CANADA IN THE WORLD

Back to the Future: Canada’s Re-Engagement in the Asia-Pacific Region

by Bernard J. Brister

Major Bernard J. Brister, CD, PhD, a highly experienced RCAF tactical helicopter pilot, holds a doctorate in War Studies, and is currently an Assistant Professor of Politics at the Royal Military College of Canada. This article is an updated summary of thoughts and perspectives he presented at the 2012 annual Haycock Lecture. Because it derives from a speech, it lacks CMJ’s usual formatting with reference end notes. However, Major Brister can be contacted for discussion or consultation at Bernard.Brister@rmc.ca.

Fundamental Change

Canadian interests have long been influenced by events and developments in the Asia-Pacific region. The direct connections to and periodic engagements with the various sub-regions and individual states of the region go back more than a century, and in a number of cases, the nature of those relationships serve as startling contrasts to how many Canadians see themselves as icons of multiculturalism.

The nature of the modern relationship in the post-Second World War era was both unique and innovative in terms of western engagement with the region, until a deteriorating domestic fiscal situation forced a shortsighted retrenchment in policy. This was followed by a pre-occupation with and the dedication of scarce resources for international engagement to the stabilization of Afghanistan in the post-9/11 period.

More recently, however, as Canadian commitments in South Asia approach their conclusion, there appears to be a renewed interest on the part of government and business in the development of relationships in the region that serve the needs and interests of Canadians in the 21^st Century. The genesis of this interest has roots in both Canada and the Asia-Pacific region itself (of which Canada is a part), and it can be considered from both economic and security perspectives.

Notwithstanding the recent conclusion of the Comprehensive Economic and Trade Agreement (CETA) with the European Union, the focus of Canadian trade and its economy had long ago shifted away from Europe. Focused upon the United States in the post-Second World War era, trade with Europe has been on the decline for several decades. The European economic linkages that are now second place to those that have been developed by Canada with the United States will shortly fall to third place as they are supplanted by linkages with Asia. As the decline in European trade continues, commerce with Asia continues to grow. In terms of the future, projected growth in the three global economic centres is forecast to be greatest in Asia, with North America taking second place, and Europe running a ‘distant third.’ Clearly, the weight of global trade and commerce is shifting to Asia, and Canadian trade is shifting with the global trend.

The prosperity and security that Canadians have traditionally drawn from their economic relationship with the United States may also be in for a fundamental change. A number of observers have noted that the benefits to Canada flowing from the North American Free Trade Agreement (NAFTA) have pretty much run their course. They contend that the potential for growth in the Canadian share of the American market is on the wane, and it may be an opportune moment to begin considering of what the ‘next big idea’ might be in the Canadian economic strategy that will generate the same magnitude of benefits that were generated by NAFTA over the last couple of decades.

Even the energy component of the Canada-United States economic relationship, a fundamental building block for decades as America continually sought ever-increasing volumes of energy from secure sources, is now entering a new era. Advances in recovery technology have increased recoverable domestic supplies of both oil and gas in the United States, such that America will potentially be self-sufficient in energy by 2015.

At the same time that supplies of energy are increasing both north and south of the border, the North American energy transportation infrastructure, in terms of pipelines and refining capacity, has not kept up. The Canadian energy industry has always been focused exclusively upon its biggest customer, the United States. The vast bulk of Canadian energy exports go into a pipeline system that runs north-south to its major customer, and also to the most cost-effective refining facilities that are located in the United States. With the increasing glut in domestic American energy production, and the Canadian marketing infrastructure running one-way into the United States, Canadian companies are forced to sell their product at discounts approaching $30/barrel in order to get it to market. Some estimates put the cost of this deep discounting at approximately $20 billion dollars per year in terms of lost revenue to the Canadian economy.

With issue of national energy security resolved at least temporarily for the United States, the American people and the administration of President Obama have adopted a much greater concern over the relative environmental impacts of various energy sources. Strangely, they have elected to focus upon the environmental effects of Canadian oil sands production, even as they continue to use the much dirtier coal to provide approximately 40 percent of their power needs. The net effect of this process of energy politicization will be the perpetuation of the deep-discount phenomenon to which the Canadian energy industry is being subjected. The prioritization of American production access to American refining facilities, and then to markets both domestic and foreign, threatens to marginalize Canada as a budding energy ‘super power,’ and limit the extent to which Canadian national and international interests are served by a continued reliance upon American downstream energy infrastructure. It may be time for a change in strategy…

In terms of Canadian geostrategic security, the evolving story is not much different from the economic story. For most of the past century, Canadian security concerns have been focused upon political stability and the balance of power on the European landmass. After two world wars, and then the Cold War, which lasted almost half a century, it appears that Europe is at long last approaching a degree of stability. The military threat from the USSR has disappeared, and the use of energy by Russia as a coercive tool in European politics appears to be one that can be controlled by the European Union (EU). Europe, at least for the moment, appears to be in a position whereby the United States is not compelled to control European security affairs, and Canada does not feel obligated to participate in them by virtue of its history and heritage. While Canadian internationalism will probably involve some degree of participation in the North Atlantic Treaty Organization (NATO) in the future, the trend in Canadian strategic multilateralism appears to be swinging toward interest-based coalition operations involving one-or-more partners of what is known as the “Five-Eyes” Community (Canada, United States, United Kingdom, Australia, and New Zealand).

Similar to the European situation, security concerns on the North American continent seem to have stabilized into a steady state that could represent the long-term future. The realignment and reorganization of defence and security relationships within and between Canada and the United States, resulting from the end of the Cold War and the attacks of 9/11, appear to be effectively addressing the security and political concerns of both countries. The Cold War security infrastructure represented by the North American Aerospace Defence (NORAD) agreement has been re-oriented towards a more comprehensive security mission, even while it has become part of a wider process of change and integration.

The changes that were undertaken within the NORAD agreement as a result of security events over the last two decades have been accompanied by the establishment of Canada Command (Canadacom) and Northern Command (Northcom). These two organizations are intended to improve national security in Canada and the United States, and to harmonize bilateral security efforts on the continent of North America. While the debate regarding the primacy of NORAD over Canadacom in the management of the cross-border security relationship is ongoing, the overall comprehensive security focus, based upon the existing infrastructure, appears to be relatively stable and capable of addressing future security continental security concerns.

Why Asia?

Similar to the discussion of the roots of change originating in Canada, the impetus for change in Canadian economic and security policy emanating from the Asia-Pacific region can be understood when considered from both an economic and a security perspective.

The transition of the region from a third-world source of raw materials and cheap labour in a colonial era, to the global centre of population and economic growth in the 21^st Century has been nothing less than revolutionary. Of the three global economic centres (North America, Europe, and Asia), Asia will shortly become second largest behind North America, and it already possesses the greatest potential for future growth.

Asian states that include China, South Korea, Japan, Indonesia, and India already dominate major portions of global trade, and with rates of growth that have only recently dropped from double-digits to the high single digits, they represent the most lucrative global economic opportunities in the future. Where Europe can be seen as a competitor to Canadian commerce, Asia should be viewed as a customer. It represents the greatest potential for growth Canadian markets and the national economy, ahead of North America and far ahead of Europe.

The Northeast Asian triad of China, Japan, and South Korea is of particular note in this regard. Some estimates have China surpassing the United States as the world’s largest economy by as early as 2017. Historical and political differences aside, the integration of the three economies in Northeast Asia is proceeding apace, and even now, it represents one of the largest economic entities on the planet, with the potential to become the global centre of trade and commerce, and thus, a global locus for the demand for raw materials and services.

While much attention has been focused upon the extent to which the manufacturing function appears to be concentrating in Asia at the expense of countries such as Canada, the shift of first-world economies (including Canada) into the more lucrative service sector has received relatively little notice. The percentage of the Canadian economy devoted to manufacturing has been in decline for several decades, and its transition to the provision of services and the growth in the provision of raw materials, including those related to the production of energy, is not widely known or understood.

The potential for growth in the Canadian economy, particularly in the service and resource sectors, resulting from trade with Asia, represents the single greatest opportunity for the pursuit of Canadian economic interests in the post-Second World War era. Competing with Canada for business in the region are both the European Union and the United States.

While Canadians can and do compete effectively with their American and European counterparts in the service sector, possibly the greatest potential for growth in trade with Asia lies in the resource sector. Social and political stability in the region is contingent upon continuing and stable economic growth. Underpinning the sustainment of this growth is the acquisition of sufficient and secure supplies of energy. Canada is uniquely positioned (gifted?) to play a major role in the maintenance of economic growth and political stability in the region with its abundant supplies of key strategic energy resources, such as oil and gas.

The major obstacle preventing the Canadian economy from capitalizing upon this opportunity is access to the markets for energy in Asia. With the major focus of the Canadian energy transportation infrastructure being upon feeding past American demand for oil and gas, the Canadian potential for opening new markets in Asia is limited and even controlled by the United States. Approaching American energy self-sufficiency will soon transition into a need to find export markets or surpluses, and as such, it will place American companies in direct competition with Canadian companies. Limited Canadian access to foreign markets is presently controlled by pipelines and the refining capacity existent in the United States. Recent resource, political, and environmental developments in the United States indicate that it is not in the political interests of the President or any number of environmental groups, and not in the business interests of American resource companies to take decisive action to remedy this Canadian problem.

The solution to the Canadian economic dilemma appears to be in gaining access to ‘tidewater’ via a transportation system controlled by Canadians to serve Canadian interests. Unfortunately, for the moment, the reconciliation of these interests among the various domestic groups involved (federal and provincial governments, First Nations, business and environmental groups) does not appear to be possible any time soon. Until that time arrives, Canadian economic interests and prosperity cannot be maximized and the potential for Canadian influence and participation in regional and global affairs will not be realized.

In contrast to the complexity of the economic issues involved with Canadian re-engagement in Asia, the security issues and rationale for a Canadian presence are relatively simple and straightforward.

The underlying objectives of Canadian internationalism have always been the maintenance of a peaceful and stable global environment. Such an environment facilitates Canadian security and prosperity by allowing the development of political, security, and economic relationships throughout the world. The increasing importance of the Asia-Pacific region to Canada and the world in terms of trade, environmental issues, and human development relative to other regions simply serves to underline the need for Canada to focus and prioritize the allocation of its meager political, diplomatic and security capabilities on this region in order to maximize its own national interests.

There are a number of regional issues that might disrupt the peace and stability of the region, and thus interfere with the pursuit of Canadian interests. These issues include the resolution of Cold War enmities in Northeast Asia associated with North Korea. A thorn in the side of American interests in the region for decades, the antics of the Kim regime in North Korea had worked in the best interests of its primary sponsor and benefactor, China until recently. Now, as China becomes increasingly integrated in the Western economic system, the utility of the North Korean regime in the achievement of Chinese interests is on the wane. The problem now is how to remove the North Korean regime as an impediment to regional progress in the face of its development of nuclear weapons.

Another critical issue involves the resolution of ongoing disputes over territory between historical enemies in the region. The disputes involve relatively isolated, and, until now, innocuous pieces of rock claimed by China, Japan, and South Korea in the sea space known as the East China Sea by China. The disputes between China and South Korea and South Korea and Japan are relatively low-key affairs that simply serve to underline the historical political and social enmity between old empires dating back thousands of years.

The disputes between China and Japan over the Senkaku/Diaoyu islands in the East China Sea and some states of Southeast Asia (Vietnam, Philippines, Malaysia, Indonesia), and China in the South China Sea are different in that they pose real and proximate threats to regional peace and stability. Until recently, these long standing disputes had been collectively set aside by the states involved in order to pursue mutual self-interests by virtue of the development of peaceful relations in the region.

A growing demand for energy to feed economic development that will ensure domestic political stability has brought these disputes to the forefront of regional relations. A complicating factor is the rise of virulent nationalism in a number of the states involved that interferes with or even prevents the effective resolution of these disputes through the use of diplomacy and compromise. The increasing tensions among the states threaten regional peace and stability, which, in turn, inhibit the economic development and integration of the region, a process vital to the satisfaction of Canadian interests.

Perhaps as critical to the peace and stability for the region as good international relations is the issue of domestic social and political stability within the states themselves. A case in point is China. The amazing economic performance of this nation in the past two decades draws attention away from the fragile and incomplete social, economic, and political infrastructure that has supported it. The transition from Maoist economic policies to an ongoing experiment with a centrally controlled free-market economy has resulted in amazing advances in the wealth and welfare of the Chinese people. At the same time, it has created increasing demands upon the regime by and from those same people to provide social and political programs, as well as the economic support systems that are present in first-world free-market economies.

The Chinese Communist Party must balance the development of new and unfamiliar economic and financial structures and policies in order to ensure uninterrupted financial growth with the control mechanisms necessary for them to remain in power. They must also simultaneously develop and implement the social welfare and political support systems required of any first world economy and state. All this must be accomplished at a breakneck pace for the largest population of any state on the planet in order for the regime to retain the social permission of the Chinese people to rule the land. The number and complexity of the Gordian Knot of problems associated with this process are staggering, and the threat of domestic collapse and chaos is ever-present. The support and participation of regional partners in the development of the mechanisms for social, political, and financial governance in China will be critical to the nation’s survival, as well as the prosperity and stability of the region in general, and possibly, even the globe.

A final issue pertaining to regional security concerns the fabled ‘pivot’ or re-balancing of American attention to the region. It is difficult to clearly establish the direction of American policy with respect to it. It appears to be centred upon a vague policy combination of Cold War-type containment to keep China out of the Western economic and political system, and a more enlightened one of engagement intended to facilitate its integration with that system. Complicated by domestic political maneuvering and financial restraint in a time of economic recovery, the American approach to its Asia-Pacific relations worries its regional allies and supporters, as well as its regional competitors. Chinese officials contend that if American policies are not aimed at China, they most certainly are about China, and they bristle at what they see as inappropriate American intervention in regional affairs and relationships. American allies and supporters in the region attempt to balance the advantages of American support in the region with their own sovereignty and the benefits of developing a relationship with China. Both China and the United States are vying for power and influence in the region. The other states in the neighborhood are reluctant to take sides, and they have singularly refused to do so up to this point.

The Canadian Past in Asia

The extent to which Canadians can ‘weigh-in’ on these regional economic and security issues in the pursuit of their own interests as well as regional peace and stability is influenced to a great extent by their past engagement in the region.

As mentioned earlier, Canadian engagement in the region has not always fit well with the egalitarian, multicultural image many Canadians have of themselves. The Canadian government pursued polices that were both anti-immigration and explicitly racist towards Asian peoples from the early days of nationhood, and well into the 20^th Century. Entry of Asians to Canada was initially restricted to males for work on the railroad, with the understanding that upon completion of their contract, they would be returned to their homeland. Later on, immigration was allowed, subject to the payment of a head tax and the segregation of Asian immigrants into their own communities. Japanese Canadians were removed from their homes and businesses in British Columbia during the Second World War, and kept in a series of internment camps. This policy was carried out in spite of an RCMP determination that they posed no threat to national security at the time. Upon their release, they were left to fend for themselves to rebuild their lives and fortunes.

Early Canadian participation in regional security issues included limited engagement in Hong Kong, Burma, and the Pacific during the Second World War, peacekeeping in India-Pakistan between 1949 and 1989, and participation in the Korean War between 1950 and 1953.

Politically, Canada has, on occasion, played a leading role in the development of relations with China after the success of the communist revolution. Recognizing the potential influence of the new regime in the region, Lester B. Pearson tried to generate political recognition of China by Canada as early as 1949, obtaining the passage of a Cabinet resolution before ultimately failing in his attempt. Later in the 1960s, when there was widespread famine in China as a result of the failure of Mao’s land reform policies, Canada provided China with millions of tons of wheat – on credit. In 1970, China did finally receive formal recognition by Canada in the face of American pressure not to do so. The next year, 1971, Canada sponsored China for membership in the United Nations.

In other parts of the region, Canada participated in a “Track 2” diplomatic process intended to bring North Korea into the regional diplomatic process. This initiative was called the “North Pacific Cooperative Security Dialogue,” and it was undertaken over the period from 1989 to 1993. Another diplomatic initiative was a partnering with Indonesia in the mid-1990s in the “South China Sea Workshop,” an attempt to address the territorial disputes in that area. In the mid-1990s, Canada was admitted to the Association of Southeast Asian Nations (ASEAN) Regional Forum, an organization devoted to the improvement of peace, stability, and good governance in that part of the world.

Notwithstanding these post-Second World War examples of security and political engagement, there has never been a coherent strategy of engagement undertaken by Canada in the region. Much of the formal government policy has focused upon economics, with the most visible aspect of these policies being the “Team Canada” trade expeditions of the 1990s.

What strategies, policies, and programs of engagement that did exist were discontinued in the mid-1990s, when political funding and attention turned inward to address a worsening domestic economic situation. Later, when economic circumstances did improve, national attention and resources were focused upon Canadian security commitments in Afghanistan in the aftermath of the 9/11 attacks.

Most recently, the government, with no corporate memory of engagement with Asia or China, was reluctant to re-establish relations in the region, even in the face of an already shifting economic and security landscape. Time passed, however, and the federal government gradually warmed to the idea of engagement and recognized the potential benefits of doing so. There now somewhat belatedly appears to be a great amount of political and economic enthusiasm for re-engagement in the region in general, and specifically, with China.

There is recognition that not only does the region hold the greatest potential for economic engagement, but it is also one of the most lucrative sources of the $660 billion dollars of foreign direct investment that Canada will require in the next ten years to develop its economic and energy infrastructure. From a domestic political standpoint, the Asian diaspora in Canada is not only getting larger, it is also becoming more affluent and politically active, and, as such, it is pressing government to address regional issues and concerns that have the potential to influence Canadian political, security, and economic interests. Given all these factors, and both the reality of and the potential for Asian social, political, and economic development, Canadian re-engagement in the region seems not to be a question of ‘if,’ but ‘how.’

The Canadian Future in Asia

The first factor in the determination of the ‘how’ is consideration of a social/cultural factor. Asian people and their governments value consistency over time, and the establishment of personal relationships. The Canadian track record for consistency in its Asian relationships is a poor one, and it will take time to establish a degree of credibility in the region before the benefits of a relationship can be realized. Patience and perseverance, not necessarily Western political or business virtues, will be required for success.

Having said that, there are economic advantages for Asian partners in the relatively rapid development of economic ties to Canada. Among these is long-term access to large volumes of energy from a politically stable and economically reliable partner. If Canada is able to address and overcome the domestic obstacles to the establishment of an energy infrastructure oriented to the Asian market, there appears to be more than enough Asian capital to finance its expeditious development on the basis of long term supply contracts, a ‘win-win situation’ for Canada and its regional partners.

A relationship that truly addresses all Canadian interests, however, including those of a diaspora growing in both size and domestic political influence, must address more than the purely economic aspects of an engagement strategy. It must also involve components that utilize the diplomatic and security levers of international power and influence.

Diplomatically, Canada can play on its reputation as an even-handed arbiter of disputes to assist the states involved in regional disputes in the development of solutions to those disagreements in either the long or the short term. What remains of its international reputation for diplomacy and the reality that it has nothing to gain or lose from a given solution to any issue (the Canadian interest would be in the peaceful resolution of the issue, not in one side or the other gaining any advantage) would make it a valuable resource for the preservation for peace and stability in a region beset with historical suspicions and animosity.

One drawback in the current strategy of re-engagement in the region has been the singular failure of Canada to gain access to any of the more useful and effective regional governance organizations. Specifically, Canadian membership in both the ASEAN Defense Ministers Meeting (ADMM+) and the East Asia Summit (EAS) has been denied, at least for the time being. This is undoubtedly a consequence of the historically inconsistent Canadian engagement policy and its long absence from the region. Only perseverance and continuing attempts at the provision of diplomatic utility to the region will overcome this obstacle and enable political access to the more influential organizations of regional governance.

Another useful avenue of influence development that falls within the realm of diplomacy is assistance in the development of best practices and good governance in the evolving economic and political infrastructure of the region. Assistance and stabilization of the rapidly growing and developing social, political, and economic infrastructure of countries such as China is an essential element of regional peace and stability. Canada can be a source of the expertise required to assist in the development of the needed infrastructure in this regard, and the use of its experience and expertise in these areas carries none of the ‘political baggage’ that would accompany an American offer to do the same thing.

With respect to American interests in the region, the parallel nature of those interests with those of Canada would mean that Canadian relationship successes in the region would also be American successes. Further, as with other times and other regions, Canada and Canadian diplomats can sometimes be employed as interlocutors on issues where direct interaction is deemed inappropriate for either domestic or international political reasons. Lastly, the presence on many of the regional fora of a long-time friend and ally with similar interests in the region would be welcomed, and this nuanced aspect of Canadian participation in the region, in and of itself, may provide some benefits in terms of the Canada-United States relationship.

Of the three main avenues of re-engagement, that of security is perhaps the most limited for Canada and the resources it has available for its internationalist agenda in the region. The Canadian military is relatively small, and in general, its capabilities must be husbanded for use in the direct security of the state in accordance with the Canada First strategy. However, there are a number of ways that the Canadian Armed Forces can contribute to the success of a Canadian strategy of re-engagement in the Asia-Pacific region.

The first would be through the employment of the humanitarian assistance/disaster response resources held by the military. Timely and effective contributions to domestic stability after a disaster are not quickly forgotten, and in addition to the demonstration of Canadian values, they can contribute to the satisfaction of Canadian interests in the longer term.

Another contribution by the military could be through participation in what are known as “Confidence Building Measures,” or CBMs. These measures would initially be based upon participation in scenarios using military assets involving the common good, such as search and rescue and anti-piracy endeavours. Some of the scarce Canadian military resources could be contributed on a case-by-case basis to CBMs in order to initiate or foster military-to-military relationships between states that may find themselves in a confrontation with each other in the future. If such confrontations were to occur, the leaders on both sides would benefit from a mutual knowledge and understanding of the other’s tactics, techniques, and procedures that could be used to defuse a given situation before an actual engagement were to occur.

A third use of the military with respect to the development of a Canadian re-engagement strategy for Asia would be an educational/training variation of the CBM approach to relationship development. Acquiring knowledge of the region, its politics, and its security concerns is essential for effective government and military engagement. To this end, Canadian military educational and training institutions, at all levels and in all services, could make slots available for use by selected regional clients and allies. The opportunity to attend a Western military educational or training institution would be of value to the foreign military involved in learning to work closer with friends, or to understand potential adversaries, and the Canadian military could use the same opportunity to make itself familiar with the workings of Asian governments and their militaries.

The Road Ahead

Canadian economic and security interests are undergoing a period of fundamental change that involves a shift in emphasis away from the historic North Atlantic relationship, and even from the traditional post-Second World War relationship with the United States. The impetus for these changes lies in the deterioration of relationships in Europe, the stagnation of relationships in North America, and the budding opportunities to pursue Canadian interests in the Asia-Pacific region.

The Canadian legacy of engagement in the region is inconsistent, and establishing the value and credibility of Canadian contributions to the economic progress, as well as the peace and stability of the region, will take time. One strategy to achieve this objective, while simultaneously pursuing Canadian economic and security interests, is to lead with an economic policy that encourages the development of Canada as a secure, long-term and stable source of energy supplies to support regional prosperity. The central economic thrust of this strategy should be supported by diplomatic and security policies that build upon the Canadian brand in the region, and support the maintenance of a peaceful stable environment.