example, a ship has a medical alert issue, gets stuck in
the ice, they inform us before they go in because we need to be available to
help them out.
Senator Downe: Our position is they have to seek permission.
Rear-Admiral Gardam: No. Our position is they have to inform us. We do
not deny the Northwest Passage to anyone. Why would we?
Senator Downe: If they don't inform us?
Rear-Admiral Gardam: As I said, it has only ever happened twice, so it
is not an issue really.
Senator Downe: What was the second time?
Rear-Admiral Gardam: I can't remember; I can get back to you on that.
Senator Robichaud: You talked about the importance of maritime
security for the transportation of goods. You also talked about piracy and the
fact that there has been a dramatic decrease there. Is it still a major issue?
And do those countries, Indonesia and the Philippines, have sufficient means to
Rear-Admiral Gardam: In short, yes.
The three countries are working together. The profits they gain from not
losing their trade and keeping that international channel open far outweighs the
costs of their investing in their coast guards. It's a huge success story. Here
we had countries that didn't cooperate before but now do. It is that cooperation
that is paying off significantly now because piracy is almost down to zero in
the strait. That would not have been the case 10 years ago.
The Chair: One other area that you touched is immigration and illegal
immigration. That is a problem because of certain treatments. We know in
Myanmar, for example, there are groups that have gone over the border and are in
official or unofficial refugee status. This is a growing issue of people moving
for jobs and tensions within certain groupings. Are we monitoring, paying
attention, involving ourselves in that, as it may come to our borders?
Rear-Admiral Gardam: We monitor things that may come to our borders. I
cannot comment on what actually happens in those countries, but our partners —
CIC, the RCMP, CSIS — actively work to help Canada in queuing. I do not want to
go into details. I know that from my last job, but I'm not an expert in that
I can say that Canada absolutely cooperates interdepartmentally to determine
who is coming here and why. It's all about queuing. You need to send out ships
and aircraft to find the vessel before it lands in Canada and we have new
The Chair: Twenty years ago, anyone talking about security in the
Asia-Pacific would be talking about confidence building and trying to get
countries to sit down together even in a superficial way. What you have
described is certainly a step forward or perhaps even more. Are we moving to a
stronger architecture for security in Asia-Pacific?
Rear-Admiral Gardam: Yes, we are.
The Chair: I see no other questions. Thank you for coming before us
and putting forward an area that is of concern. When you talk about the word
"prosperity," you have to bring in a word like "security." I think we are
looking and monitoring to those countries that we may wish to engage in
Asia-Pacific, and we will probably engage with all of them, but to a certain
extent greater and others lesser. We thank you for putting that information
before us. It will be helpful in our study.
Rear-Admiral Gardam: You are welcome.
The Chair: Honourable Senators, the Standing Senate Committee on
Foreign Affairs and International Trade is studying the security conditions and
economic developments in the Asia-Pacific region, the implications for Canadian
policy and interests in the region and other related matters.
On this panel we have, from Foreign Affairs, Trade and Development Canada,
Susan Gregson, Assistant Deputy Minister (Asia); Peter MacArthur, Director
General of South, Southeast Asia and Oceania; Jeff Nankivell, Director General
for Development in Asia; and Leslie Norton, Director General, International
Humanitarian Assistance Directorate. Welcome to the committee.
I think most of you have already testified before us in the past. We look
forward to your opening statements, and then we will go to questions. I am not
sure who will lead us in. Ms. Gregson?
Susan Gregson, Assistant Deputy Minister (Asia), Foreign Affairs, Trade
and Development Canada: Yes, that is right. Thank you very much, Madam Chair
and honourable senators. It is pleasure to be back here with you today.
Canada's ties with the three Southeast Asian countries under discussion today
are already robust and are growing rapidly. All three are key non-traditional
partners for Canada in a diverse and rapidly evolving region of ever-increasing
importance to Canada across all three components of our department: foreign
policy, trade and development.
I will provide an overview of Canada's relations with each of the three
countries separately, after which I will be pleased to answer your questions.
Allow me to begin with Indonesia, the third-largest democracy in the world.
Indonesia is a dynamic, diverse archipelago of 17,000 islands with over 300
languages spoken. Our bilateral relationship spans the spectrum of Canadian
priorities: human rights and governance; peace and security; development
cooperation; and trade and investment.
Indonesia is the "centre of gravity" in Southeast Asia and hosts the
Secretariat of the Association of Southeast Asian Nations, or ASEAN. Home to the
world's largest Muslim population, Indonesia is a partner for Canada in the
global effort to combat international terrorism.
On peace and security, Indonesia has been one of the top recipients of DND's
Military Training and Cooperation Program, and has participated in DFATD's
Counter-Terrorism Capacity Building Program and Anti-Crime Capacity Building
Program as well.
With the biggest economy in the region and a large working-age population,
Indonesia represents an important economic opportunity for Canada, and has been
identified as a priority market in DFATD's Global Markets Action Plan. Indonesia
is one of the few major economies in the world with which we have a trade
surplus. In 2011, Canadian direct investment in Indonesia was larger than our
investment in China.
However, inadequate infrastructure, accountability issues and lack of
transparency remain major challenges. A significant portion of the population
lives below the poverty line. Thus, while there is substantial potential for
growth, there is much need for progress across a range of governance and
development challenges in order for Indonesia to reach its potential.
Canada has been working with Indonesia for over 50 years to address many of
these challenges, and Indonesia is one of Canada's five countries of focus in
Asia for development cooperation. Programming has focused on sustainable
economic growth, governance reforms, skills for employment, and the promotion of
democratic values. Canada was the first country to launch a bilateral human
rights dialogue with Indonesia in 1997. Indonesia is also a proposed country of
engagement for the Office of Religious Freedom, and we launched our first
project under this program in August 2013.
Moving on to the Philippines, the Philippines is another increasingly
important partner for Canada, as demonstrated by the visit of Prime Minister
Harper in November 2012 and the signature of a memorandum of understanding on
procurement between the Canadian Commercial Corporation and the Philippine
Department of National Defense. On March 28 of this year, the Philippine
Department of National Defense and Armed Forces acquired — under this MOU —
eight Bell 412EP combat utility helicopters for a value of close to $120
million. Canada is home to some 800,000 people of Philippine origin and the
Philippines is a top source country for immigrants and temporary foreign workers
in Canada. Those people-to-people ties give Canada a high profile in the
Philippines and greatly enhance the overall bilateral relationship.
As in Indonesia, our work in the Philippines is fully aligned with Canadian
priorities, in areas such as poverty reduction, promotion of democratic
development, governance, rule of law, peace and security, and human rights.
Canada also supports the stated priorities of President Aquino, which are to
advance socio-economic development, fight corruption, and negotiate a peaceful
settlement with the Moro Islamic Liberation Front to end the decades-long
insurgency in the Southern Philippines. Canada is supporting the peace process
by, for example, chairing the Independent Commission on Policing in Mindanao
through deployment of RCMP Assistant Commissioner Randall Beck.
The Philippines, with an estimated population of 97.4 million, is the second
largest archipelago in Southeast Asia, after Indonesia. By virtue of its
geography, the Philippines is one of the most disaster-prone countries in the
world. You'll all remember Haiyan, or Yolanda, as it's known in the Philippines.
This is the Category 5 typhoon that struck the Philippines last November. Haiyan
was possibly the most powerful storm ever to make landfall. It caused more than
6,200 casualties and displaced 4 million people. In response, Canada provided
$20 million to humanitarian partners to meet urgent food, water and sanitation,
emergency shelter, medical and basic household needs within the first two weeks.
In addition, the Canadian Armed Forces' Disaster Assistance Response Team, or
DART, was deployed to support humanitarian efforts.
Challenges aside, the Philippines has been able to make economic progress. A
significant level of domestic consumption, a resilient service sector, and large
remittances from the nine million Filipinos who work abroad, including nearly $1
million from Canada in 2013, have helped bolster the economy.
Bilateral merchandise trade remains modest, though with potential for growth
for Canadian companies in the Philippines, particularly in the areas of
agri-food, infrastructure, information and communications technologies and
education. Canadian exports could increase were there greater transparency and
reduced protectionism, building on the efforts by the Government of the
Canada, through its development cooperation program, works with the
Philippines to achieve sustainable economic growth by strengthening the
investment climate and advancing economic opportunities for the poor, both of
which are priorities for the Philippine government.
Finally we come to the dynamic city-state of Singapore. Singapore is the
economic heart of Southeast Asia, and punches well above its weight
internationally. Our bilateral relationship is characterized by cooperation in
trade and investment; science, technology and innovation; and security and
defence. Relations are enhanced by the roughly 6,000 Canadians living in
Singapore, the 83,000 Canadians who visit every year, and the 16,000 Singaporean
graduates of Canadian universities. More than 20 Canadian universities have
exchanges or other ties with Singaporean universities.
In 2013, Singapore was Canada's second largest destination in Southeast Asia,
after Indonesia, for foreign direct investment, and our largest source of
foreign direct investment from Southeast Asia. Over 100 Canadian companies have
established a regional presence in Singapore. As one of the world's busiest
container ports, Singapore has positioned itself as a business gateway to Asia.
Like Indonesia, Singapore has been identified as a priority market under DFATD's
Global Markets Action Plan and we have high hopes for the future of our
Singapore is also an important partner for Canada on security and defence. We
have cooperated in areas such as pilot training, maritime security,
non-proliferation of weapons of mass destruction, and counterterrorism. We also
have significant cooperation in international organizations, including the UN,
WTO, ASEAN, APEC and, most recently, the Arctic Council, where there is much
scope for collaboration. We look forward to marking our 50 years of diplomatic
relations with Singapore in 2015.
In closing, with this context in mind, we look ahead to upcoming milestones
in these important and dynamic countries. Nearly 190 million Indonesians will be
voting in legislative and presidential elections starting next week. The
Philippines will host APEC in 2015. And Singapore will celebrate the 50th
anniversary of its independence next year.
All three are important voices within ASEAN and its related organizations.
Indonesia is Canada's coordinating country for economic issues within ASEAN for
2012 to 2015. Singapore is Canada's overall coordinating country in ASEAN for
the same period, and it will pass the torch to the Philippines from 2015 to
Canada's relationships with these countries will only increase in
significance as Southeast Asia gains in economic strength and political heft, as
people-to-people ties deepen, as ASEAN integrates further and expands links with
dialogue partners such as Canada, and as Canadian companies further their
engagement in the region.
The Chair: Thank you.
Senator Fortin-Duplessis: I have two quick questions. Indonesians will
be going to the polls on April 9 to elect a parliament and then again in July to
elect their next president. To begin, can you tell us if our diplomats in
Jakarta have had discussions with the leading presidential candidates and the
leaders of the political parties?
Ms. Gregson: All I can say is that, at this time, our Head of Mission
has been in contact with Jokowi Dodo. I, too, was at the meeting in the fall of
2013. I am certain that our embassy will meet with all of the other candidates,
and that they will provide us with reports about the candidates and the
positions held by their party.
Senator Fortin-Duplessis: Second question: Is Canada sending observers
to monitor this election?
Ms. Gregson: No, there are no plans for that at this time.
Senator Fortin-Duplessis: Thank you very much.
Senator D. Smith: I was kind of surprised by the statement on the
first page in the third paragraph under "Indonesia":
Canadian direct investment in Indonesia is larger than our investment in
That isn't to say that the direct investment there is huge, but I can't
believe it's that small in China. Maybe you can give us definitions of these
words. When you say "direct" investment, do you have a definition for "indirect"
investment, like if they buy 30 per cent of some company?
I find it hard to believe that our presence in China — depending on how you
define these — would not be higher than in Indonesia. How do you define this
terminology? Is it smaller in China because the laws just don't allow us to take
over little companies?
Ms. Gregson: I'll start off by saying that I, too, was quite surprised
to see that figure. You know that we have negotiated a foreign investment
protection and promotion agreement with China: that has not yet been ratified
but has been concluded.
In terms of further details on Indonesia, I'll defer to my colleague Peter
Senator D. Smith: I would be interested to know if you have the exact
Peter MacArthur, Director General of South, Southeast Asia and Oceania,
Foreign Affairs, Trade and Development Canada: That's a good question. The
economic mass of this G20 economy, Indonesia and its natural resource base,
which is very strong, has encouraged many Canadian mining and oil and gas
companies to invest directly in their own operations, their own presence on the
Companies such as the following would make up a large percentage of this FDI
from Canada: Talisman Energy for oil and gas; Husky Energy for natural gas,
Ballard for fuel cells; SNC-Lavalin is there in a service capacity, but it has
people on the ground; CAE for flight simulators, aerospace sector; Sherritt in
In the services sector, which is also an investment on the ground, both
Manulife and Sun Life are there. The Indonesian middle class is a big
attraction. As the country industrializes and develops a middle class, the
service industry is very much there.
IPR protection in China maybe is something that some of our business
community is concerned about.
Senator D. Smith: It's hard to get in. You hear all the debate about
Russia and Ukraine and then Canadian investment. Russia, the mineral resources
are huge, but the only company you hear anything about is the Kinross Gold mine,
whereas in Indonesia you just mentioned seven or eight, I think. So that would
be what's driving those numbers.
Mr. MacArthur: It's driven by natural resources and more of an
interest by our industry and possibly more of an opening at the Indonesian end
for our companies. To answer your question, total stock of Canadian FDI in
Indonesia in 2012 was $3.2 billion.
Senator D. Smith: Do you know what it was for China?
Mr. MacArthur: I don't have that number with me, but we can certainly
I do want to point out that statistically it's sometimes difficult to measure
FDI. In the case of India, for example, we know it's higher, but some Canadian
companies, like many foreign companies, route their investments through third
countries such as Mauritius or Dubai. For this reason, statistically it's
difficult to have the full picture on FDI. However, we are very confident that
in the case of Indonesia, because it's mining and oil and gas, it's much easier
to track — it's right there.
Senator Demers: Hello to all our witnesses. Ms. Gregson, I would like
to congratulate you on your impeccable French.
In recent times, countries in the Asia-Pacific have had a lot of riots
regarding basic foodstuffs such as rice. What has been the cause of those riots?
They seem to be multiplying.
Population growth in countries in Southeast Asia is especially vulnerable to
these riots, and why? What is the future to protect food security in Asia?
Ms. Gregson: This is an excellent question. I'll ask my colleague Jeff
Nankivell to take that one.
Jeff Nankivell, Director General for Development in Asia, Foreign Affairs,
Trade and Development Canada: From a development perspective, one sees the
news reports of riots in recent years, and of course in each case there are very
specific causes in the country. Thailand has had riots and demonstrations and a
shutdown of the city centre over political contestation, which is not really
related to the price of food or that kind of thing.
In recent years, in Indonesia there have been demonstrations over changes to
the price of oil and gas or the petrol price, because there's a subsidy program
still in effect and the government is trying to ease out of that. It has a big
effect on the population.
In terms of food production, these are countries that have made huge strides
in their ability to feed themselves. Many of the countries in the region are now
major exporters in most years, but it's a region that's very vulnerable to
climate events, and that has always been the case. Production can be very badly
affected by storms. We've seen in the Philippines, for example, the impact of
the November typhoon on agriculture has been very significant. It's a big part
of the economic losses.
If we take a long-term view, the trends have been good. In terms of improving
productivity, Canadian companies play a role in that through technology, through
fertilizer exports to some of these countries.
In our development cooperation programs in recent years in the region, in the
Philippines we have supported work in the agriculture sector, but it has been
from the angle of agribusiness, right from small-scale farming through the
production chain, working on private-sector development to improve logistics and
distribution and provide opportunities for farmers. The issue hasn't been basic
food security, as such. It has been trying to build that value chain, working
with partners like the World Bank's International Finance Corporation. We also
have similar projects in Indonesia and Vietnam.
We're not focusing on Vietnam today, but that is one area in our long-term
development cooperation programs in the region where we have, in more recent
years, been doing work on food production, food quality and food safety as a
major part of our programming.
In terms of food security, Ms. Norton may have something to add on that. We
could just mention that when these disasters do hit, one of our typical avenues
of response, and we spend millions of dollars every year in the region on
disaster response of one kind or another, much of that is going through agencies
like the World Food Programme for provision of food, or food for work and
Senator Dawson: I would like to get back to Senator Duplessis'
question about sending observers to Indonesia's next election.
Setting aside the fact that observers such as Democracy Watch in Indonesia
are not being sent, what does the Department of Foreign Affairs and
International Trade have to say about the credibility and reliability of the
Indonesian electoral process?
Ms. Gregson: I do not believe that we have major concerns with the
elections in Indonesia.
Mr. MacArthur: We feel that Indonesia has made a great deal of
progress in terms of democracy over the past 15 years.
We find that it is all in very good order and that the civil society is very
vibrant and active compared to previous years, and that the media are
Senator Dawson: That is good news. Now, on the subject of the
You talked about $1 million of remittance. How do we measure in this era of
electronic transfer? In the old days, with the transfers being done through the
big agencies that would take 15 per cent of every dollar that was sent, we could
monitor it more easily. You say $1 million. Where do you get $1 million?
Ms. Gregson: This is according to current account data we have. The
Philippines, as a government, has a very well-structured system to track and
monitor these remittances from abroad. It is a large part of their economy, and
they're very au courant with what is coming in.
Senator Dawson: It's monitored on their receiving end?
Ms. Gregson: That's right.
Senator Dawson: Maybe we could monitor how much money we can get from
our rich Canadians who are in Singapore. We could get some remittance from them.
Senator Johnson: Unlike Singapore, Burma and Indonesia, which are
three of the countries the committee is focusing on studying, the Philippines
was not identified in our government's 2013 Global Markets Action Plan. So I was
wondering, the other markets, you said, they hold greater promise. What about
the Philippines? They said that it does not hold the greatest promise for
Canadian business. I am wondering why it was not identified in any way as a
priority for Canadian business in the action plan, given the kind of
relationship we are building with them.
Ms. Gregson: As in any kind of action plan, you've got to set
priorities, and we've done that by looking at which countries have the most
promise. There are some issues around accountability and transparency in the
Philippines that have caused some concern.
I don't know if Mr. MacArthur wants to jump in here.
Mr. MacArthur: That's a very good question. Thank you, senator.
The allocation of priority markets, one of the factors was who the bargaining
countries are in the TPP. Brunei and Singapore are. Philippines, at this stage,
is not yet in the TPP. That was one of the criteria that drove this.
Having said that, we have a robust, strong trade commissioner team in Manila,
and we also interact with the Asian Development Bank in Manila.
Examples such as Bombardier, the Bell helicopter sale that Ms. Gregson
referred to, those was very much supported by the Canadian Commercial
Corporation, Government of Canada and the Canadian embassy in Manila. So we
maintain a good presence in Philippines. As you've heard, we have had to make
some decisions to prioritize for proactive work, but the reactive the work is
still there, and we have a good set-up to support Canadian business in the
Senator Johnson: I come from Manitoba, a province where we have the
largest Filipino population per capita in the country and have had for many
years. We know that it's increasing all the time. We also known the amount of
money they send back home, not just from the Manitoba region, of course, but
across Canada. They're amazing citizens. They have been amazing people in
Manitoba and also the work they do.
It's interesting that so many of them are continuing to want to leave. Are
you seeing this more and more? They really want to get over here.
Ms. Gregson: That would really be a question better directed to
Senator Johnson: That's true.
Ms. Gregson: I can certainly tell you from my own previous experience
in that department that the Philippines has long been a country of immigration
for many parts of the world, but because of the different programs we have had
in Canada, certainly in Manitoba with the garment industry, that they went over
as garment workers to start. We have lots of foreign workers who have come over
to be domestic, live-in caregivers. A lot of people have come over as nurses.
It's really part of the economic situation in the Philippines that drives
people to seek employment abroad.
Senator Johnson: Yet in this article in Foreign Affairs, Karen
Brooks said that the Philippines is a big surprise, among the fastest growing
and promising economies.
You say you have to prioritize. I understand that, but it's such a
contradiction in terms of it having this potential and yet, of course, there are
so many people that we can't see what will happen. It's such an incredible area
and so large in terms of Canadian attraction and business, yet we have so many
people here from there. It's incredible.
Mr. MacArthur: Senator, in reply, it's very clear that Philippines
plays a key role in filling many specialized labour force requirements that we
have, particularly in Western Canada. Some of this is aided by the fact that
many of these Filipino workers have worked in the oil and gas industry in the
Persian Gulf, so they have skill sets. They've come back to the Philippines, and
they're able to bring these to Western Canada.
For example, I'm told by one province that Filipino female welders are very
good at welding, and so to meet welding requirements, it's an important source
of labour from the Asia-Pacific area.
You're quite right. They're playing an increasingly important role in
Canada's economic future.
Senator Robichaud: You said that more than nine million Filipinos send
money back to their country. We were told that there was also a $1 million
direct contribution from Canada. If I have the figures right, yesterday we were
told that $2.1 billion is transferred to the Philippine economy. Is that correct
in your opinion?
Ms. Gregson: I believe so.
Senator Robichaud: Thank you. We were also told that there is
insufficient food production. You talked about the efforts being made to help
people produce more food, also by using the infrastructure. But there are always
families that go hungry. When people find themselves in these circumstances, it
often leads to unrest.
Can this situation be contained and are enough efforts being made to ensure
that these families have something to eat?
Mr. Nankivell: Thank you for the question. It is always a challenge.
Our efforts to provide financial support focus on the system and the economic
framework in order to create employment to provide people with good jobs.
However, it is a long-term project. In the end, it will depend on the state of
the economy in general. A great deal of progress has been made in that regard in
the Philippines. However, the poverty rate is still too high. According to the
most recent statistics, approximately 18.4 per cent of the population lives on
less than $1.25 a day in the Philippines.
Approximately 41 per cent of the people are living on less than $2 a day.
This means that they are susceptible to poverty. This problem is exacerbated by
natural disasters, such as Typhoon Haiyan, or Yolanda.
This is a long-term effort to encourage economic growth and sustainable
social development. We are still working on it, but it is a long-term project.
Leslie Norton, Director General, International Humanitarian Assistance
Directorate, Foreign Affairs, Trade and Development Canada: I would like to
add something. When there are areas with humanitarian needs, such as Mindanao
Island, we work closely with our international humanitarian partners to meet
these needs. That adds to what Mr. Nankivell just said.
Senator Robichaud: In the case of natural disasters, we are talking
about one-time interventions, correct?
Ms. Norton: And also conflicts.
Senator Robichaud: Of course.
You said that 18 per cent of the population lives on $1.25 a day in
assistance and that 40 per cent of the population lives on less than $2 a day?
Mr. Nankivell: Forty-one per cent. Including the people below.
Senator Robichaud: That is a lot. Can we say that the rich are getting
richer and that the poor are losing ground?
Mr. Nankivell: The situation for the poor keeps improving in the
Philippines and in Indonesia, even though things have slowed down in recent
years. It is not true that the poor are becoming poorer. These statistics have
improved in recent years.
Malnutrition or undernourishment is a separate indicator. It is true that
living on less than $2 a day in a country like the Philippines or Indonesia is
not like living on $2 a day in Montreal, Ottawa or Fredericton. There are large,
poor populations in these countries, definitely.
Senator Fortin-Duplessis: Ms. Gregson, I would like to know how the
different federal departments and agencies coordinate their priorities and their
activities in the Asia-Pacific region.
Ms. Gregson: Coordination is primarily done in our embassies and
community zones. There are a number of departments on the ground, so that makes
it easier to coordinate efforts. Here in Ottawa, our department is in constant
contact with our colleagues from other departments, especially with respect to
official visits or our regional strategies. We often talk to our colleagues in
other departments. Other departments are on our radar. We have many colleagues
from the immigration department working at our embassies, as well as colleagues
from the Departments of Agriculture, Natural Resources and Industry.
Mr. MacArthur: Three times a year, I hold a meeting with my
counterparts from all departments on the Southeast Asia file so that we can
coordinate our plans, visits and relations and so that we can share our
information on this file.
Senator Fortin-Duplessis: Would you say that it is well coordinated
and that you are aware of everything that is going on and how it is going on?
Ms. Gregson: Yes.
The Chair: Thank you for coming here and zeroing in on the countries
that we are starting to focus on. It is helpful. We may have to have you back
again; we are not sure. As we continue to study this, your input has put the
government perspective on our work. Thank you very much for appearing today.
Ms. Gregson: Could I add one thing, senator, with your permission?
The Chair: Please.
Ms. Gregson: Recently, we commissioned a study on ASEAN commercial
opportunities for Canadian business, and we would like to table that. We have
copies in both official languages that we will leave with the clerk.