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Sean Speer: Canada (finally) picks a side between the U.S. and China


Global Affairs Minister Melanie Joly ostensibly chose Vancouver as the venue to release the government’s long-awaited Indo-Pacific Strategy because of its proximity to the region and self-image as Canada’s Asia-Pacific Gateway. Vancouver is about a quarter of the distance shorter than Ottawa to Beijing. 

But one gets the sense that the real audience for Joly’s announcement was about half the distance away in Washington, D.C. The Trudeau government’s rhetorical and policy shift on China—from “China is an important partner for Canada” in 2017 to “China is an increasingly disruptive global power” in the new strategy—is undoubtedly driven in part by a recognition that a growing hawkishness vis-à-vis China is now the “cost of doing business” with the Biden Administration. 

The shift in Washington’s own thinking about China actually started under the Trump Administration. Its 2018 National Defense Strategy has been called “the most significant revision to U.S. defense strategy in a generation” for altering the conception of America’s strategic relationship with China. As the strategy set out in language broadly similar to Joly’s own document: 

China is leveraging military modernization, influence operations, and predatory economics to coerce neighboring countries to reorder the Indo-Pacific region to their advantage. As China continues its economic and military ascendance, asserting power through an all-of-nation long-term strategy, it will continue to pursue a military modernization program that seeks Indo-Pacific regional hegemony in the near-term and displacement of the United States to achieve global preeminence in the future. The most far-reaching objective of this defense strategy is to set the military relationship between our two countries on a path of transparency and non-aggression.

The problem, of course, is that while the Trump Administration held these rightful intuitions about China’s global ambitions and the return of so-called “great power competition”, it lacked the capacity, discipline, and deft to do much besides enacting a unilateral mix of tariffs and trade sanctions. 

The Biden Administration has been far more effective in bringing expression to a new China policy. It accepted the core insights of its predecessor’s National Defense Strategy and has gone about operationalizing them through a combination of domestic industrial policies, foreign and defence strategies (including President Biden’s strong message on Taiwan), and multilateral efforts to reconceptualize the world’s relationship with China. 

The Indo-Pacific Economic Framework (involving 14 countries including Australia, India, Japan, and the U.S.) is an economic form of this new approach to China. The new naval pact between the United States, Australia, and the United Kingdom (which aims to establish an Australian nuclear submarine capacity to deter China in the Indo-Pacific) is part of its defence and security agenda. 

Canada has been slower than most to respond to these trends. One gets the sense that the Trudeau government may have had false hopes about straddling the two sides in an increasingly bifurcating economic and geopolitical environment. Its slow decision on excluding Huawei from the country’s wireless networks reflected Ottawa’s elusive search for a middle ground. 

It became increasingly obvious, however, that middle ground-ism was not a sustainable economic or security position for Canada. American expectations about supply chain security (such as its “Made in America” strategy for critical minerals) alone meant that the Trudeau government was inevitably going to have to pick sides. 

That decision was probably never in doubt. But it was still aided by a combination of China’s belligerence towards Canada (including the unlawful detentions of the two Michaels and its alleged interference in the 2019 federal election) and the Biden Administration’s growing demands for coordination on China policy including with respect to supply chains, security issues, and human rights. 

It doesn’t seem like a coincidence that Deputy Prime Minister Chrystia Freeland delivered a hawkish foreign policy speech about the need for democracies to coordinate on economic and security matters in Washington in October. Or that Industry Minister François-Philippe Champagne spoke about “decoupling” from China on his own visit to the American capital later in the same month. 

Or that days after he announced that the government was ordering three Chinese companies to sell their interests in Canadian mining companies on national security grounds, we learned that the U.S. defence department is considering public funding directly to Canadian mining projects for the same reason. 

Or even that the U.S. Ambassador to Canada, David Cohen, issued an uncharacteristic statement lauding Joly’s announcement of the Indo-Pacific Strategy over the weekend. 

Canada has its own reasons to modify the government’s policy approach to China. It’s been evident for a long time that the basic assumptions undergirding our policy thinking about China were wrong and needed to adjust. The Trudeau government’s strategy took too long and there are outstanding questions about its implementation, but it represents in theory the kind of paradigmatic shift required to bring Canadian policy into line with a realist view of Xi’s China. 

That it also brings us into close alignment with the United States may, however, be just as important for understanding the Trudeau government’s own shift as any other factor. The U.S. is only mentioned four times (compared to 51 times for China) in the 26-page document. But it should be read between the lines on virtually every page. 

Canada has clearly chosen sides in the technological and geopolitical rivalry between the U.S. and China that will dominate the coming decades. It’s about time. 

Bill Robson: Reshoring is a poor long-term strategy for sustainable growth


On November 22, 2022, as part of the Ontario Chamber of Commerce’s Ontario Economic Summit, The Hub’s executive director Rudyard Griffiths moderated a “Munk-style” debate involving Globe and Mail columnist Andrew Coyne, C.D. Howe Institute CEO Bill Robson, former Ontario Cabinet minister Sandra Pupatello, and The Hub’s own editor-at-large Sean Speer. The debate’s resolution read: Be It Resolved: Ontario Needs Reshoring as Part of Its Growth Agenda. Pupatello and Speer argued in favour of the motion. Coyne and Robson against it. The Hub is honoured to publish the debaters’ opening statements.

Thanks to the organizers for inviting us here to debate this very important question. Our worthy opponents, Sandra and Sean, make a very valiant case in favour of reshoring as part of Ontario’s growth agenda. 

Notwithstanding, Andrew and I have our doubts, and we think that you should have your doubts also. It’s not because we’re against growth—an agenda that makes Ontario a place of choice to work, invest, and innovate is a very good thing. And we’re not indifferent to how the things we buy get made and how they get to us or not, as Sandra was just referring to. 

We’re all thinking about that. And we’re thinking about it a lot more than we used to do personally and in our businesses. So, in addition to price and quality, smart business leaders and managers are thinking more than ever now about reliability, their suppliers, possibly their suppliers’ suppliers as well, about transportation, after-sales service, ESG, and many other factors. That’s just good judgement. That’s giving your customers the same quality, price, and reliability that you’re looking for from your own suppliers. 

So, it’s not about that. It’s not about whether we want growth or whether we want secure supply chains. We do and we should. If reshoring and Ontario’s growth agenda means anything, it means policy. It’s about government’s using subsidies or procurement or other discriminatory measures to try and make sure that production that wouldn’t otherwise occur in Ontario does, and conversely, some production that would otherwise happen in Ontario doesn’t, because the two do run together. Andrew and I say no, there are lots of things that belong on Ontario’s growth agenda, but just not those. 

I’m going to anticipate Andrew, my debating partner, a little bit by just saying how good trade is for us. As consumers, we do not grow all our own food, we do not make our own clothing, we do not build our houses, and we do not do our surgery. We exchange with each other the gains from trade that give us better food, more food, clothing, and better shelter than we otherwise would have. Those same gains apply, whether we’re talking about individuals or families or neighbourhoods when you go up to cities and provinces and countries. That’s why Canada went for free trade, with the United States first and then Mexico, in NAFTA. Then with the EU, and now with the Trans-Pacific Partnership. Show of hands, should we have freer trade here in Canada? I think most people think we should. 

Here’s another key point, though. It’s not just true for consumers—it’s true for producers as well. We know some auto parts cross the border eight times before they go into the finished vehicle. Imports and exports go together in cars and transportation equipment, as Andrew Thompson referenced earlier, but it’s true everywhere. It’s true in food, it’s true in services, and countless industries that exist in Ontario now. Also in countless industries that could exist in the future, and they go together for the economy as a whole. We are not going to be self-sufficient in everything for long periods of time. Temporary, yes, but not permanently. 

A growth agenda for Ontario should include access to customers and access to inputs, not discrimination that protectionists can game, not subsidies that will dry out when the money runs out, but conditions that will produce sustainably profitable businesses and not white elephants. Making Ontario a top place to work and invest and innovate means making it a place where producers can access what they want. Whether it’s materials, intermediate products, energy competitively priced, IP services, finance talent, etc. And whether it’s from Ontario, which is great, but if it isn’t, Quebec, Manitoba, New York State, or India—it’s all good. 

So much else belongs in Ontario’s growth agenda, competitive taxes, infrastructure, education—it’s a long list that is all good. Let’s just leave subsidies and discriminatory procurement off the list. Ontario does not need that kind of reshoring in its growth agenda.