Minister of International Trade - Briefing book

2019-11

Strategic Overview

Issue

• The free flow of goods, services, capital, technology and people is critical to Canada’s growth and improved living standards. Canada must seize opportunities to expand and diversify its trade while navigating rising global trade tensions and challenges to the rules-based global trading system.

Context

As Minister of International Trade, your key responsibilities will include: building and safeguarding an open and inclusive rules-based global trading system; support for Canadian exporters and innovators in their international business development efforts; negotiation of bilateral, plurilateral and multilateral trade agreements; administration of export and import controls; management of international trade disputes; facilitation and expansion of foreign direct investment; and support to international innovation, science and technology. This is done in support of the Minister of Foreign Affairs, who oversees all matters relating to Canada’s external affairs, including trade and commerce.

Your portfolio is complemented by the work of the Minister for International Development, whose focus on sustainable development and poverty reduction contributes to strengthening and stabilizing the economies of developing countries, creating opportunities for mutually beneficial trading partnerships.

To advance your portfolio you are supported by the Deputy Minister of International Trade. You can also rely on the Deputy Ministers of Foreign Affairs and of International Development, who directly support your colleagues. As a team, the Deputies and the wider Global Affairs senior leadership work to ensure that the department’s 10,707 employees in Canada and 110 countries around the world are delivering an integrated and coherent approach to Canada’s advantage.

Disrupted global trade context

As a trading nation, Canada is endowed with an impressive range of comparative advantages including our diverse, highly-skilled population; abundant natural resources; strong public institutions; world-leading companies; and a shared commitment to the fundamental values of a free, open and democratic society. Canada also benefits from strong trade rules and market access with most of its major trading partners, with 14 bilateral and regional free trade agreements (FTAs) in force, covering 51 countries and two-thirds of global GDP.

However, the global trading environment is facing increased turbulence in major trading relationships, juxtaposed with deepening challenges to the rules-based trading system. In this context, Canada must adapt and pursue new and emerging opportunities.

Over the last few years, the increase in trade tensions, [REDACTED] are hampering global economic growth rates for advanced economies and developing economies alike.

While Canada’s economy has grown, there is increasing concern about the potential for a global recession in the not-too-distant future. Canadian exporters and investors have been harmed by these developments, which in some instances have been motivated by non-trade considerations.

International observers continue to expect global growth to rebound in 2020, albeit at lower levels, and recent outlooks have been revised downward.

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New technologies and trans-boundary threats like climate change will also affect Canada’s prosperity. They promise to alter modes and patterns of trade, impact domestic policies, and will in some cases require new international frameworks for collective action, at a time when finding common ground is more challenging.

Multilateral, plurilateral, and regional trade

The WTO remains the pre-eminent international institution supporting the rules-based trading system. The WTO and the General Agreement on Tariffs and Trade (GATT) before it, has underpinned global trade during the postwar period. Active participation at the WTO has proven to be of strategic interest to Canada for its ability to protect Canada’s interests and allowing it to influence discussions in a way that would not otherwise be possible [REDACTED].

Early attention will be required due to a number of developments and upcoming events.

Canada has an established position in leading a group of diverse and representative WTO members (the “Ottawa Group”) committed to supporting and strengthening the WTO. This grouping will remain important for advancing discussions to strengthen and modernize the organization although we will need to reassess how we can play an even broader leadership role at the WTO.

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This issue is expected to come to a head if not resolved by December 10, when the terms of two of the last three members end.  The absence of a functional appeal system would permit Members to evade binding dispute settlement, which runs counter to Canada’s interests.  Canada will need to remain particularly focused on this issue, and in particular, with respect to building broader alliances in support of our objectives.  If an effective dispute settlement mechanism ceases to exist at the WTO, the overall legitimacy of the institution itself could be brought into question.

More broadly, Canada cannot take for granted that the multilateral system anchored by the WTO will continue to evolve as the world economy grows. As countries navigate a global economy caught between difficult multilateral discussions and bilateral deals-based approaches based on spheres of influence, regional relationships are taking on increasing importance. Canada needs to strengthen its regional alliances as well.  Although we have a broad network of FTAs, further work is required to ensure shared views on the value of rule-based trade, along with a willingness to be prepared to do something to advance and strengthen those rules.

Canada is well-placed to leverage regional and other groupings e.g. APEC Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP) expansion, Association of South-East Asian Nations (ASEAN), the Organization for Economic Cooperation and Development (OECD), and various standard-setting bodiesto enhance its influence to shape new rules, counter-balance asymmetric relationships, and foster further trade opportunities.

Key bilateral relationships

Canada’s proximity and economic integration with the United States dictates that access to the U.S. market will remain paramount. Improved stability and predictability in this commercial relationship has been a key priority. [REDACTED]
This should be advanced through the ratification and implementation of the Canada-United States-Mexico Agreement (CUSMA), which on the Canadian side will require the passage of implementing legislation in Parliament.

[REDACTED]

China is Canada’s second-largest trading partner, [REDACTED]

Growing trade in other markets

Notwithstanding global trade challenges, the past decade has seen historic advances in some of our most important trade relations.  In addition to CUSMA, Canada has successfully negotiated both the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), and CPTPP. Together these agreements afford us preferential market access to all of the other members of the G7. For both CETA and CPTPP, efforts will be needed to encourage the remaining Parties to ratify as soon as possible.  Furthermore, expansion of the CPTPP to include new members [REDACTED] also represents a key opportunity to secure access to new markets in Asia.

A focus for the Government of Canada has been to create an enabling environment for firms and businesses to fully capitalize on the opportunities arising from these significant trade agreements, as well as from economic growth in a wider range of overseas markets more generally. Canada can also look to continuously improve the international competitiveness of its businesses by supporting robust trade promotion services and programs through the Trade Commissioner Service (TCS). Every day, some 945 Trade Commissioners located in 160 missions aboard, and 95 located in six regional offices across Canada, work to help Canadian businesses compete and win in global markets by providing customized market intelligence, advice and contacts.

Trade Commissioners serve clients from locations across Canada and around the world.

Asia is one of the fastest growing regions in the world; many countries are aggressively positioning themselves to tap into the region’s growth, [REDACTED] Canada has recently completed exploratory discussions for a potential Canada-ASEAN FTA [REDACTED]

In the Americas, Canada has been negotiating a comprehensive trade agreement with Mercosur (Argentina, Brazil, Paraguay, and Uruguay) since 2018. As well, a final Agreement with the Pacific Alliance (Chile, Colombia, Mexico and Peru) may be reachable in the coming months.

The United Kingdom’s departure from the EU would mean that Canada’s most significant trade partner in Europe would no longer be party to the CETA
[REDACTED]

Canada is also considering modernization of several of its existing FTAs to meet the ambition of its most recent agreements and maximize benefits for Canadians, e.g. the Canada-European Free Trade Association (Switzerland, Norway, Iceland, and Lichtenstein), and Canada-Ukraine FTAs.

Finally, with respect to developing countries, Canada has been investing in initiatives that support their engagement and success in regional and global trade. This includes providing support for the establishment of the African Continental Free Trade Area to boost intra-African trade; and funding technical expertise and targeted interventions through the Global Alliance on Trade Facilitation and the Canadian Trade and Investment Facility for Development.

Controlling trade in sensitive sectors

Import and export permits are required when there are important and sensitive political, security and/or economic concerns about trade (e.g. foreign policy or national security consideration, trade liberalization for agricultural goods). The economic impact to Canada and the volume of transactions is significant, attracting extensive stakeholder interest. The Minister of Foreign Affairs traditionally gives responsibility for all trade-related policy and operational issues (e.g. agriculture, softwood lumber, steel, and aluminum) that do not have security or defence implications to the Minister of International Trade. You will be called on, including in the early days of your tenure, to make a number of time-sensitive operational and policy decisions.

Investment, talent, and the changing nature of trade

Just as the growth of developing economies is re-shaping global trade patterns, fast-emerging technologies (e.g. digitalization, artificial intelligence, and advanced manufacturing) as well as responses to global issues such as sustainability and climate change portend transformative effects on Canada’s economy and trade. In addition, Canada’s North and Arctic is a region of global interest, at once becoming more connected through technology and transportation links while also facing unique challenges. Such changes are likely to affect what we trade; how we produce and deliver it; who we trade with; and which Canadians and firms participate in international trade.

Simultaneously, many relevant policies and regulations (e.g. on data flows, infrastructure, the investment climate, and promoting innovation) that shape the global competitiveness of Canadian firms and Canada’s standing as a destination for foreign direct investment and talent will be developed in a domestic context. The challenge in this regard is to ensure that international implications are kept in mind during that process as strong international competition is to be expected in all these areas.

To reconcile these trends, Canada will need to have a well-developed and coordinated approach between Global Affairs and domestic line departments on trade-related matters in order to take a leadership position.

Global Trends

Issue

International relations have entered a period of heightened uncertainty and instability, with established institutions, alliances, and practices being challenged by a shifting balance of power, new economic and social forces, and renewed ideological competition.

Context

An historic shift of geopolitical and economic power from the Atlantic to the Pacific is underway, and as a multi-node world emerges, new and established powers, as well as non-state actors, are seeking to recast the international system to their benefit. Innovations and globalization over the past 25 years helped to bring millions of people out of poverty. But the optimism that accompanied these developments has been tempered more recently by growing inequality, a resurgence of ethno-nationalism, and a return to great power rivalries and proxy warfare.

The consequences of this dynamic evolution impose strategic choices on Canada’s foreign policy.

In promoting its interests abroad, Canada has contributed to developing and strengthening an evolving international system based on rules in which parameters for inter-state behaviour were largely collectively shaped and mutual accountability was expected. In this context, Canada has benefitted from U.S. support and Washington’s position as the world’s leading power, with its vast network of alliances and partners, including NATO and NORAD, which underpin Canada-U.S. security and defence cooperation. [REDACTED] International development and economics have also emerged as domains for geopolitical influence and competition. [REDACTED]

Not surprisingly, these shifting geopolitical realities are straining the existing system of international laws, norms, alliances and institutions. [REDACTED] and in cyberspace, which has become an active domain for geopolitical rivalry and the nefarious activities of non-state actors. [REDACTED]

This shift is increasingly apparent with regards to debt financing. The composition of public debt in Low Income developing Countries (LICs) continues to shift from traditional sources (largely the Paris Club, including Canada) towards non-traditional bilateral lenders [REDACTED] In 2007, 66 percent of public external debt in LICs was held by multilateral development banks or Paris Club members, with just 19 percent held by Non-Paris Club lenders. By 2016 fully 37 percent of public debt in LICs was held by Non-Paris Club, with combined MDB and Paris Club debt down to just 33 percent. Moreover, this presents an incomplete picture of the global debt shift since it only focusses on LICs, and does not account for other forms of financing, including non-governmental foreign direct investment, public funding through non-governmental organizations, or investments through state-owned enterprises with close links to the central government, [REDACTED]

On the security front, several pressures are apparent. Nuclear non-proliferation faces sustained challenges, particularly from Iran, North Korea, [REDACTED] Violent extremism, including in the form of pernicious terrorist groups (e.g. Daesh, Boko Haram, Al-Qaida), white supremacists, and anti-immigrant movements, threaten people around the world. And protracted crises, such as Syria, are extremely costly in terms of lives and livelihoods, and for their regional and international implications.

Change in Creditor Composition of LIDC's Public External Debt 2007 to 2016

In parallel to these specific preoccupations, globalization continues to reshape economic and social life and has contributed to the shifting balance of power. Freer trade, technological innovation and transnational value chains have raised global standards of living. Between 2000 and 2017, emerging Asian countries (including China and India) increased their share of world GDP from approximately 7 percent to 22 percent and are projected to grow at a much faster rate than advanced economies – [REDACTED] Developing countries are also increasingly urbanized, and some face demographic “youth bulges” in their fast-growing populations – offering the potential for continued growth, especially if jobs can match success in extending life expectancy, but also threatening social stability if they cannot. This speaks to the urgent need to accelerate the achievement of the sustainable development goals.

While increased growth and interconnectedness have created a growing global middle class, the momentum to liberalize international trade has stalled, as evidenced by protracted disagreements over the WTO and rising protectionism. This stems partly from the recognition that the benefits of globalization have been unevenly shared. From 2005 to 2014, 65-70 percent of households in advanced economies, on average, were in income segments whose real market incomes were flat or falling (McKinsey).

International migration, regular and irregular, is expected to increase, with competition for jobs and resources in less-developed regions and labour shortages in developed economies.

Emerging markets, including countries where Canada currently invests significant development assistance, present new economic opportunities, although geopolitical, security and governance-related concerns can limit the scope for engagement in the very near term. These and other complex transnational challenges – including climate change and pandemic diseases – affect Canada directly, and Canada can most effectively protect its prosperity and stability by working alongside new and traditional allies and partners.

Canada faces an international environment of growing great power competition, rising trade protectionism, complex transnational challenges, traditional partners who are distracted or disengaged, and resurgent authoritarianism. Yet amid these challenges are opportunities to shape the evolving international system, embrace new markets and non-traditional partners, regroup with like-minded countries and leverage Canada’s deep people-to-people ties around the world. [REDACTED]

In the context of growing international volatility, Canada’s efforts will require close collaboration between Global Affairs Canada and other government departments and agencies to coordinate a whole-of-government approach. But Canada is equipped with an international policy toolkit to meet many of these challenges: its membership in key institutions such as the UN, G7, G20, NATO, NORAD, APEC, the OECD, the Commonwealth and La Francophonie offers comparative leverage; it sustains a positive global reputation for freedom, tolerance, diversity, gender equality, and good governance, including through our leadership of issue-based alliances; it has trade agreements with all G7 members and has solidified the Comprehensive Economic and Trade Agreement (CETA) with the EU, as well as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP); and Canada still possesses hard-won, though transient, credibility on issues of peace and security and international development. In this new era of international relations, Canada will need all the tools at its disposal to navigate difficult strategic terrain ahead.

State of the Global Economy / Trade

Issue

• Global growth is softening as geopolitical and trade tensions are disrupting supply chains and have led to a worsening of business sentiment.
• Despite rising concerns of the risk of recession, most projections call for global growth to rebound in 2020, due to stronger performance by emerging markets and developing economies.
• The Canadian economy is expected to grow by 1.5 percent in 2019 and 1.8 in 2020, but weak global trade is expected to moderate business investment and exports.

Context

Global growth is expected to be weak in 2019 in both advanced and emerging economies. Several factors have contributed to this slowdown:

(1) the ongoing trade and technology conflict between the world’s two largest economies (United States and China); (2) Brexit-related uncertainty; (3) rising geopolitical tensions; and (4) business conditions decelerating after years of steady expansion.

Chart 1: Real GDP Growth projections

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The global economy has experienced a long period of growth since the 2008 financial crisis, but this growth is decelerating in 2019. While the global services sector has held up, manufacturing activities have either contracted or decelerated in many major economies in the first half of 2019, as indicated by manufacturing industrial production.

Given the uncertain outlook, it appears that firms and households continue to hold back on long-range spending as shown by weak business spending (machinery and equipment) and consumer purchases of durable goods, such as cars and appliances. The IMF and OECD project global growth to rebound in 2020 due to stronger performances by emerging markets and developing economies, but these projections are for modest growth, and outlooks have been revised downward repeatedly over the last 18 months.

Trade Tensions

[REDACTED]

Global trade growth in volume terms has declined sharply in recent quarters. Escalating trade conflicts and related uncertainty have given rise to concerns about a potential recession, reflecting unease in the global economy.

Uncertain Growth

The U.S. economy is steady for the moment but is sending increasingly mixed signals. Europe is losing momentum as its largest economy, Germany, has contracted in two of the last four quarters. At the same time, China is showing its weakest growth since 1992, a situation that is set to worsen unless the United States and China resolve their trade conflict. There are also concerns about debt sustainability in developing economies, as growing debt burdens, particularly in Latin America and East Asia, have the potential to quickly become unsustainable.

In response to uncertain growth prospects, many central banks, including the United States Federal Reserve, have cut interest rates to provide economic support, but the lower interest rates can also foster financial vulnerabilities as financial markets move to riskier assets. For its part, the Bank of Canada has maintained its rate unchanged since October 2018 (1.75 percent) as core inflation remained around its 2 percent target, but it has flagged that it will continue to watch developments closely.

Regional Update

Canada

In 2018, Canada’s exports of goods and services increased 6.2 percent to $706 billion, while imports rose 5.4 percent. The total value of trade in goods and services reached a record high of $1.5 trillion. However, GDP growth for 2018 as a whole was 1.9 percent, down from three percent in 2017. The slower rate of growth in late 2018 and early 2019 has been attributed to weakness from the goods producing sectors, uncertainties generated by trade tensions between the United States and China and by American tariffs on steel and aluminum (lifted in May 2019). Despite a frail start in 2019 and ongoing weaknesses in the oil-producing sector and corresponding regions, economic growth rebounded to 3.7 percent in Q2 after growing only 0.5 percent in Q1, driven by strong performance in goods exports, although domestic demand was weak. Canada has seen a trade deficit since the global financial crisis. The IMF projects that Canada’s GDP growth will be at 1. 5 percent in 2019 and 1.8 percent in 2020 – both below the 2018 level.

Overall, the Canadian economy remains sound. The strong national labour market, with close to record low unemployment (5.5. percent in September), should bolster household income and support steady growth in household consumption.

Key factors that could affect the short-term outlook are global trade and geo-political tensions, persistent transportation and production constraints in the oil and gas sector, and an elevated level of household indebtedness. Given interconnectedness with the U.S. economy, economic trends in the United States will also impact the Canadian economy.

United States

The current U.S. economic expansion is the longest on record, though talk of a U.S. recession in the next 18 months has risen following the publication of a string of weak leading economic indicators over the summer.

In response, the United States Federal Reserve has cut its interest rate three times this year, the first cuts since the 2008 financial crisis. U.S. GDP is projected by the IMF to continue growing next year but growth is expected to fall from 2.9 percent in 2018 to 2.4 percent in 2019 and 2.1 percent in 2020, as the effects of past fiscal stimulus unwinds and the impacts of tariffs counter measures by other countries make their mark.

Europe

Euro area growth declined to 1.9 percent in 2018 and is projected to further decline to 1.2 percent in 2019, before rebounding to 1.4 percent in 2020. Export-reliant Germany, Europe’s largest economy, has contracted in two of the last four quarters. Growth in the Italian economy has been tepid since the recession that occurred last year, due to business and political uncertainty. In the second quarter of 2019, the U.K. economy contracted for the first time since 2012, as the U.K. ’s stockpiling for Brexit reached a peak and the car industry implemented shutdowns. Going forward, the IMF expects the U.K. economy to grow at 1.2 percent in 2019 and 1.4 percent in 2020. Uncertainties from Brexit continue to weigh on economic prospects in the United Kingdom and the Eurozone.

Emerging and developing Asia

GDP is expected to grow at 5.9 percent in 2019 and 6.0 percent in 2020, lower than previous forecasts, largely reflecting the impact of tariffs on trade and investment. Chinas growth (year over year) dipped to 6 percent in the third quarter of 2019, the lowest on record since 1992. Escalating tariffs have added downward pressure on an economy already in the process of a structural slowdown and regulatory tightening to rein in debt. Chinas slowing growth is expected to spill over to other emerging Asian economies that are integrated in its supply chains. Elsewhere, Indias economy is set to grow at 6.1 percent in 2019, due to weaker-than-expected domestic demand, and by 7 percent in 2020, as fiscal and monetary stimulus start to have an impact. Indias economy has decelerated in the past few quarters, fueling concerns of a structural slowdown. [REDACTED]

Other emerging markets and developing economies

As indicated in Chart 1, economic growth projections are higher for emerging markets and developing economies. For example, the IMF projects that Sub-Saharan Africa as a region will grow at 3.2 percent in 2019 and 3.6 percent in 2020. However, the regionwide numbers mask considerable differences in the growth performance and prospects of their constituent countries. Also, while growth rates can be high, it is often from a smaller base, which means that it will take some time for these countries to play a bigger role in the global economy and global trade.

In the meantime, there are opportunities to leverage Canada`s diplomatic and international assistance relationships to position us for the future, as other countries are already doing.

International Horizon Issues (November 2019 - March 2020)

North America

Relations with U.S.:

• CUSMA ratification (timelines TBD)
• [REDACTED]
• [REDACTED]
• [REDACTED]
• [REDACTED]
• [REDACTED]

Mexico:

• [REDACTED]
• Central American migration

Europe

Regional:

• [REDACTED] Middle East and African migration
• Developments [REDACTED]

EU/United Kingdom:

• Brexit negotiations (new bilateral trade agreement)
• CETA ratification by all EU member states
• Follow-up from 17th Canada-EU Summit (June 2019)

Ukraine:

• Military training mission (Op UNIFIER) and other security cooperation
• Ongoing political reforms

Russia:

• Crimea and Eastern Ukraine
• [REDACTED]
• [REDACTED]
• Intermediate-range Nuclear Forces (INF) Treaty
• [REDACTED]
• [REDACTED]

Romania:

• [REDACTED]

Latin America and the Caribbean

• Migration flows and impact [REDACTED]
• Venezuela: ongoing political crisis, LIMA group engagement/leadership
• Caribbean: managing hurricane season
• Latin America: [REDACTED]

Africa

• African Continental Free Trade Agreement and growth opportunities
• Political transitions [REDACTED]
• Security situation [REDACTED]
• Sahel: mitigate terrorism, [REDACTED] G7 and broader coordination of international efforts
• Piracy in the Gulf of Guinea and migration to Europe

Global themes/trends to watch

• [REDACTED]
• [REDACTED]
• [REDACTED]
• Democratic institutions, processes, and freedoms under threat
• [REDACTED] and violent extremism
• Peace, stability and climate change
• Scale and drivers of migration
• Diverging approaches to cyberspace, online platforms, new digital technologies and regulations

Multilateral

G7/G20:

• Signature initiatives from Canada's 2018 G7 Presidency – implementation & follow-up
• G7 transition from France to U.S.
• G20 transition from Japan to Saudi Arabia

UN:

• Canada's UN Security Council campaign (vote in June 2020), related events/interactions
• Secretary General Guterres' vision for UN Reform
• Implementation of Agenda 2030 for Sustainable Development (Decade of Action 2020-2030)
• UN Framework Convention on Climate Change – (COP25, December 2019)

WTO:

• Appellate Body appointment stalemate (December 10 deadline)
• WTO reform initiatives (Ottawa Group: transparency, dispute settlement, rule-making)
• [REDACTED]

NATO:

• Foreign Ministers' Meeting (Nov. 2019) and Leaders Summit (Dec. 2019)
• [REDACTED]
• Contributions to NATO missions in Iraq and Latvia
• [REDACTED]

Plurilateral trade agreements:

• CPTPP (Canada ratified Dec 2018)
• [REDACTED]
• [REDACTED]

Treaty on the Non-proliferation of Nuclear Weapons (NPT):

• 2020 Review Conference

Global Replenishments:

• Global Fund (October 2019)
• Green Climate Fund (October 2019)

International Development:

• Nairobi Summit (Nov 2019): 25th anniversary of Int'l Conference on Population and Development
• "Beijing 25+" (March 2020, New York): 25th anniversary of Fourth World Conference on Women

Legal/Regulatory

• [REDACTED]
• [REDACTED]
• [REDACTED]

High profile consular cases

• [REDACTED]
• [REDACTED]
• [REDACTED]
• [REDACTED]

Middle East

Turkey/Syria:

• [REDACTED]
• White Helmets (civilian volunteer group), government as gatekeeper of aid operations

Regional:

• Instability in the Strait of Hormuz
• Regional spillover [REDACTED]
• Global Coalition against Daesh
• Political transitions [REDACTED]

Israel/ Middle East Peace Process (MEPP):

• [REDACTED]
• [REDACTED]
• [REDACTED]

Gulf States:

• Bilateral relations with [REDACTED]
• [REDACTED] humanitarian situation, peace talks
• Human rights concerns [REDACTED]
• [REDACTED]

Iran:

• [REDACTED]

Libya:

• Escalating civil conflict, political and institutional backsliding

Asia

Regional:

• [REDACTED]
• [REDACTED]

China:

• [REDACTED]
• [REDACTED]
• [REDACTED]
• [REDACTED]
• [REDACTED]
• [REDACTED]

Northeast Asia:

• [REDACTED]

North Korea:

• Nuclear negotiations [REDACTED]
• Multilateral efforts [REDACTED]
• Human rights and humanitarian situation

South Asia:

• Situation [REDACTED]
• [REDACTED]

Afghanistan:

• [REDACTED]
• Peace process

Myanmar:

• Rohingya crisis [REDACTED]
• Reinforce democratic transition

The Department at a Glance

Issue

Global Affairs Canada is responsible for shaping and advancing Canada’s integrated foreign policy, international trade and international assistance objectives, and supporting Canadian consular and business interests. We have 10,707 employees working in Canada and in 178 missions in 110 countries around the world with a total budget of $6.7 billion.

Who We Are

Canada’s first foreign ministry was established in June 1909. Since then, the department has progressively transformed itself to reflect the changing international environment. The most significant transformations include its amalgamation with the Department of Trade and Commerce in 1982 and with the Canadian International Development Agency in 2013.

While the legal name of the department (pursuant to the Department of Foreign Affairs, Trade and Development Act of June 26, 2013) remains the Department of Foreign Affairs, Trade and Development, its public designation under the Federal Identity Program is Global Affairs Canada.

What We Do

Global Affairs Canada manages Canada’s diplomatic and consular relations with foreign governments and international organizations, engaging and influencing international players to advance Canada’s security and prosperity in a dynamic global context.

The department develops and implements Canada’s political, trade and international assistance policy and programming priorities based on astute analysis, consultation and engagement with other government departments, Canadians and international stakeholders.

The department’s work is focused on five core responsibilities:

1) International Advocacy and Diplomacy:

Promote Canada’s interests and values through policy development, diplomacy, advocacy, and engagement with diverse stakeholders. This includes building and maintaining constructive relationships to Canada’s advantage, primarily through our network of missions; taking leadership on select global issues; and efforts to build strong international institutions and respect for international law.

2) Trade and Investment:

Support increased trade and investment to raise the standard of living for all Canadians. This includes building and safeguarding an open and inclusive rules-based global trading system; support for Canadian exporters and innovators in their international business development efforts; negotiation of bilateral, plurilateral and multilateral trade agreements; administration of export and import controls; management of international trade disputes; facilitation and expansion of foreign direct investment; and support to international innovation, science and technology.

3) Development, Humanitarian Assistance, Peace and Security Programming:

Contribute to reducing poverty and increasing opportunity for people around the world. This includes alleviating suffering in humanitarian crises; reinforcing opportunities for sustainable and equitable economic growth; promoting gender equality and women’s empowerment; improving health and education outcomes; and bolstering peace and security through programs that counter violent extremism and terrorism, support anti-crime capacity building, peace operations and conflict management.

4) Help for Canadians Abroad:

Provide timely and appropriate travel information and consular services for Canadians abroad, contributing to their safety and security. This includes visits to places of detention; deployment of staff to evacuate Canadians in crisis situations; and provision of emergency documentation.

5) Support for Canada's Presence Abroad: 

Deliver resources, infrastructure and services to enable Canada’s whole-of-government presence abroad. This includes the management of our missions abroad and the implementation of a major Duty of Care initiative to ensure the protection of Government of Canada personnel, overseas infrastructure and information.

Legal Responsibilities

The Department is the principal source of advice on public international law for the Government of Canada, including international trade and investment law. Global Affairs Canada lawyers develop and manage policy and advice on international legal issues, provide for the interpretation and analysis of international agreements, and advocate on behalf of Canada in international negotiations and litigation. There are also a number of Department of Justice lawyers at the Department, who provide legal services under domestic law, including on litigation and regulations such as sanctions implementation.

Our Workforce

To deliver on its mandate, the Department relies on a workforce that is flexible, competent, diverse and mobile.

The department counts 10,707 active employees. The majority of them (6,875 – 64 percent) are Canada-Based Staff (CBS), serving either in Canada or at our missions abroad. The remaining 3,832 employees (36 percent of our workforce) are Locally Engaged Staff (LES), usually foreign citizens hired in their own countries to provide support services at our missions. Currently, 56 percent of Canada-based staff are women (compared to 54 percent of LES) and 60 percent have English as their first official language (40 percent French).

A distinctive human resources system allows the Department to meet its complex operational needs in a timely manner. Our staff work in some of the most difficult places on earth, including in active conflict zones. Among the various occupational groups and assignment types, a cadre of rotational employees supports delivery of the Department’s unique mandate through assignments typically ranging between two to four-year periods, alternating between missions abroad and headquarters. They are foreign service officers (in trade, political, economic, international assistance, and management and consular officer streams), administrative assistants, computer systems specialists and executives, including our Heads of Mission.

Heads of Mission serve the Minister further to a cabinet appointment. They develop deep expert knowledge of their countries of accreditation, establish wide networks, and provide advice and guidance on pressing matters of bilateral and international concern. The Head of Mission is responsible for Canada’s “whole of government” engagement in their countries of accreditation and for the supervision of all federal programs present in their mission.

Global Affairs Canada personnel work in Canada and abroad to advance Canadian interests through creative diplomacy ranging from formal negotiations and network building to stakeholder engagement and capacity building. Canadian officials take part in thousands of international meetings every year on a multitude of topics, advancing Canadian interests through formal and informal interactions with representatives from virtually every country on earth. These efforts are aligned carefully with the priorities of the department and are amplified through targeted public diplomacy, including on social media.

The department is also supported by a 24/7 Emergency Watch and Response Centre in Ottawa which is always on guard to assist Canadians in need of consular assistance abroad or to respond in real time to natural disasters and complex emergencies around the globe.

Our finances

The Departments total funding in the 2019-20 Main Estimates was $6.7 billion. This amount is broken down as follows:

• Vote 1 (Operating): $1,743.4 million
• Vote 5 (Capital): $103.1 million
• Vote 10 (Grants and Contributions): $4,192 million
• Vote 15 (LES pension, insurance, social security programs): $68.9 million
• Budget Implementation : $269.5 million
• Statutory items (e.g. direct payments to international financial institutions; contributions to employee benefit plans): $342. 8 million.

The budget distribution by core responsibility of the Department in the 2019-20 Main Estimates was reported as follows:

2019-20 Core Responsibilities and Planned Spending (in millions)

Our network

The departments extensive network abroad counts 178 missions in 110 countries (see attached placemat for an overview of the network). They range in type and status from large embassies, to small representative offices and consulates.

The departments network of missions abroad also supports the international work of 37 Canadian partner departments, agencies and co-locators (such as Immigration, Refugees and Citizenship Canada; National Defence; Canada Border Services Agency; Public Safety; Royal Canadian Mounted Police; Export Development Canada; several provinces).

The departments headquarters offices are located in the Ottawa-Gatineau region. Most staff are located in the first three buildings:

• Lester B. Pearson Building (125 Sussex)
• John G. Diefenbaker Building(111 Sussex)
• Place du Centre (200 Promenade du Portage)
• Queensway Corporate Campus (4200 Labelle)
• Cooperative House (295 Bank)
• National Printing Bureau(45 Sacré-Coeur)
• Fontaine Building (200 Sacré-Coeur)
• Bisson Centre (the Canadian Foreign Service Institute Bisson Campus)

The department also has six Canadian regional offices to engage directly with Canadians, notably Canadian businesses:

• Vancouver
• Calgary
• Winnipeg
• Toronto
• Montréal
• Halifax

Senior leadership and corporate governance

In support of Ministers, the department’s most senior officials are the Deputy Minister of Foreign Affairs (USS); the Deputy Minister of International Trade (DMT); the Deputy Minister of International Development (DME); the Associate Deputy Minister of Foreign Affairs (DMA); and the Coordinator for International Economic Relations (DMX). Sixteen Branches, headed by Assistant Deputy Ministers, report to the Deputy Ministers and are responsible for providing integrated advice across various portfolios, ranging from geographic regions to corporate and thematic issues. (See separate bios)

Canada’s Heads of mission abroad are responsible for the management and direction of mission activities, and the supervision of the official activities of the various departments and agencies of the Government of Canada in the country or at the international organization to which they are appointed.

The department has a robust corporate governance framework with specific committees for audit, evaluation, resource and corporate management, policy and programs.

Senior managers from headquarters and the mission network manage and integrate the department’s policies and resources in this context to maximize our assets, and ensure accountability for the delivery of departmental programs and results. The amalgamated approach in the Department results in more coherent and cohesive international engagement, supported by an integrated organizational structure.

2019-2020 Corporate Governance Committee Structure

Planning and reporting

The department’s annual planning and reporting process is structured around its Departmental Results Framework.

A Departmental Plan establishes the Government’s foreign affairs, international trade and development agenda for the coming year. It provides a strategic overview of the policy priorities, planned results and associated resource requirements for the coming fiscal year. The document is approved by the Ministers and tabled in Parliament (usually in March-April). The Plan also presents the performance targets against which the department will report its final results at the end of the fiscal year through a Departmental Results Report, typically tabled in Parliament in late fall.

A Corporate Plan acts as a companion piece, and is the Department's operational plan, aligning the work of branches and missions with the strategic plans and priorities established by the Departmental Plan and financial and human resources. The Corporate Plan ensures the integration of key enabling functions, such as human resources, IM/IT, communications, business continuity and risk management, into one operational planning process. The Corporate Plan is finalized in time for the start of each fiscal year in April.

Annex

Global Affairs Canada Network Placemat

Global Affairs Canada Organizational Chart

Biographies of senior officials

Deputy Ministers

Marta Morgan, Deputy Minister of Foreign Affairs

On April 18, 2019, Prime Minister Justin Trudeau appointed Marta Morgan to the position of Deputy Minister of Foreign Affairs, effective May 6, 2019.

Prior to joining Global Affairs Canada, since June 2016, Ms. Morgan was deputy minister of Immigration, Refugees and Citizenship Canada. In that previous role, she led the development of immigration policies and programs to support Canada’s economic growth, developed strategies to manage the significant growth in asylum claims and improved client service.

Before that, Ms. Morgan acquired extensive leadership experience in a range of economic policy roles both at Industry Canada and the Department of Finance Canada. In those departments, as assistant deputy minister and associate deputy minister, she provided leadership in telecommunications policy, spectrum policy, aerospace and automobile sectoral policy, and in the development of two federal budgets.

Prior to her time at Industry Canada, Ms. Morgan held positions at the Forest Products Association of Canada, the Privy Council Office, and Human Resources Development Canada.

She has also been a member of the board of the Public Policy Forum since 2014.

Ms. Morgan has a Bachelor of Arts (Honours) in economics from McGill University and a Master in Public Policy from the John F. Kennedy School of Government at Harvard University.

John Hannaford, Deputy Minister of International Trade

On December 7, 2018, the Prime Minister appointed John Hannaford Deputy Minister of International Trade at Global Affairs Canada, effective January 7, 2019.

From January 2015 to January 2019, Mr. Hannaford was the foreign and defence policy adviser to the Prime Minister and Deputy Minister in the Privy Council Office of the Government of Canada. Until December 2014, Mr. Hannaford was the assistant secretary to the Cabinet for foreign and defence policy in the Privy Council Office. Prior to December 2011,

Mr. Hannaford was Canada’s ambassador to Norway. Before that, for two years, Mr. Hannaford was director general of the Legal Bureau of the Department of Foreign Affairs and International Trade. As a member of Canada’s foreign service, he had numerous assignments in Ottawa and at the Canadian embassy in Washington, D. C. , during the early years of his career.

Mr. Hannaford graduated from Queen’s University in Kingston, Ontario, with a Bachelor of Arts in history. After earning a Master of Science in international relations at the London School of Economics, he completed a Bachelor of Laws at the University of Toronto and was called to the bar in Ontario in 1995.

In addition to his work as a public servant, Mr. Hannaford has been an adjunct professor in both the Faculty of Law and the Graduate School of Public and International Affairs at the University of Ottawa.

Vincent Rigby, Associate Deputy Minister of Foreign Affairs

On July 31, 2019, the Prime Minister appointed Vincent Rigby as Associate Deputy Minister of Foreign Affairs at Global Affairs Canada, effective August 12, 2019.

Prior to this appointment, Mr. Rigby was Associate Deputy Minister of Public Safety Canada from July 2017 until August 2019.

From 2013 to 2017, Mr. Rigby was Assistant Deputy Minister of Strategic Policy at Global Affairs Canada, where he was responsible for providing integrated strategic policy advice reflecting the foreign policy, international assistance and international trade streams of the Department. In this capacity, Mr. Rigby also served as the Personal Representative (Sherpa) to the Prime Minister on the G20, supporting three G20 Leaders’ Summits. Mr. Rigby carried out a number of additional roles as Assistant Deputy Minister, including as the Department’s Chief Results and Delivery Officer, G7 Sous-Sherpa, Chief Negotiator for the Post-2015 Development Agenda, and Chair of the Arctic Council’s Senior Arctic Officials.

Before the creation of Global Affairs Canada, Mr. Rigby was Vice-President of the Strategic Policy and Performance Branch of the former Canadian International Development Agency (CIDA). In this role, Mr. Rigby was responsible for developing and coordinating Canada’s international assistance policy as well as overseeing the performance management and evaluation of Canada’s development programme.

From 2008 to 2010, Mr. Rigby was the Executive Director of the International Assessment Secretariat (IAS) at the Privy Council Office (PCO). Mr. Rigby was also Afghanistan Intelligence Lead Official while at PCO, responsible for coordinating the Canadian intelligence community in support of Canada’s Afghanistan mission.

Before arriving at PCO, Mr. Rigby was Assistant Deputy Minister (Policy) at the Department of National Defence (DND) from 2006 to 2008. Over his 14 years at DND, Mr. Rigby held a number of other positions within the Policy Group, including Director General Policy Planning, Director of Policy Development and Director of Arms and Proliferation Control Policy. Prior to joining DND, he was a defence and foreign policy analyst at the Research Branch of the Library of Parliament, from 1991 to 1994.

Mr. Rigby holds an MA in diplomatic and military history from Carleton University in Ottawa.

Jonathan T. Fried, Coordinator, International Economic Relations

Mr. Fried is the Personal Representative of Prime Minister Justin Trudeau for the G20 and Coordinator for International Economic Relations at Global Affairs Canada, with a horizontal mandate to ensure coherent policy positions and government-wide strategic planning in international economic organizations and forums regarding, for example, Canada-Asia and other international trade and economic issues.

He served as Canada’s Ambassador and Permanent Representative to the WTO from 2012 to 2017, where he played a key role in multilateral trade negotiations, including as Chair of the WTO’s General Council in 2014 and chair of the Dispute Settlement Body in 2013. He was the co-Chair of the G20’s Trade and Investment Working Group with China in 2015, and the “Friend of the Chair” for Germany in 2016. Formerly Canada’s Ambassador to Japan; Executive Director for Canada, Ireland and the Caribbean at the International Monetary Fund; Senior Foreign Policy Advisor to the Prime Minister; Senior Assistant Deputy Minister for the Department of Finance and Canada's G7 and G20 Finance Deputy. Mr. Fried has also served as Associate Deputy Minister; Assistant Deputy Minister for Trade, Economic and Environmental Policy; Chief Negotiator on China’s WTO accession; Director General for Trade Policy; and chief counsel for NAFTA.

Mr. Fried is a member of the World Economic Forum’s Global Agenda Council on Trade and Investment and of the Steering Committee of the e15 initiative on Strengthening the Global Trading System. He serves on the advisory boards of the Columbia Center on Sustainable Investment, the World Trade Symposium and the Central and East European Law Institute. Mr. Fried was named in 2015 as the inaugural recipient of the Public Sector Lawyer Award by the Canadian Council on International Law to honour his service and contribution to public international law.

Organizational Structure

Mission Network

Minister of International Trade Upcoming Events and Key Decisions

High-profile international events

• World Economic Forum, Davos, Switzerland (January 21–24, 2020): 2020 Davos theme: "Stakeholders for a Cohesive and Sustainable World'. [REDACTED]

Additional travel and events for consideration

• [REDACTED]

Possible bilateral travel

• [REDACTED]
• [REDACTED]
• [REDACTED]
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Treasury Board

• Approval of the Departmental Results Report by November 29th as it is due to Treasury Board on December 2nd, 2019

Cabinet

• [REDACTED]
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Parliament

• Budget Letters
• [REDACTED]
  • Decision to approve/table the following (all due within the first 15 sitting days):
    • Access to Information and Privacy Annual reports for Export Development Canada, ExInvest, The Canadian Commercial Corporation and Invest in Canada; 
    • Directive to Export Development Canada on loan agreement with General Dynamics Land Systems

Policy Decisions

• [REDACTED] urgent approval
• [REDACTED] November 2019
• [REDACTED] November 2019
• [REDACTED] December 2019
• [REDACTED] December 2019
• [REDACTED] December 2019
• [REDACTED] January 3, 2020
• [REDACTED] January 2020

Minister of International Trade Key Portfolio Responsibilities

Issue

• The Minister of Foreign Affairs has overall responsibility for conducting the external affairs of Canada, including international trade and commerce and international development, as outlined in the Department of Foreign Affairs, Trade and Development Act (2013).
• The Act specifies that the Minister of International Trade’s role is to “assist the Minister of Foreign Affairs in carrying out his or her international trade responsibilities, and to promote the expansion of Canada’s international trade and commerce”

Context

The global economy impacts all Canadians. A fifth of all jobs in this country are directly linked to international trade, and Canadian companies are among the most successful on the international stage. This has made the role of the Minister of International Trade and the trade-related work of Global Affairs Canada increasingly critical in the ever-evolving global economy.

In this capacity, your key responsibilities will include: building and safeguarding an open and inclusive rules-based global trading system; support for Canadian exporters and innovators in their international business development efforts; negotiation of bilateral, plurilateral and multilateral trade agreements; administration of export and import controls; management of international trade disputes; facilitation and expansion of foreign direct investment; and support to international innovation, science and technology. You will be working in close collaboration with the Minister of Foreign Affairs as the Minister responsible for the whole Department, and the Minister of International Development, responsible for Canada’s development and humanitarian assistance activities.

Experts across Global Affairs Canada support the international trade mandate. This includes dedicated expertise in the Trade Policy and Negotiations Branch (see Key Priorities brief on Trade Policy and Negotiations), the Trade Commissioner Service (see brief on the Trade Commissioner Service) and staff in bilateral and functional branches.

In addition to the support provided by the department, the Minister of International Trade is also responsible for certain other arms’ length entities and statutory obligations, described below.

Portfolio responsibilities within Global Affairs Canada

Invest in Canada (IIC)

IIC is a departmental corporation mandated to coordinate with all levels of government and the private sector to increase Canada’s ability to attract high-impact Foreign Direct Investment (FDI) across the country.

As a departmental corporation, IIC functions with greater autonomy from the core public administration than do ministerial departments. It must however comply with any general or special direction given by the Minister in carrying out its mandate. The Minister of International Trade generally communicates these directions through an annual Statement of Priorities and Accountabilities (SPA) letter.

IIC was formally established under the Invest in Canada Act in March 2018. Since its inception, the IIC team has met with over 175 potential investors. Its first Chief Executive Officer is Ian McKay, appointed in March 2018.

Canadian Ombudsperson for Responsible Enterprise (CORE)

As special adviser to the Minister of International Trade, the Ombudsperson is mandated to: advise stakeholders on responsible business conduct best practices; review allegations of human rights abuses arising from the operations of a Canadian company abroad in the mining, oil and gas, and garment sectors; conduct joint and independent fact-finding; make recommendations; monitor implementation of those recommendations; and report publicly throughout the process.

The CORE is one of Canada’s two non-judicial dispute resolution mechanisms to assist with company - community dialogue facilitation and dispute resolution, complementing Canada’s National Contact Point for the OECD Guidelines for Multinational Enterprises (NCP).

The creation of the Canadian Ombudsperson for Responsible Enterprise position was announced in January 2017. Ms. Sheri Meyerhoffer was appointed in April 2019 as Canada’s first CORE and is working with the Department to ensure the Office is operational as soon as possible.

Portfolio Agencies

The Minister for International Trade is designated as the Minister with respect to Export Development Canada (EDC) as well as for the Canadian Commercial Corporation (CCC). Both are crown corporations that operate at arm’s length from government. They follow a private-sector model, but with a mixture of commercial and public policy objectives. The Minister provides them annually with a Statement of Priorities and Accountabilities (SPA), which sets out the strategic direction that the Minister would like them to pursue, in line with Global Affairs Canada’s trade objectives.

Export Development Canada (EDC) and its subsidiary, FinDev

As Canada’s export credit agency, EDC’s mandate is to support and develop export trade between Canada and other countries, as well as Canadian capacity to engage in that trade and to respond to international business opportunities. It also has a mandate to provide development financing and other forms of development support in a manner consistent with Canada’s international development priorities. Its CEO is Mairead Lavery, appointed in February 2019.

In 2018, EDC reported facilitating $104.6 billion in exports, foreign investment, and trade development opportunities. EDC served some 13,000 plus customers in more than 140 markets. EDC’s range of services includes trade financing, credit insurance, bonding and guarantees, equity investments, and knowledge products.

As outlined in the Export Development Act, the Government must undertake a Legislative Review of EDC every ten years. The latest Legislative Review was launched in June 2018. The first stage of the review was completed when the Minister tabled the Government’s report in Parliament in June 2019. The report will next proceed to study by a Parliamentary committee.

FinDev Canada, formally known as the Development Finance Institute Canada (DFIC) Inc., is a development finance institution focused on supporting inclusive private sector growth and sustainability in developing markets. A wholly owned subsidiary of EDC, FinDev Canada nevertheless has its own mandate, governance and investment strategy separate from EDC's. EDC is accountable to Parliament for FinDev Canada through the Minister of International Trade and in consultation with the Minister of International Development. FinDev Canada’s Managing Director is Paul Lamontagne, appointed in February 2018.

Canadian Commercial Corporation (CCC)

The CCC has the mandate to help Canadian exporters sell to foreign government buyers through government-to-government contracting. The Corporation’s business lines support Canadian companies by contracting in a variety of industries and sectors.

Established in 1946 pursuant to the Canadian Commercial Corporation Act, CCC reported facilitating $3.4 billion in commercial transactions in 2018-2019. During that period CCC was active in 74 countries, providing government to government contracting expertise to 162 customers, among other service offerings.

Its previous president and CEO was Martin Zablocki, appointed in April 2014. He retired effective September 16, 2019. The board of the CCC appointed a President and CEO on an interim basis for a period of 90 days.

In September 2019, an intention for Global Affairs Canada to undertake a comprehensive review of the CCC was made public. Key themes outlined for the review included the CCC’s: mandate, governance and functions; impact for exporters, including potential to support more SMEs; coordination and fit with other federal business development and trade services; and capacity to maintain alignment with the Government of Canada’s international, defence, and economic policy priorities. Global Affairs Canada has issued a Request for Proposals for an external contractor to assist with a review, should it move forward.

Other Statutory obligations / Parliamentary actions

While departmental reporting obligations lie primarily with the Minister of Foreign Affairs, the Minister of International Trade has a number of statutory obligations to table certain reports and parliamentary returns in the House of Commons and the Senate. The key annual tablings are as follows:

• Annual Reports on operations as well as annual Corporate Plans on behalf of EDC and CCC, pursuant to the Financial Administration Act;
• Annual Reports on behalf of EDC, CCC and IIC on the administration of the Access to Information Act and Privacy Act, pursuant to those Acts; and
• An Annual Report on the operation of the Canada-Colombia Free Trade Agreement, pursuant to the agreement’s implementation act.

The Minister is typically responsible for introducing the implementing legislation for free trade agreements in Parliament (the Canada-United States-Mexico Agreement being the main exception).

The Minister is also normally designated under implementing legislation for free trade agreements as Canada’s principal representative on the Commissions of Free Trade Agreements.

The Minister is also responsible for Order-in-Council appointments for certain organizations (e.g. Canadian seats on the APEC Business Advisory Council).

Key priorities: Trade policy and negotiations

Issue

Canada’s trade policy and negotiations are facing a challenging global environment characterized by broad uncertainty, increased protectionism, unilateralism, and trade tensions among key partners.

Context

As a country that relies on trade and investment for its prosperity, Canada continues to develop and maintain access to foreign markets for its goods, services and investments; manage key trading relationships while diversifying opportunities; and maximize the benefits of trade for all Canadians.

In the face of growing trade tensions, protectionism, and aggressive unilateralism, Canada faces the challenge of maintaining an open and transparent global trading system.

Global Affairs Canada’s Trade Policy and Negotiations Branch leads on the development and implementation of Canadian trade policy, including negotiation and implementation of all international trade, investment and air transportation agreements; resolution of bilateral market access irritants; litigation and dispute settlement; and the administration of trade controls under the Export and Import Permits Act. The Branch collaborates with a wide range of partners including federal departments, and maintains an active dialogue with provinces, territories, industry representatives and civil society.

Trade policy priorities

Strengthening Canada-U.S. Relations 

Canada is the largest merchandise export destination for the United States, and imports more goods from the United States. than from China, Japan, and the United Kingdom. combined. In 2018, total bilateral trade reached $969 billion – 63 percent of Canada’s overall trade. Continued stability and predictability in this commercial relationship is a key priority, including by implementing the Canada-United States-Mexico Agreement (CUSMA) and reducing enduring tensions.

WTO and Multilateral Cooperation

Canada depends on a strong multilateral trading system, with the WTO at its core, helping to enforce transparency, rules, and predictability. However, the WTO finds itself at a crossroads. Beyond difficulties in concluding negotiations in a number of areas, the organization is facing numerous challenges, including divergent positions on trade priorities; lack of consensus on how to treat developing countries; an overloaded dispute settlement system; and a stalemate surrounding vacancies on the Appellate Body.

Canada plays a leadership role on WTO reform, including by chairing the “Ottawa Group” of likeminded WTO members^{Footnote 1} that seeks to find ways to strengthen the WTO. Its focus is in three main areas of work: transparency, dispute settlement, and rule-making. Canada is also working with other WTO members on a solution to the United States blocking new Appellate Body member appointments, which will prevent it from hearing new appeals after December 10, 2019 (see “WTO” brief).

Canada is also actively engaged in other multilateral institutions that play important trade policy roles including the Organization for Economic Co-operation and Development (OECD), APEC, the G7, and the G20.

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Consolidating our successful negotiations

Diversification of trading partners has been a long-standing Canadian trade policy priority, facilitated through the negotiation of multilateral and bilateral regional free trade agreements (FTAs).

Canada has 14 bilateral and regional FTAs in force, covering 51 countries and two thirds of global GDP. Among the most significant are the recently implemented Comprehensive Economic and Trade Agreement (CETA) ^{Footnote 2} , and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)^{Footnote 3} . The total GDP gains for both CETA and CPTPP are estimated to amount to $12.8 billion when the agreements are fully implemented.

Seeking new FTA partners

Canada is negotiating comprehensive FTAs with Mercosur^{Footnote 4} and the Pacific Alliance^{Footnote 5}. Canada has also recently concluded FTA exploratory discussions with the Association of Southeast Asian Nations (ASEAN); and is engaged in discussions with several partners (Ukraine, EFTA^{Footnote 6} ) on potential modernization of existing agreements. In addition, Canada has 37 Foreign Investment Promotion and Protection Agreements (FIPAs) in force, and air transport relationships with 123 countries, including 50 Open Skies-type Air Transport Agreements.

Inclusive trade

Canada seeks to ensure that the benefits of trade and investment are more widely shared both in Canada and abroad, including by advancing trade policies and provisions in trade agreements to increase the participation of underrepresented groups in international trade, such as businesses owned by women and Indigenous peoples, and small and medium-sized enterprises (SMEs). Canada also consults with a broad range of stakeholders in developing its trade policy positions and objectives.

Brexit

The impact of Brexit on Canada-United Kingdom trade relations will depend on how the United Kingdom leaves the European Union. Discussions to transition the CETA to a transitional trade agreement remain paused as a result of the United Kingdom’s March 2019 announcement of its Most-Favoured Nation (MFN) applied tariff schedule for a no-deal Brexit. (Please see separate “Brexit” note).

Disputes and Sensitivities

Canada continues to use negotiations, litigation, and advocacy to protect its trade interests. These include trade remedy investigations by the United States (i.e. softwood lumber, steel, solar panels, wind towers); WTO disputes with Brazil (Bombardier C-Series) and Australia (national treatment of wine). Canada has also recently requested consultations at the WTO with China (canola).

International Obligations: Trade Controls

The Export and Import Permits Act delegates to the Minister of Foreign Affairs wide discretionary powers to control the flow of import and export of goods contained in specified lists to support domestic priorities, such as dairy supply management, or to ensure consistency with Canada’s defence and foreign policy, (i.e. CETA origin quotas, or including the export of dual-use military and strategic goods and technology). In practice, the Minister of International Trade Diversification provides policy direction in most areas involving market access and trade policy.

Assistance for Developing Country Partners

Canada provides trade-related support and capacity building for developing countries to foster sustainable economic growth by building economic foundations, growing businesses and investing in people in partner countries. These activities are delivered through various channels, including bilateral and multilateral programming and partnerships with stakeholders such as the Trade Facilitation Office Canada.

Building on this strong foundation, in 2019 Canada launched the Expert Deployment Mechanism (EDM) for Trade and Development, a seven-year project that provides technical assistance to help developing countries negotiate, implement, and benefit from bilateral/regional free trade and investment agreements with Canada. Informed by Canada’s trade negotiations agenda, the EDM identifies eligible priority countries/regions for each fiscal year and develops a technical assistance package that responds to the partner country’s needs. [REDACTED]

The Trade Commissioner Service

Issue

• The Trade Commissioner Service (TCS) helps Canadian firms identify, pursue, and execute on export sales and other global opportunities.
• The TCS provides advice on regulatory issues, foreign investment, innovation and corporate social responsibility.
• The TCS also promotes Canada as a top destination for foreign direct investment (FDI).

Context

For more than 120 years, Global Affairs Canada’s Trade Commissioner Service (TCS) network of international business development professionals (“Trade Commissioners”) has helped Canadian businesses grow through export sales, foreign investment, and other forms of international commercial partnership. Every day, some 945 Trade Commissioners located in 160 missions abroad, and 95 Trade Commissioners anchored in six regional hub offices across Canada, work to help Canadian businesses prepare for international markets; assess market potential; find qualified contacts; and resolve business problems.

Trade Commissioners serve clients from locations across Canada and around the world.

On occasion, Trade Commissioners provide trade advocacy support to clients who have signed an Integrity Declaration following a discussion on the corruption risks and responsible business conduct climate in their markets, and Canada’s obligations under the Corruption of Foreign Public Officials Act. The TCS network also promotes Canada as a destination for job-creating FDI.

The TCS administers “CanExport”, a suite of grants-and-contributions programs that provide over $35 million per year in financial assistance to help small and medium-sized enterprises (SMEs), industry associations, innovators, and Canadian communities achieve their international business development goals.

The largest CanExport program is dedicated to SMEs, and enables recipient firms to undertake activities such as business travel, market research, participation in trade fairs, adaptation and translation of marketing tools, intellectual property protection, certification of contracts, as well as expert advice on business, legal or tax matters. To date, CanExport for SMEs has helped more than 1,500 SMEs undertake over 1,800 projects targeting more than 125 markets around the world, resulting in over $376 million in new exports.

The TCS serves Canadians through six regional hub offices located in Vancouver, Calgary, Winnipeg, Toronto, Montreal, and Halifax, and satellite offices in other regional centres. The TCS places a strong emphasis on serving diversity clients. For example, under its Business Women in International Trade initiative, the TCS organizes women-focused trade missions and provides other offerings oriented toward women-owned businesses.

On average, TCS clients export 19.8 percent more in value and to 24.8 percent more markets compared to non-clients. It is estimated that every dollar invested in the TCS results in $26 dollars in increased exports. The vast majority of TCS clients are SMEs. The TCS served approximately 15,000 clients in 2018-19, and achieved 91.7 percent client satisfaction.

Share of TCS services provided by region delivered.

Key TCS Initiatives

• Helping High-Potential Firms Succeed: The TCS is expanding its support tailored to high-potential firms. The Canadian Technology Accelerator (CTA) program offers high-intensity programming to help selected highgrowth, high-potential technology firms scale-up by connecting them with opportunities in global innovation centres. Building on the program's success in U.S. centres, CTAs were expanded to the Asia-Pacific in 2019. Other high-intensity TCS services will include increased Key Account Management and a new business mentorship program. The TCS will also continue to engage with the Accelerated Growth Service (AGS). The AGS is an initiative led by Innovation, Science and Economic Development Canada (ISED), and delivered in collaboration with 10 other federal organizations. The AGS aims to help growth-oriented Canadian businesses access and fully leverage the government services they need to expand. For example, the service provides firms with a dedicated advisor to help them identify and connect with the government programs best suited to support their business development objectives.
• Free Trade Agreement (FTA) Promotion: Continue efforts to ensure that Canadian firms are aware of and taking full advantage of market access afforded by Canada's FTAs.
• International Education: Since 2018, the TCS has facilitated more than 300 international education sector contracts and agreements, and provided services to over 800 institutions and organizations offering education services and products. Under the International Education Strategy, the TCS aims to attract more students from a greater number of countries to study at a broader range of Canadian institutions.
• Science, Technology and Innovation: The TCS supports the competitiveness of Canadian firms by helping them secure international innovation partnerships and access to technology and technology-related expertise abroad, as well as technology-based investments.
• Science, Technology and Innovation: The TCS supports the competitiveness of Canadian firms by helping them secure international innovation partnerships and access to technology and technology-related expertise abroad, as well as technology-based investments.

TCS Priorities

• Trade Growth and Diversification: Ensure TCS services and programs are optimized to help Canadian firms grow through international opportunities. Deploy trade support resources where demand and economic potential
• Strategic Partnerships Strengthened: Sustain strong relationships with key partners in the federal trade ecosystem (i.e. Export Development Canada, Canadian Commercial Corporation, Business Development Canada, the Department of Innovation, Science, and Economic Development, and National Research Council – Industrial Research Assistance Program) to ensure that businesses can easily navigate the full range of federal international business development services and enjoy seamless referrals.
• FDI Attraction: The TCS and Invest in Canada share the mandate to increase FDI by attracting, retaining and expanding FDI in Canada, in support of long-term economic growth. This is done in close cooperation with federal, provincial, and municipal partners.
• Digital Transformation: The TCS is enhancing client experiences by embracing new methods and tools to improve how it delivers its services and resources.

TCS Ecosystem

The TCS works closely with three federal corporations mandated to support trade and FDI attraction: Export Development Canada (EDC), the Canadian Commercial Corporation (CCC), and Invest in Canada (IIC) (see Minister’s Key Portfolio Responsibilities brief). The TCS also works closely with a range of other federal partners in helping Canadian firms fully leverage global opportunities. These partners include ISED, Agriculture and Agri-Food Canada, the federal Regional Development Agencies, Business Development Canada, Natural Resources Canada, and Canadian Heritage, among others.

Trade Litigation

Issue

As an exporting nation, Canada relies on a rules-based trading framework to protect and promote its economic interests, including using trade litigation as a means to enforce international obligations.

Context

To advance Canadian economic and policy interests, Canada regularly uses trade litigation, mostly at the WTO and under NAFTA Chapter 19 on anti-dumping and countervailing duty matters. Canada’s trading partners also regularly challenge Canadian federal and provincial actions, mainly at the WTO, and foreign investors challenge federal and provincial actions through investment provisions, mostly under NAFTA Chapter Eleven on investment. Litigation is also possible under Canada’s other Free Trade Agreements (FTAs) and Foreign Investment Protection and Promotion Agreements (FIPAs).

The Minister for International Trade has the authority to decide whether Canada should start trade dispute settlement proceedings and generally has political oversight over ongoing cases brought by and against Canada. The Deputy Minister of International Trade and the Trade Policy and Negotiations Branch generally have policy responsibility for issues arising in the litigation, in consultation with other government Departments and provincial governments, as appropriate. The Assistant Deputy Minister of the Trade Policy Branch also generally decides if Canada will make legal submissions in WTO disputes between other parties (as a “third party”).

All of Canada’s disputes are litigated by federal government lawyers at the Trade Law Bureau (JLT), a joint Global Affairs Canada-Department of Justice unit, except domestic litigation in Canada or another country, in which case the Department of Justice or foreign lawyers conduct the litigation under JLT’s supervision.

WTO Dispute Settlement

Together with the United States, EU, and China, Canada is a top user of the WTO’s two-stage binding dispute settlement system. WTO disputes begin with a WTO Member filing a request for consultations to challenge an action taken by another WTO Member that allegedly violates the WTO Agreement. If consultations do not resolve the dispute, the complainant can force the issue to proceed to a panel of neutral experts to decide if the other member has violated the WTO agreement. The findings of the panel may be appealed to the standing WTO Appellate Body (AB).

If a WTO Member is found to have violated the WTO Agreement and does not take action to resolve the issue, the complainant may “retaliate” by imposing trade measures (normally increased tariffs) on the offending Member up to a specified amount.

While from a Canadian perspective the WTO dispute settlement has generally worked effectively for the last 25 years, due to the U.S. refusal to agree to appointments to the AB, there is a serious upcoming problem relating to its functionality, which will have a significant impact on the enforceability of panel reports (see the briefing note on the WTO).

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Currently, Canada is a complainant in five WTO disputes, including challenging the United States on their softwood lumber trade measures. Canada has also requested WTO consultations with China with respect to its restrictions on canola imports. Canada is a respondent in two WTO disputes, brought by Australia (challenging rules for wine sales), and Brazil (challenging support for Bombardier). Canada is also a third party in many WTO cases.

Since 1995, Canada has brought 40 cases in the WTO, been a respondent in 23, and been a third party in 147. Although Canada has not been successful in all of its offensive cases, Canadian litigation has successfully resulted in the removal of trade measures in areas such as softwood lumber (United States), agricultural exports (e.g. beef exports to Korea and the EU, cattle and hog exports to the United States, and grains to the EU), and automotive parts (China). The removed measures often affected trade in the billions of dollars, such as U.S. softwood lumber measures (litigation led to an agreement that returned more than $5 billion to Canadian exporters) and U.S. pork and beef labelling (the economic effects of the U.S. measures on Canada were estimated at approximately $3 billion annually). Canada’s success in these cases has also reinforced the importance of the rules-based trading system.

Investor-State Dispute Settlement Investor-state dispute settlement (ISDS)

Investor-state dispute settlement (ISDS) is a mechanism in most of Canada’s FTAs and FIPAs, most notably in NAFTA Chapter Eleven. A foreign investor can bring an ISDS claim that Canada has violated obligations in those treaties, usually alleging discrimination or other unfair treatment, and similarly a Canadian investor can bring a claim against other states. Under the Canada-United States Mexico Agreement (CUSMA), the ISDS mechanism will not apply to Canada, nor will Canadian investors have access to ISDS. NAFTA’s existing ISDS mechanism will continue to apply for three years after termination of the Agreement for investments made prior to the entry into force of CUSMA. Given ISDS provisions in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Canadian investors will continue to have access to such provisions vis-à-vis Mexico.

Investor-state arbitrations are heard by ad hoc tribunals, except under the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), which will have a standing tribunal, although this is not yet in place. There is no appeal mechanism for investor-state arbitrations (except under CETA, which provides for the creation of an Appellate Tribunal); awards by tribunals or the CETA Appellate Tribunal are final and binding on the parties involved. Canada is currently responding to eight disputes, seven under NAFTA Chapter Eleven and one under the Canada-Egypt FIPA. Decisions in one NAFTA dispute (Lone Pine) and in the FIPA dispute (brought by Global Telecoms Holdings (GTH)) are expected in the coming months. [REDACTED]

Over the years there have been 44 investor-state cases against Canada, in which investors have claimed approximately CAD$14 billion. Of the 37 of those cases which have been concluded or are inactive, claimants have only been awarded two percent of the amounts claimed (approximately CAD$190 million in settlement and awards paid net of cost awards to the Canadian government). At least 46 cases have been brought by Canadian investors against other states, with some significant rulings in their favour in the billions of dollars.

NAFTA Chapter 19 on anti-dumping and counter-vailing duty matters

NAFTA Chapter 19 has received significant attention as a priority for Canada in NAFTA, particularly for the softwood lumber industry. It allows an affected party to challenge certain import charges imposed by a NAFTA country through an international mechanism rather than through domestic courts. Panels include independent experts who are nationals of the NAFTA countries involved in the litigation, who decide the dispute on the basis of the domestic law of the challenged country. Canada is currently involved in three cases challenging United States import charges on softwood lumber from Canada. However, only one of those panels (Injury) is operating [REDACTED]

Since its inception, there have been 19 cases against Canada and 46 cases have been brought under NAFTA Chapter 19 by Canadian companies in other NAFTA countries. Most notably, under Chapter 19, Canada has on numerous occasions challenged determinations by the United States Department of Commerce relating to softwood lumber imports from Canada. Chapter 19 was preserved in the CUSMA outcome and incorporated into Chapter 10 (Trade Remedies).

State-to-State Dispute Settlement

Canada’s FTAs also provide for state-to-state settlement of trade disputes. As with WTO litigation, state-to-state litigation involves panels of independent experts deciding whether a responding party has violated its treaty commitments. Unlike the WTO, there is no appeal from those decisions. Some of those agreements require the Minister for International Trade or other Ministers to appoint “rosters” of potential panel members. Only one state-to-state dispute that Canada has brought under NAFTA Chapter 20 is currently active, challenging U.S. safeguard measures on solar imports from Canada. However, it has not proceeded due to U.S. blockages. Canada has never brought a state-to-state challenge under an existing FTA other than NAFTA, but it is quite possible that it could do so in future, particularly given the WTO AB impasse. NAFTA state-to-state dispute settlement was preserved as a part of the CUSMA outcome, but certain challenges to panel formation remain.

Trade Controls Litigation

The Minister for International Trade is normally delegated the authority by the Minister of Foreign Affairs to issue permits under the Export and Import Permits Act (EIPA) related to economic matters, including import permits for supply-managed goods such as dairy, eggs, and chicken, or export permits for controlled goods, and to track volumes of steel and softwood lumber. Affected parties can challenge permit decisions before the Federal Court, with the possible result that the Minister is required to reconsider the permit decision based in part on direction from the Court. The Minister for International Trade is currently a respondent in one judicial review application under the EIPA concerning the former Minister’s decision to deny import permits for certain chicken products (Foster Farms). There is also a challenge to export permits issued by the Minister of Foreign Affairs under the EIPA for Light Armoured Vehicles to Saudi Arabia.

Since entering into force, there have also been at least 16 EIPA cases (two on export; 14 on import), including several cases that have recognized broad Ministerial discretion to issue permits under the EIPA.

International Trade

Issue

• Canada is an open economy dependent on rules-based international trade and investment.
• Exports remain heavily concentrated towards the United States despite preferential access achieved through Free Trade Agreements with other key markets.
• Canada has worked to facilitate and encourage firms to diversify all aspects of exports: where, what, how and by whom.

Context

Trade accounted for 66 percent of Canada’s GDP in 2018, underlining its vital importance to the economy.

Chart 1: Canadian Goods and Services Trade

[REDACTED due to copyright]

Open markets are critical to Canada’s success as a mid-sized trading nation. In addition to the importance of maintaining access to the U.S. market, Canada has depended on a rules-based international trade regime, with the WTO at its core. Canada is presently facing the challenge of maintaining this trading system in the face of global uncertainty and rising protectionist pressures (See “WTO” brief). Bilateral and regional free trade agreements also facilitate Canada’s participation in international trade by providing Canada with preferential access to a number of key markets. Canada now has 14 free trade agreements in force, covering 51 countries and two-thirds of global GDP (further information on Canada’ trade agreements and promotion efforts are covered in specific briefs).

Trade in Goods and Services

Canada’s exports of goods and services increased over six percent in 2018, while imports rose over 5 percent, both in line with growth since the global financial crisis, although Canada moved from posting annual trade surpluses prior to the crisis to deficits since.

“Where”: The United States is Canada’s largest trading partner. For example, in 2018, the United States accounted for three-quarters of Canada’s merchandise exports (see Chart 2) and more than half of merchandise imports. A large proportion of Canadian exporters sell only to the United States, and of those that move into new markets most export to the United States first. [REDACTED]

At the same time, this overall concentration of trade with the United States is down from two decades ago. While the value of merchandise goods exports to the United States climbed five percent in 2018, exports to non-U.S. destinations grew even faster, up almost 9.8 percent. Among Canada’s major non-U.S. trading partners, exports to China (+16 percent), South Korea (+9.7 percent) and Japan (+9.1 percent) recorded the fastest growth.

Chart 2: Share of Canadian merchandise exports, 2000 vs. 2018

[REDACTED due to copyright]

“What”: Canada’s top merchandise exports include energy (22 percent), automobiles and parts (13 percent) and mechanical machinery and equipment (eight percent). Many other sectors are primarily export-oriented. For example, Canada is the fifth largest agricultural exporter in the world, with a significant number of producers dependent on international trade.

Services also represent an important segment of the Canadian economy, accounting for about 70 percent of GDP and a large share of employment. Canadian services exports grew for the ninth consecutive year, currently account for about 17 percent of direct exports, and contribute to the export of related goods. For example, in 2018, there were more than 572,400 international students in Canada and it is estimated that they spent around $21.6 billion on tuition, accommodation, and other spending. Tourism contributed some $9.7 billion to Canada’s GDP and generated more than 583,000 jobs.

“How”: Expanding Canada’s exports will depend on being part of global value chains and require the support of transportation and infrastructure networks including ports, railways and airports accommodating the flow of goods and people. The ways firms can sell their goods and services are also changing, especially with the Internet and digital technologies facilitating transactions and increasingly being used for the cross-border delivery of digital products. The ability of Canadians to fully capitalize on such opportunities requires that government policies and regulations keep pace.

“Who”: While larger firms account for the bulk of trade, Canada has sought to increase the participation of under-represented groups in international trade, and to ensure that Canadian companies of all sizes are aware of the potential opportunities created by Canada’s trade agreements. For example, SMEs account for 90 percent of private sector jobs in Canada. However, only about 12 percent of SMEs export goods and services outside of Canada. Notably, research shows that the proportion of exporting SMEs that are women-owned in Canada doubled from 7.4 percent of all SME exporters in 2011 to 15 percent in 2017. The results from a survey of Indigenous entrepreneurs show that in 2014, the proportion of Indigenous owned SMEs that exported was twice that of all Canadian SMEs – 24 percent versus 12 percent, respectively.

The role of foreign affiliates in the Canadian economy and international trade also must be appreciated. Foreign affiliates account for over half of Canada’s total merchandise trade (also employing 1.9 million Canadians and 38 percent of total R&D conducted by businesses in Canada). Meanwhile, Canadian foreign affiliates abroad sold more goods and services than was generated by Canada’s conventional exports, helping their Canadian parent firms stay competitive, gain access to technology and other inputs, and concentrate on headquarters activities.

Foreign Direct Investment (FDI)

FDI is an important driver of economic growth and contributes to connecting Canadian industries to global value chains. Indeed, foreign affiliates operating in Canada employ 1.9 million Canadians (representing 12 percent of employment) and export $31 billion of merchandise and services (representing 48 percent of Canada’s exports) in 2016.

Overall, Canada’s FDI stock reached $877 billion in 2018. Top five countries investing in Canada, correcting for FDI transiting through low-tax jurisdictions, are the United States, the United Kingdom, Japan, Switzerland and Brazil.

Chart 3: Share of FDI in Canada, total book value 2018

[REDACTED due to copyright]

FDI flows fluctuate from year to year, with at times sharp increases or drops. Global FDI flows saw such sharp drop in 2018. Many reasons underlie fluctuations; last year’s trends are generally attributed to weaker global economic growth, trade tensions, political uncertainty, and the effects of recent U.S. tax reforms. However, total inflows of FDI into Canada increased by 70 percent in 2018, in contrast to the decrease experienced by most other developed economies. It should be noted that the 2017 flows were affected negatively by the acquisition of two foreign affiliates by Canadian companies in the oil sector and the 2018 flows were back to about the average of levels observed in 2013-16.

To facilitate FDI, Invest in Canada was established in 2018 with the goal of attracting more global investment, which falls within the Minister of International Trade’s portfolio. There are also guidelines for the national security review of investments, administered by the Minister of Innovation, Science and Economic Development (ISED) in close collaboration with the Minister of Public Safety.

Canadian direct investment abroad (CDIA) holdings increased to a total of $1.29 trillion in 2018. Similar to FDI, CDIA is largely dominated by the United States (45 percent of the total stock) then followed by the United Kingdom (8. 4 percent) and Luxembourg (7 percent), although a portion of this CDIA and is probably destined to other countries. Canadian companies heavily invest abroad in the finance and insurance sector (36 percent of the total stock) and mining, oil, and gas extraction (16 percent). In terms of CDIA flows, outflows fell by 38 percent in 2018. This overall decrease masks the diverging trend of a 60 percent contraction of investment in the United States, even as outflows to the rest of the world increased by 48 percent.

Canada – U.S. Relations

Issue

• Constructive relations with the United States remain essential to Canada’s prosperity and security, irrespective of political dynamics in Washington, D.C.
• In the lead up to 2020 elections,U.S. attention will be focused domestically. CUSMA is Canada’s top priority, in addition to continuing to pursue collaboration in areas of mutual interest.

Context

Canada and the United States benefit from a unique relationship, built on many shared values and interests, the close personal and professional ties of our citizens and a deeply integrated economic relationship. Some 385,000 people cross the Canada-U.S. border daily, the longest shared and demilitarized border between any two nations.

Thanks to NAFTA, Canada and the United States enjoy one of the largest trading relationships in the world. In 2018, $499 billion worth of Canadian goods and services exports (71 percent of Canada’s total exports) went to the United States. Canada imported $470 billion of goods and services (62 percent of total imports) from the United States, making Canada its largest single export market (Statistics Canada). Canadian foreign direct investment (FDI) in the United States amounted to $595 billion, making Canada the second largest source of cumulative FDI in the United States (12 percent of total FDI into the United States). U.S. investment in Canada is worth $406 billion, the largest source (46 percent of total) of FDI in Canada. Canada is the largest, most secure, foreign source of energy for the United States (including oil, natural gas and hydro-electricity).

Canada and the United States have traditionally enjoyed a close, positive and integrated relationship, despite irritants (e.g. softwood lumber). [REDACTED] Canada to create an augmented standard for engagement at all levels with U.S. opinion shapers. [REDACTED] Canada has engaged on priority issues with key influencers, including from both parties in Congress and at the state and local levels. [REDACTED]

President Trump is intensifying his focus on his re-election in November 2020 and [REDACTED]

[REDACTED]

In the meantime, Canada is focused on five priority areas:

1. Trade:

The Administration is pushing Congress to ratify the CUSMA. House Democrats, led by Speaker Pelosi, have however demanded changes to the Agreement, in particular on enforceability, worker protections, environmental protections and access to affordable medicines, leaving timelines for ratification uncertain. CUSMA ratification is also pending in Canada.

Trade irritants continue to pose challenges to the bilateral relationship, especially duties on softwood lumber and the threat of Buy American measures. [REDACTED] The United States has stepped up historic grievances (e. g. with regard to the dispute settlement system’s Appellate Body), and believes that the WTO rule book has not kept pace with geo political/economic developments and does not effectively address Chinas non-market economy practices. It is therefore pushing for significant reforms to the organization that it believes will help correct perceived imbalances. While it has tabled proposals in some areas that Canada supports (e.g. proposal on transparency to improve WTO members compliance with WTO obligations to notify measures), its approach in other areas (e. g. blocking appointments to the WTO Appellate Body and unilateral declarations challenging the practice of differential treatment for developing countries) risks further cleaving the WTO membership and delaying progress in a variety of areas.

2. Defence and Security:

Canada and the United States were both founding members of the North Atlantic Treaty Organization (NATO) in 1949 and have worked side by side in the North America Aerospace Defense Command (NORAD) since 1958. Canadas deployments and military cooperation, including our participation in NATOs Enhanced Forward Presence in Latvia, have been welcomed by the United States. [REDACTED] the United States has long sought to rebalance defence burden-sharing with allies, including under the Bush and Obama administrations, [REDACTED] While Canada takes a broader view of what constitutes burden-sharing, defence spending is projected to reach 1.4 percent of GDP by 2024.

NORAD policy and modernization is a strategic priority for Canada and an essential part of maintaining its sovereignty. [REDACTED]

Canadas Arctic and Northern Policy Framework commits Canada to empower Northern communities while protecting the Arctic environment, and maintaining the Arctic as an area of peace and stability. However, we cooperate with the United States on North American Arctic security through NORADs integrated command structure, including through the North Warning System which monitors the air approaches of North America.

The Canadian and U.S. Coast Guards also work together on public safety, search and rescue, and other operational activities.

Arctic security is becoming an area of focus of the U.S. Administration, including great power competition for resources.

The United States has warned of Chinas increased presence and interests in the Arctic, particularly Chinese investments and infrastructure development, some of which seek to establish a permanent security presence in the North, according to the United States. They have also expressed concerns over Russias sovereignty and jurisdiction claims in relation to the Northern Sea Route and Russian military buildup in the Arctic (e.g. new icebreaker fleet).

3. Borders and Transboundary Issues:

Regardless of political affiliation of national governments, line departments in both countries work closely to improve management and security of our shared border to facilitate the secure movement of people and goods. This includes preclearance, used by nearly 15 million travellers annually and the implementation of the entry-exit initiative, involving the exchange of arriving traveller information through a land border crossing. Canada also works with the United States to address the influx of irregular migrants arriving in Canada via the U.S. northern border. [REDACTED]

Canada has also cooperated closely with the United States to combat the opioid crisis which claimed the lives of 4,100 Canadians (11.2 per 100,000) and 47,600 Americans (14.9 per 100,000) in 2017.

The United States has declared the opioid crisis a Public Health Emergency.

In June 2019, Canada and the United States agreed to work more closely together to find solutions to the opioid crisis.

Canada and the United States have a number of maritime boundary disputes (e.g. Beaufort Sea, Dixon Entrance) and hold divergent views regarding the legal status of the Northwest Passage (NWP). Canada considers the NWP as part of its sovereign internal waters, whereas the U.S. views it as a strait where international freedom of navigation applies. [REDACTED]

Canada is also concerned about a U.S. oil and gas leasing program in the Coastal Plain of the Arctic National Wildlife Refuge in Alaska which is a habitat for a number of shared species and populations including the Porcupine Caribou herd, polar bears and migratory birds. Given the complexities and costs associated with drilling in the Arctic Refuge, together with high profile opposition from Democrats and environmental non-government organizations, the likelihood of judicial challenges delaying and/or preventing development in the area is high.

Despite the challenges on the Arctic file, collaboration on Arctic science continues. For example, Polar Knowledge Canada and the U.S. National Science Foundation are in discussions to enhance research collaboration.

4. Energy and resource security:

Canada is by far the largest and most secure energy exporter to the United States. While the Trump Administration has made energy security a key priority, significant opposition in the U. S. has caused delays to new energy infrastructure, such as Keystone XL, and Enbridge Lines 3 and 5, and Hydro-Qubec/New England project.

The United States is looking to reduce its reliance on foreign imports of minerals critical to its defence, manufacturing, and high tech industries. In June 2019, Canada and the United States agreed to develop a joint action plan on critical minerals to improve mineral security, future competitiveness of our industries and ensure secure and reliable supply chains. Canada is a leading supplier of 13 of the 35 minerals the United States deems critical, including aluminum, potash, and uranium.

In 2017, the minerals sector generated 634,000 jobs across Canada.

5. Global Action:

The United States historically has played a vital role shaping the institutions of the postwar multilateral system (the UN, the IMF, the World Bank and the WTO). The Trump Administration has taken a more skeptical approach to some multilateral efforts, such as the Paris Agreement on Climate Change, and security arrangements, such as the Joint Comprehensive Plan of Action (Iran nuclear deal). [REDACTED] Canada has an interest in sustaining constructive U.S. engagement on international issues and within multilateral institutions.

Canada and the United States collaborate on a broad range of shared foreign policy priorities such as support for Interim President Juan Guaido in Venezuela, upholding Ukrainian sovereignty, working toward denuclearization of the Korean Peninsula, and coordinating, when appropriate, on imposing new sanctions measures (i.e. Russia, Venezuela, Nicaragua and Myanmar).

U.S. competition with revisionist powers (i.e. Russia, China) increasingly frames its policies. [REDACTED]

The United States is the worlds largest bilateral donor (US$34.7 billion) of overseas development assistance (0.18 percent of Gross National Income or GNI). Canadas overseas development assistance amounts to US$4. 6 billion (0.26 percent of GNI). We share common development priorities such as supporting maternal and newborn health, combatting infectious diseases and epidemics such as AIDS/HIV and encouraging the private sector to play a greater role in development financing. While the Trump Administration has cut health funding to organizations which provide abortion-related information and services, we continue to collaborate closely on promoting womens economic empowerment in development.

Canada-China

Issue

• The current bilateral crisis highlights inherent and emerging challenges to Canada-China relations in an unsettled and uncertain geostrategic context.
• One year ahead of the 50th anniversary of diplomatic ties (October 2020),the relationship is at a fundamental juncture: while Canada has long framed its China policy through the lens of economic opportunity, it now needs to take account of Beijing’s long-term strategic challenge to Canadian interests and values.

Context

The bilateral relationship with China is in unprecedented crisis, with relations at their lowest ebb since formal ties established in 1970. Following the December 1, 2018 arrest of Huawei’s Meng Wanzhou, [REDACTED] by arbitrarily detaining and sentencing Canadian nationals, significantly disrupting canola seed exports and suspending all normal high-level bilateral dialogue mechanisms. Measures against canola in particular have led to a 1.4 percent decline of Canadian merchandise exports to China in the first half of 2019. The situation has been complicated by Beijing’s response to recent tensions and violence in Hong Kong^{Footnote 7} – home to a large Canadians diaspora.

As the PRC continues to bolster its assertive foreign policy demeanour, Canada must promote and defend its values in close partnership with like-minded allies and coalitions.

Despite recent developments (one formal bilateral meeting between foreign ministers, and the respective nominations of Ambassadors) the Chinese government’s position remains unchanged. China’s public [REDACTED] messaging remains that Canada must correct its “mistake” and release Meng, or relations will remain poor, if not deteriorate further. As the extradition process is likely to continue for months if not years, [REDACTED]

Meanwhile, Michael Spavor and Canadian Foreign Service Officer (on leave) Michael Kovrig continue to be detained on national security grounds. Information on their cases is extremely limited [REDACTED] In 2019, Robert Schellenberg [REDACTED] Canadians received death sentences, [REDACTED]

Since December 2018, Canada has raised these and other bilateral issues at the highest levels of the Chinese government. Behind-the-scenes Canada has pursued more than 1,000 diplomatic engagements with a wide range of foreign interlocutors.

Inflection Point

Canada is at a fundamental juncture in its relationship with the PRC as the latter asserts its economic and geopolitical strength to harden its resolve. The crisis has demonstrated Beijing’s readiness and ability to use aggressive political and economic levers to punish Canada (a pattern observed in China’s other bilateral relationships), and to propagate norms of international relations inimical to Canadian interests.

Over the past four decades, our sustained commercial engagement of China has resulted in it becoming Canada’s third largest trading partner (four percent of total exports vs. 75 percent to the United States and 8 percent to the EU). While business continues, recent Chinese discriminatory trade policies against Canada have contributed to an increase in Canada’s trade deficit with China (for the first half of 2019) as some Canadian exports have been restricted while Chinese imports continue unabated.

The PRC’s [REDACTED] market presents a strategic challenge to Canadian trade policy, and the direction of bilateral relations going forward. In 2018, eight of our top ten exports to China were agricultural or natural resources. Canadian commercial interests that are dependent on the Chinese market are vulnerable to sudden and arbitrary trade disruptions. This is primarily true of commodities, but China is also Canada’s second largest source of international students (24 percent) and tourists (more than six percent). [REDACTED]

While opportunities exist, Canadian exporters and investors continue to experience problems in accessing and participating in the Chinese market by both formal and informal barriers. Many sectors are limited by restrictions to foreign participation (e.g. digital economy and advanced manufacturing).

Exploratory discussions on a potential FTA with China suggest that achieving satisfactory outcomes in all areas of interest to Canada would be challenging [REDACTED] While China’s economy drives a large proportion of global growth, FTA negotiations with China are off the table for many like-minded partners, some of whom see pressure at the WTO as the best means of securing rules-based trade with China.

Other Canadian Interests and Values

[REDACTED]

[REDACTED] The Chinese government has been pushing for reforms to the global governance structure to reflect its rising status. China is no longer a rules-taker, but increasingly a rules-maker in the global arena, as exemplified by its establishment of the AIIB. The PRC promotes perspectives on governance, economic security, and human rights that diverge in fundamental ways from Canada’s. For example, Canada, along with several like-minded, continues to call out Chinese authorities on grave human rights abuses against ethnic Uighur and other minorities in Xinjiang, while China applies pressure to support its narrative and governance model in Xinjiang.

[REDACTED]

With respect to the current international rules-based system, the PRC tends to: endorse aspects [REDACTED] (climate change initiatives, asymmetrical access to advanced markets); redefine others to advance [REDACTED] interests (WTO reform); and to flout them where irreconcilable (South China Sea, human rights). The Chinese government also seeks to promote its ideology by inserting Communist Party of China (CPC) language in multilateral documents, challenging universal human rights with appeals to sovereignty and majoritarianism.

This new-found voice in multilateral forums has allowed China to project its national interests globally and sets a path for the CPC to seek a [REDACTED] place on the world stage.

Meanwhile Canada’s neighbours in the Western Hemisphere have found themselves at the sharp end of China’s international assertiveness – constraining and complicating our engagement.

The Chinese government has established alternative multilateral forums, such as the AIIB and Belt and Road Initiative to provide soft loans and infrastructure investment with fewer conditions. China has utilized these alternative forums to leverage its economic prowess to gain regional influence and export its model of governance around the world. Beijing commands new political leverage over an increasing number of vulnerable democracies in Latin America and the Caribbean, indirectly solidifying its preferred model [REDACTED] in the region [REDACTED].

Stuck in the Middle

The current bilateral crisis has put Canada at the center of a sharpening U.S. -China geopolitical rivalry, [REDACTED] In recent years, China has made a practice, especially in Asia, of driving wedges between the United States and allies to mitigate its potential “containment”. China has deployed variations of this strategy – wielding restrictions on market access and severing diplomatic engagement – against the United Kingdom, Australia, Japan, South Korea, Norway, and Sweden among others. The range of leverage and intimidation towards Taiwan, still considered by the PRC to be a “renegade” province, is even more intense, and is likely to test the limits of the current rules-based system.^{Footnote 8}

The United States, in turn, is deeply concerned with China’s growing economic heft – exemplified in the BRI: a world-spanning push to expand China-centric supply routes by financing transport, communications and extractive infrastructure in partner nations.

While critics have labeled this phenomenon “debt-trap diplomacy,” BRI projects often address longstanding critical infrastructure gaps in developing countries; investments deemed too risky by Western donors and financial institutions. China also has an expansionist plan for its future in the Arctic [REDACTED]

[REDACTED] In the Canadian case, Meng’s arrest was seen by Beijing as a U.S.-directed blow to China’s innovation agenda. Washington, for its part, remains wary of Canada's interest in China-led infrastructure or investment projects – illustrated most vividly by ongoing U.S. efforts to minimize Chinese participation in Canada’s 5G network.

Engaging “Many Chinas”

While China’s foreign policy is to support overarching goals of “national rejuvenation”, legitimizing the CCP’s authoritarian model, and shaping an international environment conducive to these ends, there are “many Chinas”. There is the image of a global juggernaut, but also evidence that Beijing’s assertiveness abroad seeks to compensate for fragility at home. Demographically, China’s population is aging, lacks a functional social safety net (its “social credit” system tends to amplify inequalities), and will likely be overtaken by India’s population in 2022. Similarly, while economic models predict that China’s GDP will overtake the United States by the late 2020s, this growth is expected to level off shortly thereafter. Acute levels of environmental degradation, pollution, corruption, consumer debt, and other financial risks will continue to constrain “best case” economic development scenarios. [REDACTED]

Going forward, [REDACTED] Distance, language, ideology, censorship, an opaque political system and greater CPC restrictions on exchanges compound the situation.

In normal times, China’s transition towards a consumption-driven economy would mean widening opportunities for Canadian exporters in innovative sectors such as clean tech, consumer/health products and life sciences, including via e-commerce. However, these and other opportunities to engage (i. e. on less sensitive files and global issues including climate change, global health security), must be balanced against Canada’s long term interests and core values (without neglecting imperatives under the current crisis).

Rules-Based International System

Issue

• Many of the laws, norms, alliances and institutions that have underpinned international relations in recent decades are under stress, increasingly challenged by both states and non-state actors, with important ramifications for global rule-making, rule-taking and relationships.
• In order to defend and advance its national interests, Canada may require new tools and approaches as it seeks to shape the evolution of the global order to come.

Context

Canada’s prosperity and security have benefited over several decades from a global system composed of institutions such as the WTO; alliances such as NATO, norms such as good governance; and international law such as the Humanitarian Law of Armed Conflicts. This system broadly governs contemporary international affairs. This is often referred to as the rules-based international order (RBIO), in which parameters for inter-state behaviour have largely been collectively shaped and mutual accountability was expected (with some exceptionalism). While the system has regularly evolved, at its core was a desire to foster predictability and non-aggression between states, respect for international law and territorial integrity, economic openness and cooperation, and coordinated responses to shared multi-jurisdictional challenges.

The current system has contributed to the relative peace and expanding prosperity of the last 75 years. It has facilitated, for example, massive trade growth (from 12 percent of global GDP in 1960 to over 30 percent today) and, through a proliferation of complementary treaties, institutions, and cooperation arrangements, it has provided an expanding framework to manage global affairs. For Canada alone, almost 550 multilateral treaties entered into force from 1967 to 2016 (in addition to nearly three times as many bilateral treaties). While the rules governing this dynamic system have not always been applied consistently, notably by large powers, they have nevertheless helped to mitigate the use of hard power between states, facilitated international cooperation, reduced financial instability, and advance global prosperity.

Most states continue to claim support for a rules-based system and to appreciate the benefits it brings, even if they don’t actively work to promote or protect all of its elements. This, plus the tendency for some institutional continuity, suggests the current core attributes of the system are unlikely to be entirely undermined in the short term.

Challenges to the current system

Many of its elements continue to function well, including parts of the global financial system such as the IMF, World Bank and Bank for International Settlements, because states recognize their value in protecting their own economic interests. A large number of technical bodies and standards (e.g. Universal Postal Union, Codex Alimentarius, International Civil Aviation Organization) and development organizations and banks (Inter-American Development Bank, World Food Programme) also continue to largely fulfill their mandates with the support or, at best, acquiescence of global powers. But despite these successes, the current rules-based system and the principles that underpin it are under increasing stress. Several forces are contributing to this state of affairs:

1. A shifting balance of power has encouraged a return to great power competition, growing unilateralism among major powers and a return to proxy warfare. This, in turn, has created openings for countries to disregard those principles and institutions that are inconvenient for them domestically, notably those related to human rights, rule of law and good governance. Some states have worked to undermine elements of the international system, particularly on issues that might involve yielding sovereignty or constraining their regional or global ambitions. This has resulted in transgressions of the most basic rules protecting states from territorial aggression (e.g. Russia's annexation of Crimea), the undermining of important mechanisms such as the UN Convention on the Law of the Sea [REDACTED] and the WTO [REDACTED] and the treaties and institutions that underpin global arms control efforts.
2. Protectionism has grown alongside isolationist and ethno-nationalist domestic politics in several countries. In many instances the populist phenomenon has been coupled with a backlash against globalization, which is not seen to be universally delivering on its promise, notably among those most directly impacted by economic inequality, corruption, environmental degradation or systematic violations of human rights. The proliferation of the purported solutions that grow out of certain populist politics (e.g. those related to trade or migration) may lead to more nationalist policies that create barriers to international cooperation.
3. There has also been a growing problem of legitimacy around the representativeness of some global institutions (e.g. international financial institutions), and concerns about the performance of others (e.g. the WTO). Such concerns spring from citizens who may feel left behind by globalization, from states which regard global economic governance arrangements as unfair and outdated, not taking into account emerging regional powers, and from non-state or sub-state actors which lack agency in existing international forums.
4. Finally, there has been a proliferation of malevolent non-state actors (including cyber criminals, and terrorist groups) who use a variety of methods to undermine confidence in national institutions, and to disrupt international action. These groups rely heavily on ungoverned (or under-governed) spaces and technologies, often operating in cyberspace and/or violating international law with impunity. These and other frontier threats demand new forms of global governance and cooperation (e. g. related to data, and disinformation), with new actors involved.

Canada and the Rules-Based System

The international community will have to address and adapt to these trends by refurbishing the current rules-based system, but there is fundamental disagreement over the nature and extent of the changes required. [REDACTED] there is more space for other actors whose views differ from Canada's. While this offers opportunities for innovation and collaboration, it is also disrupting how international relations have been conducted over the past seven decades, and introduces an element of unpredictability.

For Canada, and for many other states, there are significant implications of any potential degradation of a rules based system, [REDACTED] Given the importance of challenges as diverse as climate change, transnational crime, terrorism, nuclear proliferation, and political and transboundary humanitarian crises, strategic cooperation will be required not merely to protect the current system, but to reform and revitalize it to reflect 21st century dynamics, and serve our citizens’ interests for the foreseeable future.

[REDACTED] The system should be resilient enough to withstand disruptive stresses, while being flexible enough to meet new challenges and address the representativeness and performance challenges listed above. The extent to which this will involve the creation of new rules, norms or institutions, or the reform of older ones, depends on multilateral cooperation efforts involving a wide range of state and non-state stakeholders.

Canada may also have to make tough choices when the views of our closest partners may diverge [REDACTED]

Bilateral relations, including listening to and working with a diverse range of states about how the system can advance their interests, is an important element of any strategy for revitalizing a rules-bases system.

It is of particular interest for Canada to ensure that the international system of the future be not merely ‘cooperative’, or ‘multilateral’ but ‘rules-based’. This means creating, respecting and working towards improved compliance with international law.

Canada is well-positioned to exercise leadership on a range of institutional, thematic, technical, and issue-based initiatives that address an increasingly challenged rules-based system. [REDACTED]

International Assistance

Issue

• In an interdependent and turbulent world, international assistance is an important element of Canada’s foreign policy toolkit. Canada contributes to poverty eradication, supports humanitarian action, and reinforces peace and security.
• Canada benefits directly from the prosperity, stability and partnerships its international assistance fosters.
• Canada’s nearly $5.75 billion in international assistance complements its diplomatic, defence and trade activities.

Context

While the last three decades have seen unprecedented global development progress, not everyone has benefitted equally. Some 736 million people still live on less than $1.90/day, and 71 million people have been forcibly displaced due to conflict, violence and human rights violations. Women and girls are more severely impacted by poverty due to gender inequalities. Poverty is increasingly concentrated in fragile states and in low-income countries – those places least able to provide necessary supports without international help.

Canada has been an active donor since the 1950s. Canada’s international assistance contributes to Canada’s broader foreign policy and international trade objectives and advances Canada’s interests. Poverty, inequality, violence and fragility matter for both global and Canadian stability and prosperity. Developing countries are important economic partners and sources of global growth: as economies stabilize and grow, Canada has opportunities to develop mutually beneficial trade relationships.

Canada has committed to implementing the globally adopted 2030 Agenda which includes 17 universal Sustainable Development Goals (to be pursued in all countries), reflecting a global consensus to leave no one behind in the social, economic and environmental dimensions of sustainable development.

Canada’s International Assistance Envelope is nearly $5.75 billion in 2019-20. Global Affairs Canada delivers the majority of these investments (85 percent). Canada’s Official Development Assistance to Gross National Income (ODA/GNI) ratio is currently projected to be 0.27 percent in 2019. (The globally accepted target is 0.7 percent.)

What We Do

Canada takes an integrated approach to addressing poverty, humanitarian crises, and peace and security through its international assistance. Canada targets its international assistance to where it can make a significant difference in the lives of the poorest and most vulnerable, including those living in fragile contexts. The thematic focus of Canada’s international assistance has evolved over the years in response to changing needs, opportunities, and Canadian priorities.

In June 2017, Canada launched its Feminist International Assistance Policy, which outlines the “what, how, and where” of Canada’s international assistance. The policy seeks to eradicate poverty and build a more peaceful, inclusive, and prosperous world. It emphasizes that promoting gender equality and empowering women and girls is the most effective approach to achieve this goal. Building on Canada’s strong leadership on gender equality since the 1980s, the Policy lays out some ambitious targets. For example, by 2020-21, at least 95 percent of Canada’s bilateral development assistance will either target or integrate gender equality and the empowerment of women and girls. Currently, this figure stands at 90 percent.

Some 60 percent of Canada’s international assistance investments are in global health, humanitarian assistance, and environment and climate action. Our remaining funding addresses other critical areas such as economic growth, education, governance, and peace and security.

Some key Canadian results in 2018-19 include:

• Saving or improving the lives of over 135 million people in 62 countries, and responding to 37 natural disasters
• Reaching more than 408,000 people with Canada-funded projects that help prevent, respond to, and end sexual violence
• Training more than 355,000 teachers according to national standards
• Enabling 216,000 women and girls to access justice and public services
• Reducing or avoiding [REDACTED] of greenhouse gas emissions

Where We Work

Canada disbursed Official Development Assistance in 130 countries in 2017-18 though diverse channels and partners. Programs are tailored to respond to specific needs and opportunities in each country. Canada has committed to directing 50 percent of its bilateral international development assistance to sub-Saharan Africa by 2021-22. (Canada’s top ten bilateral recipients are shown in the graph below).

In recognition that developing countries have different needs depending on where they are in their development journey, Canada aims to tailor its country partnerships:

• Partnerships for development impact: Canada provides sustained support to low-income countries to reduce poverty and vulnerability and create the conditions for more inclusive growth.
• Partnerships for peace, security and recovery: In fragile states and countries in crisis, Canada helps meet urgent needs through its humanitarian assistance; and helps build more peaceful and resilient states and societies through its security and development aid.
• Partnerships for transition: In middle-income countries, Canada principally provides targeted assistance to help countries tackle key barriers to progress and transition to more self-sufficient economic partnerships. Global Affairs Canada’s Technical Assistance Partnership will increase the deployment of Canadian experts abroad in response to country needs.
• [REDACTED]: Canada also has the flexibility to provide smaller-scale assistance to a range of countries or regions to address specific local sustainable development challenges in response to a one-time need or to support wider foreign policy interests.

Preliminary 2018-19 Global Affairs Canada Top 10 Bilateral International Assistance Recipients (in $ millions)

Bilateral international assistance is the disbursement of funds where the donor earmarks or controls the funds by specifying the recipient and/or other aspects of the initiative. It includes international humanitarian assistance (shown in orange), which is designed to save lives, alleviate suffering, and maintain and protect human dignity during emergencies and in their aftermath.

How We Work

Canada is committed to internationally agreed development effectiveness principles, based on decades of experience, including the importance of countries leading their own development, focusing on results, working in inclusive partnerships, and transparency and accountability.

Canada's international assistance is delivered through diverse partners including partner governments, multilateral organizations, non-governmental organizations, and private sector entities. Canada chooses the most appropriate partner to achieve its objectives in a given context. Canada is increasingly working in multistakeholder partnerships, because effective development cooperation requires harnessing all potential resources and stakeholders to achieve results.

Partner organizations are selected based on their capacity to deliver impact in country, and an analysis of past performance.

Canada groups its international assistance into three broad categories, which are complementary to other trade and diplomatic assets:

• Long-term Development Assistance: seeks to help partner countries reduce poverty and implement sustainable long-term solutions to development issues and move forward towards self-reliance and inclusive sustainable development.
• Humanitarian Assistance: primarily delivered by providing financial support to experienced humanitarian partners to help save lives, alleviate suffering and maintain dignity in conflict situations and natural disasters.
• Peace and Security Assistance: provides dedicated programming in conflict prevention and stabilization, security capacity building, anti-crime and trafficking, and weapons threat reduction.

Canada also promotes innovative approaches to delivering international assistance, given the international consensus that new approaches are critical to ignite changes needed to achieve sustainable development. Canada encourages experimentation and scaling-up of sustainable solutions, for example using new technologies for health services.

Canada has positioned itself as a leader in helping to unlock additional sources of development finance for the Sustainable Development Goals. Canada is developing new partnerships and expanded its development financing toolkit to more effectively support private sector engagement and resource mobilization to secure more funds globally for sustainable development. For example, in 2018, Canada’s development finance institution, FinDev Canada, was established to support private-sector investment in developing countries.

Canada uses a range of mechanisms in the delivery of its international assistance, including core support to multilateral organizations; grants and contributions; and repayable contributions to better enable Canada to mobilize new streams of finance. Two new programs announced in Budget 2018 – the International Assistance Innovation Program and the Sovereign Loans Program – provide greater flexibility for financing arrangements and partnerships so that Canada remains at the leading edge of development financing. In addition, Canada has committed $300 million to help establish an Equality Fund – an unprecedented collaboration that brings together the philanthropic community, the investing community, the private sector and civil society into a single platform to leverage more than $1 billion in assets to build gender equality in developing countries.

Humanitarian Assistance

Issue

• During political crises, conflict or natural disasters, Canada provides timely and needs-based humanitarian assistance to save lives, alleviate suffering and support the dignity of affected persons.
• Humanitarian needs have nearly tripled in the last decade, largely due to protracted crises like Syria. In response, Canada works within a global system to burden share and enable effective responses. Canada consistently ranks among the top 10 humanitarian assistance donors.
• Humanitarian assistance is grounded in Canada’s obligations under international humanitarian, human rights, and refugee laws and principles.

Context

Humanitarian assistance includes the protection of civilians and those no longer taking part in hostilities, as well as the provision of food, water and sanitation, shelter, health services, and other items of assistance.

The last several years have seen unprecedented humanitarian needs emerge. This is the result of several factors including natural disasters, climate change, and protracted armed conflicts that in the absence of political solutions, have led to the largest movement of internally displaced persons and refugees since WWII.

The 2019 UN Global Humanitarian Appeal requested US$26.7 billion to assist 94 million people. In contrast, five years ago the UN was seeking $16.4 billion to support 57 million people. The international system is struggling to keep up, and there are persistent and sizable funding gaps, and unmet needs. Moreover, notably in conflict contexts, humanitarian actors often find themselves under attack, and international law is flouted.

Humanitarian assistance is a visible and tangible expression of Canadian values, and contributing to global stability is in our national interest. Canadians expect us to respond to international crises with compassion, and our allies assume we will share in these responsibilities. Our contributions to humanitarian action are often complemented by other Canadian investments, including stabilization and long-term development efforts.

Chart 1: Requirements and funding for recent UN annual global appeals (in USD)

International Humanitarian System

Humanitarian assistance is guided by four core principles. They are critical for establishing and maintaining access to affected populations as their application helps organizations build trust and acceptance for their activities, particularly in situations such as armed conflicts.

Humanity: Human suffering must be addressed wherever it is found.

Neutrality: Humanitarian actors must not take sides in hostilities or engage in activities of a political, racial, religious or ideological nature.

Impartiality: Humanitarian assistance must be delivered solely on the basis of need, making no distinctions on the basis of nationality, race, gender, religious belief, class or political opinions.

Independence: Humanitarian assistance must be distinct from the political, economic, military or other objectives that any actor may hold in areas where humanitarian assistance is being delivered.

Canada provides humanitarian assistance within a well-established global system. Support through this system avoids duplication of efforts, and allows for a proportional, timely, coordinated and needs-based response in line with consolidated and prioritized appeals. In recent years, the emergence of new actors and innovative ways of working (e.g. multi-year funding and cash assistance) have increased the complexity of the humanitarian system.

Humanitarian Assistance by the Government of Canada

Canada’s humanitarian assistance is an important foreign policy tool to respond to international crises in order to save lives, maintain human dignity and alleviate suffering resulting from conflict situations, food insecurity and natural disasters in developing countries.

When an affected national government is unable to respond to a conflict, crisis, drought or natural disaster, donors and humanitarian partners respond. The following conditions are required for Canada to provide humanitarian assistance:

1. A request for international assistance by the affected country is made (although sometimes this may be bypassed, for example, with the situation in Syria);
2. A credible needs assessment is undertaken; and
3. Humanitarian appeals are issued.

Canada has a robust toolkit with which to respond to humanitarian crises. Canada’s needs-based response engages multiple actors within Global Affairs Canada and across the Government of Canada. Canada works through experienced partners, notably the UN, Red Cross, and NGOs. Responses consist primarily of cash contributions to experienced partners but can also include sending relief supplies from Global Affairs Canada’s stockpile, and the deployment of civilian experts. Following large-scale natural disasters it can also include, at Global Affairs Canada’s request, the use of Canadian Armed Forces’ unique capabilities such as the Disaster Assistance Response Team (DART).

Canada’s humanitarian assistance has significant reach: Canada is currently responding to humanitarian crises in over 45 countries, the majority of which are in the Middle East and sub-Saharan Africa. As well, with recent annual disbursements averaging over $800 million/year, humanitarian assistance represents a significant proportion of Canada’s official development assistance.

Chart 2: Proportion of Canada's Humanitarian Assistance to Total Official Development Assistance (ODA)

Gender-responsive Humanitarian Assistance

In line with the objectives of the Feminist International Assistance Policy, through its “Gender Equality in Humanitarian Action” sub-policy, Canada supports gender-responsive humanitarian assistance. This approach seeks to address the specific needs and priorities of people in vulnerable situations, particularly women and girls, to support their empowerment and to ensure that our assistance has a greater and more lasting impact.

Canada is taking concrete actions to support gender-responsive humanitarian assistance. This includes dedicated programming and piloting new approaches, such as the “Gender Hub” project in Bangladesh as part of the response to the Rohingya crisis, and through advocacy efforts such as its ongoing leadership of the Call to Action on Gender-Based Violence.

United Nations Security Council Candidacy

Issue

In 2016, the Government announced that Canada would run for a non-permanent UN Security Council seat for the 2021-2022 term with elections on June 5, 2020.

[REDACTED]

Context

Canada is competing for one of two UN Security Council (UNSC) seats in the Western Europe and Others Group against Ireland and Norway, who declared their candidacies respectively 10 and 12 years before Canada. A rotational seat on the UNSC offers Canada a voice in the preeminent global decision-making body responsible for international peace and security. Seeking a seat is a tangible example of Canada’s commitment to global burden sharing. Canada would contribute its ideas and expertise to accelerate progress in addressing the world’s most difficult challenges and increase its global influence. Canada would also work closely with the five permanent members of the Security Council (called P5: China, France, Russia, The United Kingdom and the United States), more importantly in the emerging multi-polar world, with other elected members of the UNSC [REDACTED]

[REDACTED]

As there are two seats available, each of the 193 UN Member States can vote for up to two of the candidates. Member states are not obligated to use their votes and may choose to vote for only one or even no candidates. Canada must obtain the votes of 129 countries (two thirds majority) to be elected. If more than one candidate is unable to obtain 129 votes, those below this level will continue against each other in subsequent rounds until two obtain the two thirds threshold.

A breakdown of Canada’s current support levels is as follows:

[REDACTED]

Next Steps:

The department is prepared to offer advice and guidance on next steps, including proposals for the engagement of ministers in the final seven months of the campaign.

Brexit

Issue

• The United Kingdom decision to depart the EU has not proceeded smoothly and continues to cause deadlock in British politics. Brexit has caused significant political and economic disruption for the United Kingdom and EU partners, which will persist for the foreseeable future. Canada has put in place policy and legal provisions to manage the transition. Should theUnited Kingdom leave the EU without a deal at the end of January 2020, bilateral trade would revert to a pre-CETA basis.
• In such a scenario, nearly all current Canadian goods exports would be duty-free. Notwithstanding the impact of Brexit on the United Kingdom, it will remain an influential player/partner as a permanent member of the UNSC in NATO, the G7, G20, and the Commonwealth.

Context

In the more than 1200 days since the June 2016 referendum on whether to leave the EU, the issue of how to achieve Brexit has paralyzed political life in the United Kingdom. New political identities have been formed around the Leave/Remain axis, with potentially generational consequences. While former Prime Minister Theresa May negotiated a Withdrawal Agreement with the EU, it was defeated in the U.K. House of Commons three times. The deadlock in Parliament on the best approach on Brexit ultimately led to May’s resignation, and the subsequent rise to power of Prime Minister Boris Johnson in July 2019.

The referendum result and subsequent uncertainty have dampened economic growth, discouraged investment and damaged the UK’s reputation, including as a haven for commerce. A recent report from the UK Institute for Fiscal Studies estimates that current U.K. GDP is likely 2. 5 percent smaller now than it would have been had the remain side won the 2016 referendum. There is significant uncertainty regarding potential future impacts on the U.K. Treasury and investment climate. A number of companies have announced or actioned plans to move operations out of the country or to delay/cancel new investments.

In an effort to ensure predictability, the United Kingdom has signed continuity or partial continuity agreements (based on existing EU trade agreements) with some current free trade agreement partners (such as South Korea, Switzerland, Norway, and Chile), accounting for less than 9 percent of U.K. global trade. Parallel FTAs with other partners, including Canada and Japan, remain incomplete. Finally, there is also concern among U.K. citizens living on the continent and EU citizens living in the United Kingdom about their status and future prospects.

The eventual impacts of Brexit will depend on the shape of any final arrangement between the United Kingdom and the EU. Brexit supporters have argued that ending British contributions to the EU would allow for increased financial flexibility, as well as control over immigration, labour markets and regulation. Economists have warned that being in the EU has a strong positive effect on trade, and that leaving the EU will negatively affect the economy in the medium and long term. Since the Brexit vote, the unemployment rate has continued to drop and is now the lowest it has been since the mid-1970s. However, average inflation-adjusted earnings have levelled off, and Britons today are earning less after inflation than they did before the 2008 financial crisis.

Status of EU-U.K. Negotiations

EU and United Kingdom negotiators reached a new Withdrawal Agreement on the morning of October 17, 2019, just 14 days before the scheduled October 31 United Kingdom departure. The European Council approved it the same day.

As Prime Minister Johnson’s attempt to obtain parliamentary approval by October 19 was unsuccessful, he was required to seek an extension to the Article 50 period until January 31, 2020, as a result of legislation previously passed by Parliament. The Withdrawal Agreement implementation bill was introduced to the House of Commons and has passed second reading, though a proposed timetable of 48 hours to consider and vote on the bill was rejected by the House, leaving the bill in limbo. The EU agreed to a January 31, 2020, extension but has made clear that no further changes to the Withdrawal Agreement will be entertained. Whether the Agreement will pass the U.K. Parliament is still an open question and the December 12 general election will have a major impact on the Agreement’s future.

If and when the United Kingdom leaves the EU with a Withdrawal Agreement, the next phase of Brexit will begin – he negotiation of the future relationship with the EU. With competing visions over trade and customs, as well as coordination on workers’ rights and the environment, this phase is expected to be as, if not more, difficult than the negotiations over the United Kingdom’s exit.

Withdrawal Roadblock

The primary issue preventing a path forward on Brexit was the conflict between avoiding border checks between Northern Ireland and the Republic of Ireland while the United Kingdom seeks to leave the EU Single Market and the Customs Union, and to negotiate its own free trade agreements. Border checks would be inconsistent with the aims of the Good Friday Agreement which laid the foundation to end sectarian violence between Catholics and Protestants in Northern Ireland. [REDACTED]

The new Withdrawal Agreement contains an updated Northern Ireland protocol which attempts to address these issues. Under the new plan, Northern Ireland will stay within the EU regulatory space for agri-food and manufactured goods. As well, Northern Ireland will officially remain within the U.K. customs area but, in practice, shipments of goods arriving in Northern Ireland from the rest of the United Kingdom will need to include a declaration whether they will stay in Northern Ireland, or will be forwarded onto the Republic of Ireland.

If the goods stay in Northern Ireland, the goods will enter without customs duties. If the goods continue onto the Republic of Ireland, they will be subject to EU tariffs. These checks will be undertaken at Northern Irish seaports and airports to avoid checks on the land border between Northern Ireland and the Republic of Ireland, thus ensuring the continuation of the all-Ireland economy stipulated in the Good Friday Agreement. The Democratic Unionist Party, which represents the Northern Irish Protestant community in the U.K. House of Commons, opposes the new agreement because of the increased alignment of Northern Ireland with the EU and because Northern Ireland will be subject to a different set of rules than the rest of the United Kingdom.

Implications for Canada

In the event that the Withdrawal Agreement is ratified and enters into force, Canada’s agreements and arrangements with the EU would continue to apply to the United Kingdom during a transition period that would last from the date of Brexit until December 31, 2020 (with the possibility of extension for another one or two years). This approach was approved by the Minister of Foreign Affairs in December 2018. [REDACTED]

Alternatively, in the event that the United Kingdom leaves the EU without an agreement and an accompanying transition period, it would cease to be party to the EU’s international agreements and would be treated as a third country. This no-deal scenario would require new Canada-U.K. instruments to be ready to come into force immediately. Individual departments have been working with their UK counterparts to develop such instruments in time for a potential no-deal Brexit. Specific agreements identified for transition include those related to Air Transport, Nuclear Cooperation, Customs Cooperation, Organic Equivalency, Civil Aviation Safety, and trade. Of the instruments identified for transition, replacement instruments have been prepared and are ready to enter into force on January 31, 2020, with the exception of the trade agreement (see below). Other aspects of a no-deal transition are not expected to be broadly problematic for Canada and Canadians, but a certain degree of disruption would be inevitable due to the inherent unpredictability of a no-deal Brexit and contingency planning continues. FAQs and other supports are being put in place to advise Canadian business and investors.

Status of the Canada-U.K. Trade Dialogue

Canada-UK merchandise trade amounted to $16. 3 billion in 2018, or 21.7 percent of our trade with the EU. Whatever the outcome of Brexit, the United Kingdom will remain a significant market for Canadian natural resources and companies. The United Kingdom is also an important source of foreign investment ($50 billion in Foreign Direct Investment stock) and destination for Canadian investment abroad ($109 billion in Canadian Direct Investment Abroad stock).

[REDACTED] On October 8, 2019, the United Kingdom published a slightly modified version of the MFN applied tariff schedule and restated its overriding policy objective, which is to protect British consumers and supply chains from price shocks. In the event of a no-deal Brexit, so as to ensure the flow of imported goods on which U.K. consumers and manufacturers depend, the United Kingdom would provide MFN duty-free market access to all WTO members on nearly 95 percent of applied tariff lines, [REDACTED]

[REDACTED]

Global Affairs Canada has put in place an interdepartmental Brexit preparedness network to support Canadian business interests in the case of a no-deal Brexit. Our Trade section at the Canadian High Commission in London has been liaising with its clients throughout the Brexit discussions as well as prepared a Brexit page on the Government of Canada website. A communications plan has also been developed for the various scenarios.

International Trade and Investment Profile

Canadian Trade and Investment Trends

Canadian Trade and Investment

Asia

Issue

• This complex region is experiencing changes in economic and power relations that are upending contemporary global and regional security dynamics.
• Weak or absent regional cooperation mechanisms, fraught histories, and increased militarization of the region increase the prospects for confrontation, conflict and economic destabilization.
• As the significance of the region grows, Canada’s approach must account for ongoing shifts in the strategic, political and economic landscape.

Context

Canada has traditionally regarded the Asia-Pacific region from a China-centric perspective; however, important changes in economic and power relations are forcing both Asian and Western countries to redefine the region. More common today is an acceptance of the term Indo-Pacific which, while still being defined, generally includes countries from the eastern Indian to the Pacific Oceans connected by Southeast Asia and including North Asia.

The “Indo-Pacific:”A region of change and tension

The Indo-Pacific is increasingly economically integrated, but faces a complex web of interrelated security challenges. It is home to 60 percent of the world’s population and represents 43 percent of the global economy. It includes three of the world’s six largest national economies (China, Japan and India), and the ten countries of the Association of Southeast Asian Nations^{Footnote 9} (ASEAN).

The Indo-Pacific region is the fastest growing economic region in the world, with projected GDP growth of 5.1 percent in 2019 (IMF). Over the past twenty years, the region has seen persistent and robust growth, driven in particular by strong economic performance in emerging markets (China, ASEAN and India), a growing middle class, and deepening linkages with global value chains.

These successes, however, mask the hard reality that the region includes three of the 10 countries with the most extreme poor in the world (India, Bangladesh and Indonesia) and remains home to 1.1 billion poor, including 264 million living in extreme poverty. Gender equality in the region is uneven, with important progress in advancing laws and policies, but a significant percentage of women experiencing intimate partner violence, and child marriage and teenage pregnancy still prevalent in some countries.

These unprecedented regional changes in economic and power relations are creating inevitable strains and tensions among countries that already have complex, and often fraught historical relations. A return of “great power politics” in the region is prevalent, alongside a fluctuating global commitment to a rules-based order, wherein states are acting in their perceived national interest unconstrained by multilateral norms and institutions—with concomitant risks of destabilization and conflict. The United States’ strategic primacy in East Asia and the Western Pacific is being challenged by China’s rise and increasingly assertive strategic posture. Bilateral U.S.-China tensions are playing out against a backdrop of competing strategic visions for the region.

Key players

China has experienced astonishing economic growth, becoming the world’s second largest economy and achieving a dramatic reduction in poverty. It is pouring resources into its military, giving it growing influence and the ability to challenge traditional power relations in the region.

An [REDACTED] one-party state, the Communist Party of China [REDACTED] depends on ensuring high levels of economic growth, and increasingly, national prestige. Tolerance of political dissent and freedom of expression has noticeably diminished since Xi Jinping became president in 2013, and a crackdown on human rights continues.

China’s Belt and Road Initiative is a centrepiece of China’s strategic repositioning, which prescribes [REDACTED] massive infrastructure investments that respond to genuine needs in many instances, but that could, over the medium term, serve to advance Chinese economic and military influence across the Indo-Pacific and beyond.

Negotiations in the ASEAN +6 format^{Footnote 10} towards a “Regional Comprehensive Economic Partnership” (RCEP) are a further vehicle for Chinese influence in the region.

Japan and Korea have both been dependent on the U.S. for their security, but have now also become highly dependent on their economic relationships with China. Both are acutely aware of their vulnerability to volatility in the relationship between the world’s two greatest powers (and with North Korea), [REDACTED]

[REDACTED], Japan is championing a vision of a “Free and Open Indo-Pacific” (FOIP) (extending to the east coast of Africa and west coast of the Americas), founded on the rule of law, freedom of navigation, economic prosperity and peace and stability as an international public good. Japan’s FOIP strategy is complemented by similar approaches adopted by Australia, the United States and India (referred to as the “Quad”) as well as South Korea and ASEAN.

India has also demonstrated significant economic growth and advances against poverty, though in a less dramatic fashion than China.

Regionally, India has had a difficult relationship with China, and traditionally had strong relations with Russia (which has ceded much influence in the region). As a growing regional power, it too is [REDACTED] reordering of regional power relations, while also being burdened [REDACTED] challenges stemming from the unending conflict in Afghanistan.

In the context of these dislocations, uncertainty, and rising tensions, all the major powers are courting [REDACTED] cooperation with the smaller ASEAN countries, which must thus struggle to navigate between the competing interests of the regional heavyweights.

The threat of protectionism and decoupling of the Chinese and American economies has prompted a renewed push for intra-ASEAN, regional and trans-regional economic integration. Similarly, ASEAN members are at the centre of the region’s preeminent political and security dialogues in the East Asia Summit and Defence Ministers’ Meeting-Plus, which includes major regional powers like China, the United States, Japan and Australia.

All this takes place in a region with a complex history and “long memories”. Territorial disputes and various other historical grievances are rife: to name but two, the two Koreas remain technically at war, and China vehemently asserts its claim over Taiwan.

Canada in the Indo-Pacific

Canada has a number of strategic interests in the region, including: i) advancing free and open market access for Canadian goods, services and investment to the region—in mature economies like India, Japan, South Korea and Australia as well as emerging markets like Indonesia, Philippines and Vietnam; ii) promoting democratic values, governance, and human rights along with like-minded partners; iii) contending with and adapting to the rise of China and India; and iv) preserving and strengthening regional security and stability, including by working with, and supporting, regional allies.

Current Engagement and Challenges:

[REDACTED]

The United States, Japan, EU, Australia, China, India and Russia, have been [REDACTED] increasing their engagement, and their influence in the region’s corridors of power. By contrast, Canada’s approach to the region has been inconsistent, with significant ebbs and flows, and has yet to fully leverage our significant people-to-people ties, commercial linkages and positive global reputation.

Political/Security:

Canada has been active in advancing priority interests and universal values in the region. [REDACTED], Canada has sought to engage regional mechanisms and forums, such as APEC, ASEAN, and the East Asia Summit, demonstrating staying power on issues that will guide both regional and Canadian interests including on climate change, cyber security, global health, the Arctic and global governance. Positive historical perceptions of Canada throughout much of the region, particularly set against U.S. -China tensions, may create additional space for enhanced Canadian diplomatic engagement.

The region faces many challenges that could lead to conflict, or otherwise threaten Canada’s interests. These include several longstanding territorial disputes (e.g. Korean Peninsula, Taiwan Strait, India/Pakistan, Japan/China) and a number of emerging security threats (e.g. South China Sea and terrorism threats throughout the region).

Canada’s people-to-people ties in the Indo-Pacific are wide and deep—including the tens of thousands of Canadians that live, work and travel to Asia every year and, reciprocally, the Asian diaspora who now live, study or work in Canada. 44 percent of Canada’s foreign-born population are from the region, with this proportion expected to increase steadily over the next decade. 16 percent of the overall Canadian population identify their ethnicity as being from the region.

By the same token, the perceived strength and influence of Asian diaspora communities in Canada may lead to charges of bias, which can debilitate bilateral relations and cooperation.

As with every Western country, a challenge is to advance Canada’s interests in supporting universal values (democracy, the rule of law and respect for human rights) and protect undeniable economic interests in China and other countries that do not share or adhere to these values.

Trade:

Many economies in the region are exhibiting strong growth, projected at around 5 percent per year on average. Even as it slows down, China’s economy is expected to continue to grow more than 6 percent annually for the foreseeable future. The region is projected to hold 65 percent of the global middle class, and to account for 50 percent of global GDP, by 2030.

Canada’s strengths in industries like minerals, energy, financial services, infrastructure, environmental technologies and services, and agri-food are closely aligned with the needs of the region, offering important avenues for export diversification. In recent decades, many Indo-Pacific countries have capitalized on globalization and regional integration to accelerate economic development, attract foreign investment, and create the world’s largest middle class.

The region’s demand for energy resources will continue to grow, and to significantly outweigh regional supply.

While Canadian trade and investment with the region is expanding, there remains significant unrealized potential for Canada to capitalize on the region’s strong growth, which will be crucial to Canada’s economic prosperity in the years to come.

For example, the region accounted for 14 percent of Canada’s overall export growth during the past decade, but Canada’s share of the region’s trade remained flat at 2.5 percent. FDI from the region accounted for 10 percent of Canada’s total inward FDI, but remains the region’s 13th largest FDI destination and only 1 percent of Asia’s outward FDI stock.

These opportunities notwithstanding, governance issues and, increasingly, the use of arbitrary trade measures will continue to constrain commercial engagement prospects. Canada’s economic interests are at risk due to rising economic nationalism and increased scepticism about the value of open, market-based trade relationships, and the rules-based international order that enables and sustains such exchanges. Despite rising trade flows between Canada and China, China’s willingness to link political and economic issues adds uncertainty to the trade relationship and increases the costs and uncertainty of doing business.

To date, Canada has two FTAs in force with Indo-Pacific partners – the Canada-Korea Free Trade Agreement (CKFTA, 2015) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP, 2018). Canada has also recently concluded FTA exploratory discussions with ASEAN, conducted exploratory discussions with China, and have ongoing (but stalled) FTA negotiations with India.

Development:

Canada’s development assistance in the region remains an important component of our engagement with Indo-Pacific countries, many of which are home to the world’s poorest people. In 2017-18 Canada’s assistance to the region totalled $1,316 million, inclusive of Central Asia. Of this total, $451 million was administered via multilateral channels such as the Asian Development Bank (where Canada is one of the largest donors) and the Asian Infrastructure Investment Bank.

Despite impressive growth in many countries of Asia and the Pacific, women continue to struggle to participate equally in the benefits of development. Canada has made support to gender equality and the empowerment of women and girls in Asia and the Pacific a fundamental aspect of its programming. Among other examples, Canada supports girls’ education in Afghanistan, sexual and reproductive health and rights in Bangladesh, women’s economic empowerment in Pakistan, the Philippines, Indonesia, Mongolia, Myanmar, and the Pacific islands, and women’s political rights in the countries of ASEAN.

From Canada’s early support to help Indo-Pacific countries meet basic human needs, Canadian assistance in the region has evolved to provide targeted technical assistance to support institutional reforms necessary for sustainable poverty reduction. Efforts to improve governance at the national and sub-national level, fostering appreciation for the rule of law, democracy, and respect for human rights, also helps to increase understanding of the benefits of, and thus support for, the rules-based international order.

Regional Drivers to Monitor’

In the face of increasing Chinese influence [REDACTED], Asian countries are jockeying to at least maintain – if not improve – their own economic and political standing within the region. This is leading to rising tensions within and between countries, [REDACTED]

Evolving socio-economic demographics will also be a regional driver to monitor.

For example, China, with its aging demographic and strengthened economy, is increasingly outsourcing manufacturing jobs to lower wage countries in the region. Further tensions may develop as regional neighbours compete to attract Chinese investment, [REDACTED]

From the perspective of Canada, despite being on the other side of the world, we cannot expect to be isolated from the effects of these changes. With the region soon to house two thirds of the middle class, we can expect their cultural, societal and financial influence to be felt globally.

To ensure Canadian values are effectively promoted and defended, Canada will require unambiguous and coherent messaging delivered as a whole-of-government platform. Fora such as APEC, the ASEAN Regional Summit and the G20 are important vectors in this regard, as are free trade agreements. Finally, to help Canada’s messages better resonate across the region, partnerships with like-minded countries in the region, such as Australia and New Zealand, will continue to be important to Canada.

Europe and Eurasia

Issue

Europe is increasingly unpredictable and divided in its approach to shared challenges. It is nevertheless essential to the promotion of core Canadian interests such as a rules-based international system, open and inclusive trade, security and prosperity.

Context

In a challenging global context, a strong and democratic Europe matters. A well-managed Canada-Europe relationship can be a source of prosperity and stability.

A sophisticated and diverse region of 515 million people, the EU is Canada's second largest market. Six of its member states are among the top 15 Canadian trade partners, and four are among Canada’s top ten sources of foreign direct investment (FDI). Between 2008 and 2018, the European share of FDI in Canada rose from 34 percent to 38 percent (to more than $300 billion) while the United States share dropped from 53 percent to 46 percent (representing just over $400 billion).

The Traditional Partners:

Canada has important opportunities to pursue vital interests in the familiar and historically like-minded parts of Europe, including the largely overlapping group of EU member states and allies in the North Atlantic Treaty Organization (NATO). The states of the EU have faced complex challenges in recent years, including uneven economic performance, irregular migration from Africa and the Middle East, increased anti-democratic populist movements, renewed far-right extremism in some places, malign influence from external actors and Brexit. On the whole, however, European states remain partners of choice for Canada for their generally close alignment on core interests, and their collective and individual weight in the global system, especially the United Kingdom, France and Germany.

NATO remains the central pillar of Euro-Atlantic security and has contributed to an unprecedented period of regional peace and prosperity throughout its 70-year history. The Alliance nonetheless faces challenges maintaining transatlantic unity, given U.S.-Europe policy divisions and U.S. pressure on Allies to increase their defence spending. Of several major Canadian contributions to NATO operations, leadership of the Enhanced Forward Presence battlegroup in Latvia has been particularly well-recieved by Allies on NATO’s eastern flank, wary of Russian aggression. Beyond NATO, Canada makes expert contributions to EU election and police observation missions.

The Strategic Partnership Agreement (SPA) with the EU helps guide Canada-EU cooperation on issues such as effective multilateralism, rule of law, human rights, a well-functioning international economic order, global security, climate and the Arctic. Canada is not always top of mind for the EU and its member states, but they recognize the practical importance of Canada's global engagement in broadening their own partnership options and appreciate our shared values. Regular and intensive interactions between Canadian ministers and senior officials and European counterparts reinforce this relationship.

The Comprehensive Economic and Trade Agreement (CETA) has been provisionally applied since September 2017. Some provisions with respect to investment, including the investment dispute resolution mechanism between investors and states (ISDS) and some provisions in the Financial Services Chapter will only apply once all Member States have ratified CETA. Bilateral trade rose 7.4 percent in 2018, totaling $156 billion. Canada is pursuing ratification by all Member States, with 13 completed to date and 15 remaining. The Brexit drama in the United Kingdom has generated much uncertainty, including for Canadian businesses. The United Kingdom is Canada’s largest EU market (22 percent of EU merchandise trade in 2018). Canada will pursue its own commercial interests with the United Kingdom as the Brexit process unfolds, including by implementing bilateral agreements in key fields such as nuclear energy and civil aviation.

Wider Europe:

Looking beyond familiar partners, Canada is increasingly affected by developments in a wider Europe that stretches east and south to include Russia, the Western Balkans, Turkey, Central Asia and the Caucasus. This region is home to some of the prominent fault lines emerging in the current rules-based international order. While trade with eastern Europe/Eurasia (including Turkey) totaled just $12 billion in 2018, there is considerable potential for growth in commercial relationships in the region.

Russia continues to take aggressive and illegal steps to assert its geopolitical ambitions and protect its national interests, particularly in the former Soviet republics and in the Western Balkans. These include violations of its neighbours’ sovereignty (Ukraine and Georgia), efforts at interference and destabilization (Montenegro, Moldova, North Macedonia, in dialogue between Serbia and Kosovo), and further signals that it would potentially intervene to protect Russian-speaking minorities in neighbouring states. Russia has also targeted NATO, the United States, Germany, France, Ukraine and others with disinformation and cyber campaigns, including interference in electoral processes. Canada’s relations with Russia remain difficult, and sanctions against Russia for its actions in Ukraine are in place. However, engagement continues on issues of common interest such as the Arctic, space cooperation and women’s empowerment.

Meanwhile, post-Soviet states in the Caucasus and Central Asia are struggling to de-link from Russia’s sphere of influence - either to choose a Euro-Atlantic orientation, or to establish a balance between Russia and the West (or, in some cases, with China). Some face threats to their territorial integrity, and are teetering between competing political, economic and generational spaces. Despite the fact that stability in this region implicates global and Canadian security, political and economic objectives, Canada’s diplomatic presence is relatively weak.

Ukraine, an especially important arena in the struggle against aggression and rising authoritarianism, is an exception. Since Russia illegally annexed Crimea and started backing militants in eastern Ukraine in 2014, Canada has committed over $785 million in multifaceted assistance to Ukraine. The 2019 Ukraine Reform Conference hosted by Canada is a good example of significant ongoing engagement. The Canada-Ukraine Free Trade Agreement (CUFTA) has been in force since August 2017. Canada’s political, trade, development, and security support are highly appreciated by Ukrainian leaders, [REDACTED]

A different test comes from Turkey – a NATO ally, G20 partner, and EU aspirant. [REDACTED] Canada is concerned about Turkey’s [REDACTED] its recent military operation in Syria. [REDACTED] Commercially, Turkey is an emerging G20 market with bilateral trade growing 20-25 percent annually, reaching just under $4 billion in 2018.

Outlook:

If in the past Canada’s interaction with European states was seen as mature and reasonably predictable, the current challenging environment of threats to security and prosperity creates further incentive for Canada to invest in relationships with Europe. [REDACTED] Canada and Europe can work together to help tilt the balance in states that are struggling towards democracy and open economies, and to enable their success.

Latin America and the Caribbean

Issue

• Latin America and the Caribbean (LAC) is an emerging region in Canada’s near abroad and thus uniquely important to our security and economic interests.
• Efforts to defend democracy and promote human rights in LAC have new urgency amidst acute governance challenges and ongoing social and economic inequalities, as seen in recent unrest across the region.

Context

Strong economic growth in Latin America and the Caribbean (LAC) in the early 2000s contributed to 72 million people being lifted out of poverty and 94 million joining the middle class.

Nonetheless, recent unrest across the region has demonstrated the lack of inclusivity of this growth, and underlying governance challenges.

Despite significant improvements in income distribution were made in the early 2000s, progress has declined since 2010. Social and economic inequalities often coincide with other forms of inequality, including gender, race and ethnicity.

Gender inequality and adolescent pregnancy rates are very high in LAC. Rates of femicide and sexual and gender-based violence are among the highest in the world.

Corruption is undermining progress.

In 2016-17, 20 percent of people in LAC reported paying a bribe for services such as education and health. Brazil-based Odebrecht (engineering/construction company) admitted to paying bribes in more than half of the countries in LAC.

The effects of climate change are impacting growth and stability across LAC.

The Caribbean is particularly affected, with many highly indebted small island states absorbing significant reconstruction costs. Recently, the Amazon region has seen a higher than average number of forest fires. While Brazil has been hardest hit, the fires are also considered the most significant environmental challenge faced by Bolivia in the past decade.

Irregular migration is at an all-time high due to the situations in Venezuela and Central America (Nicaragua, El Salvador, Guatemala, and Honduras). Migrants are overwhelming public services in Colombia, Peru, Ecuador, Costa Rica and Mexico. Approximately one quarter of LAC’s total population (154 million people) is between the ages of 15 and 29. Primary school completion rates are high (93 percent), yet youth represent more than 40 percent of unemployed (a driver of irregular migration).

Although LAC represents only nine percent of the world’s population, it accounts for nearly 40 percent of homicides. Criminal gangs and networks, responsible for one-third of the violence in the region, are particularly prominent in Mexico and Central America - fueling a surge of irregular migration north.

Although the region has now embraced democracy, there is some backsliding. Political dynamics in some places are volatile and polarized, resulting in a rise in populism. In Venezuela and Nicaragua, leaders have taken steps to undermine democratic institutions and rule of law. The Venezuela crisis is a threat to regional peace and security, and is challenging implementation of the Colombia Peace Accords. The crisis has led to the out-migration of over four million people, and is a major geo-political flash point.

Despite these challenges, the region has significant potential for further growth and democratic progress. Canada is well-placed to help mitigate governance issues, and benefit from growing trade and investment, and institutional and people-to-people links.

Canada’s two-way services trade with LAC totalled $21 billion in 2017 - an increase of 26 percent since 2013 - with $8.1 billion in services exports to LAC, and $12.9 billion in services imports. Canadian Foreign Investment in LAC amounted to $147 billion in 2018.

Total value of Canadian international assistance in LAC was $708 million in 2017-18 (12 percent of our total international assistance), and has evolved to reflect the region’s sophisticated and changing needs.

Challenges to sustained progress include low growth rates of the largest economies. In July 2019, the IMF cut growth estimates for Brazil and Mexico (the two largest economies in LAC) to 0.8 percent and 0.9 percent respectively.

Canada and LAC

In an effort to ensure shared prosperity and security, Canada is embracing opportunities and supporting efforts to tackle the challenges facing LAC:

Promoting trade and investment

In addition to two-way services trade and Canadian Foreign Investment noted above, eight of Canada’s fourteen free trade agreements (FTAs) involve countries in the region. These FTAs provide important opportunities for Canadian businesses. Ongoing negotiations with the Pacific Alliance and Mercosur trading blocs are expected to result in further opportunities.

Advancing democracy and human rights

Canada has historically championed the defence of democracy and promotion of human rights in LAC, including through extensive diplomatic, stabilization and development support for the Colombian peace process; supporting multilateral anti-corruption efforts in Guatemala and Honduras; issuing sanctions targeting officials in Venezuela and Nicaragua; and working within the Organization of American States (OAS) where, for example, it has played a leadership role vis-à-vis the Venezuela crisis.

Building climate resilience

Canada is strengthening climate resilience in the Caribbean, including through a $100 million five-year commitment to support post-hurricane reconstruction, and advocacy in multilateral institutions around access to financing. Such actions support a key regional priority and ensure safer travel for Canadians.

Opportunities for Enhanced Engagement

Capacity Building

• Many governments in LAC look to Canada for technical assistance. Mechanisms to deploy Canadian experts and provide training opportunities in Canada would enable timely support on key issues.

Innovative Technologies and Financing

• LAC offers a key market for Canadian products and services in growth areas such as green/renewable technologies, cultural industries, and public-private infrastructure partnerships.
• As the region shifts away from traditional forms of development assistance, Canada is well placed to support innovative financing initiatives.

Natural Resource Development

• Canada's strong presence in the natural resource sector could contribute to diversification into related sectors such as renewable energy, green mining, and electrification.

Democracy, Human Rights, Rule of Law

• Canada can continue to promote democratic principles and defend human rights, including by maintaining its leadership in pressuring for a peaceful democratic resolution in Venezuela.
• Canada can support and strengthen the efforts of institutions i.e. OAS and CARICOM.

Education

• Canada can strengthen its position as a destination of choice for students seeking tertiary education. Institutional partnerships, exchanges, scholarships and educational trade promotion activities can be enhanced.

Middle East and North Africa

Issue

The Middle East and North Africa (MENA) is important for the prosperity and security of Canada and its allies. Canada’s role must be carefully calibrate in response to conflict with wider international impact.

Context

Eight years after the Arab Spring, the Middle East and North Africa (MENA) region has seen increased geopolitical competition, changing relationships and the emergence of complex new conflicts. Geographically, MENA (generally the region from Morocco to Iran) is at the crossroads of Europe, Asia and Africa, situated at the origin of modern civilization. The region’s long history and diverse people place it on cultural and religious fault lines.

The region plays a pivotal role in the global economy. Five of the ten largest oil producers are in MENA, with the Gulf States home to one-third of global oil and gas reserves. Three of the world’s most vulnerable points for maritime transportation are located in the region, namely the Strait of Hormuz, Bab Al Mandeb and the Suez Canal. The region also offers commercial opportunities and sources of capital investment, in particular Israel and the Gulf. The regional GDP was US$3.6 trillion (approximately four percent of the world’s GDP). Reflective of its role as a guarantor of affordable oil for the global economy, Saudi Arabia is a member of the G20.

Income Inequality, which along with frictions on governance and human rights, has resulted in social and political unrest.

Within the region, Saudi Arabia and Iran compete for dominance through proxy groups, which exploit historic rivalries between Sunni and Shia respectively. Both countries have provided support to competing factions in Yemen (where Saudi Arabia and the United Arab Emirates support the Yemeni government against Houthi rebel forces backed by Iran) and in Libya, and retain ties to groups in Lebanon and Iraq [REDACTED]. More recently, under President Erdogan and in the face of Syria’s civil war, Turkey has sought to reassert its influence in the MENA region.

Because of the geostrategic importance and natural resource wealth of the region, global powers have in turn aligned themselves with regional players. The United States has strong commercial ties with Saudi Arabia as well as security cooperation to limit Iranian influence. For its part, Russia works closely with Iran, notably in Syria, motivated less by commercial factors (although such do exist) and more by strategic ones, significantly the basing of Russian military (including naval) forces in western Syria.

[REDACTED] The situation in the West Bank and Gaza is volatile and the risk of escalation remains omnipresent. The conflict persists as a source of contention throughout the region; only Egypt and Jordan have signed peace treaties with Israel. At the political level, regional support for the Palestinians [REDACTED] and, in the case of the Gulf States, financial assistance, but public opinion remains largely supportive of the Palestinians. Egypt, for instance, continues to maintain the blockade of the Gaza Strip jointly with Israel. Shared concerns about Iran have resulted in shifting dynamics as some Arab states engage more substantively with Israel. The latter’s enforcement of its redlines in Syria and confrontation with Hezbollah in Lebanon are designed to combat Iranian expansion and intentions; Israel continues to view Iran as its primary threat.

In response to profound inequality in their societies and resentment of Western colonial and post-colonial powers, an extremist and virulently anti-Western interpretation of Islam has developed, represented initially by Al Qaeda and later overtaken by Daesh (the Arabic acronym for Islamic State in the Levant).

The International Coalition against Daesh, of which Canada is a member, has been critical to the territorial defeat of this terrorist group. The long-term stabilization of Iraq requires the development of government institutions capable of rebuilding, providing services, and reducing sectarian tensions.

The hope of real democratic change in the region offered by the Arab Spring has waned as many countries continue to face weak governance and corruption, security threats, young and growing populations, high unemployment, and social unrest. This has led to waves of irregular migration toward Europe. More recently these conditions have provoked mass popular protest demonstrations in Lebanon and Iraq. [REDACTED] The region’s monarchies, in the Gulf and in Morocco, have remained stable but struggle to respond to their people’s demand for socio-economic and political change. Tunisia, a developing democracy, faces various socioeconomic challenges, including youth unemployment.

Canadian engagement

Working in collaboration with broader international efforts, Canada has continued to assert a leadership position where there are opportunities to do so, for example in promoting human rights, gender equality and universal freedoms; contributing to economic development; advancing stabilization and humanitarian efforts; supporting democracy; and working to counter terrorism and violent extremism. Canada has led on the annual Iran resolution at the UN General Assembly since 2003, and has been outspoken about arbitrary detentions in Saudi Arabia and the killing of journalist Jamal Khashoggi. Canada has, however, been criticized by some countries in the region for singling out the human rights records of specific countries and for its voting record at the UN on Israeli-Palestinian issues.

Canadian Armed Forces personnel are deployed in seven operations throughout MENA and were an active part of the alliance that defeated Daesh in Iraq. Canada’s military engagement under Operation Impact has been extended until March 2021. It consists of up to 850 Canadian Armed Forces deployed to Iraq, Kuwait, Qatar, Jordan and Lebanon to assist with training and advising Iraqi security forces and providing equipment, personnel and intelligence capabilities to the Global Coalition against Daesh. In addition, Canadian officers contribute to the UN Truce Supervision Organization (UNTSO) and support capacity building with the Palestinian Authority.

The presence of Canadian dual citizens, members of diaspora communities and large numbers of Canadian expatriates in the region contribute to the rich people-to-people ties between Canada and the MENA, but can represent an important consular obligation.

In 2018, Canada’s bilateral merchandise trade with MENA totaled $14.8 billion. Of that amount, $5.6 billion was with Saudi Arabia, our 17th largest trading partner. The region is regarded as an important potential source of foreign investment, especially given the size of the sovereign wealth funds held by the Gulf States (an estimated $2.5 trillion) as well as thousands of students. Free trade agreements exist both with Israel and Jordan.

In FY2017-18, total Canadian official development assistance to the region amounted to $634 million, or 11 percent of our global total. Programs focused on humanitarian relief, inclusive governance and economic growth, and women’s empowerment. Major MENA recipients in recent years include Iraq, Lebanon, Jordan, and the Palestinians. Canada is one of the top donors in providing humanitarian relief to the Yemeni and Syrian conflicts.

Canada is investing up to $3.5 billion over five years (2016-21) to respond to the crises in Syria and Iraq, and their impact on Jordan, Lebanon and the region.

This support helps set the conditions for security and stability; alleviate human suffering; enable civilian-led stabilization programs; and support governance and longer-term resilience.

Sub-Saharan Africa

Issue

Sub-Saharan Africa is a region with significant economic potential and growing geopolitical competition. For Canada, this presents opportunities for economic and political partnerships; it also represents a theater where global and regional players exert their influence. However, the region also faces persistent challenges such as poverty, weak governance, insecurity, and gender inequality.

Context

Sub-Saharan Africa (SSA) is a region of increasing economic and geopolitical importance. GDP growth is projected to reach 3.5 percent in 2019, but with growth rates of 5 percent or higher in almost half of SSA countries. Three of the top five fastest growing economies in the world are in SSA (i.e. Rwanda (8.6 percent), Ethiopia (7.7 percent) and Côte d’Ivoire (7.4 percent)). At the same time, the coming-into-force of the African Continental Free Trade Area (AfCFTA) agreement in July 2019, ratified by 27 African Union (AU) member states, aims to enhance regional economic integration and spur further growth.

Over the last decade, growth has created opportunities for Africans and international partners, many of which (e.g. United States, EU, China, India and Turkey) have reinforced commercial and political ties. Russia is the latest country to hold an African Summit [REDACTED] China’s political and economic footprint in Africa has expanded significantly, growing from $2.1 billion in investment in 2005 to $51.5 billion in 2017. This represents 2.2 percent of Chinese investment abroad in 2017. In comparison, Canada’s investment in SSA was $10.4 billion in 2017, representing 0.9 percent of its investment abroad. In terms of merchandise trade with SSA, China had $176 billion in 2017 and Canada had $5.64 billion

Through the AU, African countries are increasingly coordinated on global issues and exercising their influence within international institutions, including the UN (54 member states), La Francophonie (26), the WTO (39) and the Commonwealth (19). They have also assumed a greater role in addressing regional security challenges, including through significant contributions to UN and AU-led peacekeeping and conflict prevention and mediation efforts. Among SSA countries, South Africa and Ethiopia are strengthening their standing as regional and continental players, most recently with the Ethiopian Prime Minister playing a role in the negotiation of a transitional constitutional agreement in Sudan.

Despite these gains, SSA faces significant challenges. Some 41 percent of Sub-Saharan Africans still live in extreme poverty, with the reduction of poverty rates outpaced by population growth. These challenges are exacerbated by demographic pressures, with 60 percent of the population under the age of 25, and the growing impacts of climate change. According to Freedom House, as of 2019, only 16 out of 48 countries in SSA are electoral democracies. Despite advances in women’s political participation and girls’ enrollment in primary education, African women and girls continue to face discriminatory legal barriers, unequal access to resources, limitations on reproductive rights, and sexual and gender-based violence.

Fragility and Conflict in SSA

Armed conflict, political instability, terrorism and organized crime continue to affect parts of Africa, including in the Sahel and Lake Chad Basin area (Mali, Burkina Faso, Cameroon, Nigeria), in the Great Lakes and Central Africa (Central African Republic, Democratic Republic of Congo, Burundi), and in the Horn of Africa (Somalia, Sudan and South Sudan). Since 2012, Mali’s challenges are spreading to neighbouring countries and further regional destabilization could also take place beyond the Sahel. Piracy remains a challenge, in particular in the Gulf of Guinea region. The affiliation of some violent extremist groups with global terrorist networks is of concern, as is irregular migration of Africans to Europe – often involving dangerous crossings across the Mediterranean. According to the United Nations High Commissioner for Refugees, in 2018, an estimated 2,275 people died or went missing crossing the Mediterranean.

Canadian Engagement in SSA

Canada has cultivated relationships in Africa for more than five decades through our work with African countries and with regional and international bodies. Canada has a diplomatic presence in 19 countries and also engages with the AU on issues of regional and international importance. In 2018, Canada had $5.5 billion in two-way trade with SSA, and has eight Foreign Investment Promotion and Protection Agreements (FIPAs) in force with Benin, Burkina Faso, Cameroon, Côte d'Ivoire, Guinea, Tanzania, Mali, and Senegal.

In 2017, Canadian mining companies possessed over $26 billion in assets in SSA, and Canadian universities host over 33,500 African students. Canada maintains 15 bilateral development programs and a regional development program on the continent. In 2017-18, Canada provided over $2.32 billion in international assistance to the region, accounting for 38 percent of Canada’s total international assistance. In 2017, Canada’s Feminist International Assistance Poliy (FIAP) committed to increasing the share of bilateral international assistance provided to SSA to 50 percent by 2021-22.

Global Affairs Canada is pursuing a Feminist Foreign Policy advancing its overarching international objectives, including:

Promoting human rights and inclusive governance

Canada supports efforts to promote inclusive governance and respect for human rights in SSA, particularly for women, girls and other marginalized groups. As part of the Women’s Voice and Leadership program, Canada is supporting local women’s organizations in 16 SSA countries and at the regional level. Canada has worked closely with African partners to advance shared values, and has done so by co-sponsoring (with Zambia) a biennial resolution on ending child, early and forced marriage at the UN General Assembly since 2013. Canada also publicly advocates for democracy, as it has done through ministerial statements calling for a democratic resolution to the situation in Sudan.

Supporting poverty reduction efforts that reach the poorest and most vulnerable

Canada actively contributes through investments in education, health, and women’s economic empowerment. Canada is supporting sexual and reproductive health and rights, working with the nine West African countries of the Ouagadougou Partnership to increase access to family planning by 2.2 million users.

At the 2018 G7 Summit in Charlevoix, Canada announced a $400 million contribution for girls’ education in conflict and fragile states over three years – including a significant portion to SSA - as part of a $3.8 billion commitment by several G7 partners and the World Bank.

Investing in inclusive and green economic growth and diversifying trade

Canada is contributing $150 million to the objectives of the African Renewable Energy Initiative to increase access to renewable energy, and is collaborating with African partners on the development of the Blue Economy, co-hosting a high-level Sustainable Blue Economy Conference with Kenya in November 2018. Canada is also the sole donor to the African Trade Policy Centre which supported the development of the AfCFTA. In conjunction with these initiatives, and through the Trade Commissioner Service, Canada is helping Canadian companies access opportunities in a number of sectors including clean tech, climate-friendly agriculture, education, mining and information and communications technology (ICT).

Contributing to peace and stability

Canada contributes to regional peace and security through deployment of personnel to UN peacekeeping missions, investments in conflict prevention, peacebuilding and capacity building, and by championing the Women, Peace and Security (WPS) agenda. Canada is deploying up to 20 police officers to the UN Multidimensional Integrated Stabilization Mission in Mali (MINUSMA) and the EU Capacity Building Mission in Mali, as well as 10 military staff officers to MINUSMA, and is deploying a tactical airlift capability to the UN Regional Support Centre in Entebbe, Uganda. Canada is also partnering with Côte d’Ivoire as part of the G7 WPS Partnership initiative, and as part of the Elsie Initiative on Women in Peace Operations, Canada has established bilateral partnerships with the Armed Forces of Ghana and the Zambia Police Service, and is supporting the Senegal Armed Forces’ Gender Integration Strategy.

The United Nations

Issue

The United Nations System is a vital component of the global governance architecture and remains a central platform to advance Canada’s foreign relations. However, it is under increasing strain due to both evolving great power dynamics and organizational challenges.

Context

The UN is the only multilateral entity with universal membership, currently composed of 193 member states. The General Assembly and major UN Summits bring together world leaders to engage on pressing global issues and negotiate normative frameworks to address them. The Security Council remains the only world body with the authority to declare threats to international peace and security and deploy responses, including sanctions and military personnel. Peacekeeping missions (currently 14) seek to respond to multifaceted conflicts with mandates that encompass a wide variety of activities, including protecting civilians, monitoring human rights, supporting elections, facilitating humanitarian access and leading security sector reform efforts. The UN Development System provides critical support to countries around the world to assist the poorest and most vulnerable and implement the 2030 Agenda. UN entities such as the World Food Program and the UN High Commissioner for Refugees are front-line responders to humanitarian crises. The UN-brokered Paris Agreement guides global efforts to combat climate change. The UN advances human rights norms and contributes to the primacy of the rule of law by codifying and developing international law on a wide-variety of subjects.

Given its diverse mandate and central role in the global governance architecture, it is important that the UN functions efficiently and effectively. However, the UN currently faces a number of pressing challenges not least related to the resurgence of great power dynamics, and a difficult financial situation.

A return to great power competition and growing unilateralism among major powers is playing itself out in real time at the UN. This can undermine some of the principles and institutions that comprise the world body.

The current U.S. administration’s harder stance on a number of issues at the UN, including its decision to remove itself from the Human Rights Council, withdraw from UNESCO, and unilaterally limit its assessed contribution for peacekeeping (currently 28 percent) have [REDACTED] This is happening as China has taken an increasingly active and assertive posture at the UN, arguing convincingly that its economic and political heft should accord it greater influence. [REDACTED]

The UN Security Council is confronted with an increasing volume of complex crises but Geopolitical dynamics also affect the UNSC. Its reputation and effectiveness are frequently hampered by the degree to which its deliberations are driven by the national interests of the five permanent members (P5) and the use of (or threat to use) the veto by China and Russia, most starkly apparent in the case of Syria.

The UN currently faces a dire financial situation, with member states owing approximately US$5 billion in assessed contributions. The United States alone owes US$3.3 billion. Paying a share of the UN’s costs is a core obligation of membership. The Secretary-General has written to world leaders three times over the past year urging them to pay what they owe. Canada always pays its assessed contributions (US$76.2 million) to the UN system in full and on time. China also pays in full. Assessed contributions cover the UN regular budget (US$ 5.8 billion for the biennium 2018-2019), the peacekeeping budget (US$6.7 billion covering 13 of the 14 active peacekeeping missions) and International Criminal Tribunals (US$196 million for the biennium 2018-19).

While often a result of Member State decisions, the UN has long been criticized for having fragmented and duplicative structures, cumbersome and costly budgetary procedures, overly bureaucratic processes and organizational culture that can hinder effective implementation of programs in the field, and senior leadership of mixed quality. The UN has also had to grapple with some shortcomings in the management of some agencies and programs recently, with the heads of the UN Environment Programme and UNAIDS stepping down. In response, UN Secretary-General (UNSG) António Guterres has advanced an ambitious reform agenda that has upended decades-old structures in the areas of peace and security, sustainable development, and internal management in order to strengthen efficiency, transparency and accountability. Achieving gender parity in senior management and combatting sexual exploitation, abuse and harassment by United Nations personnel are also part of the reform agenda, and progress is being made.

Canada’s national interests are protected and advanced through a well-functioning UN. Our UN engagement provides a means of working with partners to advance international priorities and strengthen the institutions, treaties, arrangements and norms that are central to a rules-based international system. Canada is seeking election to the UN Security Council as a strong indication of our commitment to global burden sharing. Moreover, as one of the largest overall contributors to the UN, we can continue to lead by example by maintaining our strong support for the implementation of reform measures and by demonstrating constructive multilateral engagement.

UN Regular Budget: Top 10 Contributors

NATO

Issue

• The North Atlantic Treaty Organization (NATO) is the embodiment of the transatlantic bond and remains vital to the collective security of its members.
• Canada is an active member contributing substantially to the Alliance’s core tasks and missions. Canada faces criticism, primarily from the United States, for not increasing defence spending to 2 percent of GDP, the non-binding target level agreed by Allied leaders in 2016.

Context

NATO has been a stalwart in supporting and protecting the current rules-based international order which has evolved over the last seven decades. The principle of collective defence among NATO Allies, enshrined in Article 5 of the North Atlantic Treaty, ensures that Canadian sovereignty and security will be defended by Allies should Canada face a miltary threat. In turn Canada is commited to the defence of NATO Allies. The Alliance has been a cornerstone of Canada’s international security policy. As decision making is by consensus, membership gives Canada a voice and a veto on issues related to Euro-Atlantic security.

The Alliance currently has three main tasks: (1) collective defence among the 29 Allies (soon 30 with Macedonia) (2) crisis management within and beyond NATO’s borders (e.g. Afghanistan and Libya missions); and (3) cooperative security through partnerships (i.e. capacity building in Iraq, Jordan and Georgia).

Key challenges facing the Alliance include:

Russian aggression:

The NATO-Russia relationship, already strained by the 2008 hostilities in Georgia, has been severely affected following Russia’s illegal annexation of Crimea in 2014, ongoing interference in eastern Ukraine, and aggressive actions in the Kerch Strait in November 2018. In response to Russia’s provocative and destabilizing behaviour, NATO takes a dual-track approach of deterrence and high-level political dialogue. Notably, NATO has established an enhanced Forward Presence (eFP) through which it has deployed four multinational rotational battle groups, one each in Estonia, Latvia (which Canada leads), Lithuania and Poland.

Burden sharing:

Fair NATO burden sharing, and the progress of each Ally in reaching the guideline of spending two percent of GDP on defence, continues to be an issue of the highest importance for the United States and will be the most significant issue to manage at the December 2019 Leaders’ Meeting. Canada has not provided a plan to meet the 2 percent guideline by 2024, but continues to ensure that our significant contributions to the Alliance and defence spending increases are recognized. Canada is increasing its spending on defence by 70 percent from 2016-2017 to 2026-27, as part of its defence policy Strong, Secure, Engaged (SSE). Canada will reach an expected 1.48 percent of GDP in 2024-2025, (approximately CAD $31 billion). To reach two percent in 2024, based on current GDP forecasts, spending would need to be approximately $54.4 billion and there would be important operational constraints to address. Canada’s current level of defence spending is 1.27 percent of GDP for 2018-19, or approximately $28.8 billion.

Strain in transatlantic relations:

The relationship between the United States and the rest of NATO has become strained under the Trump administration. Contributing factors include U.S. President Trump’s threats to withdraw from the Alliance if Allies do not meet burden sharing expectations and a European push to bolster internal security and defence cooperation with a view to achieving European ‘strategic autonomy’. French President Macron’s call for a “European Army” raised worries about competition with NATO and duplication of effort.

The potential that non-EU Allies will be at a disadvantage or even barred from participating in joint European defence projects and procurement has also angered the United States. Despite these frictions, NATO-EU cooperation has increased in recent years and pursuing such cooperation remains necessary to maintain Alliance unity.

China:

At the behest of the United States, Allies have embarked on a comprehensive assessment of how China’s foreign, defence and security policies impact Alliance security. As Allies develop recommendations for NATO, [REDACTED]

Turkey-U.S. friction:

The deterioration of the Turkey-U.S. relationship is increasingly likely to have an impact on the Alliance. Both countries are at odds over multiple interconnected issues, including past U.S. support for the Syrian Democratic Forces, characterized by Ankara as terrorist entities, Turkey’s invasion of Syria’s north east and Turkey’s purchase of a Russian-made S-400 surface-to-air missile system. Turkey is an important member of the Alliance and possesses its second-largest army.

Afghanistan:

NATO remains engaged in Afghanistan chiefly through its Resolute Support Mission and the financial sustainment of the Afghan National Defence and Security Forces. Canada has not contributed military personnel to NATO’s current training mission in Afghanistan (France is the only other Ally with no troop contribution) but is providing $195M towards Afghan security sector support from 2018 to 2020, and $270M in development assistance from 2017 to 2020. U.S. and Afghan peace negotiations with the Taliban will impact NATO operations going forward.

Nuclear and Arms Control issues:

NATO continues to adapt its nuclear policy to evolving nuclear security challenges. Canada supports NATO’s ongoing efforts in this area and continues to promote Allies’ commitment to disarmament, arms control, and non-proliferation measures.

In response to Russia’s persistent violation of the Intermediate Range Nuclear Forces (INF) Treaty, the United States withdrew from the Treaty on August 2, 2019. NATO explicitly supported the U.S. withdrawal.

Canada and NATO

Canada was one of 12 founding members of NATO in 1949 and has contributed to every NATO military operation. Canada’s Joint Delegation to NATO is staffed by Global Affairs Canada and National Defence/Canadian Armed Forces. Canada’s current financial contributions to NATO total $165 million for 2018-19.

Canada currently holds a leadership role in three NATO operations:

• Canada is the framework nation for the enhanced Forward Presence multinational battle group in Latvia with up to 540 troops and is committed to continuing in this role through 2023.
• Canada has the command of the NATO Mission – Iraq, with up to 250 troops and will continue in this leadership role until the fall of 2020.
• In June 2019, Canada assumed command of the Standing NATO Maritime Group 2, operating in the Mediterranean and Black Seas, and is committed to continuing in this role until January 2020.

Canada is also a leader on the issue of women, peace and security (WPS) at NATO, and is the most important financial contributor to the NATO WPS Office headed by a Canadian, Clare Hutchison. Canadian female general officers currently occupy the post of Commandant of the NATO Defence College, are commanding the Standing NATO Maritime Group 2 and will lead the NATO Mission Iraq starting this autumn.

Emerging issues

NATO is currently working to address new and evolving challenges including cyber and hybrid threats, disruptive technologies, and the growing role of space.

Upcoming key NATO events in 2019

• Foreign ministerial, November 20, Brussels, Belgium.
• Leaders’ meeting, December 3-4, London, United Kingdom.

Five Eyes Intelligence Partnership

Issue

• The Five Eyes (FVEY) partnership is a longstanding and comprehensive multi-country intelligence sharing relationship [REDACTED]
• Managing risks associated with a Chinese presence (Huawei) in5G telecommunications networks is currently a topic of high importance to the FVEY community and a current example of how the community consults and coordinates on intelligence-driven issues.

Context

The post-World War II FVEY intelligence sharing partnership grew out of the vital wartime signals intelligence and cryptographic relationship between the United Kingdom and the United States.

In the post-war period, a number of bilateral and multilateral agreements between Canada, the United States, the United Kingdom, Australia and New Zealand solidified and expanded this partnership.

Today, the intelligence sharing relationship among the FVEY partners includes engagement between allied signals collection entities, militaries, security intelligence agencies, [REDACTED]

The FVEY partnership provides senior decision-makers with intelligence products on thematic topics and geographic areas where Canadian access and analysis is often limited or non-existent. Canada is thus a significant beneficiary of the FVEY relationship, which is a core component of our cooperation with allies to protect national security.

[REDACTED]

The benefit that Canada draws from the FVEY partnership can be considered in terms of intelligence burden-sharing. [REDACTED]

[REDACTED]

Global Affairs Canada (GAC) is part of the Government of Canada’s core security and intelligence community, alongside Public Safety, CSIS, RCMP, CBSA, DND/CAF, CSE, IRCC and Transport Canada.

[REDACTED]

The FVEY relationship also provides the structure for consultation on issues of common concern, such as the 5G discussion, and around response mechnisms, such as hostage taking.

[REDACTED]

Review and Oversight

Global Affairs Canada’s security and intelligence activities are subject to review by two new bodies mandated to review national security and intelligence activities across the Government of Canada.

The National Security and Intelligence Review Agency (NSIRA) was established in July 2019, following the passage of Bill C-59. NSIRA has a broad mandate to review the national security and intelligence activities of any federal department and agency, and Global Affairs Canada is implicated in several ongoing reviews. National security accountability in Canada also benefits from the work of the National Security and Intelligence Committee of Parliamentarians (NSICOP), an all-party statutory committee established in 2017 and authorized to review any national security or intelligence matter. Both of these organizations have broad access rights to classified information held by the department, [REDACTED]

NSICOP is expected to undertake a department-wide review of Global Affairs Canada’s national security and intelligence activities in 2020, and it is expected that reviews from both NSICOP and NSIRA will constitute a major resource burden for the department in the years ahead. Officials are developing a business case for new resources to address future intelligence review and oversight requirements, and continue to liaise with both domestic and international partners to draw lessons on their experiences with review.

Canada and the G7

Issue

• An effective and well-functioning G7 remains in Canada’s direct interest.
• Despite tensions reflecting wider geo-political dynamics, the annual Leader’s Summit and Foreign Ministers meetings offer important venues for Canada to promote and coordinate pressing economic, trade, security and political issues among broadly like-minded countries.
• The United States is G7 President in 2020, culminating with a June 10-12 Summit.

Context

History and Key Issues

The Group of Seven (G7) was established in 1975 to increase international cooperation on pressing global economic and financial matters. The scope of the agenda has grown and members now address a range of matters, including security, development, environment, health, and gender equality, among other issues.

The G7 is comprised of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. Since 1977, the EU has also been invited to attend G7 meetings. In 1997 Russia joined, making the configuration a G8 until Russia’s expulsion in 2014, following its illegal annexation of Crimea.

Canada has hosted six G7 summits, most recently in 2018 in Charlevoix, Québec.

G7 and the International Context

G7 members have historically been bound together by respect for human rights, fundamental freedoms, democracy and the rule of law, and by a shared commitment to a rules-based international system. In the past, the G7 has bolstered international economic unity and proposed coordinated approaches to address pressing global peace, security and economic crises.

[REDACTED] Under the G8 format in particular there were several examples where Chairs’ Summaries were issued as opposed to negotiated consensus communiqués.

The real value of the G7 lies not just in the members’ ability to reach consensus on issues, but to have open and frank discussions on common challenges and points of division in order to bridge these gaps, and consequently influence global discussions and decision-making.

Canada and the G7

[REDACTED] A seat at the table offers Canada an opportunity to leverage the significant political and economic influence of the group to address global issues of priority concern to Canada. [REDACTED], the G7 currently remains unique in its reach. The G7 has been instrumental in orienting and stabilizing global financial markets, bringing much needed financing in support of global initiatives, and harnessing broader partnerships with non-G7 countries. The G7 also offers Canada (and the others) a privileged opportunity to engage and cooperate when confronting common geopolitical challenges.

France holds the 2019 presidency and Leaders met in Biarritz on August 24-26. The United States will assume the Presidency in 2020, and the Leaders’ summit will take place on June 10-12 (Location TBC). The agenda and themes will likely only be known in late 2019.

In addition to the summit itself, each Presidency chooses a series of ministerial meetings based on their G7 priorities, though Finance and Foreign Ministers meet every year.

[REDACTED]

However, the United States has expressed an interest in re-inviting Russia to the table [REDACTED]

G7 Foreign Ministers' Meetings

Participation in the G7 Foreign Ministers’ process (FMM) provides Canada with a unique vehicle to align positions with a small group of our closest partners on pressing international political and security challenges. The G7 FMM is usually held prior to the Leaders’ Summit, though dates for 2020 have yet to be announced. [REDACTED]

The United Kingdom will assume the G7 Presidency in 2021.

Canada and the G20

Issue

• Canada’s membership in the G20 – a group that represents 85 percent of global GDP - remains fundamental to address issues of economic growth and financial stability.
• The G20 Foreign Ministers’ meeting will take place from November 22-23 in Nagoya, Japan.
• Saudi Arabia will assume the Presidency of the G20 as of December 1, 2019.While their presidency is expected to be controversial, G20 partners have not yet expressed any hesitation about attending the Summit.

Context

History and Key Issues

The Group of 20 (G20)^{Footnote 11} was established in 1999 in large part as a result of efforts by Canada in response to the Asian Financial Crisis of the late 1990s. It met initially at the level of finance ministers and Central Bank Governors from advanced and emerging economies to discuss the stability of financial markets, and how to promote economic cooperation. Its diverse membership represents 85 percent of global GDP.

In response to the 2008 global financial crisis, the G20 was elevated to the level of leaders. At its core, G20 members are expected to promote economic stability and sustainable growth. Responsible and better coordinated monetary and fiscal policies are preconditions for such growth. The G20 continues to provide an important forum to discuss common approaches to global imbalances, capital market regulation, international trade and investment, and sustainable job creation in an increasingly digitalized world.

In recent years, the G20 has taken on an increasing number of subject areas, including health, environment/climate change, gender and women’s entrepreneurship, education and training, and migration/displacement.

Though cautious to ensure against mission creep, Canada has argued that such issues are appropriate for G20 consideration as there are significant economic implications associated with each of these issues if left unaddressed, and G20 action can offer an important demonstration effect.

In addition to an annual Leaders’ Summit, most recently in Osaka, Japan on June 28-29, 2019, the G20 Presidency traditionally hosts a range of annual ministerial meetings coinciding with the priorities of the presidency.

G20 Foreign Ministers Meeting

Japan’s G20 Presidency, which will wrap up with a meeting of G20 Foreign Ministers in November, 2019. This will be only the fourth time a G20 host has brought foreign ministers together as the G20 has not historically addressed peace and security issues. The meeting will provide a venue for a candid exchange of views on current issues related to the rules-based international order, counter-terrorism, anti-corruption and possibly geographic hot spots. In addition, this event offers an opportunity for key bilateral meetings.

Canada and the G20

For Canada, the G20 remains an important platform to influence global economic, financial, and trade policy issues notably given its make-up. The Group is most effective when focussed on matters affecting stability and growth, and international economic governance.

In this respect, the real value of the G20 continues to be the opportunity to build consensus among the major countries represented to pursue strong fundamentals crucial for economic stability and growth. This includes pursuing a collective international approach in support of the international financial architecture and open, rules-based trade and investment as a means of enhancing prospects for growth. However, consensus can be difficult to achieve with many diverse interests and perspectives at the table. [REDACTED]

In 2018 and 2019, all G20 members acknowledged that the rules-based trading system is a shared interest, though the current rules and institutions (namely the WTO) are falling short. The G20 called for reforms to make the multilateral system more responsive to the challenges of the 21st century. In 2019, Canada successfully launched a new initiative entitled the Private Sector Alliance for the Empowerment and Progression of Women’s Economic Representation (EMPOWER). A first meeting of EMPOWER can be expected to take place under Saudi Arabia’s presidency.

Turning to 2020, [REDACTED]

We can expect that the Saudis will seek to use the G20 to project a positive narrative of the nation as a strong economic influencer with a reformist approach consistent with their own domestic reform efforts.

Trade and the effective functioning of the institutions that underpin a rules-based trade order are expected to remain front and centre on the agenda.

Canada, through its own leadership efforts within the G20 and in other fora, can continue to bring a practical pro-trade voice to the table. Equally, there will be important opportunities to use the G20 platform to promote economic opportunity for all of our citizens, including ensuring that the Saudi presidency follows through on the G20 commitment to EMPOWER. [REDACTED]. Canada will have an important opportunity to encourage G20 members to remain focussed on the key issues that could impact upon global economic growth, while ensuring the annual Summit delivers concrete results.

Italy will assume the G20 Presidency in 2021.

World Trade Organization

Issue

Since its founding in 1995, the World Trade Organization (WTO) has helped create a comprehensive and common rulebook which underpins the majority of international trade. Through the WTO, member countries have lowered tariffs and established disciplines on other barriers to trade. The WTO, however, now faces serious challenges, including in concluding negotiations as well as a serious threat to its binding dispute settlement function.

Context

In an increasingly multipolar world where long-held expectations are being challenged, the WTO remains the pre-eminent international institution to uphold rules-based trade and is of strategic importance to Canada’s interests.

The WTO was established in 1995, replacing its predecessor, the General Agreement on Tariffs and Trade (GATT). Its 60+ agreements, binding on all 164 member states, are the largest trade agreements in the world, and effectively set the baseline rules for the multilateral trading system. The WTO’s dispute-settlement system is a key feature that is used by members to seek enforcement of the WTO’s rules.

Canada's Interests at the WTO

The WTO has been a cornerstone of Canadian trade policy. It provides a common set of rules, rights, and obligations for its 164 members and has been a forum for Canada to advance its trade interests on the broadest possible basis. It has also been a vehicle for Canada to build alliances, influence multilateral trade rules and secure concessions or results on issues where we would otherwise have little individual leverage as a medium-sized economy. In particular, binding WTO dispute settlement has facilitated the resolution of Canadian trade disputes (i.e. country of origin labelling for beef and pork, and softwood lumber), [REDACTED]

Status of WTO Negotiations

The most recent comprehensive round of WTO negotiations (Doha Development Agenda, or “DDA”) was launched in 2001, covering the core areas of agriculture, market access for non-agricultural goods and services, trade facilitation, development, intellectual property, trade remedies and subsidy disciplines, trade and environment, and dispute settlement.

The DDA has been stalled since 2008 and at the 10th WTO Ministerial Conference (MC) in 2015, members could not agree on the Doha-round status [REDACTED] Negotiations on core issues (i.e. agriculture domestic support, disciplining subsidies in fisheries) continue, albeit without much progress.

In December 2017, WTO members committed to conclude multilateral negotiations on fisheries subsidies by the end of 2019; [REDACTED] For example, in January 2019, 76 members (including Canada) announced their intention to launch plurilateral negotiations on e-commerce.

Other plurilateral initiatives underway include negotiations for domestic regulations on services, micro, small and medium sized enterprises and investment facilitation.

WTO Reform

The WTO faces many challenges: divergent positions among the membership on trade priorities; lack of consensus on how to reflect development considerations in trade policy, in particular the issue of differentiation for developing countries; an overloaded dispute settlement system; and a stalement over filling current and future Appellate Body vacancies. As a result, the system has come under severe stress, with some observers questioning its continued relevance. Nonetheless, WTO members agree that he organization performs a crucial role in facilitating global commerce. In this context and given the importance Canada attaches to the WTO, it has taken a leadership role to foster discussion among members on the need for WTO reform. In October 2018, Canada convened a diverse and representative group of WTO members^{Footnote 12} (the “Ottawa Group” or “OG”) committed to supporting and strengthening the multilateral trading system by working with other WTO members to complement and achieve coherence between modernization efforts undertaken by other WTO members, and to help identify ideas that appeal to the broader membership. Discussions have focused on three priority areas:

1. improving the efficiency and effectiveness of the WTO’s monitoring and transparency function;
2. safeguarding dispute settlement at the WTO and
3. updating the WTO rule book to reflect 21st century realities. OG Ministers have met three times to date: in October 2018, January 2019 and May 2019.

Impasse in Appellate Body Appointments

Over the past several U.S. administrations, the United States has had concerns on the operation of the dispute settlement system. More recently, the United Stateshas blocked new appointments of Appellate Body (AB) members. [REDACTED]

If the impasse in appointments is not resolved by December 10 (when the terms of two of the last three members ends), the AB will not be able to hear new appeals, because it will have fewer than the required three members to decide an appeal.

Given that a losing WTO member can appeal a panel decision to the AB, and that a WTO ruling is not effective until after the appellate process is over, a dispute could fall into the void if there is an appeal to a non-functioning AB. This would make the enforceability of WTO rules problematic and runs counter to the interests of many other WTO members (including Canada), and would be a serious blow to the credibility of the WTO. [REDACTED]

Canada continues to work with like-minded WTO members to find ways to address U.S. concerns. Canada and other Ottawa Group members have been supportive of the “Walker Process” under the WTO General Council led by New Zealand’s Ambassador to the WTO (David Walker). The process has provoked good discussion and identified areas of convergence in positions among WTO members, [REDACTED] Given the urgency of the situation, Canada and the EU have established a bilateral interim appeal arbitration arrangement which would operate within the framework of existing WTO rules and provide the option of resorting to binding arbitration as an alternative means to dispute settlement if the AB is unable to hear new appeals. Canada has been engaging other WTO members to gauge their interest in forming similar arrangements. [REDACTED]

Upcoming Events

WTO mini-ministerial meetings will be held on the margins of the World Economic Forum in Davos (January 2020), and the OECD Ministerial meetings in Paris (May 2020). These meetings represent opportunities to convene a ministerial meeting of the Ottawa Group. The 12th WTO Ministerial Conference (MC12) is set to take place in Nur-Sultan, Kazakhstan, in June 2020. [REDACTED]

International Financial Institutions

Issue

• International financial institutions (IFIs) play a critical role in enabling economic and social development and global economic stability through policy leadership, loans and grants to governments and investments in the private sector.
• Canada is a major shareholder in IFIs, given the fundamental role they play in the current rules based system and in supporting economic development in middle-income, poor, and fragile states.
• Canada also leverages its engagement with IFIs to advocate for and advance its sustainable development policy priorities with other countries. Given that the IFIs were established as non-political fora, it has been possible to make more progress on issues such as debt sustainability, including with China, than in other political fora such as the G20.

Context

IFIs are components of the international financial architecture established after WWII. Their mandate has evolved from rebuilding post-war Europe to providing necessary financial resources for programs in poor and middle-income countries, including fragile states. IFIs have comparative advantages in promoting sound economic management, infrastructure, and supporting the growth of the local private sector through innovative financing mechanisms.

IFIs include multilateral development banks (MDBs) and the International Monetary Fund (IMF). MDBs aim to reduce poverty; advance sustainable economic and social development; and promote regional cooperation and integration.

The MDBs typically provide non-concessional financial assistance to middle-income countries and some creditworthy low-income countries on market-based terms. They also provide concessional assistance, including grants and loans at below-market interest rates, to low-income countries.

Sharing the same objectives as the MDBs, the IMF fosters global monetary cooperation, secures financial stability, and facilitates international trade. The IMF conducts economic surveillance and provides policy advice, lending programs and technical assistance.

IFIs are making efforts to address concerns regarding the representativeness of their governance bodies, particularly reforming voting rights. Global powers including China, India, and Brazil are concerned with increasing their voice and voting power in these fora, along with developing countries.

BRICS countries (Brazil, Russia, India, China and South Africa) are also exploring alternative routes to play a larger role in global governance outside the traditional IFIs that Canada supports. BRICS established the New Development Bank in 2016 (formerly the BRICS Development Bank) to finance infrastructure. Traditional IFI shareholders remain concerned about the lack of solutions to address unsustainable borrowing by developing countries [REDACTED]

Canada and the IFIs

Canada is a significant shareholder in IFIs. IFIs are among Canada’s largest and most strategic partner institutions for supporting development interventions at scale given the size of their operations, track record, technical and financial expertise, convening role, and thought leadership. For example, with contributions from Canada and other donors, the World Bank’s International Development Association (IDA) provided $20 billion in grant and loan operations annually on average over the 2015-18 in order to support development results in infrastructure, social protection, and other sectors in the poorest countries. This included connecting 44 million people with new or improved electricity services over the same period.

Canada’s relationship with all the IFIs is co-managed by Global Affairs Canada and the Department of Finance. The Minister of Finance is Canada’s Governor to the Board of Governors of the World Bank, the International Monetary Fund, the European Bank for Reconstruction and Development, and the Asian Infrastructure Investment Bank. The Minister of International Development is Canada’s Governor to the African Development Bank, the Asian Development Bank, the Caribbean Development Bank, and the Inter-American Development Bank. As Governors, they are responsible for Canada’s oversight and overall governance of these institutions including their strategic policy direction, accountability, institutional effectiveness, financial and programming decisions. Most of these powers are generally delegated to Global Affairs Canada or Finance Canada’s senior management. Executive Directors represent Canada on the Boards of Directors of these institutions, which are responsible to oversee their general operations.

The Trade Commissioner Service maintains Offices of Liaison with International Financial Institutions (OLIFIs) in most IFI Headquarters cities to provide information, support and guidance to Canadian clients seeking procurement contracts and financing opportunities. The vast majority of Canadian contracts are for consulting services (versus goods or works), and are smaller contracts. However, Canadian companies are not as successfully engaged in implementing large IFI-funded climate-finance projects compared to firms from other major donors. To address this, the TCS invested in new resources for climate finance in 2017 and currently has regionally focused trade commissioners located within Canadian missions in Washington DC, London, Manila and Abidjan.

Current priority issues at IFIs

International Monetary Fund (IMF)

Kristalina Georgieva, former World Bank Chief Executive Officer, has succeeded Christine Lagarde as Managing Director of the IMF. We expect that under her leadership the IMF will continue to track the economic impact of gender inequality where it is critical to economic growth and public finances. Given that debt sustainability is an increasing concern, the IMF and the World Bank have developed a new approach to managing debt sustainability, which includes greater transparency.

World Bank Group

The World Bank is Canada’s largest development partner institution. It is a strategic partner of choice for supporting development interventions at scale given its global operations, track record, technical and financial expertise, convening role, and thought leadership. The World Bank has made serious commitments to eradicate extreme poverty by 2030 and to promote shared prosperity. In 2018, Canada, the United States, and other shareholders agreed to a $13 billion capital increase, which strengthened the World Bank Group’s financial stability and set robust targets on gender equality, climate change, and fragile and conflict-affected states. Climate finance has become an increasingly important part of its portfolio, representing almost a third of its financing as of 2019. Canada has played a key role within the organization in advancing gender equality and debt sustainability. Negotiations on the replenishment of the World Bank’s concessional window will conclude in December 2019.

African Development Bank (AfDB)

The AfDB is dedicated to poverty reduction, economic development and improving the lives of people on the continent. In 2019, Canada demonstrated its support by providing temporary callable capital to the AfDB to protect its AAA rating.

This allowed the Bank to keep its capacity to lend money to its regional members at a lower interest rate than the market. Negotiations are ongoing to replenish the African Development Fund, the concessional window of the Bank, which provided loans and grants to the poorest countries to improve their economic governance, build infrastructure and address sources of fragility and vulnerability.

Inter-American Development Bank (IDB)

The IDB is dedicated to reducing poverty and inequality, advancing infrastructure, and improving health and education in the Americas. The IDB will be a key partner to re-engage and help rebuild Venezuela once a transition takes place. The IDB has achieved important results in infrastructure. Between 2016 and 2018, it has helped built or upgrade more than 6,000 km of roads, provide access to new or improved sanitation to more than 968,000 households and make drinking water available to over 792,000 households.

Asian Development Bank (ADB)

The ADB focuses on poverty reduction and infrastructure development, in addition to being a leading contributor to the production and dissemination of knowledge in Asia.

In 2018, the ADB contributed to reducing close to 2.5 million tons of carbon dioxide equivalent per year reduced and trained 1,200,000 students on quality assurance systems. Negotiations of the replenishment of its concessional window, the Asian Development Fund, will take place in 2020.

Caribbean Development Bank (CDB)

The CDB supports inclusive and sustainable growth and development, promotes good governance and enhances the operations and effectiveness of local institutions. In 2018, the CDB helped 15,643 persons benefit from upgraded road infrastructure and 103 small and medium enterprises benefit from increased access to credit. Negotiations of the replenishment of its concessional window, the Special Development Fund, will take place in 2020.

Asian Infrastructure Investment Bank (AIIB)

Created in 2016 and based in Beijing, the AIIB is a new MDB focused on financing infrastructure projects. As of October 2019, the AIIB had 74 member countries, financed 50 projects with USD 9.6 billion, and has maintained a AAA rating. Since inception, the AIIB has implemented several policies, sector strategies and governance mechanisms to define how the AIIB operates and invests, in line with traditional MDBs. In 2020, we expect the AIIB to accelerate investments, continue to introduce some new strategies (e.g., Corporate Strategy, Water Strategy), while starting to review the effectiveness of existing policies (e.g., Environmental and Social Policy Review).

Organisation for Economic Co-operation and Development

Issue

• The OECD provides evidence-based and peer-reviewed policy analysis to advance economic and social issues in Canada and its 35 other member countries.
• Canada contributes actively to the work of the OECD, including on trade, AI, the future of work, taxation and the environment.
• A new Secretary General (SG) will be elected in 2021.

Context

Established in 1961, the OECD has 36 members representing approximately 62 percent of the world economy. Its mandate is to promote better policies for sustainable economic growth, employment, and a rising standard of living through open and stable markets and mutually supportive economic and social policies. Over 700 Canadian delegates from all levels of government and civil society participate in OECD committee work.

The OECD has over 250 committees, working groups and other bodies focusing on various OECD work areas (i.e. economics, trade, science, education). Four issues currently facing the world economy are particularly relevant in the context of the OECD: (1) the rising backlash against international trade and globalization; (2) the overall fragility of the world economy; (3) the interconnectedness of the global trading system; and (4) the digital transition. The OECD’s comparative strengths are its comprehensive and multi-disciplinary approach to data collection and comparative analysis, peer learning, evidence-based policy direction and guidelines, and policy coherence and impact measurement. The OECD’s work is supported by a Secretariat comprising 3500 staff from member countries. Angel Gurria, SG since 2006, will conclude his third term in 2021, [REDACTED]

The OECD budget is EUR 386 million (2019). Canada is the seventh largest contributor, paying 3.5 percent of the core budget ($18 million annually in assessed contributions).

Six countries applied for membership in 2017 (Argentina, Brazil, Bulgaria, Croatia, Peru and Romania), [REDACTED]

In 2019, the OECD focused on issues related to the digital transition for OECD economies. Highlights include hosting the Going Digital Summit (March 2019) and the Ministerial Council Meeting (May 2019), vice-chaired by Canada’s Minister of International Trade, which discussed how to harness the economic and social benefits of digitalization while mitigating potential risks.

Canada and the OECD

The OECD is an important multilateral platform for Canada, particularly in combatting anti-globalization sentiment and encouraging policies that promote inclusive societies. It offers a principled forum to share best practices, and gain insights from likeminded economies. Canada’s priorities for the OECD for 2019-20 are trade and investment; international taxation; supporting sustainable development; innovation and productivity and focusing on the digital economy.

Canada is working with other member countries to strengthen OECD governance, focused on member-driven priorities and budget discipline.

Asia-Pacific Economic Cooperation

Issue

• Canada is a founding member of the Asia-Pacific Economic Cooperation (APEC) forum, whose 21 members account for 60 percent of global GDP.
• Canada last hosted APEC in 1997.
• Our engagement has waned in recent years, and with it, Canada’s ability to set the agenda in this important regional plurilateral forum.

Context

Established in 1989, APEC remains Asia’s pre-eminent economic forum. Its mission – to promote sustainable growth and prosperity among its 21 member economies^{Footnote 13} —is advanced through a variety of forums, working groups and initiatives aimed at expanding free and open trade and investment, and cultivating favourable business environments throughout the region. It seeks in particular to enhance regional integration by removing barriers to trade and investment “at the border,” enhancing supply chain connectivity "across the border," and improving the regulatory environment "behind the border."

APEC also serves as a platform to share best practices on trade, economic integration and structural reform, and through technical cooperation targeting developing member economies.

APEC initiatives often complement work undertaken by other multilateral forums such as the G7, G20, Organization for Economic Cooperation and Development (OECD), and at the WTO in support of a rules-based trading system.

Hosting APEC is a significant commitment and rotated annually. In addition to the Annual Economic Leaders’ Meeting (or “Summit”), host countries will organize meetings of APEC ministers responsible for foreign affairs, trade and finance, “sectoral ministerials” in areas such as transportation, tourism, and SMEs, and a variety of technical and private-sector focused events. Chile was to host in 2019, but had to cancel due to civil unrest. Malaysia will host in 2020, New Zealand in 2021 and Thailand in 2022. Since APEC was founded in 1989, Canada has hosted only once, in 1997 (most economies with the capacity to host have done so twice).

Recent trade tensions between the United States and China have impacted APEC’s normally collaborative nature, and limited progress against some of its core objectives. Leaders did not reach consensus on a declaration at the 2018 summit in Papua New Guinea for the first time since 1993.

Private sector engagement is an important pillar of APEC's activities. The APEC Business Advisory Council (ABAC) represents the interests of the APEC business community. The annual APEC CEO Summit and regular APEC industry dialogues provide opportunities for business leaders to interact with APEC leaders. Each APEC Leader can appoint up to three ABAC members. Canada’s currently has two ABAC member, Ralph Lutes (VP Asia, Teck Resources) and Janet De Silva (CEO, Toronto Region Board of Trade).

APEC in the global economy

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Canada in APEC

APEC provides Canada the opportunity to further strengthen trade and economic ties with Asia-Pacific’s most dynamic economies. Four of Canada’s top five trading partners are APEC members: the United States, China, Mexico and Japan. In 2017, APEC accounted for more than 84 percent of Canada's total merchandise trade, alongside FDI in Canada valued at over $480 billion.

APEC is the only trans-Pacific regional organization—of which Canada is a member—that hosts an annual leaders-level meeting. It therefore serves as a critical platform to pursue our regional objectives, including trade liberalization and market reforms, as well as broader foreign policy goals, including membership bids for regional forums such as the leader-level East Asia Summit and ASEAN Defence Ministers Meeting – Plus (ADMM+).

Global Affairs Canada coordinates the activities of over a dozen partner departments involved in APEC’s broad agenda, ranging from customs procedures and regulatory reform, to women’s economic empowerment, mental health, and the digital economy.

In recent years, Canada has played an instrumental role in pressing for governance reforms, in particular the streamlining of APEC’s complex and expansive organizational structure, which now includes over 30 working groups. However, Canada has been less active in shaping the APEC agenda – a key measure of Canada’s commitment to the region among member economies.

Outlook

Chile was to host APEC Ministerial and Leaders’ Meetings November 13-17, 2019, to which foreign and trade ministers and Leaders from each economy were invited. On October 29, 2019, the Chilean President cancelled the meetings in order to focus his government’s attention on addressing domestic unrest.

Malaysia will host APEC 2020, with the first Senior Officials meeting scheduled for December 9-11, 2019. Leaders week scheduled for November 6-12, 2020.

Inter-American Multilateralism

Issue

The complex multilateral environment of the Americas requires Canada to engage strategically in those organizations that offer it the best opportunities to advance its foreign policy.

Context

Canada is a respected and influential multilateral player in the Americas, and uses its engagement in the region’s multilateral bodies to advance democracy, security and human rights (including gender equality and indigenous and minority rights), increase responsible trade and investment, and combat climate change.

The Americas have been prolific in generating multilateral organizations, often with overlapping goals, functions and activities. A recent survey carried out through the International Development Research Centre (IDRC) identified nearly 180 multilateral groupings in the Americas. There is scope for Canada to do more to strategically engage those institutions that best permit us to advance our core values and interests.

The Organization of American States and the Summit of the Americas

Organizations centered on the Organization of American States (OAS) and the Summit of the Americas process are considered to form the Inter-American system. The OAS has 34 active member states and its mandate consists of four pillars aligned with Canada’s long standing interests in the region: democracy, human rights, development and security.

The OAS is the primary forum for political engagement in the Americas.

Latin American and Caribbean nations place a high degree of importance on this insitution. Its meetings and yearly General Assemblies offer opportunities to deepen bilateral relations with key partners in the region. OAS instruments such as the Inter-American Democratic Charter, aimed at defending democracy when under threat, are among the most forward-looking of their kind, and OAS electoral observation missions are considered a model globally.

However, the OAS faces the limits and challenges inherent to many multilateral organizations. [REDACTED]

In addition, the OAS has been inclined to over-extend its mandate in spite of a modest budget (US$82.7 million in 2019) and limited insitutional capacity.

The Summit of the Americas process brings the highest level of political attention to hemispheric issues and is an opportunity for Leaders to meet, generally every three years, and provide guidance to the Inter-American system on pressing challenges. The most recent summit was held in Lima, Peru in 2018 and focused on “Democratic Governance against Corruption”.

Other Inter-American Organizations

Canada is also engaged with other Inter-American organizations, some of which have extra-regional ties, as well as sub-regional bodies, and informal groupings that complement formal efforts. Smaller sub-regional groupings organized along geographic or ideological lines are of increasing importance to Canada’s engagement in the hemisphere. The Caribbean Community (CARICOM) is the oldest of these and has been particularly adept at leveraging its voting bloc in larger organizations like the OAS and the UN. Canada is also a regional observer to the Central American Integration System (SICA), [REDACTED] is key to Central America’s economic development and integration.

In South America, the new Forum for the Progress and Development of South America (PROSUR) is being promoted by Colombia and Chile to replace the Union of South American Nations (UNASUR), an attempt to bring together South American Nations to explore political and economic cooperation. Canada is monitoring how it develops as it has the potential to become a significant player in the region.

Canada is currently negotiating a free trade agreement with the Southern Common Market (MERCOSUR) and a free trade agreement to become an associated state of the Pacific Alliance (PA). MERCOSUR and the PA are major trade blocs that are key to Canadian strategic trade and investment interests in the region.

Among Inter-American organizations with extra-regional ties, the Pan-American Health Organization (PAHO), the Economic Commission for Latin America and the Caribbean (ECLAC) and the Inter-American Development Bank (IDB) have been key policy and programming partners to Canada in the hemisphere. In addition to Canada’s cumulative subscription to the IDB of US$7 billion, its support to the IDB amounted to $18.3 million in core funding for 2018-19.

The emergence of informal groupings such as the Lima Group formed by some OAS Member States – including Canada – keen to address the democratic backsliding in Venezuela has had an impact on multilateral dynamics in the Americas. Such groupings can be useful to adopt temporary measures to complement the work of formal bodies when warranted.

Canada’s Inter-American focus to date

Canada has grown to be a respected and influential partner in the region, based on historic relations, mutual respect, its reputation of bringing a balanced voice to regional debates, and program investments.

The promotion and defence of democracy and human rights have been a hallmark of Canada’s multilateral involvement in the region. Canada made key contributions that led to the adoption of the Inter-American Democratic Charter in 2001, and, more recently, Canada’s leadership on Venezuela and Nicaragua has strengthened our voice and credentials.

Canada has been involved in multilateral initiatives and programs to fight corruption and advance hemispheric security, including through its Americas-focused Anti-Crime Capacity Building Program. [REDACTED] Canada has established good economic ties through trade agreements and development programming aimed at inclusive and clean growth.

Canadian Inter-American International Assistance focuses on governance, health, gender equality, inclusive growth and climate change, and strengthens the capacity of select regional institutions, such as the PAHO, the Inter-American Commission on Human Rights, the Justice Centre of the Americas and ParlAmericas. Canadian financial and institutional support has helped these organizations become evidence-based and results-oriented in implementing significant programming in the region.

La Francophonie

Issue

• As the multilateral organization that brings together the largest number of countries after the UN, with a focus on Africa and youth, La Francophonie is an important forum for advancing Canada’s foreign policy priorities.
• Canada is deeply engaged in maintaining and expanding its influence within La Francophonie, as well as increasing the organization’s efficiency and relevance.

Context

The International Organisation of La Francophonie (IOF), with its 88 member states, member governments and observers from across the globe (54 of which are full members), is the multilateral organization that brings together the largest number of countries after the UN. As more than half of its voting members are African countries, the organization is firmly focused on Africa. With an annual budget of approximately $100 million, its programming is primarily aimed at youth, reflecting the fact that 60 percent of the total population in the Francophone world is under the age of 35.

Canada is La Francophonie’s second largest donor after France, with annual contributions of approximately $40 million, including $24 million to the IOF. The remaining sum is divided among La Francophonie’s various institutions, including TV5MONDE, TV5 Québec-Canada, the International Association of Francophone Mayors, the Academic Agency of La Francophonie, the Senghor University of Alexandria, and the two ministerial conferences (for ministers of education—CONFEMEN—and for ministers of youth and sport—CONFEJES).

Federal-Provincial Dimension

For Canada, there is a key federal-provincial dimension to La Francophonie because Quebec and New Brunswick are also members, like Canada, while Ontario joined as an observer in 2016. It is the only international organization with this kind of provincial participation.

Constructive working relationships between the various levels of government in Canada have enabled Canada to maintain an enviable reputation within La Francophonie. The only fly in the ointment is the Government of New Brunswick’s recent reneging on its commitment to host the 2021 Francophonie Games.

Canada has held several high-level events for La Francophonie in this country, including three summits: in the city of Québec in 1987 and 2008, and in Moncton in 1999. This trend continues as Quebec is in the run to host the 2021 ministerial conference.

Full members of the Organisation internationale de la Francophonie (OIF)

Influence and leadership

Louise Mushikiwabo’s appointment as the head of the IOF in January 2019, succeeding Michaëlle Jean, did not lead to any loss of influence for Canada. The Secretary General selected Canadian Catherine Cano as the IOF’s Administrator, the number two position in the organization. They share similar views on the IOF’s broad direction. Among other things, they have set up a focus group on the organization’s direction and governance, and they have put a hold on new memberships so as not to interfere in discussions on IOF expansion.

The four major thrusts of the Secretary General’s roadmap (visibility of French, especially in the digital realm, youth, gender equality and political action) are in line with Canada’s list of long-standing priorities in La Francophonie. The Secretary General and the Administrator want the organization to put forth programming that is more focused and to place greater emphasis on initiatives that bring value added to communities.

IOF Expansion

For the past 20 years, encouraged by France, the IOF has seen its membership grow by more than 60 percent. [REDACTED]

50th Anniversary in 2020

The IOF will celebrate its 50th anniversary in 2020, and the Tunis Summit will be the high point of the celebrations. This summit, the first led by Louise Mushikiwabo and Catherine Cano, will be more than symbolic. The recommendations of various working groups and commissions that are studying key issues for the organization’s future (direction, governance, expansion, programming, budget, transparency, etc.) are slated to be presented to the heads of state and government for adoption and could redefine the organization.

Commonwealth

Issue

• As a founding member and a top donor, Canada has a keen interest in the future of the Commonwealth.
• Canada values the convening power of the Commonwealth. In the past, it has played an important role in promoting and upholding core democratic values, and in advocating for small and vulnerable states.
• [REDACTED]
• The 2020 Commonwealth Heads of Government Meeting (CHOGM) in Rwanda will be an opportunity for Canada to demonstrate leadership in the organization.

Context

The modern Commonwealth is a values-based association, which was founded in 1949. It has 53 member states, representing 2.4 billion people on five continents, most with historic links to the United Kingdom. The Commonwealth Secretariat’s 2019-20 budget is £44.1 million (approximately. $74.8 million).

The Commonwealth includes three intergovernmental organizations:

• The Commonwealth Secretariat (based in London);
• The Commonwealth Foundation (also based in London, whose role is to empower civil society); and
• The Commonwealth of Learning (hosted by Canada in Burnaby, B.C, whose remit is open distance education and learning in the Commonwealth, with a focus on girls).

[REDACTED] In recent years, Canada has consistently called for reforms to ensure that the Commonwealth is “fit for the 21st century” and has advocated for greater focus on its areas of value added, including:

• Being a forum for deliberation, problem solving, consensus decision making and collective action on common global challenges (such as climate change);
• Promoting and upholding good governance, democracy, human rights (including gender equality), and the rule of law – all core Commonwealth values enshrined in the Commonwealth Charter; and
• Advocating for, and supporting, small and vulnerable states (the majority of its membership), including to strengthen their resilience.

The Commonwealth has observed more than 140 elections in nearly 40 countries since 1980.

Commonwealth Governance

While Queen Elizabeth II is the overall Head of the Commonwealth, dual British-Dominican national Baroness Patricia Scotland is currently serving the last year of a four-year mandate as Secretary-General. Her term is due to end in April 2020 but will likely be extended by two months until the June 2020 CHOGM. She is also widely expected to seek a second, four-year term.

The High-Level Group (HLG) on Commonwealth Governance was mandated by Leaders at the 2015 CHOGM to provide independent recommendations on ways to improve Commonwealth governance Recommendations, which include introducing regular performance reviews for Secretaries-General, were adopted by Commonwealth Foreign Ministers at their September 2019 meeting, following three unsuccessful attempts, and will come into effect immediately after CHOGM 2020, subject to their endorsement by Heads.

Canada, a key player

A founding member, Canada is among the top three contributors with the United Kingdom and Australia. In 2018-19, Canada provided $10.5 million in core funding, including $7.9 million in assessed contributions to the Secretariat and Foundation, and $2.6 million in voluntary contributions to the Commonwealth of Learning.

The Commonwealth offers a forum and an audience to advance Canada’s priorities, including our UNSC campaign.

Canadian Arnold Smith served as the first Secretary-General (1965-75), and Canada has hosted CHOGM twice (1973 and 1987). In the mid-1980s, Canada played a leadership role within the Commonwealth to spearhead efforts to end apartheid in South Africa.

The 2020 CHOGM

The next CHOGM will take place on June 22-27, 2020 in Kigali, Rwanda (including a Foreign Affairs Ministers Meeting, and parallel Business, Youth, People and Women Fora). Over 8,000 participants are expected.

Host Rwanda has identified “Delivering a Common Future: Connecting, Innovating, Transforming” as its overall theme, as well as five key sub-themes for the CHOGM outcome document (Communiqué):

1. Governance and the Rule of Law;
2. Information and CommunicationTechnology (ICT) and Innovation;
3. Youth;
4. Environment; and
5. Trade.

In the coming months, consultations will continue on a High-Level Policy Paper circulated by Rwanda, which will form the basis of the Communiqué.

Among the other key issues expected to be discussed at CHOGM 2020 are:

1. Re-admission of the Maldives;
2. Endorsement by Leaders of the HLG recommendations; and
3. Ongoing implementation of the London 2018 CHOGM commitments, including the Commonwealth Blue Charter (Canada/the Department of Fisheries and Oceans is the Commonwealth Blue Charter Champion on Ocean Observations, through an Action Group).

CHOGM 2020 will provide Canada’s Prime Minister and Foreign Minister with opportunities for side-events, bilateral meetings and announceables, and also for a potential visit to other African countries in the margins. CHOGM 2020 will take place three weeks after the election for a non-permanent seat on the UNSC.

The World Economic Forum

Issue

The World Economic Forum is a pivotal platform for convening private- and public-sector leaders to tackle global issues and shape global, regional and industry agendas. Canada actively engages with the Forum through participation in Forum-related events and bodies, collaborating on key reports and issues and funding specific initiatives. The Forum’s Annual Meeting at Davos takes place each year in January, attended by a Canadian delegation selected by the Prime Minister.

Context

The World Economic Forum was established in 1971 as a not-for-profit foundation that identifies global issues and seeks solutions through private-public collaboration. Headquartered in Geneva, Switzerland, the organization engages with political, business, academic and civil society leaders to shape global, regional and industry agendas. In January 2016, the Forum was granted the status of an “International Organization”.

While often perceived as elitist, the Forum has succeeded in becoming a pivotal venue for fostering public-private partnerships and for focusing the attention of private sector leaders on the long term and the implementation of solutions to global issues like sustainability, technological disruption, environmental and social issues and governance. In particular, the Forum has established itself at the cutting edge of global discussions on “Globalization 4.0,” also known as the “Fourth Industrial Revolution” (4IR).

Forum Leadership

The Forum is chaired by its founder and executive chairman, Professor Klaus Schwab. The organization’s mission and values are guided by a Board of Trustees made up of leaders drawn from business, politics, academia and civil society. Canadians Mark Carney and Chrystia Freeland are currently members of the Board of Trustees in their personal capacities.

A Managing Board acts as the executive committee and ensures that activities fulfill the mission of the Forum. Børge Brende, former Norvegian Foreign Minister, is the President of the Managing Board and de facto number two in the organization.

Forum Meetings

The Forum’s flagship Annual Meeting at Davos takes place each year in January. It is attended by a Canadian ministerial delegation, sometimes led by the Prime Minister. Engagement at Davos provides an opportunity to attract investment, advance specific priority Canadian themes and build networks, helping shape discussions across sectors on global issues as well as the forward agenda of the Forum.

The Forum also holds a series of annual or biannual regional meetings in China, Africa, the Middle East, India, and Latin America. These are incomparable venues for understanding regional priorities and pursuing economic and political relationships. [REDACTED]

Forum Working Structure

The Forum has established a range of “System Initiatives”, led by Stewards— senior leaders from the public and private sectors, to serve as platforms to set agendas in particular issue areas and mobilize leadership, expertise, and resources from business, government, civil society, and international organizations. Many Canadian Ministers have in the past served as Stewards of Forum Systems Initiatives. The Minister of International Trade has served as a Steward for the System Initiative on Shaping the Future of International Trade and Investment, which aims to advance proposals for modernizing the international trade and investment system, including through improvements in trade facilitation, investment policy and global value chains.

The Forum’s Global Future Councils are responsible for carrying out the agendas set by the System Initiatives through leveraging talent and expertise across public and private knowledge networks, and by promoting innovation and cooperation on global issues. Canada is well-represented on the Global Future Councils at the senior official level from across government and by Canadian civil society and private sector leaders.

Forum Centres

The Forum recently opened two centres: the Centre for the Fourth Industrial Revolution (4IR) in San Francisco, and the Centre for Cybersecurity in Geneva. The Centre for the 4IR explores how science and technology policies can benefit society and how to counter the disruptive impacts of new technologies. The mandate of the Centre for Cybersecurity [REDACTED]

Canadian Engagement

The Forum provides a multi-layered platform to advance Canadian priorities and shape the Forum’s agenda in a unique ecosystem that brings together players from political, business, academic and civil society.

Canada’s engagement in the Forum ecosystem ranges from funding specific initiatives, such as the Global Alliance for Trade Facilitation, to participation in several Forum-related bodies and collaboration on key reports and initiatives. Canada also attends the Forum’s Annual meeting in Davos and regional meetings.

Global Affairs Canada’s recent involvement with the Forum has focused on initiatives related to trade and investment, development financing, food security, humanitarian assistance, resilience-building, and the Arctic. It was in collaboration with the Forum that Canada created “Convergence” in 2015 as a platform to accelerate blended finance deal-making in developing countries. Most recently, Canada has inspired the WEF to pilot country mapping exercises to attract private capital for SDG projects.

The Forum’s annual meeting in Davos and regional meetings offer opportunities to promote domestic intitiatives to an international audience through the participation in public sessions, and to connect with a wide range of actors through bilateral and pull-aside meetings.

The Forum’s work intersects with the work of other international organizations, such as the G7, the G20, APEC and the WTO.

Association of Southeast Asian Nations

Issue

• Canada derives a range of benefits from engagement with the Association of Southeast Asian Nations (ASEAN), including strengthened ties with individual members.
• There are nascent discussions underway for a Canada-ASEAN Free Trade Agreement (FTA), and Canada would like to upgrade its status to strategic partnership, and secure membership in the East Asia Summit.
• However, achieving institutional and trade objectives in the ASEAN context will require Canada’s consistent participation in related summitry, and meaningful support to thematic and programming mechanisms.

Context

Southeast Asia is a region of growing political and economic importance to Canada. The ASEAN is the region’s premier multilateral body. Its ten members represent nearly 637 million people with a combined GDP of US$ 3.1 trillion (2019). As a group, the countries of ASEAN represent the seventh largest economy in the world, and third largest population in Asia.

Initially established in 1967 to prevent conflict and the spread of communism in Southeast Asia, ASEAN’s work remains grounded in principles of non-interference, peaceful resolution of disputes, renunciation of the threat/use of force, and regional cooperation. An annually rotating member-state Chair sets ASEAN priorities each year and can make statements that represent ASEAN positions. Thailand is Chair in 2019, to be followed by Vietnam in 2020.

ASEAN Member States

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Since its formation, the Association’s significance has grown, in part through Dialogue Partnerships with global and regional powers including the United States, the European Union, China, and Japan. Dialogue Partners including Canada enjoy a special relationship with ASEAN and have access to dedicated ASEAN processes and meetings. This includes the annual ASEAN Post-Ministerial Conference (involving the foreign ministers of all Dialogue Partners), and annual ASEAN-Canada Economic consultations, co-chaired by Canada’s Minister of International Trade.

Meetings hosted by ASEAN cover a broad range of files – foreign policy, security, cultural and people-to-people ties, trade and economic issues – offering unique insights on the region and its place in the world. With Canada’s largest trading partners and several like-minded regional players participating in various ASEAN forums, these meetings also provide a venue to engage (bilaterally or otherwise) on Canadian priorities in Asia-Pacific.

Canada’s Engagement

Canada’s multilateral engagement with ASEAN is on the upswing. Recent policy advances include: the conclusion of exploratory discussions on a possible Canada-ASEAN Free Trade Agreement (FTA); the Joint Feasibility Study for an ASEAN-Canada FTA; the announcement of Canada’s scholarship program for ASEAN; and, the signing of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), whose members include four ASEAN member states.

Canada also supports ASEAN through international development and security programming. Since 2000, Canada has provided $2.7 billion in development assistance to ASEAN and its member states to help reduce poverty. This aid is delivered through various channels, including bilateral, regional, partnership, and multilateral programs, and the International Development Research Centre (IDRC). Canada also supports the region through a targeted ASEAN Regional Development Program with a field presence in Jakarta, which directly contributes to priorities set out in the Canada-ASEAN Dialogue Partnership.

International security programming assistance targeting ASEAN includes anti-crime and counter-terrorism capacity building, and extensive counter-proliferation support through the Weapons Threat Reduction Program (WTRP) – making Canada a privileged partner in this area. Since 2011, the WTRP has committed some $45 million to ASEAN and its member states, including $7.3 million announced in 2018 to support the mitigation of serious biological threats across the region.

Objectives in the ASEAN context

Canada is a founding member of the ASEAN Regional Forum (ARF), which is the primary Foreign Ministry-led security and defence forum in Asia-Pacific.

Beyond this role, Canada currently seeks to:

[REDACTED]

Strategic Partnership

[REDACTED]. A strategic partnership, while largely symbolic, would send a strong signal to ASEAN member states of Canada’s long-term commitment to the region and our desire to be a robust partner. [REDACTED]

Possible Canada-ASEAN FTA

Canada and ASEAN launched FTA exploratory discussions in September 2017. An initial set of exploratory discussions was held in July 2018, and subsequently in April 2019. ASEAN and Canadian officials presented a Joint Report on the outcomes to Economic Ministers at the ASEAN Economic Ministers (AEM)-Canada Consultations on September 10, 2019, effectively concluding Canada-ASEAN FTA exploratory discussions. Canada and ASEAN are now reflecting on next steps, [REDACTED]

East Asia Summit (EAS)

The EAS is recognized as the region’s premier leader-level comprehensive dialogue, involving Heads of State or Government from the ten ASEAN countries, the United States, China, Russia, Japan, India, Australia, New Zealand, and the Republic of Korea (i.e. all ASEAN dialogue partners, except for Canada and the European Union). The EAS deals with the full range of global issues, including regional stability and security, energy, environmental issues, and trade and economic matters. The EAS is where Leaders chart the future direction for cooperation in the region and participation gives countries a say in the region’s ongoing evolution.

Defence Ministers’ Meeting-Plus (ADMM+)

ADMM+ is a forum focusing on operational defence issues with a membership matching that of the EAS. Canada’s 2017 defence policy explicitly identified membership in ADMM+ as a policy objective in Asia-Pacific. Since then, National Defence has increased engagement with ASEAN members, including through an enhanced naval presence in the Asia-Pacific region, boosting participation in multinational exercises, increased high-level engagement, and focused efforts to strengthen key bilateral relationships. [REDACTED]

Canada and the African Union

Issue

• The African Union (AU) is the leading continental multilateral forum and principal interlocutor for Africa, including at the UN and other international forums.
• It is a key decision-making organization on peace and security, socio-economic development, governance, climate change, and continental integration.
• The AU is a conduit for strengthening engagement with African countries and helps advance Canada’s bilateral interests on the continent.

Context

The AU, led by its assembly composed of 55 African Heads of States and Government^{Footnote 14}, is a multilateral organization that promotes continental integration, security and sustainable development. It develops, negotiates and adopts common positions on key continental issues and priorities. The AU’s work is guided by Agenda 2063 − Africa’s blueprint for sustainable and inclusive development. Agenda 2063 sets out a vision for an integrated, prosperous and peaceful Africa.

Canada views the AU as a critical interlocutor to advance African peace and security, trade and development objectives. Canada supports the AU’s vision of finding African-led solutions to address developmental and political challenges.

The AU plays a growing role in peace and security on the continent through missions authorized or mandated by its Peace and Security Council, despite financial and capacity limitations. This includes maintaining peace operations in Somalia (AMISOM) and the hybrid UN-AU Mission in Darfur (UNAMID). The AU is also active in advancing the Women, Peace and Security (WPS) agenda^{Footnote 15}, and launched a series of activities aimed at establishing WPS networks and encouraging member states to adopt WPS National Action Plans. The AU promotes conflict prevention and resolution in several countries, most recently in Sudan. The development of these capacities is essential to protect Canadian political and economic interests, especially with the growing insecurity affecting the continent and beyond.

AU Summits

The AU Heads of State and Government meet annually at the AU Summit, one of the most important political events on the continent. High-level events taking place on the margins of the Summit are a key opportunity for AU members to engage with partners in in-depth discussions on shared priorities. The 2019 Chair of the AU Assembly is Egyptian President Abdel Fattah el-Sisi. South Africa was elected as the incoming chair and will take over in 2020.

AU Commission (AUC)

The AU Commission (AUC), based in Addis Ababa, Ethiopia, is the secretariat for the AU and is mandated to develop the policy frameworks, initiatives and instruments for the implementation of AU decisions. The Chairperson of the AUC is Moussa Faki Mahamat, an influential leader on the continent elected in 2017 for a four year mandate.

African Continental Free Trade Area

One of the most prominent flagship projects of the AU is the establishment of the African Continental Free Trade Area (AfCFTA), which Canada supported through its $13.2M (2016-21) contribution to the UN Economic Commission for Africa (UNECA). The AfCFTA agreement entered into force on May 30, 2019. As of November 2019, the agreement had been signed by 54 of the 55 AU member states (Eritrea has not signed), and ratified by 28 AU member states. The AfCFTA has the potential to drive growth and innovation in Africa, thus contributing to poverty reduction and achievement of the Sustainable Development Goals. Economic integration in Africa will contribute to deepening Canada-Africa trade and commercial ties and provide potential new opportunities for Canadian companies.

AU – UN Cooperation

Both the AU and the UN have made deepening their partnership a priority, signing a Joint UN-AU Framework for Enhanced Partnership in Peace and Security in April 2017. While cooperation has progressed, the question of providing predictable and sustained financing for Security Council-sanctioned AU-led peacekeeping missions through UN assessed contributions remains controversial. [REDACTED] Canada’s current approach focuses on encouraging efforts to find more predictable, flexible and sustainable financing mechanisms for African-led peace operations, while acknowledging that the UN is also facing a financial crisis.

AU Institutional Reforms

Since 2016, the AU has been undertaking a reform process to address a number of issues, including its financing, governance, structure, and coordination challenges with other African regional organizations. Canada closely follows the AU’s reform as the strengthening of the AU’s capacity would provide for a stronger strategic continental partner to advance peace and security, trade, economic growth and development.

Canada - AU Engagement:

Canada is represented at the AU by its Ambassador to Ethiopia who is cross-accredited. Canada is providing important financial support to the AU and partner organizations, including:

• $5M (2017-19) [REDACTED] to the AUC to build its capacity and support its efforts to increase gender equality and women’s empowerment in sectors such as peace and security, trade, economic development and regional integration.

AU related initiatives:

• $430,000 (2019) to the UN Development Program and the Cairo International Centre for Conflict Resolution, Peacekeeping, and Peacebuilding (CCCPA) in support of the Aswan Forum, the flagship initiative of Egypt as Chair of the AU for 2019.
• $13.2M (2016-21) to UNECA in support of the Action Plan for Boosting Intra-Africa Trade.
• $150M (2016-21) to the International Finance Corporation in support of the African Renewable Energy Initiative.
• $40M (2017-21) to the Africa Risk Capacity Initiative World Food Programme in support of the Strengthening Climate Resilience in Africa project.
• $1.25M (2017-20) in support of UNICEF and the Roméo Dallaire Child Soldiers Initiative.
• $1.4M (2018-19) in support of the International Crisis Group to strengthen UN-AU collaboration.
• $15.3M (2013-19) to UNECA for the implementation of the AU’s Africa