Minister of International Trade - Briefing book
Table of contents
- A. Key portfolio responsibilities
- B. The department
- C. Global overview
- D. Geographic – Integrated regional overviews
- E. Top issues
- COVID-19 response and recovery
- International trade and investment during COVID-19
- Rules-based international system
- International trade
- Trade policy and negotiations key priorities
- Promoting the benefits of trade
- Trade litigation
- Responsible business conduct
- Digital economy and trade
- Trade and development
- Export controls
- Climate and environment
- Feminist foreign policy
- Trade engagement with Asia
- Canada-European Union Comprehensive Economic and Trade Agreement
- United Kingdom
- United States
- F. Multilateral
- United Nations
- North Atlantic Treaty Organization
- World Trade Organization
- International financial institutions
- African Union
- Asia-Pacific Economic Cooperation
- Association of Southeast Asian Nations
- Inter-American multilateralism
- La Francophonie
- Organisation for Economic Co-operation and Development
- The World Economic Forum
A. Key portfolio responsibilities
- The flow of goods, services, capital, technology and people is critical to Canada’s growth and improved living standards. Rising geopolitical tensions, growing protectionism and economic nationalism have strained the multilateral trading system and created heightened uncertainty.
- Supply chains and the wider international trade in goods have largely proven resilient during the pandemic, despite some well-documented disruptions, while many service exports remain depressed. Creating stable conditions for Canadian businesses, supporting trade rules, and solidifying key trading relationships are priorities in the ongoing recovery phase.
In 2020, Canada exported over $638 billion worth of goods and services, and imported over $683 billion from the world; taken together, international trade is equivalent to over 60% of Canadian GDP. Foreign investment is also an important part of Canada’s economy; foreign multinationals employed 2.3 million Canadians in 2018 (accounting for 12% of jobs) and had a stock of more than $1 trillion invested in 2020.
Canada must continue to seize new trade and investment opportunities in what will become a greener and more digital global economy, whose overall centre of gravity is steadily shifting toward emerging and developing economies, especially in the Indo-Pacific. Your leadership is instrumental in this respect.
As Minister of International Trade, your key responsibilities will include: building and safeguarding an open and inclusive global trading system; supporting Canadian enterprises in their international business development efforts, including promoting the uptake of responsible business practices; negotiating new bilateral, regional, plurilateral and multilateral trade agreements; administering export and import controls; managing international trade disputes; facilitating and expanding foreign direct investment; and supporting international science, technology and innovation collaboration. 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 of 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 mandate, 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. As a team, the deputies and the wider Global Affairs Canada senior leadership work to ensure that the department’s 12,737 employees in Canada and 110 countries around the world deliver an integrated and coherent approach to Canada’s advantage.
Disrupted global trade context
Canada is endowed with an impressive range of competitive advantages including: its diverse, highly-skilled population; abundant natural resources; strong public institutions; globally-competitive companies; and a longstanding shared commitment to the fundamental values of a free, open and democratic society. As a trading nation, Canada’s prosperity depends on strong international trade rules, facilitating two-way foreign trade and investment and new market access for Canadian businesses, through negotiations at the World Trade Organization (WTO) and bilateral and free trade agreements (FTAs). Over the past several decades, Canada has brought into force 15 bilateral and regional FTAs) covering 49 countries and two thirds of global GDP.
The pandemic presented an unforeseen shock to the global trading system, stressing supply and demand in largely unpredictable ways. However, even before the pandemic, the global trading environment faced turbulence. Rising trade tensions, protectionism, and general economic uncertainty caused global trade volumes to decline modestly in 2019. While the pandemic has vividly illustrated the value of international cooperation and the realities of our global economic (and wider) interdependence, the crisis has also brought into sharp relief the lack of trust that exists between some states.
Growing trade and technological competition between the United States. and China is especially notable and appears entrenched. [REDACTED].
Current U.S. stimulus spending and the new administration’s planned reforms and investments have only increased its significance as a natural first market for most Canadian exporters. There are also longer‑term strategic opportunities created by its focus on working with trusted partners to shore up and create new critical supply chains. However, U.S. domestic priorities will continue to inform the administration’s approach to trade policy, and protectionist tendencies remain, including with respect to Buy America policies and softwood lumber. Regular engagement with U.S. stakeholders at the federal and sub-federal level remains crucial, leveraging a whole-of-Canada approach to protect Canadian interests.
As North American partners work together to support the effective implementation of CUSMA, there are unique opportunities for Canada-U.S. collaboration to advance shared objectives, including to support Mexico’s labour reform efforts and address global trade challenges that affect North American competitiveness, notably those related to China, climate change, the digital economy and WTO reform.
[REDACTED]. China is nevertheless Canada’s second‑largest trading partner. Canada, like other states, will need to find ways to support Canadian business and address market access irritants, while defending national interests. Canada is working with like-minded partners to address human rights concerns and China’s anti‑competitive and unfair trading practices, including actions that undermine the rules‑based trading system.
Globally, we are seeing renewed focus on industrial policy and identification of strategic sectors. Many of Canada’s key trading partners, including the United States, EU, United Kingdom, Japan and South Korea, have leveraged pandemic recovery spending to attempt to reorient strategic sectors to new geopolitical and structural realities. This includes an emphasis on gaining advantage in emerging technologies such as clean tech, electric vehicles, lithium-ion batteries, advanced manufacturing, artificial intelligence, and quantum computing, as well as tackling dependencies on critical minerals and single‑source suppliers of raw materials, semiconductors and pharmaceuticals. In parallel, a renewed focus on supply chains, tackling illegal trade practices such as distortive subsidies and implementing carbon border adjustment mechanisms (CBAM) are expected to be leveraged in developed jurisdictions as a way to level the playing field with countries with lower labour, environmental or institutional standards [REDACTED].
Many national strategies also include provisions for protecting strategic sectors, creating new foreign direct investment (FDI) reviews, tightening export controls (including for dual use goods and technologies) and limiting research collaboration. The result will likely be a less open and cooperative, and more fragmented trading environment in the medium term. The potential for new barriers and market distortions may prevent Canadian companies from competing on a level playing field.
Global emphasis on sustainability and climate change portend transformative effects on Canada’s economy and trade. The push for diversification away from less sustainable sources could present opportunities for Canadian raw material providers and suppliers of technologies in many markets. The responsible business conduct landscape is similarly evolving rapidly with important implications for Canadian companies, particularly given higher stakeholder expectations and calls for increased due diligence in supply chains. Canada’s North and Arctic is also increasingly a region of global interest, at once becoming more connected through technology and transportation links while also facing unique challenges.
To enable Canada to succeed in a more intangible, digital and data-driven, green (and blue) global economy, it will need to keep pace with the evolving global policy context. Cross-government efforts to modernize the Canadian economy, including regulatory and policy choices, will therefore carry big implications for the trade portfolio, including its ability to support nimble, innovative Canadian companies that can compete in shifting international markets; ensuring compliance with and consistent promotion of trade rules; heading off new trade barriers; and shaping new international standards to Canada’s advantage. A well-developed and coordinated approach between Global Affairs Canada and domestic line departments on trade-related matters will be vital to shape issues that will influence Canada’s global competitiveness.
Multilateral & regional trade
The WTO remains the pre-eminent international institution supporting the multilateral trading system. Active participation at the WTO has proven to be beneficial to Canada for opening, facilitating and regulating access to markets while providing mechanisms to resolve disputes as they arise. However, amidst competing world views and ongoing trade tensions, WTO rules have not kept pace with global economic developments. In addition, the U.S. blockage of new appointments to the Appellate Body to fill vacancies has resulted in the WTO’s dispute settlement system being unable to hear appeals, rendering panel decisions unenforceable. The long-term health and viability of this system nonetheless remains a strategic interest worthy of continued support.
The 12th WTO Ministerial Conference, which will be held November 29-December 3, 2021, is an opportunity for Canada and other members to lay the groundwork for future negotiations and institutional improvements.
Since 2019, Canada has led the Ottawa Group, a small group of diverse and representative members committed to supporting and strengthening the WTO. As chair, Canada will need to reassess how this group can play an even broader leadership role at the WTO.
More broadly, as the world economy grows, Canada cannot take for granted the ongoing centrality of a multilateral system anchored by the WTO. Difficult, often stalled discussions have heightened the attractiveness of regional arrangements, resulting in fragmentation of the global economy and a proliferation of competing trade rules found in a plethora of bilateral and regional FTAs. Canada needs to remain attentive to such shifts and engage accordingly.
G7 members agree on the importance of rules-based trade, and have vowed to play a role as global standard setters. Canada is well-placed to leverage regional and other groupings, such as the G7, G20, Asia-Pacific Economic Cooperation (APEC), CUSMA, Association of Southeast Asian Nations (ASEAN), the Organization for Economic Cooperation and Development (OECD) and various standard-setting bodies. Being active in these groupings allows Canada to influence the shape of new rules, counter-balance asymmetric relationships, and foster further trade opportunities. The recently announced EU-U.S. Trade and Tech Council, designed to deepen bilateral cooperation and build a more united transatlantic front on issues as diverse as technology standards, secure supply chains, information and communications technology (ICT) security, data governance and technology platforms, could also eventually present opportunities for triangulation or plurilateralization of cooperation in some sectors of common interest. While these efforts remain at an early stage, and will be focused on bilateral issues between the EU and the United States, Canada will need to carefully position itself for any trend‑setting action that could come out of these discussions between its 2 main partners.
Growing Canada’s trade – Actors
A longstanding focus for the Government of Canada has been enabling Canadian businesses to fully capitalize on international growth opportunities, including by providing robust and coordinated trade promotion services; supporting coordinated FDI attraction efforts; and expanding and enhancing Canada’s trade and investment agreements.
This demand will only increase as new global opportunities shift to more distant and challenging markets, and as ongoing disruptions to the global economy require increasingly sophisticated international growth strategies. Global Affairs Canada’s Trade Commissioner Service (TCS) is Canada’s leading trade promotion organization, with over 1,100 international business development professionals (trade commissioners) supporting Canadian businesses from 160 locations around the world and across Canada. The TCS provides customized market intelligence and advice, key contacts, problem-solving support and a growing suite of innovative programs and services. The TCS also promotes the uptake of responsible business conduct by providing guidance and advice to Canadian companies active abroad.
The TCS remains focused on expanding its digitally-enabled tools and providing a tailored and enhanced level of its key services to meet increasingly diverse client needs in today’s international business environment. Tailored services help to support the global growth of high-potential, high-growth companies and can accelerate the process of bringing their innovations to market.
Canada’s official export credit agency, Export Development Canada (EDC), is likewise a key enabler of Canadian trade, providing financial solutions for companies of all sizes to pursue international opportunities. EDC facilitated $102.3 billion in exports, foreign investment and trade development opportunities in 2020 alone. While EDC is a Crown corporation operating at arm’s length from government, it works closely with the TCS and other federal partners to support the government’s trade agenda and wider economic priorities.
Another Crown corporation, the Canadian Commercial Corporation, continues to fulfil an important role in certain areas of Canada’s trade, namely by facilitating export sales to foreign governments.
FDI is a key driver of economic growth and the attraction of FDI remains a priority for many enterprises and communities across Canada. In 2017, Parliament created Invest in Canada, a departmental corporation mandated to coordinate FDI promotion efforts in Canada and to lead the implementation of a national FDI attraction strategy. Invest in Canada collaborates with a variety of federal, provincial/territorial, municipal, and private-sector partners to pursue its mandate. Among these partners is the TCS, which manages a network of trade commissioners dedicated to identifying and cultivating FDI opportunities.
As Minister for International Trade, you will have a direct role in setting the strategic direction of these federal business services, both in support of the Government’s economic priorities and in response to the evolving global economic context described above. Partners such as the TCS will also provide key support for trade and investment promotion activities (e.g., trade missions) led by you and/or other government representatives.
Enabling growth through international agreements and trade policy initiatives
Despite the very real setbacks that the pandemic has dealt to economic growth in most emerging markets and developing economies, countries in the Indo-Pacific, Latin America and Africa are centres of long-term growth and opportunity, as well as being contested spaces for geopolitical influence.
The Indo-Pacific is one of the fastest growing regions in the world; many countries are aggressively positioning themselves to tap into the region’s growth. Canada will want to ensure it does not fall behind. Canada’s centrepiece engagement in the region is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trade agreement built for expansion and provides Canada with the opportunity to actively encourage new economies to join the high‑standard agreement rules. Canada also has ongoing negotiations with India and Indonesia, and is exploring a possible FTA with ASEAN. [REDACTED].
In the Americas, Canada has been negotiating a comprehensive trade agreement with Mercosur (Argentina, Brazil, Paraguay and Uruguay) since 2018. [REDACTED].
Most economically significant parts of the Canada-EU CETA have been in force since the agreement was provisionally applied in 2017. Following the United Kingdom’s withdrawal from the EU, Canada and the United Kingdom concluded a Trade Continuity Agreement that preserves the main elements of CETA and commits both countries to negotiating a new FTA tailored to the bilateral relationship. The United Kingdom is also seeking accession to the CPTPP, and on July 1, 2021, Canada and the 6 other CPTPP parties agreed to initiate the process. Elsewhere in Europe, Canada is also exploring the modernization of its FTA with Ukraine.
Canada has been investing in initiatives that support the engagement and success of developing countries in regional and global trade. This has included providing support for the negotiation and implementation 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, Expert Deployment Mechanism for Trade and Development, Canadian Trade and Investment Facility for Development, and Trade Facilitation Office (TFO) Canada. Consolidating and nurturing new opportunities may require greater flexibility to pursue tools and approaches that meet our mutual objectives.
Promoting shared benefits of trade
Canada has an interest in ensuring that the benefits of trade and investment are broadly shared and recognized by the Canadian and global public, mindful that trade policy and trade promotion tools can be used to advance important socio-economic goals and ultimately to create a more cooperative multilateral environment. Governments, investors and the public are increasingly attuned to the notion of building back a better economy that is more inclusive, fair and sustainable. Canada will have opportunities to work with businesses, investors and groups that have traditionally been underrepresented in trade, such as businesses owned or led by women, visible minorities, Indigenous peoples and small and medium-sized enterprises, to support their further participation in trade and widen positive impacts.
Minister of International Trade’s key portfolio responsibilities
- 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.”
The health of the global economy impacts all Canadians. A fifth of all jobs in this country are directly linked to international trade. For Canadian companies to successfully compete on the international stage they rely on the support of the Minister of International Trade and the trade-related platform of Global Affairs Canada.
Indeed, your role is critical for enabling Canadian prosperity in an ever-evolving global landscape, including as a prominent part of supporting the COVID-19 economic recovery. In this capacity, your key responsibilities will include: building and safeguarding the open and inclusive rules‑based global trading system; programs, services and funding to support Canadian exporters and innovators in their international business development efforts; negotiation of bilateral, plurilateral and multilateral trade agreements; administration of export and import controls; responsible business conduct abroad; management of international trade disputes; facilitation and expansion of foreign direct investment; promotion of study in Canada; and support to international innovation, science and technology. You will work in close collaboration with the Minister of Foreign Affairs as the minister responsible for the department as a whole, 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, the International Business Development, Investment and Innovation Branch and staff in bilateral and functional branches and missions abroad.
In addition to the support provided by the department, the Minister of International Trade is also responsible for certain other arm’s length entities and statutory obligations, outlined below.
Portfolio responsibilities within Global Affairs Canada
Invest in Canada (IIC) is a departmental corporation mandated to: (1) promote, attract and facilitate foreign direct investment (FDI) in Canada; and (2) coordinate the efforts of the government, the private sector and other stakeholders with respect to FDI in Canada.
As a departmental corporation, IIC functions with greater autonomy from the core public administration than do departments. It must however comply with any general or special direction given by the Minister in carrying out its mandate, and prepare its departmental planning and reporting documents within the same framework as line departments.
IIC was formally established under the Invest in Canada Act in March 2018. Since then it has actively engaged with 540 potential investors, promoting Canada’s advantages in key sectors and markets attracting investments estimated at $3.2 billion. It is currently led by Acting CEO Katie Curran, appointed in May 2021 until August 2022, or until a permanent CEO is appointed, whichever comes first.
Canadian Ombudsperson for Responsible Enterprise (CORE)
As special adviser to the Minister of International Trade, the CORE is mandated to: promote the implementation of the UN Guiding Principles on Business and Human Rights and the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises; advise Canadian companies on their practices and policies with respect to responsible business conduct; review allegations of human rights abuses arising from the operations of Canadian companies abroad in the mining, oil and gas and garment sectors; offer informal mediation services; and provide advice to the Minister on any matter relating to her mandate.
The creation of the CORE was announced in 2018 to strengthen Canada’s approach to responsible business conduct (RBC). The current Ombudsperson, Sheri Meyerhoffer, was appointed in April 2019 and the office began to accept cases on March 15, 2021. In Budget 2021, the government increased the annual budget of the CORE to $4.3 million per year ongoing. The CORE is required to submit an annual report to the Minister for tabling in Parliament, though this has yet to occur.
The CORE is 1 of 2 Canadian non‑judicial dispute resolution mechanisms, and complements the National Contact Point for Responsible Business Conduct for the OECD Guidelines for Multinational Enterprises (NCP). The NCP applies to all sectors, and a broad range of issues, including human rights, employment, environment, disclosure and bribery. It can review cases in Canada and abroad. The CORE’s mandate differs from that of the NCP in that the CORE has the unique ability to initiate a review, undertake joint or independent fact-finding and report at any time in the course of a review.
The CORE’s mandate was the subject of study in spring 2021 by the Parliamentary Subcommittee on International Human Rights of the Standing Committee on Foreign Affairs and International Development.
The Minister of 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, which sets out the strategic direction that the Minister would like them to pursue, in line with Global Affairs Canada’s trade objectives.
EDC and its subsidiary, FinDev Canada
As Canada’s export credit agency, EDC’s mandate is to support and develop export trade between Canada and other countries, Canadian capacity to engage in that trade, and respond to international business opportunities. It is also mandated to provide development financing and other forms of development support, through its subsidiary FinDev Canada, in a manner consistent with Canada’s international development priorities. Its CEO is Mairead Lavery, appointed in February 2019.
In 2020, EDC reported facilitating $102.3 billion in exports, foreign investment and trade development opportunities. EDC has 20 offices across Canada and representation in 21 locations abroad. In 2020, it provided financial products to 12,200 customers. EDC supports Canadian exporters through a range of exporting solutions, including: trade financing; credit insurance; bonding and guarantees; equity investments; and, knowledge products.
EDC administered several programs as part of the government’s pandemic response in 2020, including the Canada Emergency Business Account (CEBA) and Business Credit Availability Program (BCAP). In particular, CEBA provided over 890,000 loans totalling over $48.8 billion to Canadian businesses impacted by the pandemic.
EDC also administers the Canada Account on behalf of the Government of Canada. The Canada Account is used to support transactions that are outside of EDC’s corporate policy framework, but that are determined by the Minister of International Trade to be in the national interest. Recent examples include CEBA; Trans-Mountain Pipeline Expansion; and Telesat Lightspeed.
FinDev Canada, established in 2018, is a development finance institution focused on supporting inclusive private sector growth and sustainability in developing markets. FinDev has signed commitments for over US$325.5 million, US$107 million of which were signed in 2020. 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 CEO is Lori Kerr, appointed in June 2021.
Canadian Commercial Corporation (CCC)
CCC has the mandate to help Canadian exporters sell to foreign government buyers through government-to-government contracting. Its business lines support Canadian companies by contracting in a variety of industries and sectors. Its President and CEO is Robert (Bobby) Kwon, appointed in March 2021.
Established in 1946 pursuant to the Canadian Commercial Corporation Act, CCC reported facilitating $2.92 billion in commercial transactions in 2020-2021. During that period CCC was active in 79 countries, providing government to government contracting expertise to 153 customers, among other service offerings.
CCC’s primary public policy mandate is to administer Canadian exporter sales to the U.S. Department of Defense under the Canada-U.S. Defence Production Sharing Agreement (DPSA). Pursuant to that agreement, CCC does not charge fees to administer DPSA contracts.
Following a comprehensive review of its mandate and operations completed in 2020, CCC was provided with renewed strategic direction, including: prioritizing its role in administering the DPSA; ensuring its international prime contracting business lines operate on a financially self-sustaining basis; and maintaining close alignment between the corporation’s export activities and Canada’s foreign policy. Budget 2021 included an annual parliamentary appropriation of $13 million to be used for the administration of the DPSA.
Trade portfolio collaboration
In the summer of 2020, the Business, Economic and Trade Recovery (BETR) team was established to leverage existing coordination, collaboration and innovation among the partners in the Minister of International Trade’s trade portfolio to maximize the impact of services for Canadian business during the post‑pandemic recovery period.
BETR partners collaborate to identify existing and emerging business needs, identify gaps, develop solutions, and reinforce coordination and coherence. BETR has developed three new cross‑cutting initiatives (in infrastructure, agtech, and health tech) to promote Canadian businesses internationally.
Success stories are being developed which demonstrate how enhanced collaboration between partner organizations helps strengthen support to Canadian business.
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. These include: (1) Annual reports on operations and corporate plans on behalf of EDC and CCC, pursuant to the Financial Administration Act; (2) 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 (3) 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 having been an 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 responsible for order‑in‑council appointments for certain organizations (e.g. Canadian seats on the APEC Business Advisory Council).
Ministerial high-level events
- Signature of Indigenous Peoples Economic Cooperation Arrangement, on margins of APEC Leaders’ Summit – November 8
- Toronto Global Forum – November 8 to 10
- APEC Ministers’ Meeting, Virtual - November 8 to 9
- Opening remarks at the 29th Annual Canadian Council for Public-Private Partnerships (CCPPP) Conference, Toronto-based, but being held virtually – November 18
- Ottawa Group Ministerial On the margins of MC12 – November 28
- WTO 12th Ministerial Conference (MC12) (hybrid vs. virtual TBC, Geneva, Switzerland) – November 30
Fall events to be confirmed
- Ad-hoc ASEAN Economic Ministers-Canada Consultations meeting [REDACTED] – October or November 2021
- Host the Canada-Turkey Joint Economic and Trade Committee in Canada – Fall 2021
- 2+2 Ministerial Dialogue with Mexico, Location to be confirmed – Fall 2021
- Virtual round table discussion with Central America trade ministers, co-hosted by the Minister of International Trade of Canada and the Minister of Economy of Guatemala – Fall 2021
- Minister of International Trade-led trade mission to the Caribbean(virtual or in-person) – Fall/winter 2021
- Canada-India Ministerial Dialogue on Trade and Investment, New Delhi, India – Fall 2021
- Canada-France Conseil des ministre – Location TBD
- Women entrepreneur trade mission to Africa, Sénégal, Côte-d’Ivoire, Botswana, South Africa – December 6 to 9 (virtual)
- Canada-Australia Virtual Trade Ministers’ Dialogue – December
- Canada-EU CETA SME Forum – co-hosted by the Minister of International Trade of Canada and EU Executive Vice-President Dombrovskis – December (Early)
- Western Governors’ Association, Coronado, California – December 9 to 10, 2021
- Pacific Alliance Ministerial Meeting with Observer Countries, Buenaventura, Colombia – December 11
PM LEVEL EVENTS
Global Affairs Canada ministers may be asked to participate in the events with the Prime Minister
- North American Leaders’ Summit Meeting, Location TBC – Fall 2021
- ASEAN Leaders’ Summit and related meetings, Virtual – October 26 to 28
- G20 Leaders’ Summit, Rome, Italy – October 30 to 31
- Heads of State and Government Summit of the International Coalition for the Sahel – October or November
- COP26, Scotland, United Kingdom – November 1 to 12
- APEC Leaders’ Summit - November 11 to 12
- U.S.-hosted leaders’ Summit for Democracy, Virtual - December 9 to 10
B. The department
The department at a glance
- Global Affairs Canada is responsible for shaping and advancing Canada’s integrated foreign policy, trade and international assistance objectives, and supporting Canadian consular and business interests. We are a networked department with 12,737 employees working in Canada and 110 countries (at 178 missions), with a total budget of $6.7 billion.
Who We Are
Canada’s first foreign ministry was established in June 1909. At punctual moments since then, the department has been renewed to reflect the changing international environment. The most significant adaptations include its amalgamation with the Department of Trade and Commerce in 1982 and with the Canadian International Development Agency in 2013.
While its legal name remains the Department of Foreign Affairs, Trade and Development (as per the June 2013 act), its public designation under the Federal Identity Program is Global Affairs Canada.
What We Do
The department manages Canada’s diplomatic and consular relations with foreign governments and international organizations, engaging and influencing international players to advance Canadians’ security, prosperity and health in a dynamic global context. It advances a coherent approach to Canada’s political, trade and international assistance goals based on astute and evidence-based analysis, consultation and engagement with other government departments, Canadians and international stakeholders. The department is constantly monitoring global developments and assessing their potential implications on the government’s ability to deliver on its mandate.
The department’s work is focused on five core responsibilities:
- 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 bilateral and multilateral relationships to Canada’s advantage, primarily through our network of missions; taking diplomatic leadership on select global issues and negotiations; and supporting efforts to build strong international institutions and respect for international law, including through the judicious use of sanctions.
- Trade and investment: support increased trade and investment to raise the standard of living for all Canadians. This includesbuilding 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.
- 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 inclusive, 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.
- 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.
- Support for Canada’s presence abroad: deliver resources, infrastructure and services to enable a whole-of-government and whole-of-Canada 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.
Through these 5 pillars of action, Global Affairs Canada provides an integrated and agile platform from which to deploy and leverage a strong and diverse toolkit, including those skills and assets that come from Canada’s Parliament, other orders of government, the judiciary, Canadian civil society, research institutions and the private sector. These efforts are aligned carefully with government priorities 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.
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.
To deliver on its mandate, the department relies on a workforce that is flexible, competent, diverse and mobile.
The department counts 12,737 active employees; 7,235 of them are Canada‑based staff (CBS), serving either in Canada or at our missions abroad. The remaining 5502 employees are locally engaged staff (LES), usually foreign citizens hired in their own countries to provide support services at our missions. Currently, 56% of CBS are women (compared to 59% of LES) and 59% of the CBS population has English as their first official language (41% 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 2 to 4-year periods, alternating between missions abroad and headquarters or Canadian regional offices. 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. They are responsible for Canada’s “whole of government” engagement in their countries of accreditation and for the supervision of all federal programs present at mission.
The department’s total funding requested in the 2021-22 main estimates was $6.7 billion. This amount is broken down as follows:
- Vote 1 (Operating): $1,878.2 million
- Vote 5 (Capital): $106.4 million
- Vote 10 (Grants and Contributions): $4,275.9 million
- Vote 15 (LES pension, insurance, social security programs): $85.5 million
- Statutory items (e.g. direct payments
to international financial institutions; contributions to employee benefit plans): $377.3 million.
The budget distribution by core responsibility of the department in the 2021-22 Main Estimates was reported as follows:
|International Advocacy and Diplomacy||929|
|Trade and Investment||377|
|Development, Peace and Security Programming||4015|
|Help for Canadians Abroad||54|
|Support for Canada's Presence Abroad||1071|
Chart summarizing 2021-2022 planned spending by core responsibility:
International Advocacy and Diplomacy: $929 million
Trade and Investment: $377 million
Development, Peace and Security Programming: $4015 million
Help for Canadians abroad: $54 million.
Support for Canada’s presence abroad: $1071 million
Internal services: $277 million
The department’s 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 department’s 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), and provinces and territories.
The department’s headquarters offices are located in the Ottawa-Gatineau region. Most staff are located in the first 3 buildings:
- Lester B. Pearson Building (125 Sussex)
- John G. Diefenbaker Building
- Place du Centre (200 Promenade du Portage)
- Queensway Corporate Campus
- Cooperative House (295 Bank)
- National Printing Bureau
- Fontaine Building (200 Sacré-Coeur)
- Bisson Centre (the Canadian Foreign Service Institute Bisson Campus)
The department also has six Canadian regional officesto engage directly with Canadians, notably Canadian businesses, located in Vancouver, Calgary, Winnipeg, Toronto, Montréal and 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); and the Associate Deputy Minister of Foreign Affairs (DMA). See attached biographies for USS, DMT and DMA.
Sixteen branches, headed by assistant deputy ministers, report to the deputy ministers and are responsible for providing integrated advice across all portfolios, ranging from geographic regions to functional and corporate issues.
The department has a robust corporate governance framework with specific committees for audit, evaluation, security, financial operations, corporate management, policy and programs, and diversity and inclusion. 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.
Chart summarizing 2021-2022 Corporate Governance Committee Structure:
External Committee: Departmental Audit Committee
DM-chaired committees: Executive Committee; Performance Management and Evaluation Committee
ADM-chaired Committees: Security Committee; Financial & Operations Management Committee; Corporate Management Committee; Policy & Programs Committee; Diversity & Inclusion Council. (All 5 ADM-chaired committees report to the Executive Committee)
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 the fall.
The department’s top corporate priorities are identified each year to ensure that the enabling functions of the department (human resources, finance, IM/IT, accommodations, etc.) are able to provide optimal services to support the department’s mandate. As well, top departmental risks are identified and communicated in the Enterprise Risk Profile. For 2021-22, the department is focusing on mitigating risks related to its workforce (i.e. health, safety and wellbeing of staff, and human resources capacity), IM/IT capacity (i.e. digital transformation and cyber/digital security and resilience), and to the management and security of its real property and assets. Both the corporate priorities and risks are managed through the department’s governance system and re-evaluated on an annual basis.
In the context of COVID-19, there has been an intensified focus on advancing the digital transformation agenda. In particular, the pandemic has highlighted the need for the department to focus on transitioning towards newer digital solutions to enable the nimbleness and effectiveness required to deliver on its mandate and service Canadians. Investments in data driven decision-making, strong collaboration and engagement platforms, and a solid digital foundation will help the department move away from the traditional bricks and mortar and embrace more modern engagement methods to drive diplomacy, trade and international development.
Deputy Minister of Foreign Affairs, Marta Morgan
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, Ms. Morgan was Deputy Minister of Immigration, Refugees and Citizenship for three years. In that 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.
Ms. Morgan has had extensive leadership experience throughout her career in a range of economic policy roles both at Industry Canada and the Department of Finance. She provided leadership in telecommunications policy, spectrum policy, aerospace and automobile sectoral policy, and the development of two federal Budgets.
Ms. Morgan has also held positions at the Forest Products Association of Canada, the Privy Council Office, and Human Resources Development Canada.
Ms. Morgan attended Lester B. Pearson College of the Pacific, she 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.
Deputy Minister of International Trade, John F.G. Hannaford
On December 7, 2018, the Prime Minister appointed John F.G. Hannaford as 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 (First Class) 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.
Associate Deputy Minister of Foreign Affairs, Christopher MacLennan
On February 7, 2020, the Prime Minister appointed Christopher MacLennan as the Associate Deputy Minister of Foreign Affairs. Since May 28, 2021, he has also served as the Personal Representative (Sherpa) to the Prime Minister on the G20. Prior to this, Mr. MacLennan was the Assistant Deputy Minister for Global Issues and Development at Global Affairs Canada. In that role, he led on Canada’s development assistance efforts through multilateral and global partners, humanitarian assistance and priority foreign policy relationships with the United Nations, the Commonwealth and La Francophonie. In addition to this, Mr. MacLennan served concurrently as Canada’s G7 foreign affairs sous-Sherpa.
Previously, Mr. MacLennan was acting Assistant Secretary to the Cabinet for Priorities and Planning and Assistant Deputy Minister of Policy Innovation at the Privy Council Office. Prior to that, Mr. MacLennan was Director General for Health and Nutrition at Foreign Affairs, Trade and Development Canada. Mr. MacLennan led the team that organized the Prime Minister’s Saving Every Woman, Every Child Summit on maternal, newborn and child health (MNCH) in 2014. This work followed his previous role on the G8 Muskoka Initiative on MNCH in 2010. Prior to this, Mr. MacLennan worked in various capacities at the Canadian International Development Agency, Environment Canada and Human Resources and Skills Development Canada.
Mr. MacLennan holds a Ph.D. from Western University specializing in constitutional development and international human rights and has written numerous publications including Toward the Charter: Canadians and the Demand for a National Bill of Rights, 1929-1960.
Global Affairs Canada Executive (EX) Organizational Structure
Level 1 – Deputy Ministers and Coordinator
Deputy Minister of International Development – Vacant (DME)
Deputy Minister of Foreign Affairs – Marta Morgan (USS)
Associate Deputy Minister of Foreign Affairs – Christopher MacLennan (DMA)
Deputy Minister of International Trade – John Hannaford (DMT)
Level 2 – Assistant Deputy Ministers and Directors General
Reports to the Deputy Minister of International Development:
International Assistance Operations – E. Wega (DPD)
Reports to all Deputy Ministers:
Assistant Deputy Minister Human Resources – Francis Trudel (HCM)
Assistant Deputy Minister International Platform – Dan Danagher (ACM)
Assistant Deputy Minister Corporate Planning, Finance and IT (Chief Financial Officer) – Anick Ouellette (SCM)
Assistant Deputy Minister Public Affairs – Stéphane Levesque (LCM)
Assistant Deputy Minister Strategic Policy – Heidi Hulan (PFM)
Assistant Deputy Minister Global Issues and Development – Peter MacDougall (MFM)
Assistant Deputy Minister International Security and Political Affairs (Political Director) – Dan Costello (IFM)
Assistant Deputy Minister Partnership for Development Innovation – Caroline Leclerc (KFM)
Assistant Deputy Minister International Business Development and Chief Trade Commissioner – Sara Wilshaw (BFM)
Assistant Deputy Minister Trade Policy and Negotiations and Chief Trade Negotiator NAFTA – B. Christie (TFM)
Assistant Deputy Minister Consular, Security and Emergency Management (Chief Security Officer) – Cindy Termorshuizen (CFM)
Legal Advisor – Alan Kessel (JFM) – Special Deployment Position
Assistant Deputy Minister Sub-Saharan Africa – Mala Khanna (WGM)
Assistant Deputy Minister Europe, Arctic, Middle East and Maghreb – Sandra McCardell (EGM)
Assistant Deputy Minister Americas – Michael Grant (NGM)
Assistant Deputy Minister Asia Pacific – Paul Thoppil (OGM)
Executive Director and General Counsel – P. Hill (JUS)
Chief Audit Executive – J. B. Stephens (A) (VBD)
Director General, Inspection, Integrity and Values and Ethics – R. Sinclair (A) (ZID)
Corporate Secretary and Director General – C. Calvert (A) (DCD)
Chief of Protocol – S. Wheeler (XDD)
Ambassador for Women, Peace and Security – J. O’Neill (WPSA)
Head of the Anti-Racism Secretariat – M. Montrat (Sec) (DMAX)
Planning International Summits and Major Events – Vacant (DSMO)
Level 3 – Directors General
Reports to the Assistant Deputy Minister Human Resources
HR Corporate Strategies and Operational Services – M. P. Jackson (HSD)
Assignments and Executive Management – V. Alexander (A) (HFD)
Workplace Relations and Corporate Healthcare – C. Houde (HWD)
Canadian Foreign Service Institute – L. Marcotte (CFSI)
Foreign Service Directives – M. Cameron (A) (HED)
Locally Engaged Staff – P. Kitnikone (A) (HLD)
Reports to the Assistant Deputy Minister International Platform
Client Relations and Mission Operations – L. Almond (AFD)
Planning and Stewardship – D. Schwartz (ARD)
Platform Corporate Services – D. Bélanger (AAD)
Platform Planning, Engagement and Results – A. Stirling (ABD)
Project Delivery, Professional and Technical Services – G. Stephens (A) (AWD)
Reports to the Assistant Deputy Minister Corporate Planning, Finance and IT (Chief Financial Officer)
Financial Planning and Management – A. Boyer (SWD)
Financial Operations – S. Bainbridge (SMD)
Grants and Contributions Management – M. Collins (SGD)
Information Management and Technology (CIO) – K. Casey (SID)
Corporate Procurement, Asset Management and National Accommodation – D. Pilon (SPD)
Corporate Planning, Performance and Risk Management – L. Smallwood (SRD)
Senior IM/IT Project Executive – R. Dussault (SED)
Reports to the Assistant Deputy Minister Public Affairs
Development Communications – L. Belmahdi (LCA)
Public Affairs – Charles Mojsej (LCD)
Corporate and E Communications – C. Brisebois (LDD)
Trade Communications – V. Sharma (LCC)
Reports to the Assistant Deputy Minister Strategic Policy
Evaluation and Results – T. Denham (A) PRD)
Foreign Policy – P. Pena (POD)
International Assistance Policy – A. Smith (A) (PVD)
International Economic Policy – M. McDonald (PED)
Reports to the Assistant Deputy Minister Global Issues and Development
International Humanitarian Assistance – S. Salewicz (MHD)
Economic Development – C. Urban (MED)
Food Security and Environment – C. Campbell (MSD)
Health and Nutrition – J. Tabah (MND)
Social Development – L. Holts (A) (MGD)
International Organizations – A. Lalani (MID)
Innovative and Climate Finance Bureau – S. Szabo (MLD)
International Summits Programs – M. G. Mounier (DWD)
Reports to the Assistant Deputy Minister International Security and Political Affairs (Political Director)
International Security Policy – K. Hamilton (A) (IGD)
Peace and Stabilization Operations Program – G. Kutz (IRD)
Counter-Terrorism, Crime and Intelligence – M. Benjamin (IDD)
Human Rights, Freedom and Inclusion – C. Godin (A) (IOD)
International Crime and Counter-Terrorism – J. Loten (ICD)
Reports to the Assistant Deputy Minister Partnership for Development Innovation
Engaging Canadians – S. Savage (KED)
Inclusive Growth, Governance and Innovation Partnerships – C. Hogan Rufelds (KGD)
Canadian Partnership for Health and Social Development – J.B. Parenteau (KSD)
Reports to the Assistant Deputy Minister International Business Development and Chief Trade Commissioner
Trade Portfolio Strategy and Coordination – C. Moran (BPD)
Trade Commissioner Service - Operations – S. Goodinson (A) (BTD)
Trade Sectors – R. Kwan (BBD)
Investment and Innovation – E. Kamarianakis (BID)
Regional Trade Operations and Intergovernmental Relations – F. Rivest (A) (BSD)
Chief Economist – M.F. Paquet (BED)
Reports to the Assistant Deputy Minister Trade Policy and Negotiations and Chief Trade Negotiator NAFTA
Associate Assistant Deputy Minister, Trade Policy and Negotiations – A. Alexander (A) (TFMA)
Trade Negotiations – K. Hembroff (TCD)
North America, Trade Policy and Negotiations – A. Renart (TND)
Market Access – D. Forsyth (TPD)
Chief Air Negotiator and Director General for Services, Intellectual Property and Investment – M. Shendra (A) (TMD-ANA)
Trade and Exports Control – S. Anand (TID)
Reports to the Assistant Deputy Minister Consular, Security and Emergency Management
Consular Policy – A-K. Asselin (CPD)
Consular Operations – B. Szwarc (A) CND)
Security and Emergency Management (Departmental Security Officer) – J. Sunday (CSD)
Security & Emergency Management Strategy and Policy – D. Stewart (A) (CED)
Reports to the Legal Adviser
Trade Law – S. Spelliscy (A) (JLT)
Legal Affairs – K. Knobel (A) (JLD)
Reports to the Assistant Deputy Minister Sub-Saharan Africa
West and Central Africa – M. Lebleu (WWD)
Southern and Eastern Africa – T. Guttman (WED)
Pan-Africa – T. Khan (A) (WFD)
Reports to the Assistant Deputy Minister Europe, Arctic, Middle East and Maghreb
European Affairs – R. Fry (EUD)
Middle East – J. Dutton (ESD)
Maghreb, Egypt, Israel and West Bank and Gaza – A. F. Whalen (A) (ELD)
Senior Arctic Official and Director General, Polar, Eurasia and European Affairs – H. Kutz (ECD)
Reports to the Assistant Deputy Minister Americas
North America Strategy – E. Walsh (NGD)
North America Advocacy and Commercial Programs – L. Blais (NND)
South America and Inter-American Affairs – S. Cohen (A) (NLD)
Central America and Caribbean – S. Cesaratto (A) (NDD)
Geographic Coordination and Mission Support – S. Thissen (NMD)
Reports to the Assistant Deputy Minister Asia Pacific
Southeast Asia – P. Lundy (OSD)
North Asia and Oceania – W. Epp (OPD)
South Asia – D. Hartman (OAD)
Level 4 – Outside of Main Organizational Structure
Canadian Ombudsperson for Responsible Enterprise – Sheri Meyerhoffer (CORE)
Source of information: Human resources Management System (HRMS)
In some cases, adjustments have been made by HFR to reflect the most current employee or positional information
Link to Global Affairs Canada Corporate Governance Structure
Updated on October 31, 2021
|Canadian Regional Offices||6|
|Locally engaged staff||5999|
The Trade Commissioner Service
- Global Affairs Canada’s (GAC) Trade Commissioner Service (TCS) helps Canadians identify, pursue and secure export sales; conclude innovation partnerships; and recruit international students.
- The TCS provides advice on international markets, regulatory issues, foreign investment, innovation and responsible business conduct. It also promotes Canada as a top destination for foreign direct investment (FDI).
Since 1895, the TCS has helped Canadian businesses grow through export sales, foreign investment and other forms of international commercial partnership.
The TCS is a network of over 1,000 trade and business development professionals working from more than 160 locations around the world. In addition to 977 TCS personnel abroad, 140 trade commissioners are located in 18 cities across Canada to serve clients in their home regions. Every day, they help Canadian businesses prepare for international markets; assess market potential; find qualified contacts; and resolve business problems. Trade commissioners are also continually identifying and referring new commercial opportunities to TCS clients.
The TCS had 10,882 active Canadian business clients in fiscal year (FY) 2020/21. Clients are surveyed regularly and report a 92% client satisfaction rate. The vast majority of TCS clients are small and medium-sized enterprises (SMEs), including 93% of new clients in FY 2020/21.
On average, TCS clients export 19.8% more in value and to 24.8% more markets compared to non-clients. It is estimated that every dollar invested in the TCS results in $26 in increased exportsFootnote 1.
The TCS delivers 1,200 initiatives annually (including events and activities in which Canadian companies participate directly) to support business development in a range of sectors.
Chart summarizing the share of Trade Commissioner Service services by region delivered
- Canada: 11%
- Europe: 18%
- Latin America and Caribbean: 9%
- Middle East: 6%
- North America: 22%
- Sub-Saharan Africa: 4%
- Asia-Pacific: 30%
The TCS also administers CanExport, a suite of grants and contributions programs that provide $33 million per year in financial assistance to Canadian SMEs, innovators, national industry associations and communities. The programs assist recipients in diversifying to new international markets; developing research and development (R&D) collaborations; pursuing international business development activities; and attracting FDI.
CanExport SMEs, the largest CanExport program, offers funding to SMEs undertaking international market development activities. Since 2016, CanExport SMEs has approved $133 million in funding for over 4,100 projects targeting 151 markets around the world, contributing to more than $672 million in new export revenue generated.
The TCS is complemented by other federal trade and investment agencies: Export Development Canada, the Canadian Commercial Corporation and Invest in Canada. The TCS also collaborates with a range of other federal partners to help Canadian businesses succeed globally. These include Innovation, Science and Economic Development Canada, Agriculture and Agri‑Food Canada, the federal regional development agencies, the Business Development Bank of Canada and Natural Resources Canada, among others.
The TCS engages with provinces and territories on a regular basis, both formally and informally, on international trade policy and trade promotion. This includes working with provincial representatives who are co‑located in 47 GAC missions abroad.
The TCS continues to play an important role in Canada’s COVID-19 response. From the onset of the pandemic, the TCS has provided support to lead departments in sourcing medical supplies from abroad; troubleshooting supply chain disruptions; supporting international vaccine procurement and deployment; and promoting Canadian companies with COVID-19 solutions.
The TCS is focused on continually adapting and innovating to give clients the tools and support they need across a broad range of increasingly complex global commercial activity. In recent years this has meant:
- Accelerating the TCS’s digital transformation, with more online tools to help businesses quickly access the information they need on market opportunities and government services.
- Providing more tools and services focused on client needs related to e-commerce and intellectual property.
- Pursuing greater service differentiation, to ensure clients get support tailored to their particular needs and stages of growth.
- Enhancing capacity to recruit and retain the right talent, while also providing training and skills development essential for trade commissioners to keep up with a fast-moving business environment.
The TCS is also building on service-delivery innovations developed during the pandemic, particularly the use of virtual events and tools to increase reach and impact for clients.
Key TCS initiatives
The TCS is expanding its offering of enhanced services to support high-potential, high-growth firms.
The Canadian Technology Accelerator (CTA) program helps companies accelerate their growth by providing customized market entry support in major global technology hubs. Expanding on the program's success in 4 U.S. markets, CTAs are now operating from Canadian missions in Asia, Europe and Mexico. Since the program’s inception in 2013, over 574 participants have reported $646 million in capital raised, $238 million in new revenue, 1,128 strategic partnerships and 2,529 new jobs created.
The TCS is also piloting a key account management model for its high-potential, high-growth clients and is in the soft launch phase of the Global Mentor Program (GMP). The GMP assigns experienced business leaders living abroad as mentors for targeted TCS clients, providing them with unique advice and insights to succeed in foreign markets.
The TCS plays a leading role in attracting job-creating FDI into Canada, in partnership with Invest in Canada and other government departments. The TCS facilitated 121 FDI “wins” in 2020-2021, representing more than $2.1 billion and creating more than 5,825 new jobs. These results were achieved despite the challenges brought about by COVID-19, which saw a decline of 50% in FDI flows to Canada compared to 2019.
Responsible business conduct (RBC)
The TCS helps Canadian companies understand and manage risks, solve problems related to responsible business practices, and demonstrates the competitive advantage of doing business with Canadian companies with strong RBC policies and practices.
Science, technology and innovation (STI)
The TCS supports the competitiveness of Canadian firms by helping them establish international innovation partnerships, and access technology, foreign intellectual property and technology-related expertise, as well as venture capital. The TCS facilitated 148 international STI partnerships for 128 Canadian companies and organizations in FY 2020/21, and helped raise $185 million in venture capital for Canadian SMEs.
The TCS supports women-owned and women-led, Indigenous, visible minority, LGBTQ2+ and youth SMEs, through group-focused business delegations and other opportunities oriented toward international business development. The TCS has built a variety of partnerships and trade‑development initiatives and missions focused on those exporters in recent years.
Despite the pandemic, in 2020 Canada welcomed 533,370 international students who contributed an estimated $21.4 billion to the Canadian economy and supported over 280,000 full-time jobs. In FY 2020/21, the TCS organized and participated in 226 education events worldwide, helping over 1,300 Canadian education clients meet with over 60,000 foreign contacts to develop new commercial partnerships and recruit international students.
Current TCS priorities
Deliver modern, high-impact services through recovery and beyond
- Foster a highly-skilled, client-oriented network of employees who contribute to economic prosperity by directly supporting businesses, primarily SMEs, and other clients.
- Innovate new methods, platforms, and tools to deliver services, and enhance TCS impact and reach through an online suite of offerings, virtual events and digital networking, ensuring services remain well adapted to business needs in today’s increasingly virtual and online economy.
Support economic growth and resiliency
- Ensure the TCS is optimized to help Canadian firms expand into new markets amid transformation and disruption in technology, business practices and international trade. This includes new offerings for businesses targeting international markets through e-commerce.
- Promote the competitive advantages presented by Canada’s trade agreements.
- Provide services tailored to the needs of companies seeking to grow internationally on the basis of their technological innovations, digital services and intangible assets such as intellectual property.
- Help ensure Canadian cleantech and green infrastructure companies thrive globally as international buyers look to “build back better” with more sustainable products and infrastructure.
- Promote the uptake of RBC principles by Canadian companies as a way to help them manage risks, including those related to production and supply chains.
Support a diverse exporter base
- Ensure TCS services are geared to supporting the international scale-up of firms across key growth sectors.
- Continue developing partnerships, competencies and approaches to ensure TCS services support the success of diverse businesses owned/led by members of groups underrepresented in Canada’s international trade.
Leverage partnerships to maximize impact
- Build further on strong collaboration with partners in Canada’s business and innovation ecosystem to maximize the impact of federal trade and investment promotion efforts for Canadians.
- A group of government employees and their dependants have commenced litigation against the Crown with respect to ‘Havana Syndrome’.
- The plaintiffs allege the Crown failed in its duty of care to them by not protecting their health and safety while at Canada’s embassy in Havana; [REDACTED].
In February 2019, an action commenced against the Crown in Federal Court by 9 employees of Global Affairs Canada and 18 of their dependants seeking damages in excess of $20 million as a result of what they referred to as ‘Havana Syndrome.’ The Attorney General has delivered a Statement of Defence on behalf of the Crown, denying any liability.
C. Global overview
- A complex and destabilizing global landscape has repercussions for Canada’s international agenda. COVID‑19 has introduced further uncertainty, accentuating challenges to institutions, alliances, practices and norms, while demonstrating the importance of international cooperation. As Canada contributes to fighting the pandemic and promoting an inclusive, equitable and sustainable global recovery, it must do so with an eye to the geostrategic environment, and identify opportunities to shape the rules‑based system in a manner that supports its values and long-term national interests.
Diverse inter-related geostrategic trends are imposing new strategic choices on Canada’s foreign policy. Four stand out. First, there has been a sharpening of great power competition, most importantly the rivalry between the United States and China, which affects the strategic choices of every country. Second, authoritarianism and illiberal populism persist in many countries, while even robust democratic systems are experiencing strains. Third, deepening inequality within and across countries is driving questions about who shapes and benefits from current national and global systems. This is occurring in tandem with deliberate action to roll back progress on human rights and gender equality in all regions and across some international bodies. Fourth, therole of technology, and those who develop and deploy it, is evolving rapidly. A more digital world offers significant potential to improve lives, but is also leading to increasing disruption across a wide range of economic, social and political spheres.
COVID-19 introduced new uncertainty to a global system already in flux, exposing the risks and opportunities of our interconnected world. The pandemic has exacerbated inequities and vulnerabilities, and significantly reversed poverty reduction and development gains, notably for women, children and marginalized groups. It has also demonstrated the importance of cooperation, and the key role played by multilateral bodies, including international financial institutions and many UN agencies, funds and programs. There has also been cooperation on global health and vaccines, such as the COVAX Facility, and for economic recovery, such as the World Bank COVID-19 Strategic Preparedness and Response Program. And yet, COVID-19 has also accentuated challenges facing institutions (such as the United Nations Security Council (UNSC), World Health Organization (WHO) and World Trade Organization (WTO)), and sparked reflections about self-reliance in strategic sectors. With the development of new vaccines, though inequitably distributed, there is a new focus among policy makers on the future strategic landscape and opportunities to revitalize a strained rules-based system.
Geopolitical competition, peace and security
The historic shift of geopolitical and economic power from the Atlantic to the Pacific is still underway as emerging Asian countries (including China and India) are projected to continue growing at a faster rate than advanced transatlantic economies. This is occurring at a moment when the system of agreed international laws and institutions that govern inter-state behaviour are under strain due to a confluence of factors, all of which contributes to an unpredictable international strategic environment. Shaping this environment is a key focus of the Biden administration, which has swiftly sought to re-establish U.S. leadership on a range of international issues, including by re-joining the Paris Agreement, re-engaging with the UN Human Rights Council, arranging high-level meetings with China and Russia, initiating nuclear discussions with Iran, hosting a climate summit, planning a summit for democracy and seeking to improve transatlantic cooperation. The quick agreement on a Roadmap for a Renewed Canada-U.S. Partnership outlines how our 2 countries can face a range of challenges, including on multilateral issues. While these shifts are welcome, [REDACTED]
For its part, China continues its economic, political and military ascent, overtly using levers of influence [REDACTED]. China is becoming a systemic actor in some areas, including technology, outer space, climate and energy, [REDACTED] while seeking to shape the context across multiple issues, regions and forums to align with the goals of the ruling regime. [REDACTED] (China was viewed unfavourably by majorities in every country in a 2020 Pew survey of 14 advanced economies).
The pandemic has sharpened a U.S.-China rivalry, and both are increasing pressure on third countries to align on key issues. While some bilateral cooperation and much trade will continue, the United States and China are seeking some degree of strategic decoupling, especially in advanced technology, putting the world on a path towards less digital and technological interoperability. [REDACTED]
Increased rancor between democratic and authoritarian states is another key trend whereby assertive authoritarian states such as [REDACTED]interfere in democratic processes abroad, seek to weaken multilateral work on democracy, human rights and media, and use coercive tactics for diplomatic and economic leverage, including arbitrary detentions of foreign citizens. Illiberal populists in [REDACTED] also weaken democratic institutions in the pursuit of nationalist goals [REDACTED]
These dynamics hinder multilateral action, including on global security challenges. Just in the last year, there have been coups in Myanmar and Mali, evidence of egregious human rights violations by Chinese authorities in Xinjiang, conflict in Tigray and Nagorno Karabakh, fighting between Hamas and Israel, border clashes between India and China, and political protests and violence in Colombia, Belarus and Haiti. Violent extremists (e.g. Daesh, Boko Haram, Al-Qaeda) continue to threaten, compounded in fragile states with low resilience. Protracted crises, notably in Syria, Libya, the DRC, Lebanon, Venezuela, Iraq, Afghanistan, and the Sahel, destroy lives and livelihoods with regional and international implications. Currently, no fragile and conflict affected state (FCAS) is on track to meet the UN Sustainable Development Goals on hunger, health, gender equality and women’s empowerment, and millions of people continue to be displaced due to conflict and instability.
More peaceful regions and issues are also vulnerable to increased contestation. The Arctic, for example, is changing rapidly in the face of climate change, further opening to maritime navigation and resource exploration. While Arctic states remain committed to a rules-based, peaceful and stable Arctic region, growing interest from non-Arctic states will make this more challenging. Nuclear non‑proliferation challenges also remain (e.g. Iran, North Korea) though the revival of negotiations regarding Iran under the Biden administration is being met with cautious optimism. Non-traditional security issues, from health security (e.g. infectious diseases prevention and preparedness, concerns over the potential weaponization of biological agents) to space security, have also been given added primacy by the pandemic. Cyberspace is an increasingly active domain for geopolitical rivalry and criminal action, with a multiplication of malicious state-sponsored cyber activities, including misinformation and disinformation campaigns, and industrial espionage efforts.
More broadly, rising geopolitical tensions may make it more difficult to reach agreement among major powers, or to advance major multilateral initiatives. To address these challenges, multilateralism will continue to be practiced by the vast majority of states, but the mechanisms by which this proceeds will evolve.Where old forums no longer meet the challenge, it may be necessary to create new forums (i.e. ad hoc coalitions and plurilateral groupings) to address emerging issues in different ways.
Democracy, human rights and gender equality
Achieving greater respect for human rights, gender equality, and inclusion is a significant challenge in the face of eroding respect for human rights and democracy globally. For 2020, Freedom House recorded the 15th consecutive year of overall decline in democracy around the world. Connected with this trend, segments of the population in many countries feel excluded from decision-making or economic opportunities. In some liberal democracies, political polarization has increased the visibility of narratives questioning the integrity and effectiveness of democratic institutions and systems.
At the same time, a deliberate anti-human rights and gender backlash is targeting feminist movements and women’s rights, including sexual and reproductive health rights, gender equality and the rights of LGBTQ2+ persons. Meanwhile, Indigenous, Black, Asian and other racialized people feel the consequences of systemic racism and discrimination both in Canada and abroad. Persons with disabilities encounter barriers to accessing health care, social protection and employment, and are more susceptible to poverty, exclusion and violence. Indigenous peoples suffer disproportionately high rates of landlessness, malnutrition, maternal mortality, and displacement. Due to the pandemic, women and girls face particular health and socioeconomic threats, exacerbated by intersecting forms of discrimination and violence. Women remain systematically underrepresented in decision-making and leadership positions, whether in elected office, civil services, the private sector or academia, which increases the risk of their specific needs and interests being overlooked in policies, plans and budgets.
New and emerging technologies are double-edged swords for democracy and human rights. Such technologies allow regimes to violate human rights and weaken democratic institutions, and are used by non-state actors to commit abuses and undermine democracies. These technologies also enable and connect civil society, human rights defenders, and pro-democratic voices in support of freedom of expression and association, facilitating citizen engagement and the monitoring of rights violations.
Development, economics and trade
Economically, with divergent recoveries underway, much remains to be seen about how quickly vaccines will roll out beyond developed countries and how the evolving pandemic affects recovery efforts. The effects of the pandemic on global poverty and efforts to achieve the SDGs are expected to be long lasting. In 2020, the world experienced the single largest increase in global hunger ever recorded, and the World Bank estimated that COVID-19 pushed 119 to 124 million people into extreme poverty, representing the first increase in the global extreme poverty rate since 1998. Youth, women, workers with relatively lower educational attainment and the informally employed were hit hardest, and income inequality is likely to increase significantly, particularly in low-income and developing countries.
International migration experienced a significant shock from COVID-19. While regular migration routes have slowed/stopped, irregular migration routes have not, with significant negative impacts on migrants and the communities that host them. Despite COVID-19, remittance flows remained resilient in 2020, registering a small decline (1.6%). The fall in foreign direct investment (FDI) flows to low- and middle-income countries was more acute – excluding flows to China, those fell by over 30% in 2020.
Trade flows did better than had been feared in 2020 and are further rebounding in 2021. However, the international trade landscape may become more fragmented as geopolitical competition and activist industrial strategies create new distortions. The multilateral trading system, underpinned by the WTO, has struggled to accommodate emerging economic players and global issues. Two major challenges are the ongoing digital and technological transformation and the shift toward a greener global economy. New disruptive technologies and the rising power of big technology companies represent challenges for policymakers, notably as a growing share of economic activity as well as because everyday social and political interactions are mediated through digital tools and platforms.
The disruptions of the pandemic have also encouraged states to review their exposure to global risks and the resilience of key supply chains, notably for critical minerals, bio-manufacturing (pharmaceuticals, vaccines), food and high tech products and services. Many countries, including many of Canada’s larger trading partners, have leveraged pandemic recovery spending to reposition key sectors for a more digital and green future, and greater economic resiliency.
Meanwhile, international developmentremains an important domain for geopolitical influence among leading powers, including China, the United States and Japan. As the pandemic recovery continues, donors are struggling to preserve official development assistance levels due to domestic fiscal requirements. This has led to a renewed focus on aid and development effectiveness, including on “localisation” as a new way of approaching the ideal of local ownership, and greater coherence of humanitarian, development and peace efforts (triple nexus). Debt financing has become an acute issue as many developing countries had high debt loads before the crisis, which now limit their ability to respond to and move beyond the pandemic. International financial institutions are using all instruments at their disposal to help countries in need, offering unprecedented emergency financing facilities and new projects, while the G20 committed to temporarily suspend debt payments on the part of the poorest countries.
In this new and uncertain era, Canada needs all the tools at its disposal to navigate difficult terrain ahead. It will need to reinforce existing partnerships while pursuing non-traditional ones. It will need to invest, with others, in shaping the international order, including to protect, promote and reform elements of the existing rules-based system that are core to its interests and support its values. At the same time, Canada needs to be discerning and strategic in its prioritization of institutional and bilateral support, multilateral and technical initiatives, and domestic measures designed to protect national interests.
State of the global economy
- The global economy continues to rebound from the COVID-19 recession, but momentum is weakening. As a group, advanced economies are rebounding much faster and are expected to emerge from the pandemic with far less economic scarring than most emerging and developing economies, many of which are facing downgraded prospects in recent months.
- The Canadian economy is forecasted to grow by 5.7% in 2021 and 4.9% in 2022 (IMF), thanks to the ongoing vaccine rollout and robust U.S. demand.
- The pandemic has accelerated structural shifts towards the digital and green economy, with many countries launching recovery plans and investments to increase supply chain resilience and to support strategic sectors. Trends to watch include COVID-19 variants’ impacts on recovery; growing social and economic inequalities; exposure of highly indebted states; rapidly rising energy costs; and potential inflation.
The most recent quarterly economic outlooks released by the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD) both project a continuing global economic recovery, albeit with slowing momentum and persistent divergences between the prospects for advanced and developing countries. The IMF’s current expectation is that after contracting by 3.3% in 2020, the global economy is projected to grow by 5.9% in 2021, and by 4.9% in 2022. While this represents a much better outcome than previously feared, global income will still be trillions of dollars less than was expected before the crisis hit, and below the headline indicators of the global recovery in progress, the prospects for many countries are being downgraded.
Both institutions also warn about similar broad risks in the recovery. First, that the economic rebound will be highly uneven within and between countries, threatening to leave many countries and more vulnerable people behind. Advanced economies, led by the United States, are expected to move more quickly toward closing the gap with what had been their pre-pandemic growth trend. The IMF projects that advanced economies will regain their pre-pandemic trend path in 2022 and exceed it by 0.9% in 2024. Meanwhile, many emerging market and developing economies, apart from China, face significant economic scarring in the form of lost growth relative to what had been forecast before the pandemic. The IMF projects that these countries will remain 5.5% below their pre-pandemic forecast in 2024 [REDACTED].
Second, limited global access to vaccines and vaccine hesitancy will increase vulnerability to persistent COVID-19 and the potential for new variants that are jeopardizing the global recovery. Inconsistent roll-out of vaccines will add to the stop-start nature of re‑openings and supply challenges that are straining the economic recovery. The risks of limited vaccine access will continue to disproportionately impact vulnerable countries and people in precarious work, but advanced economies are also at risk because of higher levels of vaccine hesitancy. The IMF warns that the downside scenario of continued vaccine rollout disparities could take more than 1% – or $5.3 trillion – off the level of global GDP by 2025 relative to its current projection.
Factors affecting growth
Whereas the pandemic’s initial lockdown shocks on consumption were broadly negative – with the notable exception of surging demand for essential goods, medical products, and technology facilitating remote interactions – the increasingly divergent trajectories have greatly depended on the social and economic circumstances of individual countries. A primary determinant has been countries’ relative wealth allowing for fiscal and monetary supports as well as access to vaccination, but so too has been their mix of economic activities.
For example, economic losses have been particularly large for countries that rely on tourism, which plunged during the 2020 recession and which has seen very little rebound given reduced mobility and face-to-face interactions. In all countries this has meant a challenge for firms participating in and supporting the travel, tourism and hospitality sectors, but is especially problematic for a number of developing countries which rely heavily on these sources of international income, in particular small island developing states, which are lagging in procuring vaccines.
After a sharp decline in the early days of the pandemic, commodity priceshave risen rapidly to feed the accelerating demand for goods, housing, and the prospect of easing mobility restrictions. Oil prices are expected to increase in 2021, close to 60% above their low in 2020, while non-oil commodity prices (especially metals and food) are expected to rise almost 30% above their 2020 levels. This rise in commodity prices is buoying the economic prospects for some commodity exporters and, as the IMF argues, is sizeable enough to offset some of their other downgrades to global growth. However, it is simultaneously contributing to concerns about consumer price inflation and food insecurity, to which developing countries are especially vulnerable.
While improved, the employment picture in most countries has yet to erase losses from the pandemic. Globally, women, youth and low-income workers have been particularly exposed to the risk of job losses, in large part because of their over-representation in hardest-hit service
sectors – and for women more generally, because of the disproportionate burden of unpaid caregiving responsibilities. Impacts have also been more severe in places characterized by informal and low-paid precarious work, where fewer social protections exist.
The combination of divergent recovery paths affecting countries, sectors, and individuals are likely to aggravate existing inequalities in the years ahead. Wider gaps in living standards compared to pre‑pandemic expectations not only represent increasing inequality but a reversal of recent gains in poverty reduction. The World Bank has also more broadly drawn attention to the erosion of human capital through lost work and schooling, which will affect potential growth in the decade ahead.
Issues to watch in the recovery
Almost overnight, the pandemic hastened an accelerated phase of digital transformation, which has continued to supercharge profits and valuations for big tech firms. Many advanced economies have leveraged their COVID-19 recovery plans to build their domestic economies ‘back better’ as not only more equipped for a digital future, but also to be more resilient, productive, inclusive and green than before. Attention to gender and to marginalized countries will be needed so as to not further exacerbate existing gaps.
Ambitious build back better recovery goals present a different challenge for each country. As countries seek to establish competitive advantages in a dynamic global context, even governments earnestly seeking to ‘build back better’ may induce a period of uncertainty about rules and standards, create market distortions, and generate less of an even playing field. Prospects for shared economic growth will best be achieved if countries can work together to increase the level of certainty, limit protectionist tendencies and reduce the escalating trade tensions that marked the global economy in recent years.
Much of the spending on recovery plans is being financed through increased debt. The Institute of International Finance estimated that overall government debt reached 105% of global GDP in 2020, up from 88% in 2019. This rise was largely driven by massive spending by advanced economies, which undoubtedly blunted the effects of the downturn, and to some extent may representing a long-term investment in future growth. Debt in emerging markets and developing economies have also mounted, and faced with tighter financing and other conditions, many are withdrawing policy support more quickly despite larger shortfalls in output. Unsustainable debt burdens in those countries risk undermining development gains and capacity to make progress toward achieving the Sustainable Development Goals.
The realities of increased debt loads are complicated, having been largely necessary, and in many cases currently affordable, but doubtlessly increasing systemic risks. While interest rates are currently historically low and the pace of borrowing has tapered in 2021, some countries, especially least developed ones, will struggle with carrying costs, which could lead to acute crises. High levels of debt will more generally constrain public policy responses, such as addressing social priorities, and the ability to respond to future crises.
Investments in green and sustainable growth have been a long-term transition but strategic investments by governments and the private sector are being made now in the policy opening created by the pandemic disruption. There is increasing investor interest in environmental, social and governance (ESG) measures and compliance in identifying growth opportunities. Immediate efforts to decarbonize the global economy and implement next-generation technology are critical to meeting agreed targets, but the International Energy Agency (IEA) and Intergovernmental Panel on Climate Change (IPCC) have recently reported that more investment is needed.
Against this longer-term trend, rapidly rising energy costs in recent months are generating concerns and will weigh on the global recovery in the form of supply challenges and inflationary pressures. Various environmental factors and low energy reserves have contributed to a situation in which global prices are spiraling, and acute shortages, most visible in Europe and China, have led to episodes of rationing and halted production. Short-term responses to the current energy scare are in development, and longer-term, the risk is that this shock may divert resources or delay making the investments urgently needed for a green energy transition.
Finally, inflation trends are being closely watched with measured concerns as to whether higher prices will be short lived or likely to persist. For example, Canada’s annual pace of inflation rose again to 4.1% in August, well above the 2% midpoint of the bank's 1-3% control range. The Bank of Canada, like many central banks, has stated that the current high inflation is due to temporary factors including rapidly rebounding prices for gasoline and other pent up demand, as well as various supply constraints. The outlook as to whether inflation dissipates depends on a number of factors, including slack in the labour market, spending re-balancing toward services, and that “excess” household savings get retained rather than financing more spending. Rising inflation, should it happen, can help debtors in outpacing their past borrowing, but higher debt burdens, especially for struggling developing countries vulnerable to capital outflows and balance of payment issues, would mean elevated risks. The potential for higher inflation and interest rates would also be unfavourable to large-scale investments, perhaps especially in the type of projects envisioned in a green energy transition.
Development landscape and challenges
- The global development landscape is increasingly complex and dynamic, with geo-political competition influencing the development sphere.
- Interconnected development challenges require coordinated responses among a growing number of actors, and consideration of innovative approaches, financing mechanisms and partnerships.
- The COVID-19 pandemic has reversed decades of progress, increasing poverty and exacerbating existing inequalities, with notable consequences for women, youth and marginalized communities.
The last 3 decades have seen unprecedented global development progress. Hundreds of millions of people have been lifted from poverty. Maternal and child mortality rates have fallen sharply, millions more girls are in school, and deaths from diseases have declined dramatically. However, rising inequality, climate change, protracted conflict and the impacts of the COVID-19 pandemic threaten to roll back progress made.
In a multinodal world with shifting power relationships, the development cooperation landscape is increasingly dynamic, with new actors and sources of funding present. The growing prevalence of a competition of ideas, governance and development models will influence bilateral relations and funding choices. These tensions are also evident in multilateral forums, where attempts to weaken norms and standards is a concern. At the same time, the pandemic has showcased the importance of multilateral co-operation and agencies.
The complexity of global challenges will require enhanced global coordination and improved synergies between development, humanitarian, peace and security and trade actors.
I – Advancing development goals and setbacks in eradicating poverty
The forecasted proportion of people living below $1.90 a day has increased following the COVID-19 pandemic.
The COVID-19 pandemic has shifted the forecast on the global goal to end extreme poverty. In 2019, the proportion of people living below $1.90 per day was 8.2%. In 2020, the rate of extreme poverty rate was initially forecasted to be 7.7% but this forecast was revised to 8.8% due the pandemic. Similarly in 2021, the extreme poverty rate was forecasted to be 7.4% but was revised to 8.7%.
Despite recent progress, the COVID-19 pandemic pushed an estimated 119 to 124 million people back into extreme poverty in 2020, representing the first rise in global poverty since the Asian financial crisis of 1998 (see figure 1 above).
Over 680 million people (9.2% of the global population) live in extreme poverty. The majority are in middle-income countries where investments in social safety nets can be particularly useful in targeting the poor. Extreme poverty is most entrenched in sub‑Saharan Africa where 40% of the population live below the poverty line. Global levels of extreme poverty are growing in fragile and conflict-affected states, where the World Bank projects up to two thirds of the world’s extreme poor will live by 2030.
In this context, the world will not reach the goal of lowering global extreme poverty to 3% by 2030 unless swift and sustained action is taken. More coordinated efforts by all development actors are needed to scale up improvements to service delivery, products and policies, in addition to developing new partnerships and funding modalities such as blended finance with the private sector that aim to deliver more efficient and effective international assistance at scale.
Challenges to education, health and food systems
The pandemic disrupted education and learning for 1.6 billion children worldwide, and is likely to increase the learning poverty rate (measured by the proportion of 10-year-olds unable to read a short, age-appropriate text) by as much as 63%. This disruption will have ramifications for years to come, particularly for children and youth already facing challenges accessing education prior to the pandemic and who will not return to school. UNESCO estimates that more than 11 million girls and young women will not return to school, many of them at the pre-primary level.
The pandemic is expected to reverse decades of improvements in morbidity and mortality. Childhood immunization programs in around 70 countries have been interrupted due to the pandemic, and, as a result, illness and deaths from communicable diseases are expected to spike. The uneven rollout of COVID-19 vaccines to developing countries is a stark example of global inequality, with lower income countries only expected to vaccinate their populations in 2022 or even later. This is likely to lead to corresponding delays for economic recovery in these countries.
Food systems were already under strain before COVID-19 due to conflict and the impact of climate change on agriculture, with moderate or severe food insecurity affecting 26% of the global population in 2019. The pandemic has exacerbated the situation by reducing purchasing power and the capacity to produce and distribute food. In 2021, the Food and Agriculture Organization (FAO) reported that the world is experiencing the single largest increase in global hunger ever recorded. An estimated 41 million people in 43 countries are teetering on the edge of famine, up from 27 million just two years ago. Malnutrition is also a significant concern, due to pandemic impacts such as the reduction of school feeding programs and other nutrition services in low- and middle-income countries.
Gender equality and youth
Women and girls are more severely impacted by poverty due to existing inequalities, often with limited control over their own bodies and reproductive choices and fewer economic opportunities. Their circumstances can be even further complicated if they are Indigenous, displaced or from a minority community. This has further been exacerbated by COVID-19. For instance, family planning and contraception are among the most disrupted health services and a rise in gender-based violence, particularly domestic violence, has been observed. Employment opportunities, especially for women employed in informal economies, have also been impacted. The essential nature of care work to societies has been exposed during the pandemic, along with the gender inequality that characterises it.
Pre-pandemic, encouraging advances were being made. Girls’ enrollment in primary and secondary school had increased significantly; fewer girls were forced into early marriage; and more women were serving in parliaments. Gains in gender equality have had a demonstrable impact across all development sectors. For example, when a girl attends secondary school, she will marry later; have fewer and healthier children; and her future income will increase, compared to girls who have only attended primary school.
The global youth population aged 15-24 is expected to reach 1.3 billion by 2030 – notably in Africa. Young people have the potential to drive economic growth in developing countries, building on opportunities flowing from the digital revolution if they can access it. However, youth in rural areas or with lower education levels risk falling behind, and this can generate political and economic instability. The pandemic has inflicted a heavy toll on young workers – with youth employment at 8.7% in 2020, compared to 3.7% for adults.
Poor governance is an obstacle to sustainable development
Many countries continue to grapple with governance challenges, undermining the effectiveness and accountability of public institutions and systems for service delivery, the promotion and protection of human rights and equitable access to justice, particularly for marginalized groups.
Recent years have seen a rise in authoritarianism and illiberal populism. Between 2008 and 2020, the share of ‘not free’ countries rose from 22% to 38%, marking the 15th consecutive year of decline in global freedom. In this context, civic space is shrinking. In 2019, 39 countries and territories experienced major prodemocracy protests. Of these, 23 experienced a decline in freedom for 2020, marked by arrests and prosecution of demonstrators and the passing of restrictive laws.
In many countries, women’s rights and the rights of LGBTQ2+ and those of marginalized religious and ethnic groups are limited, not promoted or protected, and these communities often face exclusion from economic and political life. The weak enforcement of human rights, along with related challenges such as corruption and discrimination, are serious obstacles to sustainable development.
II – Complex global challenges
A number of highly complex global challenges pose significant obstacles to achieving the Sustainable Development Goals. Protracted humanitarian emergencies, climate change, and irregular migration are closely inter‑related development challenges for which straightforward solutions are lacking. Sustainable outcomes require above all active constructive political engagement. Development actors, for their part, must show a commitment to innovation using evidence and experimentation to approach international assistance differently.
Prior to the pandemic, humanitarian needs were already at record levels due to protracted conflicts, an increase in the frequency and impact of natural disasters and health emergencies of international concern, such as Ebola outbreaks.
In June 2021, the UN requested US$35.1 billion through its annual appeal to assist those affected by crises. This is 40% higher than 2019 ($26.4 billion). These figures reflect how severely the COVID-19 pandemic has exacerbated humanitarian needs. The number of forcibly displaced people (82.4 million as of the end of 2020) is unprecedented since the Second World War, and developing countries host most of these people. Humanitarian access continues to be a major challenge, exacerbated by COVID-19 mobility restrictions for humanitarian workers and cargo, and heightened attacks on medical and humanitarian workers.
To support localized approaches and increase efficiencies, humanitarian actors are exploring how to best harness new and emerging technologies, while respecting data protection, privacy and humanitarian principles.
Climate change, biodiversity loss and environmental degradation represent not only existential threats in their own right, they are also catalysts for instability, conflict, famine and pandemics.
Extreme weather events and water shortages are affecting long-term development gains, impacting vulnerable communities who struggle to build resilience to the impacts of changing weather patterns on their homes and businesses. Poor communities, particularly in least developed countries and small island developing states (SIDS), are disproportionately affected by climate change impacts, including drought, flooding, heat waves, land degradation, sea level rise, coastal erosion and loss of biodiversity.
All credible international modelling efforts have indicated that Paris Agreement goals will not be met absent an urgent and global transition to low-carbon energy systems. Energy production and consumption is accountable for 78% of global greenhouse gas (GHG) emissions from human activities. Historically, developed countries produced the largest amount of GHG emissions, but in recent decades there has been a significant rise in emissions in the rest of the world, particularly across Asia and most notably, China. Low- and middle-income countries will need enhanced support for green and just transitions to help them move away from unabated fossil fuels towards sustainable energy sources, and to help adapt to the negative impacts of climate change.
Small island developing states
SIDS have significant vulnerabilities to external economic shocks and climate change-related risks. Low-income and lower-middle-income SIDS tend to have a weaker per capita economic growth rate than other developing countries in the same income group. Their small internal markets require them to trade for supplies of critical goods, making them highly exposed to international market volatility. The impact of the pandemic on tourism (the main economic engine of many islands) has brought these economies to a halt. In addition, SIDS are highly exposed to natural disasters. Between 1970 and 2018, natural disasters caused annual average damage equivalent to 2.8% of GDP for Caribbean SIDS, compared to only 0.3% of GDP for the rest of the world.
Pandemic-related border closures and lock-downs brought a halt to regular migration pathways, leaving many migrants stranded and with no choice but to select irregular migration routes, putting their safety at risk. This has exacerbated existing situations of vulnerability for some migrants, especially at‑risk women and girls.
During the COVID-19 pandemic, migrants worked on the front lines, in key sectors such as health care and agriculture, and faced higher risks of COVID-19 infection, with less access to health care. Despite these challenges, migrants have proven their resiliency and dedication to their families in their countries of origin throughout the pandemic, with remittance flows in some regions, such as Latin America and the Caribbean, increasing by 6.5% in 2020, defying previous predictions.
Displacement within countries continues to be affected by climate change, social instability, poverty and poor infrastructure. Although the links between the environment and migration are rarely linear, it is estimated that over 140 million people could be displaced within their countries’ borders by 2050, as a result of impacts of extreme weather, rising sea levels and other climate change effects.
III – Emerging issues
In addition to pandemic-related backsliding and complex ongoing challenges, the current development landscape is also characterized by a series of emerging issues. These trends reflect unequal access to new technologies, geopolitical shifts that are undermining established global development norms, evolving global demographic trends, efforts to localize and “decolonize” international assistance, a renewed threat of indebtedness and a rapidly evolving global financing for development architecture.
The digital revolution’s impact on developing countries
The digital revolution has the potential to raise global income levels and improve quality of life. It offers new tools for development, providing opportunities to take greater advantage of data, science and technology to address poverty reduction goals. But the advancement of artificial intelligence and automation will have a major impact on the nature of work in the coming years and has the potential to exacerbate inequalities, particularly for marginalized communities, if conscious actions are not taken. Support for building digital infrastructure and skills in developing countries, and advocating for rights-based digital ecosystems, need to be integrated into development aid.
Rapid urbanization will strain resources
By 2050, two thirds of the world’s population will live in urban centres, many of them in low‑income countries in Africa and Asia. Water and sanitation services, along with housing, transportation and urban planning, are struggling to keep pace with rapid – and often poorly planned – urbanization.
Crowd-sourcing, smart technology, and cross-sectorial collaboration and planning to address the needs of urban populations can help achieve progress.
New development actors are emerging
Distinctions between rich and poor, developed and developing, donors and recipients are becoming less and less clear. Many countries are transitioning to middle- and upper-income status and their roles in the world and relations with former donors are evolving. These countries bring different approaches and models of development cooperation – some of them Canada agrees with, others less so. For example, China’s approach blurs the line between official development assistance (ODA) and commercial investments, providing large-scale development financing on competitive terms. While their investments are responding to real market needs especially for infrastructure, this lending risks undermining debt sustainability, particularly in sub-Saharan African.
Local development and humanitarian actors will play a greater role
While international actors will continue to play an important role in supporting development and humanitarian efforts, the participation of national and local actors is required to better identify and address the needs of affected populations. The idea of localizing and decolonizing aid, in the humanitarian sector in particular, was expressed at the 2016 World Humanitarian Summit culminating in the ‘Grand Bargain’, where signatories committed to supporting humanitarian action that was “as local as possible, and as international as necessary”. The concept of localization has continued to gain traction by necessity, as the COVID-19 pandemic increased reliance on local organizations and staff, partly due to travel restrictions reducing international access to communities.
Debt burdens have increased
Developing nation debt has more than doubled in the past decade, and the pandemic has aggravated this issue. The Organisation for Economic Co-operation and Development (OECD) estimates that developing countries will have seen a drop of $700 billion in external private finance (i.e. inflow of foreign direct investment (FDI) and other investment such as bank lending) in 2020. Sovereign debt levels are expected to rise by 12% of GDP in emerging markets in 2021. More than 90 countries approached the International Monetary Fund (IMF) in 2020 to access emergency financing instruments, signalling that the problem of debt burden and limited access to liquidity is widespread.
Debt restructuring and debt suspension initiatives are underway and loom large in policy discussions linked to COVID-19 recovery and financing for development, where Canada has been a thought leader at the UN since 2016.
More diverse sources of development finance
The relative importance of ODA for development finance is evolving as other financial flows to developing countries, including remittances and flows from the private sector and philanthropic organizations, increase. Due to the pandemic, however, in 2020 FDI to developing countries declined by about 12%, while ODA reached a high of US$161 billion, equivalent to 0.32% of OECD Development Assistance Committee (DAC) member countries’ combined gross national income.
There is widespread recognition that financing for development from a range of sources is required, including blended public-private finance, but even with new funding sources, ODA continues to play an essential role, particularly for the poorest and most vulnerable. In least developed countries, ODA accounts for over two thirds of external finance and in fragile and conflict-affected contexts, it is often the only option for the provision of basic services.
Effectively addressing key financing for development challenges, such as debt sustainability and pressure on global ODA levels, is critical to enabling a credible global pandemic response and supporting efforts to build back better. Canada, alongside Jamaica and the UN Secretary General has taken a leadership role in these discussions, through the Financing for Development in the Era of COVID-19 and Beyond Initiative, a large-scale, multilateral initiative focused on developing and implementing recovery solutions aligned with the 2030 Agenda for Sustainable Development.
IV – Global development frameworks
A series of global commitments were agreed to between 2015 and 2018 in recognition of these trends and challenges, recognizing the international community can do better to meet needs and improve the resilience of hundreds of millions of people living in poverty or facing insecurity. These global frameworks are helping guide current efforts to re-assess existing approaches and partnerships, in the context of pandemic recovery:
- 2030 Agenda for Sustainable Development (2015), which includes 17 Sustainable Development Goals - successor to the Millennium Development Goals;
- Addis Ababa Action Agenda on financing for development (2015), a global framework for financing sustainable development;
- Paris Agreement on Climate Change (2015), agreed at UN Framework Convention on Climate Change (UNFCCC) 21st Conference of Parties (COP21);
- Sendai Framework for Disaster Risk Reduction (2015), a global cooperation framework of particular importance to SIDS vulnerable to extreme weather events and sea-level rise;
- World Humanitarian Summit (2016), where the largest donors and humanitarian agencies agreed to a ‘Grand Bargain’ to improve effectiveness and efficiency of humanitarian action;
- Global Compact on Migration (2018), the first-ever UN global agreement on a common approach to international migration;
- Global Compact on Refugees (2018), which aims to move towards more comprehensive refugee responses.
Additionally, a set of aid effectiveness principles adopted in Paris (2005), Accra (2008) and Busan (2011) form the foundation for effective development cooperation.
D. Geographic – Integrated regional overviews
- Asia is experiencing changes in economic and power relations that are disrupting contemporary global and regional security dynamics.
- This dynamic region features acute risk, intensified by China’s assertiveness and COVID-19.
- Events and decisions in and about Asia increasingly drive both positive and negative outcomes for Canada’s prosperity, security and global interests.
Asia is home to 60% of the world’s population and represents one third of global output. It includes 3 of the world’s 6 largest national economies (China, Japan, and India), and the 10 countries of the Association of Southeast Asian Nations (ASEAN).
China’s influence on trade, diplomacy, aid and security issues continues to increase, and its more assertive posture seeks to challenge U.S. strategic primacy in East Asia and the Western Pacific. The return of “great power politics” increases the risk of destabilization and conflict.
Asia is the fastest growing economic region in the world, and stands to deliver nearly two‑thirds of global growth by 2030. It remains a critical hub for global trade, investment, production and supply chains.
These successes, however, mask persistent challenges. The region remains home to 1.1 billion poor, including 287 million people living in extreme poverty, whose situation has been aggravated by COVID-19. Infrastructure needs are acute, with demand expected to exceed $1.5 trillion per year to 2030. It is also the world’s most disaster-prone region and is greatly impacted by climate change. Asia accounts for 53% of global CO2 emissions and is therefore key to any global cooperation on climate change. Several countries also face major human rights and governance challenges and threats to democracy (e.g. Myanmar, Afghanistan, Hong Kong).
Asia is a hotspot for emerging infectious diseases, including those with pandemic potential (e.g. severe acute respiratory syndrome and bird flu). While COVID-19 caused severe economic disruption in the region, countries in East and Southeast Asia have proven the most resilient by global standards. In 2020, developing Asia contracted by 0.2% – the first recession in nearly 6 decades – although GDP is expected to grow by 7.3% in 2021.
The region faces a complex web of security challenges, including a more assertive China in the East and South China seas, in Hong Kong, with India, and across the Taiwan Strait; ongoing tensions on the Korean Peninsula; the India-Pakistan rivalry; and more recent crises in Myanmar/Bangladesh (Rohingya) and in Afghanistan.
Canada in Asia
Canada’s people-to-people ties in Asia are extensive. Nearly half of Canada’s foreign‑born population is from the region and almost 18% of the overall Canadian population identify as having origins in Asia.
In recent years, Canada’s efforts in Asia have sought to:
- Advance free and open markets for goods, services and investment;
- Promote democratic values, governance, human rights and rule of law;
- Contend with and adapt to the rise of China; deepen and strengthen engagement with countries of growing strategic importance, such as India; and,
- Preserve and strengthen regional security and stability by working with and supporting regional allies.
Canada has deep diplomatic and security relationships in the region. Australia and New Zealand are close and long-standing partners with whom Canada regularly coordinates on intelligence, defence and diplomatic matters. Cooperation with Japan, a pivotal diplomatic and security actor, is now structured to more effectively engage on economic, energy and regional security issues following an agreement to work together in the Indo-Pacific context under the framework of “six areas of cooperation”. Canada also has strong diplomatic relations with the Republic of Korea (South Korea), strengthened by the Canada-Korea Free Trade Agreement.
Canada has a strong and growing bilateral relationship with India, but relations have yet to reach their full potential. Cooperation with Bangladesh has expanded in the last few years given Canada’s leadership on the Rohingya crisis and a growing trade relationship. [REDACTED] bilateral engagement with Pakistan, Canada endeavours to maintain a constructive dialogue and expand the relationship.
As the United States remains a central diplomatic and security actor in the region, Canada also works closely with the United States to promote regional stability, notably in the area of maritime security. Canada was not associated with the process leading up to the signing of the recent AUKUS security agreement between the US, Australia and the UK but is supportive of its objective to reinforce the security posture of close partners in the region. While AUKUS does not affect Canada’s Five Eyes relationships, it will be to Canada’s advantage to remain actively engaged with AUKUS signatories on matters related to regional security and critical technologies.
The Association of Southeast Asian Nations (ASEAN) collectively represents the world’s fifth largest economy, and has positioned itself at the center of Asia’s regional security, political and economic architecture. As a dialogue partner of ASEAN, Canada works with ASEAN on political and security issues, regional integration, economic interests, development cooperation, transnational crime and counterterrorism. Canada participates in the ASEAN Post-Ministerial Conference and is an active contributor to the ASEAN Regional Forum, including on issues such as the Law of the Sea; Women, Peace and Security; and Disaster Relief and Assistance. Canada is currently seeking membership in the “ASEAN Defence Ministers Meeting Plus”. There exists significant potential for developing Canada’s relations with a number of Southeast Asian nations.
In 2020, Canadian exports to the region accounted for 11.6% of total Canadian exports; while Canadian investments in the region totalled $116.5 billion. Canadian trade and investment is expanding in Asia, anchored by the Comprehensive and Progressive agreement for Trans-Pacific Partnership (CPTPP), the Canada-Korea Free Trade Agreement, and 5 investment agreements. Canada has sought to expand its market access to the region through the pursuit of new trade and investment agreements with Indonesia, India and ASEAN, as well as CPTPP expansion through an accession process that, in addition to the UK, now includes formal applications from both China and Taiwan.
APEC, as Asia’s preeminent forum on matters of trade and the economy, provides Canada with the opportunity to further strengthen trade and economic ties with Asia-Pacific’s most dynamic economies (which accounted for 83.3% of Canada’s merchandise trade pre‑pandemic). It serves as a critical platform to pursue regional objectives, including trade liberalization and market reforms, as well as broader foreign policy goals.
Canada’s strengths in industries like minerals, energy, financial services, infrastructure, environmental technologies and agri-food, are closely aligned with the needs of the region, and offer important avenues for export diversification. Canadian companies also have significant investment in the region, and Asian manufacturing centres form a critical backbone for Canadian supply chains, with up to 15% of our intermediate goods coming from China, Japan and South Korea.
Opportunities notwithstanding, governance issues and the use of arbitrary trade measures constrain commercial prospects. Notably, China’s linking of political and economic issues adds uncertainty and increases the costs of doing business.
Canada’s international assistance remains an important component of our engagement in Asia. In 2019-20, Canada’s total international assistance to Asia and the Pacific totalled $1.35 billion (25% of the total Canada spends worldwide).
International assistance priorities include pandemic preparedness, response and recovery, climate change resiliency, gender equality and women’s empowerment. Significant efforts in the areas of environmental sustainability, and inclusive governance and economic growth are essential to supporting the region in achieving the United Nations 2030 Sustainable Development Goals.
Canada also helps to increase understanding of the benefits of, and support for, the rule‑based international system through its efforts to improve governance and to foster appreciation for the rule of law, democracy, and respect for human rights.
In Afghanistan, following the Taliban’s overthrow of a legitimately elected government and its seizure of power by force, Canada’s international development assistance has been paused and some funds diverted to help address the humanitarian crisis. Significant questions will have to be addressed, not least of which are legal and sanctions-related, before Canadian programming can continue.
In 2018, Canada launched the first phase of a strategy to respond to the Rohingya crisis in Myanmar and Bangladesh ($300 million, 2018-2021). The second phase of the strategy ($288.3 million, 2021-2024) is underway, and will provide medium-term support to meet the needs of crisis-affected populations, intensify efforts to advance an inclusive and sustainable peace in Myanmar, and target support to advance the restoration of democratic rule and increase pressure on malign actors, including through the continued pursuit of accountability for human rights violations.
Faced with both significant opportunities and challenges in Asia, Canada is developing a strategic approach to the Indo-Pacific, which refers to the land and maritime areas situated between Northeast Asia and the Indian sub‑continent. Canada works with likeminded partners from the region to protect the rules‑based international system and promote shared values and principles, recognizing that key decisions affecting Canada’s prosperity and security will increasingly be made in the Indo-Pacific region. In light of the evolving strategic environment, a trade-centric approach needs to be balanced with other measures to protect Canada’s broader foreign policy and security interests.
A growing number of like-minded countries seek to maintain an inclusive, sustainable and stable order in the Indo-Pacific. Australia (2013), Indonesia (2013) and, most particularly, Japan (2016) were early proponents of Indo-Pacific cooperation. Many others have followed suit and adopted their own Indo-Pacific framework, including the United States (2017), India (2018), France (2018), ASEAN (2019), Germany (2020), Netherlands (2020), the United Kingdom (2021) and the European Union (2021). The G7 foreign ministers also collectively endorsed the broad principles and values underpinning a “free and open Indo‑Pacific” during their May 2021 meeting, to which Australia, South Korea, India and ASEAN were all invited.
Europe and Eurasia
- Canada’s relationships in Europe represent important partnerships in advancing shared global interests.
- There are risks associated with Russia’s and Turkey’s regional engagement, and China’s increasing influence in Eastern Europe and Central Asia, with the latter now facing refugees and instability from Afghanistan.
European countries are often partners of choice across the full range of Canada’s foreign policy, security, development, economic and commercial interests. The COVID-19 pandemic reinforced these ties, including to support the repatriation of Canadian travellers, to improve global public health coordination, to advocate for supply chain security and, going forward, to promote a sustainable and inclusive global economic recovery.
Within Europe, however, the dynamics are evolving, due to the [REDACTED] departure of the United Kingdom from the European Union, and the realignment and rebalancing of influence among EU members in its aftermath. Meanwhile, the rise of populism has led to illiberal backsliding on the rule of law [REDACTED] and grave divisions remain over migration to the continent, recently heightened by the Taliban takeover of Afghanistan.
The European Union, with 27 member states and 445 million people (post-Brexit), is a top-tier and like-minded strategic partner in protecting and promoting shared interests and values, across the policy spectrum. Canada benefits from a uniquely broad bilateral cooperation framework in the Canada-EU Strategic Partnership Agreement (SPA).
The current European Commission has made clear that its geopolitical ambitions have heightened, although its internal processes continue to present challenges. Unanimity rules make decision-making challenging among the EU member states on vital issues such as the geopolitical competition between the United States and China, where the European Union is trying to find and plot its own path. Despite shared concerns on human rights, Hong Kong, Taiwan, Tibet and the South China Sea, [REDACTED] Nonetheless, the European Union is standing up to China more publicly than in the past, including maintaining public solidarity with Canada on the two Michaels, and applying sanctions against China over treatment of the Uighurs. Despite some of these challenges the European Union is a major like-minded player and a strong and engaged European Union remains vital to promoting Canada’s global interests.
The European Union is Canada’s second‑largest global market. Five of its individual member states are in the top 15 Canadian export destinations, and six were in Canada’s top 15 foreign direct investment sources in 2020. The Comprehensive Economic and Trade Agreement (CETA) has been provisionally applied since September 2017. Bilateral merchandise trade has risen by 15.2% between the 2016 baseline and 2020. Canada will continue to promote the benefits of the accord to companies of all sizes, and enable success through the efforts of the Trade Commissioner Service. CETA ratification has now been achieved in 15 member states, [REDACTED]
These are sophisticated and wealthy markets recognized as global standard-setters. The European Commission’s Digital and Green agendas will open promising commercial opportunities for Canadian entities and firms. However, some EU regulatory measures can present certain risks.
Canada continues to cultivate relationships with individual EU member states. France and Germany, the “engine” of the European Union, remain key partners on a range of issues including support for the rules‑based system, human rights, and regional flashpoints such as Ukraine, Belarus, Afghanistan, Lebanon and Venezuela. Elections in both countries, coupled with the rise in influence in the European Union of states such as the Netherlands, Italy and Spain, bring a need to renew relationships and priorities.
Canada has a particular historical affinity for the United Kingdom, with a shared transatlantic and Commonwealth identity. The United Kingdom remains Canada’s single largest trading partner in Europe, with our exports heavily focused in non-monetary gold. Following the United Kingdom’s exit from the European Union, a trade continuity agreement, based on CETA, entered into force in April 2021. It set up the launch of negotiations of an ambitious free trade agreement within one year. The United Kingdom is also a significant security and defence ally, including at NATO and in the Five Eyes intelligence community. Continuing to find the right balance [REDACTED] will remain essential.
Canada’s contributions to NATO are especially well appreciated on the eastern edges of the territory. The Ukraine deployment is up for renewal next year, and the Latvia deployment, Canada’s largest in the world, is authorized until 2023.
Canada is increasingly affected by developments in awider Eurasia that stretches eastward to include Russia and Central Asia, and southeast to the Western Balkans as well as Turkey and the Caucasus. In this area, some prominent fault lines are emerging in the global order, such as renewed crisis and protracted conflict in Belarus and Nagorno-Karabakh.
Russia continues to take aggressive and illegal steps to assert its geopolitical ambitions and protect its national interests, particularly in what it considers its historical sphere of influence. These include violations of its neighbours’ sovereignty (Ukraine and Georgia), efforts at interference and destabilization (Western Balkans), and further signals that it would potentially intervene to protect Russian-speaking minorities in neighbouring countries. Russia has targeted NATO, the United States, Germany, France, Ukraine and others with disinformation and cyber campaigns, including interference in electoral processes. Russia is also exerting its military, economic and political heft among other Arctic states, as melting sea ice and new technologies offer new economic opportunities. Nonetheless, there is scope to pursue certain common interests, including in the context of Russia’s chairing of the Arctic Council in 2021-23.
Meanwhile, post-Soviet countries in the Caucasus and central Asia are struggling to de-link from Russia’s sphere of influence – whether to choose a Euro-Atlantic orientation, to establish a balance between Russia and the West, or to seek partnerships with China on inward investment and commercial linkages. Refugees and the risk of terrorism following the Afghanistan crisis threaten regional stability, prompting increased Canadian engagement with neighbouring countries but emphasizing Canada’s limited presence in Central Asia.
Canada has been heavily engaged in Ukraine, particularly since the 2014 Revolution of Dignity, unequivocally condemning Russia’s illegal invasion and annexation of Crimea, and actively supporting Ukraine’s sovereignty and territorial integrity. Canada’s political, trade, development, and security support are highly appreciated by Ukrainian leaders, as well as by the active 1.35 million Ukrainian Canadian diaspora.
Turkey – a NATO ally, G20 partner and emerging market – sits at the crossroads of East and West, with broad regional influence. As EU aspirations fade, Ankara’s focus has shifted to the Middle East and Caucasus, helping to check Russian influence, preventing the Assad regime from capturing Idlib, and playing a vital role in hosting over 4 million refugees. However, it also intervened militarily in Libya, Syria and Iraq, and supported Azerbaijan in the 2020 Nagorno‑Karabakh conflict. Combined with concerns over increasing authoritarianism, such actions have increased tensions with NATO allies and led Canada to suspend the export of military goods. However, overall cooperation continues, including through a Joint Economic and Trade Committee to be held later this year, and Canada seeks to retain Turkey within the Euro-Atlantic sphere.
Latin America and the Caribbean
- Canada has significant security and economic interests in Latin America and the Caribbean (LAC).
- Strong bilateral relationships underpin diplomatic engagement and position Canada as a privileged partner for countries seeking to address common challenges.
Strong economic growth in the region stagnated in the 2010s. In the fall of 2019, while the Caribbean remained relatively stable, Latin America saw widespread civil unrest driven by dissatisfaction with progress in improving social conditions and inequality. Protests largely came to a halt in March 2020 due to COVID-19 lockdown measures, but political dynamics in many countries remain volatile. Many of the issues that fuelled protests remain unresolved.
The region is among those hardest hit by COVID-19, accounting for 32% of deaths worldwide despite representing less than 10% of the global population. Vaccine procurement and distribution remains a challenge in LAC. Canada has offered significant support to the region to address this challenge, including through the Pan-American Health Organization and COVAX – this includes Canada’s donation of 40 million vaccine doses through COVAX with a regional earmark of up to 50% to LAC, and over 750,000 of Astra Zeneca doses donated bilaterally to the region. Meanwhile, China has sought to use the crisis as a means of making inroads in the broader geostrategic competition of ideas and governance.
The pandemic further exposed long-standing weaknesses with democracy in some parts of Latin America. Many citizens do not trust democratic institutions to act in their best interest, particularly due to corruption, and election results are indicative of increased polarization in some places. In Central America, violence and poverty have resulted in significant migration within LAC, as has the continued crisis in Venezuela, straining the capacities of key Canadian allies to cope. Despite ongoing challenges, there is opportunity and appetite for continued strong Canadian diplomatic engagement and leadership in LAC. Canada is trusted, offers a strong governance model, and is home to a large diaspora. The region offers opportunities for Canadian exporters and investors, helping meet Canada’s prosperity and trade diversification objectives. Geographic proximity makes the region uniquely important to Canada’s security. The region remains of interest to the United States, which will seek to work with Canada to advance shared interests, including on democratic governance, economic growth, crime, climate change and migration, particularly in the lead‑up to the U.S.-hosted Summit of the Americas in 2022.
Gender inequality remains very high, particularly for Black and Indigenous women, human rights defenders, and marginalized groups including female politicians, journalists and LGBTQ2+ persons.
Areas of particular concern: Haiti, Nicaragua, Cuba, Venezuela
The pandemic has exacerbated protracted crises in Haiti, Nicaragua, Cuba and Venezuela. Haiti remains the poorest and most fragile state in LAC and is Canada’s largest recipient of development assistance. The recent assassination of the president has resulted in a period of uncertainty, and parliament remains non-functional. The August 14 earthquake added to the country’s precarious humanitarian situation.
In Nicaragua, the Ortega regime has enacted a series of laws restricting media freedom, arbitrarily arrested political opponents, and is doing everything it can to curtail any opposition in the lead up to the November 2021 elections. Canada is increasing public pressure on Cuba to respect freedom of expression and assembly, following a series of protests in summer 2021. The dire political, economic, and humanitarian situation in Venezuela continues to have destabilizing impacts on democracy, security and prosperity in the region. Over 5.6 million Venezuelans have fled, creating the second-largest displacement crisis after Syria.
Canada is seen in the region and beyond as a convenor to find solutions in support of democracy in Venezuela [REDACTED]. On June 17, 2021, Canada hosted the International Donors’ Conference in Solidarity with Venezuelan Refugees and Migrants, securing US$2.35 billion in grants and loans. Canada pledged $115.4 million, the third-largest grant contribution.
Illicit flows of arms, drugs and people that had slowed at the start of the pandemic have increased and remain a concern, particularly in Central America. Insecurity and violence in Central America is fueling a surge of irregular migration north, the largest corridor of migration in the world.
Weak judicial systems make it difficult to consistently protect human rights. Some governments have used the pandemic as cover to impose measures that curtail civil rights. Despite this, in many countries of the region, the space for public debate and independent media remains relatively strong.
Climate change is a threat to growth, as seen in widespread forest fires in Latin America and a record-breaking Atlantic hurricane season in 2020. This puts additional pressure on governments already grappling with the social and economic impacts of the pandemic.
Democracy, human rights and international assistance
In line with the Feminist International Assistance Policy, Canada’s international assistance programs in Central America, Caribbean, Haiti, Colombia, Peru, and Bolivia offer the opportunity to advance democracy, human rights, economic prosperity, and trade-development issues.
Canada is an active partner in the Organization of American States (OAS) and views the Inter-American System as an indispensable platform for its relationship with the region.
Indigenous movements are increasingly seen as legitimate political actors in LAC countries. Canada has established partnerships and collaboration with Indigenous peoples in the region, including through international assistance programming.
Each sub-region in LAC presents unique economic challenges and opportunities. Central America has strong ties to the U.S. market, but struggles with corruption and insecurity. South America has many middle‑income countries and regional trade agreements (Pacific Alliance and Mercosur), as well as large markets including Brazil that are important to Canada. Caribbean countries are highly dependent on financial services and tourism and vulnerable to climate change, but offer opportunities for investment in clean technology. The Temporary Foreign Worker program benefits Canada’s agricultural sector and food security, while supporting local economies, including in the Caribbean. The top 3 source countries (Mexico, Guatemala, and Jamaica) represent around 75% of all incoming workers in this program.
Canada has a significant investment presence in the region, and its commercial relationship will play a key role in the respective pandemic recoveries across the hemisphere. Key partners in the region support reform of the World Trade Organization, expansion of the Global Trade and Gender Arrangement, climate change mitigation and adaptation, frameworks for the digital economy, and seek to ensure that the benefits of trade are inclusive and distributed equitably.
Middle East and North Africa
- The complex geo-strategic environment of the Middle East and North Africa and its political, military and socio-economic exigencies is important for the prosperity and security of Canada and its allies.
- Canada has sought to build and maintain constructive bilateral relationships to support peace, democracy and respect for human rights and humanitarian laws, and gender equality. Canada’s role must be carefully calibrated in response to conflicts with wider international impact.
Ten 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. Hope of real democratic change has waned as many countries face weak governance and corruption, limited socio-economic prospects, security threats and social unrest, all exacerbated by COVID-19.
On a geostrategic level, Saudi Arabia and Iran compete for dominance through alliances and proxy groups, reflecting historic rivalries between Sunni and Shia Muslims. Both countries have provided support to competing factions in Yemen (where Saudi Arabia and the United Arab Emirates have supported the Yemeni government against Houthi rebel forces backed by Iran), and retain ties to groups in Lebanon and Iraq. Israel continues to view Iran as its primary threat [REDACTED]. At the same time, longstanding conflicts have had devastating consequences for Syria, Yemen and Libya, with serious implications for the wider region. Humanitarian crises in all 3 countries have resulted in millions of vulnerable people being displaced and fleeing as refugees and migrants in neighboring countries, Europe and beyond.
The United States has strong ties with Israel and Saudi Arabia and works closely with both to limit Iranian influence. For its part, Russia is heavily involved in the Syrian conflict as one of the Assad regime’s primary allies, alongside Iran. Turkey has sought to reassert its influence in the MENA region, including through heavy engagement in Syria and Libya.
The Israeli-Palestinian conflict remains a major source of tension and insecurity for the region. Interestingly [REDACTED] and other factors did result in normalization of relations with Israel by some Gulf countries and Morocco in 2020.
The U.S.-led Global Coalition against Daesh, of which Canada is a member, was critical to achieving the territorial defeat of Daesh in Syria and Iraq. In July 2021, President Biden announced that U.S. combat operations in Iraq will cease by year’s end.
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. In Tunisia, similar frustrations exist, and President Saied’s July 25 decision to suspend Parliament and take on executive powers has generated serious concerns about the fragility of Tunisian democracy. Tunisia will host the Francophonie Summit in Djerba in November 2021.
In Libya, despite recent political progress with the creation of an interim Government of National Unity (GNU) in February 2021, the political and security situation remains volatile and national elections, currently scheduled for December 2021, remain uncertain.
Uneven economic growth
The region plays a pivotal role in the global economy, with the Gulf States home to one‑third of global oil and gas reserves. Geostrategic importance and natural resource wealth have prompted global powers to align themselves with regional players. Deep structural reforms are viewed by the World Bank as necessary to boost economic growth in the region. The reforms associated with a transition towards cleaner energy challenge the fossil fuel-driven economies of many of the MENA countries, whose capacities and readiness to pursue economic alternatives vary significantly.
The COVID-19 pandemic has adversely impacted economic growth and exacerbated development challenges for countries in the MENA region. Governments generally reacted rapidly to contain the virus during the early stages of the pandemic by closing their borders and imposing containment measures. However, many of them did not have the institutional resilience, resources and/or infrastructure to absorb the pandemic’s impacts, further increasing pressure on the health and economic sectors. The World Bank estimates that the combined regional and global effects of the pandemic threaten to push 192 million people in the MENA region into extreme poverty. GDP losses are expected to amount to US$227 billion by the end of 2021, and borrowing by MENA governments to finance emergency expenditure on essential health and social protection measures has created debt vulnerabilities.
The Arab Gulf monarchies were acutely and disproportionately affected by the negative economic impacts of the COVID-19 pandemic, as they faced the additional shock of declining oil prices and associated state revenues, which also took hold in March 2020. Heavy GDP losses are forecast for oil producers throughout the MENA region, compared to pre-pandemic levels. Disparities in vaccine access and reliance on foreign-developed vaccines have also created opportunities for China and Russia to strengthen their influence and commercial relationships across the region.
Middle East peace process
The peace process remains [REDACTED] on the final status issues – the fate of Palestinian refugees, the borders of the future 2 states, the status of Jerusalem and its religious sites, and security for both Israelis and Palestinians. Additional challenges such as [REDACTED] and the destabilizing influence of Gaza-based terrorist organizations add complexity to an already intractable conflict, and feed periodic eruptions in violence.
The new Israeli coalition government, composed of parties spanning the political spectrum, [REDACTED] The near-term prospects for direct peace negotiations towards a two-state solution [REDACTED].
Consistent with broader international efforts, Canada has sought to position itself as a constructive partner, for example in promoting human rights, accountability and gender equality; contributing to economic development; advancing stabilization and humanitarian efforts; supporting democracy and effective governance; and working to counter terrorism and violent extremism. Canada has led on the annual resolution on the situation of human rights in Iran 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 7 MENA region operations and are an active part of the alliance that defeated Daesh in Iraq. Under Operation IMPACT – one of Canada’s largest international deployments – Canada contributes to building the military capabilities of Iraq, Jordan and Lebanon, provides equipment, personnel and intelligence capabilities to the Global Coalition against Daesh, and contributes to the NATO mission in Iraq. The authorities of Operation IMPACT, including the deployment of up to 850 Canadian Armed Forces personnel, were extended for one year as part of Canada’s renewed Middle East Strategy until March 31, 2022. In addition, Canadian officers contribute to the UN Truce Supervision Organization (UNTSO) and the Multinational Force and Observers (MFO) on Israel’s borders/separation lines with Lebanon/Syria and Egypt respectively. They also support capacity building and professionalization of the Palestinian Authority Security Forces.
In 2020, Canada’s bilateral merchandise trade with the MENA region was $13.2 billion. Bilateral trade in services with the MENA region in 2019 was valued at $5.1 billion. Known foreign direct investment from the region in Canada was nearly $4.6 billion in 2020.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 international students.
Free trade agreements exist both with Israel and Jordan. The Canada-Israel Agreement in Industrial Research and Development is one of only 5 funded Science, Technology and Innovation agreements for Canada; negotiations to modernize the agreement are underway.
In FY2019-20, total Canadian international assistance to the MENA region amounted to $716 million, or 11% of total assistance. Programming focused on humanitarian relief, inclusive governance, economic growth and women’s economic empowerment. Major MENA recipients include Iraq, Lebanon, Syria, Jordan, Yemen and the Palestinians, including Canada’s ongoing support to Palestinian refugees. Canada is one of the top donors in providing humanitarian relief to the Yemeni and Syrian people. It has also provided timely assistance in response to COVID-19. In 2020-21, an additional $31 million was channeled to support countries in the region to meet urgent pandemic induced health and nutrition challenges.
Through the Middle East Strategy, Canada has committed over $4 billion over 6 years (2016-2022) to respond to the crises in Iraq and Syria, and their impact on the region, in particular on Jordan and Lebanon. This support helps set the conditions for security and stability; alleviates human suffering; enables civilian-led stabilization programs; and supports governance and longer-term efforts to build resilience.
- Sub-Saharan Africa is a region of vast economic potential – including trade and investment markets – and growing geopolitical importance, even as it grapples with challenges related to persistent poverty, conflict, insecurity, gender inequality and climate change.
- COVID-19 and lack of access to vaccines is having a devastating impact.
- Ethiopia, the Sahel, Mozambique and Somalia will require sustained diplomatic attention.
Sub-Saharan Africa is a diverse region of 48 countries that range from high-income countries to least developed and fragile states. It is home to one billion people, half of whom will be under the age of 25 by 2050, making this the region with the world’s youngest population and its fastest growing workforce (median age of 20, vs. 41 in Canada). It has a dynamic, entrepreneurial, and increasingly globally-connected population. It is also home to volatile, prolonged and destabilizing conflicts in Ethiopia, the Sahel region, Mozambique and Somalia, further complicated in some instances by links with global terrorist networks. Nevertheless, China, the United States, the European Union, Russia and the Gulf States are all competing for diplomatic, trade and security influence in Sub-Saharan Africa, albeit for diverse reasons.
Through the African Union, African countries are increasingly coordinated on global issues and have begun to exercise their collective influence at the United Nations (54 member states), La Francophonie (26), the World Trade Organization (39) and the Commonwealth (19). African leaders and the African Union are placing greater priority on partnership, trade and investment. To maintain and expand its influence in the region, Canada will need to engage more comprehensively and deliberately to be seen as a partner of choice by Africa’s leadership.
Economic progress challenged by COVID‑19
Prior to the pandemic, Africa was on an upswing. The region had 6 of the world’s 10 fastest growing economies; rates of extreme poverty were declining (from 60% in the late 1990s to 40% in 2015) and life expectancy was increasing (up by 10 years since 2000).
Due to the pandemic, however, Sub-Saharan Africa entered its first economic recession in 25 years, with economic activity contracting by 2% in 2020. Economic recovery is also expected to be muted, with slow rebounds in the region’s 3 largest economies over the next year: Nigeria (1.4%), South Africa (3.0%) and Angola (0.9%). In many countries, per capita income is not projected to return to pre‑crisis levels until at least 2025.
African public debt levels have increased significantly. Debt service payments are uniquely burdensome in Sub-Saharan Africa because they eat into already scarce fiscal space for social support programs.
An additional 20 million new private sector jobs are needed annually to 2035 to keep up with population growth. Some 70% of current jobs are in the informal economy, which was hit hard by COVID-19, with negative impacts disproportionately felt by women. In an effort to open up African markets and provide a more rules-based environment for business, 54 of the 55 Africa Union member states (Eritrea is the exception) joined in creating the African Continental Free Trade Agreement, which came into force in 2021.
Development progress reversed by COVID‑19:
Despite significant gains in recent decades, poverty remains a persistent problem in Sub-Saharan Africa. Increased conflicts, disruptions to food imports and the effects of climate change have resulted in 98 million people facing serious food crises (63% of the global total). The economic impacts of COVID-19 have pushed approximately 40 million more people into extreme poverty, adding to the 40% of the population already living below $1.90/day.
Addressing the impacts of the pandemic will remain a challenge for years to come. Health and education systems have been severely stressed. The continent has the lowest COVID-19 vaccination rates in the world (as of September 2021, less than 6% of the population has received one dose and less than 3% has received 2 doses). Canada has donated vaccines to African countries through COVAX (Kenya, Nigeria and Niger received doses in early September, with additional vaccine roll out anticipated), but it has not done so bilaterally; the United States, the United Kingdom, France, Denmark, Greece, Portugal, China, Russia, India and the United Arab Emirates have all made direct bilateral donations to the continent.
Canada’s engagement with Sub-Saharan Africa
Canada maintains a significant footprint in Sub-Saharan Africa with 21 bilateral missions and offices. The Trade Commissioner Service supports 48 markets across the region. Modest Canadian police and military deployments are present in United Nations peacekeeping operations in Mali, the Democratic Republic of Congo and South Sudan.
Despite having 8 foreign investment protection and promotion agreements in Sub‑Saharan Africa and recent growth in bilateral trade, Canadian trade with the region remains relatively small (in 2020, $7.7 billion in two-way merchandise trade). Canadian mining companies have large investments, with assets totaling $35.4 billion as of 2019.
Canada is also the fourth largest non-regional shareholder of the African Development Bank and a contributor to the African Development Fund, which provides concessional financing to the lowest income countries. Sub-Saharan Africa remains the region receiving the largest amount of Canadian bilateral international assistance at $1.5 billion annually. Canada is working to meet its goal of allocating at least 50% of its bilateral international development assistance toward Sub-Saharan Africa by 2021-22. The majority of this support is focused on human dignity (health, education) gender equality and humanitarian assistance. Sub-Saharan Africa is a significant beneficiary of the more than $2.5 billion in international assistance provided by Canada in response to COVID‑19.
Canada is continuing its engagement in the following areas:
- Political engagement: [REDACTED] and is preparing to hold regular high-level consultations; both of these initiatives have been delayed by the pandemic and current events in Ethiopia.
- Climate finance: Despite contributing the least to global warming, Sub-Saharan Africa is the region most vulnerable to the impacts of climate change. Canada’s new $5.3 billion climate finance program will include support for climate change adaptation in Africa.
- Trade/Development nexus: In support of joint trade and development objectives, Canada is focusing onclean economic growth, agriculture and the blue economy, and engaging with Canadian businesses to help implement the United Nations 2030 Agenda for Sustainable Development. Canada is also supporting the implementation of the Africa Continental Free Trade Agreement.
E. Top issues
COVID-19 response and recovery
- Canada has been effective at helping shape global efforts to respond to COVID-19. This has included facilitating global vaccine efforts to meet urgent humanitarian and development demands and creating ad hoc forums for joint action related to trade and financing a sustainable and inclusive economic recovery. Canada use its influence to frame future pandemic preparedness actions.
Canada has taken strategic actions across a range of fields to address the international implications of COVID-19. Efforts have been framed by 3 strategic pillars for action where Canada can make an immediate direct impact: (1) fighting the pandemic, (2) managing financial stresses and stabilizing economies, and (3) supporting the most vulnerable and reinforcing recovery.
To fight the pandemic, Canada is strengthening capacities at home and abroad in a manner that also reinforces delivery of the health-related Sustainable Development Goals. This involves strengthening health systems and key institutions, and providing equitable access to COVID-19 tests, treatments and vaccines, notably through the Access to COVID Tools (ACT) Accelerator, and all of its pillars, including the COVAX Facility. To date, Canada has committed more than $2.6 billion in international assistance in response to the pandemic, including $1.3 billion for the ACT Accelerator and $740 million in humanitarian and development assistance to respond to the immediate needs created by COVID-19. It has also reinforced the delivery of pandemic and health-related international assistance, with a focus on the poorest and most vulnerable populations. In May 2021, Canada co-hosted a pledging conference on vaccines and therapeutics for vulnerable countries alongside the EU and Japan, which raised US$8 billion.
To manage financial stresses and stabilize economies, Canada has worked to enable financial liquidity and stability through the G20 Debt Service Suspension Initiative to provide debt relief to the poorest countries, and within the Organisation for Economic Co-operation and Development (OECD) to identify sound economic practices. Canada increased its loan commitment to the International Monetary Fund’s Poverty Reduction and Growth Trust from $2 billion to $3 billion to help meet unprecedented demand from low-income countries and supports the IMF’s allocation of US$650 billion in special drawing rights to increase fiscal space for vulnerable countries. Through the Ottawa Group and bilaterally, Canada has worked to foster sustainable supply chains by advocating for unrestricted export of critical health products and services, including personal protective equipment and essential workers. Finally, Canada launched the Financing for Development in the Era of COVID-19 and Beyond Initiative in April 2021 with Jamaica and the UN Secretary General to foster global engagement and develop financing solutions to address the socio-economic impacts of the pandemic. Three leader-level meetings and a meeting of finance ministers have been held to date as part of this initiative.
To support the most vulnerable and reinforce recovery, Canada has focused its efforts on a humanitarian response and addressing longer-term socio-economic impacts of the pandemic in developing countries. Canada’s support has focused in particular on agriculture, food security, nutrition, access to education, promoting economic recovery and growth, and humanitarian action. Efforts to advance gender equality and promote diversity and inclusion are at the centre of all of Canada’s international assistance efforts.
Supporting Canadians abroad
Global Affairs Canada’s consular response to the COVID-19 pandemic represented the largest and most complex peacetime repatriation of stranded Canadians in history and critical on-the-ground support to those unable to depart. Between March and July 2020, Global Affairs Canada facilitated the safe return of nearly 63,000 Canadians, aboard nearly 700 flights from 109 countries and handled more than 350,000 calls and emails. The department also demonstrated ingenuity in creating new tools, such as the COVID-19 Emergency Loan Program, whereby 4811 loans totalling $20 million were disbursed to Canadians in distress.
Diplomatic response to COVID-19
Canada has demonstrated leadership in carving out spaces for dialogue and enabling international cooperation and action. It worked to enable the effective functioning of all multilateral institutions to which it is a member, and also led in the formation of multiple ad hoc plurilateral groupings to respond to the pandemic. Early in the crisis, Canada established a Ministerial Coordination Group on COVID-19, which met virtually 12 times between March and December 2020. This forum became a key channel for exchange on multilateral responses to trade and emergency measures; maintaining air, land and marine transportation links and supply chains; and coordinating support for international institutions. Canada and the United Kingdom also established a Development Ministers’ Contact Group on COVID-19. This group provides likeminded development donors with a forum to identify solutions to the development implications of the pandemic and to enable greater coherence and strategic impact in their assistance responses.
On international trade, Canada has worked closely with likeminded countries at the World Trade Organization (WTO), G20 and Asia-Pacific Economic Cooperation (APEC) to urge countries to keep global supply chains open and to report their trade measures immediately in compliance with WTO obligations so that policy decisions are based on current and reliable data. Canada also leads the Ottawa Group on WTO reform, a small representative group of WTO members which promotes concrete actions in support of current trade rules and seeks to address challenges that are putting the multilateral trading system under stress. Support has been provided to Canadian businesses both domestically and internationally with the introduction of programs such as Export Development Canada’s Business Credit Availability Program Guarantee. In addition, Canada has committed over $9 billion to procure vaccines and therapeutics and to provide international support. Most of this amount has been allocated for the up to 409 million doses of vaccines and vaccine candidates secured. Canada has also dedicated approximately $7.7 billion to buy personal protective equipment, medical equipment and supplies for federal departments and agencies, the majority of which are dedicated to equipping frontline workers through provincial and territorial health care agencies.
Global efforts will remain two-pronged during 2021: concerted action to limit the spread of the pandemic as new, more virulent strains emerge, while also focusing on addressing the long-term impacts, as the pandemic has reversed decades of progress on poverty reduction, healthcare, education, gender equality and economic development globally. The key factor in limiting the spread of the pandemic will be the rapid equitable distribution of vaccines to populations around the world, which has been a key focus of G7 efforts to date and will be at the centre of G20 discussions as well, with the summit taking place in late October. Multiple reviews related to the COVID-19 response, including the Independent Panel on Pandemic Preparedness and Response, have highlighted the need to transform the global health security architecture to reduce the impacts of future pandemics. As various bodies take up these recommendations, there will be increasing pressure on Canada to identify its contribution moving forward.
International trade and investment during COVID-19
- Despite the pandemic, both trade and global supply chains held up relatively well in 2020. The latter is however experiencing various bottlenecks, and increasingly threatened with cyber-based disruptions.
- The trade outlook for 2021 is positive but uncertain, and largely dependent on subsiding pandemic restrictions and vaccination efforts. Fiscal stimulus packages, particularly in developed countries, are expected to strongly support global trade recovery throughout 2021.
- The shift to a digital economy continues apace, with important implications for global e-commerce and growing concerns about regulatory divergence and cyber threats to data, systems and financial resources.
The global economy experienced one of the worst downturns since the Great Depression, surpassing lows experienced after the 2008 Global Financial Crisis. Economic growth has since resumed around the world; however, it took more than a year for global GDP to reach pre‑pandemic levels and there is an uneven path ahead across countries and sectors, and for historically underrepresented groups. In contrast, world merchandise trade was able to rebound much more quickly and reached pre-pandemic levels during the second half of 2020. This positive trend has continued into 2021, although impacts and recovery vary and future growth may be constrained as the pandemic persists around the globe.
Industrial production has largely returned to pre-pandemic levels, with durable products such as cars and electrical appliances accounting for a large proportion of global manufacturing recovery. Services, such as travel, arts, entertainment, tourism and brick-and-mortar retail still operate below their capacity, and remain hard hit by ongoing restrictions on movement.
Supply and demand dynamics across major trading blocs and value chains have experienced turbulence and shocks as choke points have disrupted the production and shipment of goods. In the initial months of the pandemic, there was also an amplification of a pre-existing trend toward protectionist measures, as countries introduced trade restrictions and export bans, notably on medical products. However, many trade restrictive measures have since been rolled back, and overall, the multilateral trading system has been resilient. According to the World Trade Organization (WTO), 57% of the 114 export restrictive measures put in place since the beginning of the pandemic have been repealed as of May 2021.
International trade is primed for a strong but uneven recovery in 2021. While trade fell 15% in the initial months of the pandemic, the subsequent recovery in the second half of year brought overall 2020 growth in the volume of merchandise trade to -5.3%. The WTO expects that these volumes will increase another 8.0% in 2021 and 4.0% in 2022. However, the 2021 outlook remains marred by regional disparities, continued weakness in services trade and lagging vaccine timetables as new waves of infection undermine and postpone recoveries.
Beyond the recovery, increasing geopolitical competition between the United States, China and other trading partners, especially pronounced in advanced technology spheres, will continue to influence the global trade and investment landscape, including the evolution of critical supply chains for strategic commodities and products.
Impact on businesses
The economic impact of the pandemic has generally had a disproportionate effect on micro, small and medium-sized enterprises (MSMEs), owing in part to their overrepresentation in sectors affected by distancing measures, but also because of more limited financial resources and borrowing capacity.
MSMEs face a variety of challenges during the recovery. Given their importance as engines of growth and primary employers, including of women and youth, better access to regulatory and market information, affordable trade finance, and streamlined customs procedures and requirements will be crucial to helping MSMEs and other under-represented groups in trade navigate through recovery. These needs are magnified in developing countries that will need international support.
Impact on trading partners
Important regional differences are being observed, coinciding with the timing of outbreaks, lockdowns, vaccination rates and associated re-openings. Many developing and emerging economies’ exports are still struggling to regain lost ground in 2021.
The United States: Despite being hard-hit by COVID-19, the U.S. economy experienced a shallower decline than many others thanks in large part to strong fiscal supports. However, trade suffered significantly, with the volume of exports of goods and services dropping 13% in 2020 and imports, by 9.3%. In 2021, the International Monetary Fund (IMF) expects import volumes to make a more rapid recovery (18.9%) compared to exports (10.5%) to support domestic production. Continued strength in the U.S. economy and U.S. government fiscal supports will continue to support demand for Canadian goods and services.
Europe: The Euro area’s economy suffered greatly from the effects of COVID-19, with GDP contracting 6.6% in 2020. Trade volumes also declined substantially, almost 10% lower than last year. The Euro area, which generally runs persistent trade surpluses, recorded a smaller surplus in early 2021, reflecting modest European export and import growth, and fewer goods exported globally. The IMF predicts that the volume of imports of goods of services will rise 5.7% this year with stronger gains of 7.1% in 2022. Exports are expected to rebound more rapidly in 2021, with volumes growing 7.9% and an additional 6.5% in 2022.
China: While the Chinese economy did manage to grow 2.3% in 2020, this slower pace stood in contrast to stronger growth in recent years.Similarly,China’s trade picture shifted abruptly in 2020.The volume of imports of goods and services dropped 1.5% in 2020, while exports grew by a weaker than usual 2.0%. However, China’s economy and merchandise trade levels have more than rebounded since the onset of the pandemic. China’s Q1 2021 goods exports (+20%) and imports (+22%) increased over Q1 2020 averages, with growth set to continue over 2021.
Many emerging markets and developing economies have faced a perfect storm in the wake of COVID-19, as a result of weakened exports, turbulent commodity prices, unprecedented capital outflows and depreciation of local currencies. East Asian developing economies have driven gains amongst this group, with relatively strong export growth and gains in global market share largely due to the earlier and stronger recovery in China and the benefits of soaring global demand for manufactured goods. Excluding those East Asian economies, exports from other developing economies in Latin America and Africa in particular remain below 2019 levels.
Impact on goods trade
The ongoing trade recovery comprises most sectors – not only pandemic-related (e.g. pharmaceuticals, information and communications technology (ICT), office equipment) – but also increasingly minerals and agri-food. Lockdown consumption trends, and notably U.S. stimulus, has driven elevated demand for many goods as well as the inputs to produce them, fueling global trade.
Lifted by the global rebound and improved growth prospects, commodity prices rose substantially in early 2021, particularly for some food products, and oil and copper, but are expected to stabilize. Energy prices are forecasted to increase more than 33% in 2021 over 2020, while metal prices and agriculture prices are expected to climb 30% and 14% respectively, driven by supply shortfalls and strong demand from China. The rise in agricultural prices may lead to a growing number of countries facing acute levels of food insecurity, worsening pressures on eroding development gains.
Impact on services trade
After falling sharply during the initial phases of the pandemic, world services trade appears to be in an uneven recovery phase in 2021. While tourism, travel and transportation services have experienced substantial declines as a result of closed borders and travel advisories, other sectors such as telecommunication services, insurance and pension services have contributed to economic resilience. Trade in digitally deliverable services, such as computer and business services, continued to expand, particularly in East Asia. Although the WTO’s latest Services Trade Barometer points to a rebound via a short run above trend growth in 2021, most services sectors are not expected to fully recover until the pandemic wanes.
International supply chains by-and-large have continued to hold up rather well into 2021. The sharp rebound in global manufacturing activity caused a strong rise in international orders and resulted in some supply bottlenecks. Some incidents of critical supply chain disruptions, or large restructurings, have been documented, particularly semi-conductors and downstream products including the automobile sector. However, cyber intrusions have gained international attention and heightened attention of the challenges of maintaining secure data and IT networks.
Shipping costs have been another factor disrupting supply chains. During the first 7 months of 2021, global freight prices nearly tripled, due to a drastic shortage of shipping containers on the back of stronger manufacturing activity. Digitalization of supply chains is allowing firms to better balance efficiency and resiliency, and to better monitor their suppliers and pre-empt and manage disruptions. Geopolitical risks, and the continued pandemic-related disruptions, are of continued concern.
Competition and investment
The pandemic’s economic disruptions have created uncertainty for firms and investors, creating an increasingly unstable environment for decision-making. Global foreign direct investment (FDI) flows decreased by 35% in 2020. According to United Nations Conference on Trade and Development (UNCTAD), in 2021 global FDI flows are expected to recover some lost ground with an increase of 10 to 15%.
As for competition, concerns arose around the future of otherwise healthy companies weakened by the crisis through sudden changes in valuation or disrupted operations. These companies could, in some cases, become vulnerable to opportunistic buyers or takeovers, or default to creditors and may ultimately end up foreign-owned. In response, some governments have introduced more restrictive foreign investment screening, especially in sectors deemed strategic.
The pandemic has spurred a rapid shift towards digital transformation. The competitive landscape across all market sectors has evolved rapidly, and businesses are looking to technology to increase their agility and create new digitally enabled business models. A notable trend is the boost for e-commerce trade (e.g. retail sector transition from storefront to on-line platforms). Digitization among firms is increasingly understood as fundamental for keeping operations running. The Canadian digital economy has proven to be incredibly resilient to the crisis and sectors underpinned by a strong digital base have shown to be more insulated from lockdowns and travel restriction-related shocks.
The pandemic has also exposed important challenges. In many countries, as in Canada, significant digital divides exist when already disadvantaged groups are not in a position to equally benefit from an increasingly digital economy, including due to the lack or cost of broadband.
International and multilateral cooperation
Stresses to the multilateral rules-based trading system that emerged before the pandemic were magnified over the course of the pandemic. Important gaps in the rules, reduced ability to resolve disputes due to the U.S. block on WTO Appellate Body appointments and polarized positions amongst states on various issues contributed to uncertainty and unstable dynamics.
Canada has worked closely with likeminded countries at the WTO, G7, G20, Asia-Pacific Economic Cooperation (APEC) and other multilateral forums to urge countries to keep global supply chains open and to notify their trade measures immediately in compliance with WTO obligations.
As the negative impacts of the pandemic have become better understood, certain measures have been slowly removed. Canada continues to play an important role in this phase of the pandemic and economic recovery, including through its leadership of the Ottawa Group on WTO reform.
Rules-based international system
- Growing strain on the system of laws, norms, and institutions that govern international engagement has heightened the need to protect, reform and revitalize them to meet 21st century requirements and expectations.
The current rules-based international system (RBIS) is composed of institutions such as the UN and World Trade Organization (WTO); alliances such as NATO; and norms grounded in international laws such as the Humanitarian Law of Armed Conflict. This constantly evolving system has established parameters for inter-state behaviour that have largely been collectively shaped and where mutual accountability was expected, albeit with some exceptionalism notably by strong geopolitical and economic powers. While by no means consistent, the system has nevertheless contributed to the relative peace and gradually expanding prosperity of the last 75 years. It has proven resilient in the face of inter-state tensions (e.g. Cold War), and has facilitated vast trade growth (from 12% of global GDP in 1960 to over 30% today). It has also provided an expanding framework of global norms and expectations to manage diverse issues such as fishing rights, air transport, extradition, postal services, telecom regulations, peace operations and human rights.
While as many of its components continue to function well, the current system and the principles that underpin it are under increasing stress. While we may still not fully understand the effects the COVID-19 pandemic is having, the crisis has accelerated some previously observed trends:
- Increased geopolitical competition and great power rivalry have encouraged growing unilateralism among some states. This has been accompanied by a decline in support in some quarters for multilateral action. The deterioration of U.S.-China relations in particular has affected the nature and scope of international cooperation, including within the G20, the UN Security Council, the WTO and the World Health Organization (WHO). China has assumed an increasingly assertive posture in multilateral institutions, seeking to shape the RBIS in a manner that aligns with the interests of its ruling regime, requiring vigilance by Canada and close partners.
- Some states increasingly disregard principles and institutions they find inconvenient domestically, notably those related to human rights, rule of law and good governance. This trend deepened during the COVID-19 pandemic as some countries use excessive force and have violated fundamental rights and freedoms, including the suppression of human rights defenders and media.
- Protectionism has grown alongside isolationist domestic politics and illiberal populist movements in all regions, often coupled with a backlash against globalization. The 2020 economic crisis further exacerbated this challenge, and these trends as a whole risk being more prominent as citizens react to further pandemic waves and government actions (or perceived inaction).
- Concerns about the representativeness and performance of some global institutions and multilateral arrangements, from the WHO to the UN Security Council, have led to questions about their legitimacy and relevance. In other bodies, like the international financial institutions, some states feel excluded from decision-making, regarding them as unfair and outdated.
- Financial, organizational and leadership challenges affect the ability of some multilateral entities to effectively fulfil their mandates.
Revitalizing the system
In the short term, actions need to be taken by the vast majority of states that benefit from the current system to enable the continued effective and accountable functioning of international law and key institutions, including the United Nations, its technical agencies, and international financial institutions such as the World Bank and the IMF. In the medium-term, the pandemic opens space to assess how a refurbished system can better serve the interests of all, though there will be significant disagreement over the nature and extent of the changes required.
After 4 years of tensions, the Biden administration has exhibited openness to international cooperation, supportiveness toward multilateral institutions and alliances and actively developed U.S. leadership on several multilateral issues, from climate change to nonproliferation to threats to democracy. Closer alignment on a range of multilateral issues is embedded in the Roadmap for a Renewed United States‑Canada Partnership, though differences remain regarding the WTO, UN funding, NATO burden-sharing and other issues.
This bilateral alignment is reflective of a trend toward closer cooperation on a range of multilateral issues among a subset of partners in Europe, Asia and the hemisphere, in the face of aggressive actions by major non-democratic states.
There is a strategic opportunity over the next few years to expand the community of states that will support and revitalize the RBIS in a manner that protects and advances human rights, rule of law, good governance and sustainable economic growth for all peoples.
For Canada, and for many other states, there is an urgent need to protect the current rules-based international system, and to reform and revitalize it to reflect 21st century dynamics, and serve our citizens’ interests for the near future.
It is of particular interest for Canada that the international system of the future be not merely cooperative or multilateral, but rules‑based. 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.
Bilateral relations, including listening to and working with a diverse range of partners about how the system can advance their interests, are an important element of any strategy. While most states continue to claim support for, and appreciate the benefits of the current RBIS, they may not actively work at promoting, protecting, or reforming it. In this regard, Canada has provided valued leadership in recent years in establishing new arrangements with traditional and new partners on a range of select issues, such as the Ottawa Group on WTO Reform, the Media Freedom Coalition, and the Global Partnership on Artificial Intelligence. Canada was also an early proponent of the Alliance for Multilateralism.
Canada is well-positioned to contribute substantively on a range of institutional, thematic, technical, and issue-based initiatives that can strengthen and expand the rules-based system, including in new areas and where gaps exist, such as for cyber governance, evolving dynamics in the Arctic and on human rights.
- International trade and investment is essential for the well-being of Canadians and Canada’s economic growth.
- The global economy and trade environment are undergoing important shifts that could have significant implications for Canada’s trade and economic performance.
Trade (exports plus imports) is equivalent to 63% of Canadian GDP and supports the high standard of living enjoyed by Canadians. One in 6 jobs in Canada are supported by exports, and companies that export are more productive, more innovative, invest more in research and development, and pay higher wages than do purely domestic companies.
During the pandemic, Canada’s goods trade held up well, with a rapid recovery following a sharp initial contraction. By the end of the year, trade in goods was back to pre‑pandemic levels. Trade in services, and specifically those that rely on the movement of people such as travel and transportation, were hard hit during the pandemic and have been much slower to start recovering.
As the global economy continues to recover from the pandemic period, a number of important shifts are taking place that will pose important challenges for Canada’s international trade performance in coming years. These include the rise of China, pressures on the multilateral trading system, technological change, and climate change.
China has become one of Canada’s most important commercial partners, ranking second (well behind the United States) in terms of bilateral merchandise trade and is the sixth largest investor in Canada. Even so, China remains a directed economy which has at times brought those commercial relations into question, whether that be through perceived unfair trade practices, links to Chinese human rights practices or strategic competition. At the same time, China will continue to grow more technologically advanced and increasingly compete with Canadian exports in third markets.
Global trading system
The inability for the global trade system to adequately address contemporary trade issues and perceived unfair trade practices by some has put pressure on that system. Since 2016, the United States has blocked new appointments to the Appellate Body to fill vacancies, which means that the World Trade Organization’s (WTO) dispute settlement system is unable to hear appeals, rendering panel decisions unenforceable. In addition, the stalemate in multilateral negotiations has resulted in WTO rules not keeping pace with global economic developments, such as digital trade, the role of non-market economies and shifts in agricultural production. As a mid-sized economy heavily dependent on trade, the rules-based global trading system is directly linked to Canadian economic growth and the well-being of Canadians. A lack of functioning of the global rules-based trade system is an important risk to Canada’s trade performance.
Policies necessary to avoid a climate disaster and to achieve international commitments, both on the part of Canada and by international partners, will necessitate significant transformation of the Canadian economy and trade. Canada’s top 2 export sectors, oil and autos, which together account for more than one quarter of Canadian merchandise exports by value, will be among those directly impacted. Employment in these sectors is highly concentrated geographically in Canada, raising important implications for structural adjustment and political economy. Even outside of the most CO2 intensive sectors, Canadian companies are only beginning to plan for the changes that will need to take place.
By product, Canadian exports are well diversified. Canada is often thought of as a resources-based economy, and with large scale agriculture and mining, natural resources do account for a large portion of Canadian exports. However, Canada does export a large number of intermediate goods that feed into others’ value chains. Canada is also one of the top global producers of autos, one of the few economies with a large aerospace sector, while services including finance and education account for a large and growing share of exports.
Chart: Canada’s Share of Global Trade
|Years||Merchandise Exports||Commercial Service Exports|
While Canada has gained a reputation for its tech sector and innovations, Canada has relatively low rate of commercialization and intellectual property (IP) generation, and as a result product such as micro-chip manufacturing, software and data services account for a relatively small share of the value of Canadian exports. Furthermore, some existing large sectors, such as autos, will likely undergo a transition in coming years due to a combination of climate- and technological-change pressures.
Geographically, Canadian trade is among the least diversified in the world, with the vast majority (75% of merchandise exports and 50% of merchandise imports) being with the United States. This is an advantage for Canada to have a large, stable and familiar market right next door. This is why most small and medium-sized enterprises (SMEs) start exporting in the United States. It will also be a benefit to Canada as forecasts are for a strong recovery of the U.S. economy, but looking forward the majority of economic growth will likely come from other markets, especially those in Asia.
SMEs account for a relatively small portion of Canadian trade. Although there are more than 85,000 Canadian companies that export, and the vast majority of those are SMEs, large companies (those with more than 500 employees) account for 57% of export value. Similarly, looking at the gender composition of exporters, while the propensity of women‑owned SMEs to export has risen sharply in recent years and has nearly closed the exporting gap with that of men-owned business, still only 15% of SMEs overall are majority women-owned.
Competitiveness and foreign direct investment
Canada’s share of global exports has continued to fall modestly over the last decade after a sharp decline in in the first decade of the millennium. This must be taken in light of the rise of new competitors, most notably China, and a shift to services with lower gross values but higher margins. Outward foreign direct investment (FDI), on the other hand, has risen sharply in recent years which could be a sign that Canadian companies are using FDI as a tool for internationalization. The volatility of inward FDI makes it difficult to identify a clear trend.
Chart: Canada’s Share of Global FDI
|Year||Outward FDI||Inward FDI|
Maintaining Canada’s international competitiveness while shifting to more intellectual property-based and green goods and services exports will be the primary challenge facing Canada’s export performance in coming years. The Government of Canada has also been committed to promoting firms’ responsible business practices, understanding that responsible corporate behaviour by Canadian companies active abroad not only enhances their chances for business success but can also contribute to broad-based economic benefits for the countries in which they are active, as well as being a differentiator encouraging investment in Canada.
Trade policy and negotiations key priorities
- Canada faces a challenging global environment for trade and investment, characterized by economic uncertainty, increased protectionism, trade tensions and diminishing trust in international institutions and the current rules-based trading system.
- The COVID-19 pandemic introduced additional constraints, notably export restrictions and supply chain resiliency.
- Trade policy is necessary to advance Canada’s economic interests and support growth at home and abroad.
Canada depends on access to foreign markets for its goods, services and investments. Canada’s trade policy underpins how it manages key trade relationships while diversifying opportunities. Confronted by a turbulent global economy during the pandemic, Canada has pushed to maintain market access, open and diversify supply chains, and strengthen a transparent and predictable rules-based system.
Global Affairs Canada’s Trade Policy and Negotiations Branch leads on the development and implementation of Canadian trade policy, including negotiating and implementing all international trade, investment and air transportation agreements; resolving bilateral market access irritants; managing litigation and dispute settlement; and administering trade controls under the Export and Import Permits Act. The branch collaborates with a wide range of partners including other federal departments and provincial/territorial governments, and maintains active dialogues with industry, civil society and Indigenous groups.
Trade policy priorities
1. Strengthening Canada-U.S. relations
In 2020, bilateral trade in goods and services with the United States represented 65% of Canada’s overall trade. Stability and predictability in this commercial relationship is a priority, including by implementing the Canada-U.S.-Mexico Agreement (CUSMA) and reducing new or enduring tensions. Priorities also include collaboration on regional supply chains, environmental and worker-centric trade policy, [REDACTED] and World Trade Organization (WTO) reform.
2. WTO and multilateral cooperation
Entrenched positions between developing and developed members have posed challenges for WTO members in concluding multilateral trade negotiations, which has meant that the WTO has not kept pace in adapting trade rules to 21st century issues. Coupled by an overloaded and now stalled dispute settlement system, these dynamics point to the need for WTO reform. The WTO nonetheless remains the core of the rules based trading system and principal vehicle to advance Canada’s trade policy interests.
Canada is leading international efforts to reform the WTO, and chairs the Ottawa Group, composed of 14 likeminded WTO members seeking to strengthen the organization across 3 key pillars: transparency and monitoring, negotiation and rule-making, and dispute settlement. Canada has also been leading work to ensure the WTO supports global economic recovery in the wake of COVID-19, and spearheading a new trade and health initiative.
Canada is actively engaged on trade policy in other multilateral institutions, including the Organisation for Economic Co-operation and Development (OECD), Asia-Pacific Economic Cooperation (APEC), the G7 and the G20. In the OECD, for instance, there are important discussions underway to agree on taxation of digital companies.
3. Trade diversification through free trade agreements and other instruments
Securing access to new international markets and diversifying Canada’s trade and investment relations is a long-standing Canadian trade policy priority, facilitated through the negotiation of free trade agreements (FTAs). Canada has 15 FTAs in force, covering 49 countries and nearly two thirds of global GDP. This includes the recently implemented Canada-U.S.-Mexico Agreement (CUSMA), the Canada-EU Comprehensive Economic and Trade Agreement (CETA)Footnote 2, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)Footnote 3. Despite its wide network of FTAs, Canada has consistently sought additional opportunities to expand market access and improve trade disciplines.
Following the United Kingdom’s withdrawal from the EU, Canada and the United Kingdom concluded a Trade Continuity Agreement that came into force in April 2021. This agreement preserves the main elements of CETA and commits both countries to negotiating a new FTA tailored to the bilateral relationship.
Expansion of CPTPP membership provides an opportunity to secure preferential access to new markets or improve access to markets with existing bilateral FTAs. It also supports the establishment of high-standard trade rules across the Asia-Pacific region and beyond. On July 1, 2021, Canada and the other CPTPP parties agreed to initiate the accession process with the United Kingdom. Since then, China (September 16) and Taiwan (September 22) have submitted their accession requests. Other economies that have expressed interest in CPTPP accession include Korea, the Philippines and Thailand.
Canada is engaged in ongoing FTA negotiations with MercosurFootnote 4 and recently launched negotiations toward a Comprehensive Economic Partnership Agreement with Indonesia. In addition, Canada is exploring an FTA with the Association of Southeast Asian Nations (ASEAN), and the possible resumption of negotiations with India. Canada is also considering potential modernization of existing FTAs with Ukraine, and with Norway and Iceland (as members of the European Free Trade Association (EFTA)). [REDACTED].
Canada has 38 foreign investment promotion and protection agreements (FIPAs) in force. Canada recently reviewed its FIPA model and is in a position to re-engage in negotiations with key partners based on the modernized text. Canada also has air transport relationships with 125 countries, including 24 open skies-type air transport agreements which allow carriers to operate direct and indirect services between Canada and another country.
Canada is engaged in exploratory discussions with Chile, New Zealand and Singapore on potentially acceding to the Digital Economy Partnership Agreement (DEPA), a novel trade policy instrument that aims to support digitally‑enabled commerce.
Canada, along with Chile and New Zealand, is part of the Global Trade and Gender Arrangement that seeks to promote mutually supportive trade and gender policies and unlock new opportunities to increase women’s participation in trade as part of broader efforts to improve gender equality and women’s economic empowerment.
4. Other trade priorities
- Continue to use negotiations, litigation and advocacy to protect Canada’s trade and investment interests, including through dispute settlement at the WTO and under CUSMA, such as for measures on Canadian canola seed and softwood lumber exports, and the expansion of Buy America requirements.
- Control the flow of import and export of controlled goods and technology to support domestic priorities, such as supply management, or to ensure consistency and alignment with Canada’s defence and foreign policy objectives, and trade commitments.
- Encourage and facilitate the participation of groups traditionally under-represented in international trade so that the gains from trade are more widely shared and appreciated.
- Play a leadership role on trade and climate change at the WTO and seek to include enforceable environment provisions in FTA negotiations.
- Undertake consultations with a broad range of stakeholders and uphold enhanced transparency for FTA negotiations.
- Provide trade policy-related support and capacity-building for developing countries to foster sustainable economic growth.
Promoting the benefits of trade
- While international trade contributes to Canada’s overall economic prosperity, some parts of the Canadian economy have historically been less able to reap the benefits, including the advantages provided by free trade agreements (FTAs). Canada’s trade policy has evolved in recent years to better address these gaps, particularly by negotiating dedicated provisions in trade agreements on gender, small and medium-sized enterprises (SMEs), and Indigenous peoples. The Trade Commissioner Service is also more deliberately addressing barriers faced by under-represented exporters.
The development of free trade and investment rules and agreements has led to public debate about the benefits of FTAs and globalization over the years. Some stakeholders have expressed concerns over a perceived lack of transparency in the negotiating process; perceived special rights and privileges accorded disproportionately to large corporations; negative and divergent effects on certain segments of the population; and perceived threats to the environment, health, safety and consumer standards, as well as governments’ right to regulate. Canada has taken steps to address these concerns to correct misperceptions that can affect support for trade and to better distribute the gains from trade across the economy.
In its FTAs, Canada pursues dedicated chapters and other provisions on gender, Indigenous peoples, and SMEs. Such provisions are focused on cooperation and information sharing, designed to improve the capacity and conditions for under-represented groups to better access and benefit from the opportunities created by FTAs and to remove barriers to participation.
In addition, Canada’s positions are informed before and during negotiations through the collection and analysis of gender disaggregated data, gender based analysis plus (GBA+) and thorough consultations with stakeholders, such as businesses, labour unions, and non-governmental organizations. They are also informed by ongoing dialogue with the provinces and territories, as well as Indigenous groups. A variety of consultation mechanisms are used, including Canada Gazette notices inviting written submissions, round tables and advisory groups. For example, in 2017, the department created an Indigenous Working Group and in 2020, established a Gender and Trade Advisory Group.
The government also strives to maintain a high level of transparency throughout the development of its trade policies and during trade negotiations. This includes publishing a summary on the department’s website of the key themes resulting from its consultations. Under the amended Policy on Tabling of Treaties in Parliament, the government has committed to tabling a notice of intent no fewer than 90 days before initiating FTA negotiations and tabling Canada’s negotiating objectives at least 30 days before a first round of negotiations.
Canada also participates actively in international economic forums, such as Asia‑Pacific Economic Cooperation (APEC), the G20, the Organisation for Economic Co‑operation and Development (OECD), and the World Trade Organization (WTO) to advance women’s economic empowerment, encourage more SMEs to participate in international trade, and to support economic cooperation and trade for Indigenous peoples.
There are groups in the Canadian and global economy that face additional barriers in expanding to foreign markets and reaping
economic benefits from trade. The Trade Commissioner Service (TCS) has improved and expanded its programs in order to address barriers faced by Canadian companies owned by women, Indigenous peoples, people of colour and members of the LGBTQ2+ community.
These services include targeted access to strategic intelligence, international networks and mentorship. The TCS also organizes business delegations and trade missions for under-represented exporters in order to expand their businesses into markets abroad. In addition, the TCS’ CanExport program (which provides over $33 million a year to help Canadian SMEs, innovators, associations and communities diversify exports and attract investment) has introduced a “concierge service” for under‑represented applicants to help them apply for funding, with the aim of making the program more inclusive.
- As a trading nation, Canada relies on an effective and efficient rules-based trading framework to protect and promote its economic interests, including using trade litigation as a means to enforce international obligations.
Canada regularly uses trade litigation, mostly at the World Trade Organization (WTO) and under the Canada-United States-Mexico Agreement (CUSMA) Chapter 10, to advance Canadian economic and policy interests. Canada’s trading partners also regularly challenge Canadian federal and provincial measures, mainly at the WTO. Canadian investors use investor-state dispute settlement (ISDS) provisions in our free trade agreements (FTAs) and foreign investment promotion and protection agreements (FIPAs) to protect their foreign investments. Canada is not directly involved in such litigation. Foreign investors with investments in Canada may also challenge federal and provincial measures through the same mechanism.
The Minister of 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 Global Affairs Canada’s 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 and Negotiations 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, a joint Global Affairs Canada-Department of Justice Canada (DoJ) unit, except domestic litigation in Canada or another country (e.g., anti-dumping or countervailing duty proceedings), which are undertaken respectively by DoJ or foreign lawyers under Trade Law Bureau supervision.
WTO dispute settlement
Canada is a top user of the WTO dispute settlement (DS) system. A WTO dispute begins with the filing of a request for consultations by a WTO member challenging another member’s measure that is allegedly inconsistent with a WTO agreement. If the consultations do not resolve the dispute, the complaining member can request that a panel of impartial adjudicators decide if the other member’s measures are inconsistent with a WTO agreement. The findings of the panel may be appealed to the standing WTO Appellate Body (AB). If a member’s measures are found by the AB to be WTO-inconsistent, the complaining member may (after taking certain steps) enforce the decision through “retaliation”, by imposing trade measures (normally increased tariffs) on the offending member up to a specified amount.
While WTO dispute settlement worked effectively for its first 27 years, since 2019 the AB has been unable to hear appeals due to the United States blocking the appointment of new AB members to fill vacancies. Because panel decisions can still be appealed, they can be rendered ineffective by the losing party for as long as the AB cannot hear those appeals.
Canada and 24 other WTO members (including the EU, China, Australia and Brazil) have therefore established the Multi-Party Interim Appeal Arbitration Arrangement (MPIA), which operates within the framework of existing WTO rules, to preserve their rights to binding DS with access to appellate review in disputes among them, for so long as the AB is unable to function. Currently, Canada is a complainant in 5 offensive WTO disputes, challenging U.S. (e.g. softwood lumber) and Chinese (e.g. canola) measures, but no defensive WTO disputes. Canada is also a third party in many WTO cases.
Investor-state dispute settlement
ISDS is a mechanism in most of Canada’s FTAs and FIPAs, most notably NAFTA Chapter 11. NAFTA was replaced by CUSMA on July 1, 2020, and CUSMA does not provide for ISDS involving Canada. However, CUSMA does allow for ISDS “legacy claims” to be brought under NAFTA Chapter 11 until June 30, 2023. A foreign investor can bring an ISDS claim if it believes that Canada has violated one of the specific obligations in those treaties, usually alleging discrimination or other seriously unfair treatment that passes a high threshold of bad behaviour.
Investor-state arbitrations are heard by ad hoc tribunals, except under the CETA, which will have a standing tribunal once the investment dispute settlement provisions come into force. There is no appeal mechanism for investor-state arbitrations (except for CETA which is to have a standing appeal mechanism); arbitral awards are final and binding on the parties involved. Canada is currently responding to 9 disputes, 8 under NAFTA Chapter 11 (including 2 legacy claims), and one under the Canada-Egypt FIPA. Notably, a decision in one NAFTA dispute (Lone Pine) is expected in the coming months.
CUSMA Chapter 10/NAFTA Chapter 19
CUSMA Chapter 10 (and NAFTA Chapter 19, under which there are still ongoing cases) has received significant attention, particularly regarding the softwood lumber industry. It allows an affected party to challenge anti‑dumping and countervailing duties imposed by a CUSMA/NAFTA country through a bi-national panel mechanism, rather than through domestic courts. Panels include independent experts who are nationals of both CUSMA/NAFTA countries involved, and who decide the dispute based on the domestic law of the challenged country. Canada is currently involved in 4 cases challenging U.S. import charges on softwood lumber from Canada and 2 cases challenging U.S. anti-dumping and injury determinations on fabricated structural steel. The United States. has recently re‑engaged on panel creation for these cases, which had been delayed under the previous administration. Panel creation is also in progress for a case brought by U.S. industry challenging a Canadian anti-dumping decision on gypsum board from the United States.
State-to-state dispute settlement
Canada’s FTAs also provide for state-to-state settlement of trade disputes. Like 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 provision for appeal of those decisions. Some of those agreements require the Minister of International Trade or other ministers to appoint “rosters” of potential panel members. Canada has 2 ongoing state‑to-state disputes under CUSMA: one offensive dispute challenging the U.S. safeguard measure on solar panel imports from Canada, and one defensive case where the United States is challenging Canada’s administration of its tariff-rate quotas for dairy products. Canada has never brought a state‑to-state challenge under an existing FTA other than NAFTA/CUSMA, but it is possible that it could do so in the future, particularly given the WTO AB impasse.
Trade controls litigation
The Minister of Foreign Affairs is responsible for administering the Export and Import Permits Act (EIPA). Some of the Minister’s responsibilities under the EIPA are normally delegated to the Minister of International Trade, including those relating to permit decisions on non-military goods such as supply-managed goods, 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. Currently, there is a challenge against the decision of the Minister of Foreign Affairs to deny an export permit for logs under the EIPA. There is also a challenge against the Minister’s decision to issue export permits for light armoured vehicles to Saudi Arabia under the EIPA.
Responsible business conduct
- The responsible business conduct landscape is rapidly evolving and increasingly complex, with important implications for Canada and Canadian companies, not least in view of rising stakeholder expectations and calls for action.
- The Canadian government uses both carrots and sticks in its approach to responsible business conduct. It promotes the importance of aligning to international standards and offering voluntary remedy. As well, Canada has laws and regulation in key areas: the Extractive Sector Transparency Measures Act, the Corruption of Foreign Public Officials Act and amendments to the Customs Tariff.
- The department committed to releasing a new Responsible Business Conduct Strategy this calendar year; a completed draft is pending ministerial approval.
Responsible business conduct (RBC) integrates the management of risks to the environment, people and society into a business’ core activities. It makes a company more resilient through awareness of production and supply chain risks (e.g. reputational, operational, financial and legal). RBC is an issue that intersects with many Canadian priorities, such as human rights, environmental sustainability, the Sustainable Development Goals (SDGs) and inclusive trade. Elements of RBC are discussed in many multilateral forums including the International Labour Organization (ILO), the United Nations (UN) and the Organisation for Economic Co-operation and Development (OECD), and Canada is committed to and contributes actively to these discussions.
The Government of Canada has promoted the adoption of multilateral RBC standards and guidelines, including the UN Guiding Principles on Business and Human Rights (Guiding Principles) and the OECD Guidelines on Multinational Enterprises (OECD Guidelines). The Guiding Principles implement the UN’s “Protect, Respect and Remedy” Framework and clarify the duties and responsibilities of states and companies to protect and respect human rights in the context of business activities. The OECD Guidelines address concerns about the social, economic and environmental impacts of business activities, and provide recommendations on voluntary principles and standards for RBC, consistent with domestic and international laws.
Canadian businesses largely enjoy a good reputation globally and some are seen as leaders in RBC. These companies recognize that integrating RBC practices throughout their operations is not only good for broader societal and environmental outcomes, but also improves their ability to manage operational risks, maintain a positive reputation and secure financing.
Canada takes a balanced approach to RBC, which includes: prevention (e.g. providing tools, guidance and advice to Canadian companies through the Trade Commissioner Service); legislation in select critical areas such as corruption, transparency and forced labour; and access to remedy in the form of voluntary non-judicial dispute resolution mechanisms.
Dispute resolution mechanisms
Canada has 2 voluntary non-judicial dispute resolution mechanisms. Canada’s National Contact Point (NCP) for Responsible Business Conduct was established through an Order-in-Council in 2000 as part of the Government’s commitment to the OECD Guidelines. The NCP applies to all sectors, and covers a broad range of issues, including human rights, employment, environment, disclosure and bribery. The NCP can consider cases in Canada or abroad, provided that the company in question meets the definition of a multinational enterprise. The NCP has received 24 cases since 2000. Two cases are under consideration by the NCP and final statements have been published on the NCP website for those remaining. The vast majority of cases related to companies in the extractive sector (71%) and were mainly filed by non-governmental organizations against Canadian companies. Canada also provided support to other OECD members’ national contact points in 10 cases involving Canadian companies (again largely in the extractive sector).
The Canadian Ombudsperson for Responsible Enterprise (CORE) was established in 2019 to further underscore Canada’s commitment to RBC. The CORE operates in a complementary manner to the NCP, focusing exclusively on allegations of human rights abuses arising from the operations of Canadian companies operating abroad in the mining, oil and gas, and garment sectors. Unlike the NCP, the CORE is able to initiate a review, undertake joint or independent fact-finding, and can report at any time in the course of a review.
The voluntary nature of these mechanisms has been the subject of intense scrutiny by some stakeholders, who advocate for a quasi-judicial mechanism with coercive powers and the ability to assess and levy damages. However, non-judicial dispute resolution mechanisms, like the NCP and the CORE, are generally considered to be more accessible, faster and cost‑effective than judicial avenues. Bringing a complaint to one of these bodies does not preclude a party from pursuing a complaint in other forums.
Despite their “voluntary” nature, Canada expects that Canadian companies involved in a dispute-resolution process will participate in good faith. If a company has not acted in good faith during the course of, or follow-up to, the review process, both the NCP and the CORE can recommend that trade measures be applied. Specifically, this means a company would no longer receive enhanced trade advocacy support and/or future Export Development Canada financial support.
The CORE’s mandate was the subject of a recent study by the Parliamentary Subcommittee on International Human Rights of the Standing Committee on Foreign Affairs and International Development. The government has maintained the position that the CORE, which was established in 2019 and became fully operational in 2021, should have sufficient time to achieve its goals and demonstrate how it can be effective before consideration to a change in mandate can occur. The CORE is beginning to scope out possible human rights issues for the first Ombud-initiated review.
RBC strategy renewal
A new draft RBC strategy for Canadian companies active abroad was developed in 2020/21 based on a review of the 2014 strategy and comprehensive stakeholder consultations and is pending ministerial approval. Consistent with changes in both the Canadian and global economies, as well as rising stakeholder expectations, the strategy would apply to all Canadian companies, including small and medium-sized enterprise, operating in any sector. It seeks to strengthen the competitive advantage for Canadian companies active abroad and reinforce the government’s expectation that Canadian companies will incorporate responsible business practices throughout all aspects of their operations, including supply chains.
The draft strategy is accompanied by an action plan that describes the activities that will support the implementation, such as the elaboration of a voluntary standard on due diligence reporting, program changes and a performance measurement framework.
Digital economy and trade
- The paradigm shift towards digitization of societies and economies was well underway prior to the COVID-19 outbreak, but the pandemic accelerated the adoption of technologies at an unprecedented pace. Digital transformations are opening up new opportunities for trade, while foreign direct investment (FDI) in digital industries has the capacity to help economies and boost digital capabilities although the base digital divide between and within countries remains problematic.
- It is a critical time to position Canada as an effective partner on digital issues, align ourselves strategically and promote the country as a cyber nation with a strong and resilient digital economy.
The pandemic accelerated a tech boom with wide-ranging impacts: largely positive for many developed and developing economies able to leverage new innovations to be more competitive and transform the lives of millions; also threatening to leave others behind. The competitive landscape is evolving rapidly across all market sectors as businesses look to technology to increase agility in the face of disruption. The notion that future prosperity will hinge on innovation and first-mover advantage in advanced technologies is driving global competition and geopolitical tensions.
These accelerated digital transitions will shape new habits and possibilities for e‑commerce, remote work, business travel and where companies choose to locate and how they attract their talent. As a result, intangible assets (e.g. intellectual property (IP), data, design and brands, service contracts, software and innovative technologies) will continue to make up a growing share of new investments held by companies around the world. Across all sectors, from manufacturing to natural resources, a rising share of economic growth and prosperity is being driven by intangible assets in contrast with a declining share of such tangible investments as buildings, machinery, equipment and product inventories.
Acceleration of tech innovation is raising the stakes for Canada’s participation in the global digital economy. Canada’s economy is intrinsically tied to the importance of data and economic prospects will increasingly be linked to the protection and commercialization of high-tech innovations. Successful micro, small and medium-sized enterprises that emerged and prospered during the pandemic are at significant risk (e.g. foreign acquisition of Canadian made IP, untapped commercialization and growth potential). Domestically, regional digital divides (lack of broadband in certain regions) and the underrepresentation of women and visible minorities in science, technology, engineering and mathematics (STEM) fields and among digital entrepreneurs remain challenges that need to be overcome in order to support a strong and distinct economic recovery.
Canada’s digital advantage
Home to leading companies in the digital realm, Canada has the potential to reap economic and innovation benefits. Canada is a world leader in some areas of artificial intelligence (AI) tech and quantum computing. Digital adoption and investments in digital infrastructure are also notable, and Canadian companies are successfully integrating into international supply chains. Free trade agreements (FTAs) and foreign investment promotion and protection agreements (FIPAs) are being modernized to reflect these new realities, and new models are being explored, such as the Digital Economy Partnership Agreement (DEPA).
However, several challenges exist for Canada, including slow technology adoption rates, risk-averse corporate culture, difficulties scaling up, access to talent, national security concerns, commercialization of technology, productivity and knowledge transfer and digital infrastructure issues (e.g. urban-rural divide, 5G deployment). In many respects, Canada is seen as lagging its peers, especially in terms of effectively commercializing and scaling to generating maximum value from IP created domestically. In the last 5 years, Canada has introduced measures aimed at addressing these shortcomings. In 2017, an $80 million IP strategy led by the Canadian Intellectual Property Office was launched, and Budget 2021 allocated $90 million to create ElevateIP, a program to help accelerators and incubators provide start-ups with access to expert IP services. Canada needs to keep pace with digital and technological opportunities to support a strong recovery and enable conditions for increased trade and investment.
2020 was a record-setting year for e‑commerce. Several industry analysts project that e-commerce sales will continue to grow in absolute terms and as a share of overall retail sales over the next several years. With the exception of Shopify, Canada’s lagging homegrown e-commerce market has contributed to a strong cross‑border shopping culture in recent years, a trend that has been amplified by the pandemic. As consumers increasingly acclimatize to shopping online, Canadian retailers will find themselves competing with more established foreign companies. Canadian businesses trying to make the transition online will have to be consider different strategies in order to stay viable against international counterparts in this highly competitive environment.
With the rise of e-commerce, there is a growing recognition of the importance of developing rules specific to digital trade through the negotiation of increasingly robust e-commerce/digital trade chapters in FTAs (e.g. Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), CUSMA), as well as negotiations at the World Trade Organization (WTO) on the Joint Statement Initiative on E-Commerce.
Digital trade: Opportunities
Recent FTAs covering digital trade lay the groundwork to keep pace with innovation and digitalization of the global economy. Novel trade policy instruments, such as standalone digital trade agreements (e.g. DEPA) are poised to support digitally enabled commerce, contributing to a broader dialogue on a range of technology issues. Canada has actively participated in the WTO Joint Statement Initiative on E-commerce since 2018, which seeks to establish a baseline set of obligations. However, these efforts will face challenges, as rapidly changing technology continues to transform the trading landscape and as domestic regulatory frameworks continue to evolve to impact services as well as tangible and intangible goods.
Like-minded countries are similarly exploring proposals for digital trade agreements in regions of strategic interest (e.g. Indo-Pacific), seeking not only to expand influence, but also to check rising powers with competing values. Such agreements have the potential to set important standards for the digital economy, including rules on the use of data, trade facilitation and electronic customs arrangements. Aligned standards would facilitate and encourage increased FDI in digital sectors.
Emerging middle-income economies are gaining momentum in their digital evolution, allowing sectors to skip stages of development by moving directly to digital solutions. Canada could gain from diversifying its digital trade promotion efforts in such contexts, concurrently contributing to development and poverty reduction efforts, while opening opportunities to counter digital authoritarianism.
International policy challenges
To keep up with technological change, governments are rethinking regulation, structures, skills and processes. They are attempting to engage and regulate through a variety of overlapping entry points, while industry is calling for the better use of international norms and standards as well as transparent and agile regulations. Of concern, competing standards and approaches around the world are emerging, which could result in a fragmentation in the global governance of digital technologies.
While some cooperation and much trade will continue, both the United States and China are seeking some degree of strategic decoupling, especially in advanced dual-use technologies. Each country’s focus on critical resources and competitive standard setting (including IP rights) puts the world on a path towards less digital and technological interoperability. The EU has signalled its strong digital ambitions, which is translating into massive investments in digital infrastructure and technologies and an unprecedented regulatory agenda. The Brussels Effect (i.e. externalization of the EU’s regulatory model) is notable in the digital arena; the EU’s General Data Protection Regulation (GDPR) is an example of how influential the EU has been in shaping this space, and where Canada has been slow to catch up.
There may be opportunities for Canada to work with likeminded countries to shape international standards, rules and digital norms. A strategic opportunity for Canada‑EU digital regulatory and trade cooperation exists, with room for engagement on a wide range of issues.
In terms of emerging and developing economies, the impact of digitalization remains to be seen as risks of widening inequality and poverty gaps persist, particularly following the pandemic. The global South is particularly vulnerable in this context; as lower and middle income countries have become a battleground for tech competition. Moreover, their ability to achieve sustainable, inclusive and green growth will be hindered if they are not digitally enabled.
Opportunities exist to demonstrate Canada’s policy leadership internationally with a digital economy focus, to maximize space for innovation, promote privacy, security of data and other policies in ways that advance commercial interests and further responsible business conduct. Any international strategy will need to be based on a clear domestic approach. Work is ongoing to refine and update Canada’s domestic policies and regulatory frameworks to govern and guide digital activities. The Privy Council Office, Innovation, Science and Economic Development Canada, Public Safety, Canadian Heritage and Finance Canada are among the key departments leading in this area. This would enable Canada to position itself with likeminded countries that have already signaled their initial objectives in the digital sphere.
Trade and development
- Trade and development are mutually reinforcing. Pursuing an integrated approach to advancing them can support poverty eradication and sustainable growth, enhance gender equality, and bolster support for an open multilateral trading system and the rule of law. It can also strengthen Canada’s bilateral relations and help diversify its trade and investment as part of pandemic economic recovery efforts.
The pandemic has severely impacted the global economy and developing countries, turning back progress on decades of poverty reduction gains. The pandemic has also accelerated some pre-existing trends, and provided an opportunity to address others as we consider how best to support a sustainable economic recovery. The impact of climate change, particularly on least developed countries and small island developing states, protracted political crises, continued rapid urbanization and the growth and diffusion of ground shifting technologies will all affect future economic trajectories.
Developing countries want partnerships to support economic growth and want to fully participate in global trade. In a world of great power rivalry, with a resurgence of nationalism, authoritarianism and protectionism, and the impact of growing inequality and social exclusion, developing countries are being presented with alternative models for development. This may increase risks contrary to Canadian interests, notably related to the future of a rules-based international system, the protection of human rights and the promotion of good governance.
The need to better address the inter‑linkages between trade and development has been a growing feature of international discussions, including at the G7, G20, Organisation for Economic Co-operation and Development (OECD), World Bank and UN. Emphasis has been on positioning international trade as an engine for inclusive economic growth and poverty reduction that can support the 2030 Agenda for Sustainable Development.
The Sustainable Development Goals highlight the intersection between trade and development in various ways, particularly its commitments to: no poverty; gender equality; decent work and economic growth; industry, innovation and infrastructure; reduced inequalities; responsible consumption and production; and partnerships for the goals.
How they intersect
Inclusive trade (which the UN system often defines in terms of all people having equality of opportunity to contribute to and benefit from trade) helps create good jobs in the formal economy, supports the development of quality infrastructure, provides opportunities to advance women’s economic empowerment and gender equality and increases economic resilience. Increasing trade can further expand economic opportunities for developing countries by improving productivity and economic growth, and thereby contributing to poverty reduction. Trade also connects local economies to regional and global value chains, improving access for developing countries to the global trading system. Connecting companies in developing countries to global markets is a dual win for global markets and for trade diversification (which leads to economic growth and reduced volatility).
Development efforts can similarly align with broad trade objectives. Development interventions can help share the benefits of trade more widely by strengthening trade capacity and fostering enabling environments for investment and participation by under-represented groups. Technical assistance, knowledge sharing, facilitating predictability and transparency, good governance, rule of law, regulatory environments and standards regimes help to promote trade that is more inclusive. Such an approach contributes to greater access for marginalized populations to improved health and education services, and overall greater skills development.
An integrated approach to trade and development focuses on supporting institutions and activities that enable improvements in governance and establish innovative partnerships. This provides a foundation to build upon growing public and private sector patnerships, efforts to foster open markets, and technical assistance that enables trade in ways that improve development outcomes and relationships with developing countries. Meaningful engagement with developing countries can result in mutual economic benefits and encourage a robust multilateral trading system.
Modern and green infrastructure is also frequently associated with trade and development, helping developing countries integrate into the global economy and benefit from international trade and investment flows while meeting domestic needs for critical public goods such as energy, transport and water supply. Digital infrastructure has become a key theme, which supports transition toward a rules‑based, inclusive and green digital economy that can serve as a potential nexus for Canada’s engagement with developing countries.
Canada’s approach to trade and development
Canada has a number of existing initiatives that advance a trade and development approach. These include:
- Trade policy support through internal and external initiatives: Global Alliance for Trade Facilitation, Expert Deployment Mechanism for Trade and Development, African Trade Policy Centre;
- Trade-related infrastructure: Integrated border management, ASEAN Infrastructure Centre of Excellence, public-private investment support;
- Trade-related adjustments: business enabling environment support, capacity development for agricultural growth, New Partnership for Sustainable Impacting Investing in Frontier Markets;
- Productive capacity building: Trade Facilitation Office Canada, Canadian Trade and Investment Facility for Development, strengthening small business value chains, International Trade Centre support, financing for development; and
- Other trade-related initiatives: FinDev Canada, skills for employment and productivity, Digital Livelihoods: Youth and the Future of Work at Scale, Global Partnership for Education, building responsible mineral supply chains.
There will be opportunities for Canada to maximize its impact and scale up its trade and development efforts as is part of the economic recovery of developing countries from the pandemic. This may include how they can support equality and inclusion, and also position themselves to meet the challenges of climate change and the digital economy.
- Canada’s export controls policy is under sustained and intense scrutiny by Parliamentarians, industry, civil society and the media.
- Rendering decisions on permit applications in a timely and predictable manner, within published service standards, requires strengthening.
The Minister of Foreign Affairs is legally responsible for the administration of the Export and Import Permits Act (EIPA). Traditionally, responsibilities under the EIPA have been shared with the Minister of International Trade by way of an exchange of letters, with the latter assuming oversight for trade controls on items that are not military, dual-use or strategic in nature.
The principal objective of export and brokering controls is to ensure that controlled items are exported and brokered in a manner that is consistent with Canada’s foreign and defence policies and national security interests. These controls are not meant to unnecessarily hinder international trade, but to regulate and impose certain restrictions in response to clear policy objectives.
Arms Trade Treaty: Canada became a State Party to the Arms Trade Treaty on September 17, 2019. To enable full compliance with the Treaty prior to Canada’s accession, amendments were made to the EIPA that enshrined the Treaty’s risk assessment criteria in law and created the legal framework for Canada to control the brokering of military items. In deciding whether to issue a permit for military items, the Minister of Foreign Affairs is now legally required to consider whether the proposed export or brokering transaction:
- would contribute to or undermine peace and security; and
- could be used to commit or facilitate:
- a serious violation of international humanitarian or human rights law;
- acts of terrorism or transnational organized crime; and
- serious acts of gender-based violence or serious acts of violence against women and children.
If, after considering available mitigating measures, the Minister determines that there is a substantial risk that an export or a brokering transaction would result in one of the negative consequences listed above, the Minister must deny the permit.Global Affairs Canada implemented an enhanced risk assessment framework to assist with this case-by-case assessment. The Minister also considers broader foreign and defence policy, and national security interests before rendering a decision on a permit application.
The Canadian defence and aerospace industries are heavily export-reliant and their continued viability depends on the timely processing of permit applications. In 2018, the defence industry contributed over $7 billion in GDP and close to 64,000 jobs to the Canadian economy, while exports accounted for 54% of its sales.Footnote 5
In 2020, the value of Canadianexports of controlled military goods and technology to destinations other than the United States amounted to approximately $1.966 billion.
In 2020, Saudi Arabia was the largest non‑U.S. export destination, receiving approximately $1.311 billion in Canadian military exports. The United Kingdom, Turkey, Japan and France round out the top five destinations.
In 2020, Global Affairs Canada issued a total of 3,705 export permits and denied 58 export permit applications for controlled military and strategic items.
Changing Global Dynamics: Strategic export permit applications are assessed in the context of evolving international developments.
A 2020 review of export permits of military items to Turkey, published online in April 2021, led to the cancellation of 29 permits. Currently, applications for export of military items to Turkey are considered on a case-by-case basis to determine whether there are any exceptional circumstances (for example, NATO co-operation projects), which warrant the issuance of a permit. Canada is pursuing a dialogue mechanism with Turkey to build mutual confidence and greater cooperation on export permits.
Canada also has policies of presumptive denial in place for certain items to Pakistan, Guinea and Iran, and recently put in place a temporary suspension of the issuance of permits for all controlled items to Belarus.
Increased Scrutiny and Judicial Reviews: There is sustained public scrutiny on exports of strategic goods and technology – particularly from media as well as civil society organizations. Project Ploughshares and Amnesty International released a report on the government’s export control policy for Saudi Arabia on August 11, 2021.
Export Controls issues have likewise received considerable attention from Parliamentarians. In October 2020, the Standing Committee on Foreign Affairs and International Development undertook a study on arms exports with a focus on Turkey, and presented its findings in a June 2021 report entitled Assessing Risk, Preventing Diversion and Increasing Transparency: Strengthening Canada’s Arms Export Controls in a Volatile World.
Public scrutiny has also been heightened by developments such as judicial reviews, related to arms transfers to Saudi Arabia.
Timeliness: Exporters have expressed concern over the perceived unpredictability of Canada’s export controls policies and timelines to receive export permit decisions. Despite ongoing improvements, Global Affairs Canada continues to have difficulty meeting its published service standards, largely because of a more rigorous permit review process that was implemented to address the provisions of the Arms Trade Treaty.
Through Budget 2021, the department was granted funding to help address capacity challenges, and is pursuing internal strategies to address industry concerns, while seeking to keep Canada onside with respect to its legislative and multilateral obligations.
- Autonomous sanctions are a component of Canada’s wider foreign policy tools for maintaining and restoring international peace and security, combatting corruption, and promoting respect for norms and values, including human rights.
- Canada has three sanctions regimes:
(1) Justice for Victims of Corrupt Foreign Officials Act (JVCFOA); (2) Special Economic Measures Act (SEMA); and (3) UN Act.
- In coordination with likeminded countries, Canada imposed 12 rounds of sanctions in the past year, [REDACTED].
Canadian sanctions aim to bring about a change in policy or behavior by the target states, individuals, or entities. Sanctions place restrictions on the activities permissible between Canadians and foreign states, individuals, and/or entities. They can encompass a wide variety of measures, including asset freezes, arms embargos, and travel bans.
Canada has three separate pieces of legislation authorizing the imposition of sanctions:
Justice for Victims of Corrupt Foreign Officials Act (JVCFOA) (Sergei Magnitsky Law)
The JVCFOA came into force in October 2017, and allows Canada to directly impose measures on foreign nationals responsible for or complicit in gross violations of internationally-recognized human rights or acts of significant corruption.
Canadians are prohibited from dealing with listed individuals, effectively freezing their Canadian assets. Listed individuals are also inadmissible to Canada under the Immigration and Refugee Protection Act.
Since 2017, Canada has designated 70 individuals from Myanmar, Venezuela, South Sudan, Russia (in relation to the case of Sergei Magnitsky) and Saudi Arabia (in relation to the extrajudicial killing of Jamal Khashoggi) under the JVCFOA.
The December 2019 Mandate Letter for the Minister of Foreign Affairs included a commitment to build on the JVCFOA for increased support to victims of human rights violations by developing a framework to transfer seized assets from human rights abusers to their victims. [REDACTED].
Special Economic Measures Act (SEMA)
The SEMA came into force in 1992, and allows Canada to impose sanctions against a foreign state, as well as individuals and entities related to that foreign state.
SEMA can be used in four types of situations: (1) grave breach of international peace and security resulting in a serious international crisis; (2) when an international organization to which Canada belongs calls on its members to take economic measures against a foreign state; (3) gross and systematic human rights violations have been committed by the state; and,
(4) acts of significant corruption.
SEMA measures could include: a dealings ban; restrictions or prohibitions on trade; an arms embargo and related restrictions; restrictions or prohibitions on financial transactions or other economic activity between Canada and the target state; and/or restrictions on activities such as the docking of ships or landing of aircraft from the foreign state in Canada.
Canada currently imposes sanctions under SEMA on thirteen countries –
Belarus, China, Democratic People’s Republic of Korea, Iran, Libya, Myanmar, Nicaragua, Russia, South Sudan, Syria, Ukraine, Venezuela, and Zimbabwe.
United Nations Act (UNA)
The UN Security Council may decide what measures member states shall take to restore or maintain international peace and security. Such a decision imposes a legal obligation on UN member states to introduce the measures into domestic law.
In Canada, it is done through regulations under the United Nations Act.
Twelve countries are currently subject to UN sanctions: Central African Republic, Mali, Democratic Republic of the Congo, Iran, Iraq, Lebanon, Libya, Democratic People’s Republic of Korea, Somalia, South Sudan, Sudan, and Yemen.
Canada also imposes UN sanctions against individuals and entities associated with terrorist activities, including Da’esh,
Al-Qaida, and the Taliban.
Global Affairs Canada is the focal point for coordinating the Government of Canada overall approach to sanctions imposition and management. A dedicated unit was established in 2018 toward this end.
Sanctions are implemented through the regulatory process. Imposing new sanctions requires reliable and credible open-source information that meets the legal threshold included in the Acts. These are time and resource-intensive processes, and also require the engagement of the Department of Justice and the Treasury Board Secretariat. Once the Minister of Foreign Affairs decides to proceed with sanctions, this must also be agreed by the Prime Minister (if not cabinet).
Canada continues to enhance collaboration with likeminded countries (in particular the United States, the European Union and the United Kingdom) and seeks to coordinate announcements of new measures of mutual interest.
Sanctions are typically meant to be a measures of last resort. Over the part year, in coordination with likeminded countries, Canada imposed new sanctions against Belarus, China, Nicaragua, Myanmar, Russia and Ukraine. Most recently, Canada imposed a fifth round of sanctions against Belarus to address human rights-related violations (August 6, 2021). These measures restrict certain activities relating to transferrable securities and money market instruments, debt financing, insurance and reinsurance, petroleum products, and potassium chloride products.
The department manages modest annual funding ($100K) to support projects and programming that enhances the effectiveness, and assists in better understanding the impact of sanctions in order to contribute to international peace and security.
From time to time, the Department will submit for your decision recommendations pertaining to applications for a permit or certificate to authorize activities or transactions that are otherwise prohibited, to mitigate against the unintended consequences of sanctions.
The Department will also periodically submit, for your decision, recommendations pertaining to applications to delist individuals and entities listed under the SEMA or the JVCFOA.
Climate and environment
- Climate change and biodiversity loss pose a fundamental global threat, with poor, marginalized countries and vulnerable communities most impacted.
- Canada has significantly increased its international climate finance commitments over the last decade.
- Canada will be under pressure to demonstrate international leadership on the themes of the upcoming November 2021 “Conference of Parties of Ambition” in Glasgow, including clean energy and transport transition, biodiversity, adaptation and resilience, sustainable food systems and a greener financial system.
Climate change and biodiversity loss pose a fundamental, indivisible and growing threat to the planet and all peoples. The earth’s surface warming is projected to reach 1.5C or 1.6C in the next 2 decades, and the Arctic is warming 2 to 3 times faster than global averageFootnote 6. Extreme weather events such as wildfires have doubled over the last 20-year period when compared with the previous twenty years. Since the early 1990s, the stock of natural capital per person has declined by nearly 40%Footnote 7.
The health of societies and economies and the achievement of the Sustainable Development Goals (SDGs) depend on global efforts to protect, conserve and restore nature. Developing countries are the hardest hit and the least equipped to prevent and cope with the consequences of these developments.
Poor and marginalized people are most vulnerable to climate change and biodiversity loss. Smallholder farmers, women and Indigenous peoples, often the most effective guardians of nature, are also the most affected by natural disasters and changing weather patterns.
Climate change is exacerbating pre-existing vulnerabilities and contributing to insecurity, including in the Arctic. Climate-related geopolitical challenges will continue to grow, including conflicts over arable land, water or food resources and climate-induced human displacement.
2021-2022 – The Year of Convergence of Climate and Biodiversity Action
2021-2022 is an important year for building momentum on international climate and nature issues given a series of high-level multilateral meetings.
In June 2021, G7 leaders adopted the G7 2030 Nature Compact, committing to work towards net-zero by 2050 and nature positive by 2030 for the benefit of both people and the planet. They also committed to ensuring their development assistance does no harm to nature and delivers positive outcomes overall for people, climate and nature.
The 26th Conference of the Parties of the United Nations Framework Convention on Climate Change (COP26) – billed as the “COP of Ambition” – will be in Glasgow, Scotland, from November 1 to 12, 2021. The United Kingdom COP Presidency is spearheading 5 campaigns on topics most in need of international coordination: energy transition, clean transportation, nature, sustainable finance and adaptation and resilience.
The 15th Conference of the Parties of the Convention on Biological Diversity(COP15) willbe held in 2 parts, the first of which will be virtual from October 11 to 15, 2021. The second part will be an in person meeting in Kunming, China, from April 25 to May 8, 2022. Parties are expected to adopt a new Post‑2020 Global Biodiversity Frameworkto guide global efforts for the next decade. Developing countries expect a financial commitment by developed countries commensurate with the level of ambition of the framework.
The 15th Conference of the Parties of the UN Convention to Combat Desertificationwill be held in Abidjan, Ivory Coast in May 2022. Parties will discuss global responses to droughts.
Canada’s international action on climate and environment
In addition to its domestic efforts, Canada supports low-carbon, climate-resilient economies and societies across the world.
Canada’s international climate priorities are clean energy transition and coal phase-out, nature-based solutions and biodiversity, climate-smart agriculture and food systems, and climate governance. Canada has also made significant commitments to oceans and disaster-risk reduction.
Climate finance: The world’s transition to nature positive by 2030 and to net-zero emissions by 2050 will require substantial increases of public and private investments. One of Canada’s tools to support this goal is via its international climate finance program, which help developing countries mitigate their greenhouse gas emissions and adapt to the negative effects of climate change through, among others, mangrove restoration and disaster risk finance. Canada has already fully delivered on 2 international climate finance commitments, providing $1.2 billion in ‘Fast-Start’ climate financing from 2010 to 2013, followed by $2.65 billion from 2015 to 2021. Canada's investments are expected to reduce or prevent 222 million tons of greenhouse gas emissions per year, help 5.9 million people adapt to the effects of climate change in their communities, and contribute to the mobilization of climate finance contributions from the private sector.
On June 13, 2021, at the G7 Leaders’ Summit, Canada announced that it would double its international climate finance commitment to $5.3 billion over the next 5 years, from $2.65 billion in 2015-2021, with planned programming in climate change adaptation, biodiversity and nature-based solutions.
At the United Kingdom’s request, Canada and Germany will lead the development of an international climate finance action plan to mobilize US$100 billion per year through 2025 in the lead-up to COP26. In 2019, international climate finance totaled US$79.6 billion, up from US$78.3 billion in 2018 and US$58.5 billion in 2016.
At COP26, Canada will be under pressure to demonstrate international leadership on key commitments. For example, there will be pressure on Canada to announce a commitment that 40% of its international climate finance going forwards will support adaptation and resilience and a minimum of 20% will support nature and nature-based solutions.
Decarbonizing the global economy: Canada works with the G7 and other partners are working to eliminate financial flows harmful to nature, especially in the energy sector and to advance ambitious new commitments including phasing out support for coal and limiting other fossil fuels and carbon-intensive activities.
In addition, Canada and like-minded shareholders continue to encourage international financial institutions to phase out support for coal and limit support to other fossil fuels and carbon-intensive activities.
Canada also supports the work of the UN and the Secretary-General's Special Envoy for Climate Action and Finance, to ensure that private finance accounts for the risks and opportunities of climate change.
Ocean plastics: Canada committed $100 million during its 2018 G7 presidency. To help address marine litter and plastic waste in developing countries, sparking innovation to beat plastic pollution, and supporting innovative private-public partnerships.
Feminist foreign policy
- Canada has made advocacy and action on human rights, gender equality, diversity and inclusion an integral element of its domestic and foreign policies.
- Over the past 5 years Canada has advanced a suite of feminist foreign policies and initiatives relating to diplomacy, trade, security, international development and consular services. These efforts have sought to focus on addressing fundamental structural barriers that prevent gender equality, and account for the needs of those most affected by multiple forms of discrimination.
- Work with civil society and other partners is ongoing to continue to develop Canada’s feminist foreign policy approach.
Recent global trends point to an ongoing anti-human rights backlash targeting women’s rights, gender equality, and LGBTQ2+ rights. These efforts, which also reflect a more fractious and polarized geo‑political environment, see deliberate and in many instances coordinated action by some state and non-state actors to roll back, for instance, progress on a range of women’s sexual and reproductive health and rights and initiatives to combat gender‑based violence. This is manifesting itself in all regions and is also evident across some international bodies, [REDACTED].
Not only are the limited gender equality gains made in recent decades at risk of being rolled back, but recent events have also further exposed the consequences of systemic racism and discrimination faced by Black, racialized communities and Indigenous peoples – both in Canada and abroad. The COVID-19 pandemic and its associated economic crisis has compounded matters.
Reinvigorated leadership and coherent international action are needed to combat and reverse these dynamics. From a foreign policy perspective, constructive cross-regional alliances are forming to address some specific aspects of these dynamics. In this context, and building on Sweden’s pioneering efforts, some countries have publicly adopted “feminist foreign policies”, including France, Mexico, Spain, Luxembourg. [REDACTED].
Canada’s feminist approach
Canada’s feminist foreign policy is the international expression of ongoing, coordinated, and whole-of-government efforts to advance human rights, including diversity and inclusion and gender equality domestically. In doing so, it reinforces Canada’s overarching objectives of strengthening a rules-based international system, supporting lasting peace and security, fostering prosperity, and implementing the 2030 Sustainable Development Goals.
Canada currently applies a feminist approach across all of its international policies and programming, including diplomacy, trade, security, development and consular services. This builds on a series of sectoral policies and initiatives developed in recent years, notably the:
- Feminist International Assistance Policy;
- Trade Diversification Strategy, with its inclusive approach to trade;
- Second National Action Plan on Women, Peace and Security (WPS),
- Elsie Initiative for Women in Peace Operations, and the appointment of a dedicated WPS Ambassador;
- Defence Policy, “Strong, Secure, Engaged”.
These policies place a focus on dismantling persistent systemic barriers, discriminatory norms and inequalities based on sex and gender – including sexual orientation, gender identity and expression, and sex characteristics (SOGIESC) – as well as on the basis of other intersecting aspects of identity such as race, national or ethnic origin, religion, age, language or disability.
Diplomatically, Canada coordinates with likeminded countries and works closely with partners from various regions to stem if not reverse the worrying efforts to undermine human rights and gender equality. This includes an ambitious initiative to mark the 25th anniversary of the Beijing Declaration and Platform for Action (Beijing +25) – the UN resolution setting out a roadmap for gender equality worldwide. The Generation Equality Forum, led by UN Women, France and Mexico, in partnership with civil society, seeks to generate renewed action on gender equality and counter the ongoing anti-rights backlash. Canada has joined the forum’s Multi-Stakeholder Steering Committee and is a co-leader of the “Feminist Movements and Leadership” Action Coalition. It has also joined the Women, Peace and Security and Humanitarian Action Compact.
Feminist foreign policy dialogue and paper
In February 2020, then-foreign minister Champagne publicly announced his intention to strengthen the foundations of Canada’s feminist foreign policy by working with civil society towards the development of a policy paper. The objective of the paper was to provide an overarching public statement outlining Canada’s approach and commitments to promoting human rights, advancing gender equality, empowering women and girls, fostering diversity and inclusion, and upholding human dignity around the world.
In fall 2020 and early 2021, Global Affairs Canada undertook dialogues with domestic and international partners and invited more than 400 domestic civil society, academics, and Indigenous partners to provide their views on Canada’s feminist foreign policy. A series of virtual roundtables and public webinars were organized by civil society partners and by the department, both in Canada and through embassies abroad. Global Affairs Canada employees were also invited to provide input, including through the department’s Diversity and Inclusion Council and employment equity networks. In total, more than 150 written submissions were received, including 48 reports from Canada’s missions abroad.
The paper was pending finalization and was put on hold during the electoral transition period.
- China’s assertiveness and authoritarianism challenges Canadian interests and values, in domestic, bilateral and global spheres.
- Working closely with partners, Canada must continue to promote and defend its interests, while pursuing pragmatic cooperation with China where this advances Canadian objectives.
- Canada has been actively working with allies on Hong Kong, Xinjiang, and human rights.
China has become more assertive under Xi Jinping’s leadership as both its economic and geopolitical power have grown. This is evidenced through a variety of developments, including the implementation of the National Security Law in Hong Kong, destabilizing actions in the South China Sea, and its apparent imperviousness to continued criticism of human rights abuses in Xinjiang and other regions.
Internationally, China seeks to use its growing military, political and economic might to re‑shape the international environment to be more conducive to the Communist Party of China’s (CCP) interests, as well as its authoritarian model. China also seeks to undermine and/or revise international rules and norms that have underpinned international peace, security and prosperity for decades.
Between 2008-2019, China accounted for one third of global GDP growth, and is expected to overtake the United States as the world’s largest economy by 2028. Canada’s trade has grown comensurately with China’s economic status. China is Canada’s second‑largest trading partner overall and third-largest merchandise export market after the United States and the European Union.
Domestically, structural economic and demographic risks are looming. Recent months have seen an increasingly chaotic regulatory environment for domestic entrepreneurs and foreign investors; its “made in China 2025” policy accelerates “de-coupling”, while inflation puts pressure on a burgeoning middle-class, with greater consumer and lifestyle expectations than any previous generation.
China’s 14th Five-Year Plan (2021-2025) prioritises “quality of growth”, shifting toward a dual circulation economy with a more robust, consumption-focused domestic sector, less susceptible to external shocks. Recent policy adjustments to address perceived imbalances have included a crackdown on high‑technology companies, particularly in fintech (payment processing, consumer lending), the control of digital data for state purposes, and implementation of various untested measures to address social inequity (video gaming hours limitations for kids, clampdown on after-school private education, social welfare contributions by large companies). Growth drivers include innovation, consumption, new rural revitalization and urbanization strategies, and accelerating the drive to a low-carbon economy.
China also faces important economic challenges, including: an aging population, uneven regional development; economic slowdown even pre-COVID-19; the incomplete transition to a market economy (state-owned enterprises consume 80% of available bank credit); a high level of indebtedness in China’s corporate sector, particularly in real-estate and construction (the Bank for International Settlements places Chinese corporate debt at 160% of GDP); and growing environmental concerns.
China is the world’s largest official creditor, with more than $1.5 trillion in loans to more than 150 countries. Some debtor countries owe China more than 20% of their GDP, increasing China’s economic influence and leverage towards over-dependent countries and sectors.
Canada’s relationship with China should also be viewed within the broader context of China-United States geo-strategic rivalry. The United States and many other international partners share Canada’s assessment of a changing China, but also the need to find a viable modus operandi. China, in turn, sees the United States as trying to “contain” China, and Canada as a willing partner in these efforts.
Canada’s evolving approach
Increasingly, it is important to take a comprehensive whole-of-government approach to China, which reflects the full range of implications for Canada of China’s continued economic and geopolitical rise as well as its disruptive international policies. In recent years, as China has expanded its strategic ambitions, Canada has had to continually re-examine and adjust its approach as underlying assumptions guiding its longstanding approach have also changed. Canada’s evolving approach acknowledges the complexity of the relationship and the corresponding need to: challenge the Chinese government’s violation of rules and norms while cooperating on global issues and shared interests (e.g. climate); and, compete with China’s authoritarian model, even as we co‑exist with the world’s most populous country.
This evolving approach has guided Canadian responses to emerging issues (e.g. the National Security Law in Hong Kong, human rights abuses in Xinjiang) while also informing its coordination with partners, for example on coercive diplomacy. In addition, Canada is working with other international partners to safeguard and protect the current rules-based international system and to hold China accountable for its international obligations. [REDACTED].
Bilateral efforts are focused on the following priority issues, with further work on seeking clemency and providing consular services for Canadians detained in China, including [REDACTED].
The human rights situation in China continues to deteriorate. Civil society members active in advocating for democracy and human rights in China have raised concerns over harassment and intimidation in Canada. Both internationally and domestically, attention to human rights issues continues to intensify, aggravated by the following issues:
COVID-19 response: New human rights concerns have arisen from the Chinese authorities’ response to the COVID-19 pandemic, including the increased use of digital surveillance, censorship and media control.
Xinjiang: Uyghurs and other ethnic minorities in Xinjiang face gross and systematic human rights violations, including mass arbitrary detention. The Chinese government continues to deny that abuses are taking place. Canada and other countries have repeatedly called for international independent observers to have access, including the UN High Commissioner for Human Rights.
Canada has coordinated closely with international partners on possible actions. On January 12, 2021, in coordination with the United Kingdom, Canada announced measures to address risks of forced labour entering Canadian and global supply chains and to protect Canadian businesses from becoming unknowingly complicit. On March 22, 2021, in coordination with the United Kingdom, the United States, and the European Union, Canada announced sanctions against 4 Chinese officials and 1 entity based on their participation in gross human rights violations in Xinjiang. On June 22, 2021, at the 47th session of the Human Rights Council in Geneva, Canada led a joint statement on behalf of 44 countries on the human rights situations in Xinjiang, Hong Kong and Tibet.
Tibet: The human rights situation in Tibet, including restrictions on cultural and religious freedom, remains troubling. Dominic Barton, Canada’s Ambassador to China, participated in a Chinese government-hosted visit to Lhasa, Tibet in late October 2020, the first by a Canadian official since 2015. He testified about this visit before the Canada-China Parliamentary Committee on December 8, 2020. [REDACTED].
Hong Kong: Human rights and fundamental freedoms continue to deteriorate in Hong Kong, including as a result of the implementation of the National Security Law, which criminalizes secession, subversion, terrorism and collusion with foreign forces. Following the Chinese government’s imposition of the National Security Law in July 2020, Canada announced export control measures, the suspension of the Canada‑Hong Kong extradition treaty, and updated Canada’s travel advice for the Chinese territory. In addition, Canada implemented immigration measures to support Hong Kong students and youth. Canada continues to monitor and adjust policies and statements as the situation evolves.
Foreign interference and cyber: The 2019 annual report of the National Security and Intelligence Committee of Parliamentarians (NSICOP) identified China as a key perpetrator of state-sponsored foreign interference in Canada. Canada’s whole-of-government efforts to address foreign interference includes working closely with like-minded countries, such as via the G7 Rapid Response Mechanism. It also includes stepped-up engagement with, and support to, universities and others in the research and development ecosystem.
Canada works with other countries at the UN, G20 and elsewhere to develop norms of responsible state behavior in cyberspace. On July 19, Canada joined 19 countries, NATO and the EU in identifying the Chinese Ministry of State Security as responsible for the widespread compromise of Microsoft Exchange servers, and called on China to cease this behaviour. The Chinese government denies any involvement.
Taiwan: Since 2016, cross-strait relations between Beijing and Taipei have rapidly deteriorated. Beijing continues to apply political and military pressure to deter what it sees as movement towards Taiwan independence. It has dramatically increased military incursions into Taiwan’s self-declared Air Defence Identification Zone, increasing the risk of conflict.
China’s opposition to Taiwan’s international engagement poses challenges for advancing Canada’s bilateral commercial interests and shared democratic values with the island. Canada supports Taiwan’s meaningful participation in relevant international organizations where statehood is not a requirement for inclusion, while urging restraint over unilateral actions that undermine the status quo, and peace and stability across the Taiwan Strait. Canada, [REDACTED] has sailed through the Taiwan Strait 5 times since 2019.
Regional security: China’s escalatory and destabilizing actions in the South China Sea and East China Sea are eroding the rules‑based international system and have intensified regional tensions. On July 11, Canada released a statement to mark the fifth anniversary of the 2016 judgment by an international tribunal on a case brought by the Philippines that ruled China had violated a number of provisions of the UN Convention on the Law of the Sea (UNCLOS) – a decision China has ignored. Canada believes that China and the Philippines should comply with the decision, using it as a stepping stone to peacefully manage and resolve their disputes.
Economic leverage: China has not shied away from leveraging its economic and political strength in an attempt to reshape the international order to its advantage. One channel used to exert its economic leverage is President Xi’s international signature, the Belt and Road Initiative (BRI), a loosely-banded series of projects covering many aspects of infrastructure. Over 130 countries have signed BRI memorandums of understanding with China, and many have various types of projects underway. As these initiatives have helped make China the world’s largest creditor, much of China’s development assistance is not visible through traditional lenses. The BRI constitutes approximately $1 trillion in investments and loans, and China also holds approximately $5 trillion in debt claims. What makes China’s “value proposition” so attractive is access to fast and easier credit, often with fewer questions than would be the case for a Western donor or international financial institution (IFI). While economic exposure does not necessarily translate into influence, it nonetheless provides China with leverage points to influence the behaviour of countries bilaterally and in multilateral forums.
Influence in multilateral institutions: In multilateral contexts, China is increasingly using its economic and geopolitical influence to advance its objectives. This includes challenging the rules-based international system (RBIS) where it does not align with its objectives, introducing concepts and language in texts and resolutions designed to erode rules and norms, and fostering a global governance environment that legitimises authoritarian interests. China also employs a range of strategies in pursuit of its multilateral objectives, including exclusion, obstruction and intimidation tactics. Examples of these tactics include: China’s handling of the WHO joint study into the origins of SARS‑CoV-2, where China controlled access, refused to share raw data, and pressured investigators; excluding Taiwan in early 2020 from receiving time-sensitive information on the COVID-19 outbreak; and, in the Asia-Pacific Economic Cooperation (APEC) context, overt attempts to impede Chinese Taipei by blocking proposals and Chinese Taipei candidates for leadership positions in working groups. Most recently, China refused to endorse the United States as APEC host for 2023 [REDACTED] inside and outside of APEC.
Trade and investment
Despite bilateral tensions with China, merchandise trade increased by 19.9% over the first 6 months of 2021 to $53.7 billion ($14.8 billion in exports to China, $39.0 billion in imports from China), up from $44.8 billion in the same period in 2020. It should be noted, however, that the increase in imports also resulted in an increased trade deficit of 23.1% over the same period year-on-year.
The stock of Canadian direct investment in China stood at $13 billion in 2020, making China the 16th largest recipient of Canadian direct investment abroad. In terms of Chinese foreign direct investment (FDI) in Canada, the stock of investments that originated in China stood at $32 billion, making it the sixth largest foreign investor in Canada. Nonetheless, despite opportunities, Canadian exporters and investors continue to experience formal and informal barriers to access and participate in the Chinese market.
China’s frequent use of economic coercion with trade partners, including Canada, has accelerated work to identify vulnerable Canadian sectors, to mitigate, and to diversify. Canada’s evolving approach to China has seen greater scrutiny of investment and procurement where Chinese interests are at play, and has led to tighter export controls, including to Hong Kong.
Canada continues to cooperate with China on issues of global concern where it makes sense to do so. The Chinese government has restricted high-level contact with Canadian officials since December 2018; however, there continues to be some high-level ministerial contact on the environment. Canada co-chairs with China the plurilateral China Council for International Cooperation on Environment and Development. Canada, China and the European Union also co-host the Ministerial on Climate Action, an annual meeting that brings together 40 climate leaders to push for increased global climate ambition.
Trade engagement with Asia
- Canada’s trade with Indo-Pacific economies has grown significantly over the past decade but there remains untapped potential.
- Expanding Canada’s trade with the region is crucial to both Canadian long‑term economic prosperity and efforts to diversify trade and supply chains.
The Indo-Pacific region, which extends from Northeast Asia to Oceania and the Indian sub‑continent, comprises more than half of the world’s population and 36% of global GDPFootnote 8. It represents the world’s largest regional economy and a critical hub for global trade, investment, production and supply chains. Despite the COVID-19 pandemic, the region’s economy is expected to expand by 7.3% in 2021Footnote 9. Its dynamic growth, expanding middle class and position on the global stage make engagement with the region a priority.
Over the past decade, Canada’s merchandise trade with the Indo-Pacific has grown by 42%, reaching $198 billion in 2020. Between 2010 and 2019, Canada’s services trade with the region grew by 114%. Two-way foreign direct investment (FDI) with the region more than doubled in the past decade, reaching $219 billion in 2020. During the pandemic, Canada’s trade with the region contracted by 2.7%, though there are signs of recovery in 2021, with bilateral trade increasing by 19% year-to-date (January to June). Canada’s top trading partners in the region are China, Japan and South Korea, though trade has grown more quickly with emerging partners like Vietnam and India.
The Indo-Pacific is Canada’s second largest regional trading partner after North America. Enhanced engagement with the region is central to Canadian trade diversification efforts. Canada’s Indo-Pacific footprint has grown substantially over the past decade but there is potential for Canadians to supply more of the regions needs in areas like food and energy security, clean technology, advanced manufacturing, infrastructure, life sciences, digital trade and professional services.
To help Canadian businesses realize regional opportunities, Global Affairs Canada seeks to open new markets, address barriers, and exercise influence on regional norms to reinforce an open and rules‑based trading system. These objectives are facilitated through engagement in bilateral and multilateral forums, including negotiation of trade and investment agreements.
Canada’s Trade Commissioner Service also works directly with businesses to help them take full advantage of market access gains and enter new markets. The region is where demand for trade commissioner services is greatest globally, with 3,468 clients targeting the region served in fiscal year (FY) 2020/21.
Canada has 2 free trade agreements (FTAs) in force with Indo‑Pacific economies: the Canada-Korea Free Trade Agreement (2015) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP - 2018)Footnote 10. Canada also has 5 foreign investment promotion and protection agreements (FIPAs) with China, Hong Kong, Mongolia, the Philippines and Thailand.
Canada has an advantage over many global competitors, having secured preferential market access across the region, including key markets such as Japan, Vietnam and South Korea. However, as other economies also seek to conclude FTAs (e.g. the EU), Canada’s competitive advantage could erode. Canada is therefore actively seeking preferential access to new markets.
Trade policy priorities
Expand the CPTPP
Designed for expansion, the accession of new economies to the CPTPP would secure access to new markets and support the establishment of common rules in the region and beyond. The United Kingdom was the first economy to submit its formal request to accede to the CPTPP (February 1, 2021). China (September 16) and Taiwan (September 22) have subsequently submitted formal requests. Other economies including the Philippines, South Korea and Thailand have also publicly expressed interest in joining the agreement.
On June 1, CPTPP parties reached consensus to launch an accession process with the United Kingdom that is expected to result in the negotiation of terms to permit the United Kingdom to join the agreement. CPTPP parties have not yet set a date to discuss the requests from China and Taiwan.
Defend trade interests with China
Despite divergent values and a pattern of behaviour contrary to Canadian interests, China remains a key trading partner. Timely resolution of ongoing trade irritants represents a key priority; Canada is actively engaging with China to restore full market access for Canadian canola seed exports which have been restricted since March 2019 (a WTO panel was established July 26, 2021), and has raised concerns with China’s COVID‑19 measures on food imports, including the suspension of 10 Canadian pork and beef establishments. Beyond these specific market access irritants [REDACTED]. FTA exploratory discussions (2016-2017) did not result in the launch of formal negotiations.
Deepen trade with Southeast Asia
Southeast Asia is poised to become an increasingly important hub for supply chains. Since 2017, Canada has been engaging with the Association of Southeast Asian Nations (ASEAN) on a possible FTA. Canada is also exploring bilateral options for deepening trade in the region. On June 20, 2021, Canada launched comprehensive economic partnership agreement (CEPA) negotiations with Indonesia.
Conclude negotiations with India
Since 2020, Canada has engaged with India to explore the possibility of resuming negotiations for a CEPA (launched in 2010), and FIPA (launched in 2004). Most recently, India has proposed focusing efforts on an interim or early harvest trade agreement as a precursor to a comprehensive agreement.
Re-engage on FIPAs
In May 2021, Canada released a new model FIPA, which will serve as the basis for future FIPA negotiations. A number of economies where there are significant Canadian investments have expressed interest in a FIPA with Canada, including Bangladesh, Cambodia and Taiwan. The new model is the first comprehensive revision to Canada’s FIPA approach since 2003 and positions Canada to potentially revisit stalled negotiations, including with India and Kazakhstan, or modernize older generation FIPAs (e.g. the Philippines).
Explore opportunities on digital trade
On December 9, 2020, Canada submitted a notification of interest to launch exploratory discussions on Canada’s possible accession to the Digital Economy Partnership Agreement (DEPA) involving Singapore, Chile and New Zealand. The DEPA is a novel trade policy instrument poised to support digital enabled commerce and aligns well with both Canada’s international and domestic policy objectives. While Canada continues to have a strong interest in joining the DEPA, there are additional internal deliberations that will be required over the coming months to determine Canada’s approach going forward.
Canada-European Union Comprehensive Economic and Trade Agreement
- The Canada-European Union Comprehensive Economic and Trade Agreement (CETA), provisionally applied since September 2017, is functioning as intended and delivering benefits for both Canada and the European Union (EU), despite the challenges of slow implementation in certain areas and disrupted trade during COVID-19.
- Implementation efforts continue under the guidance of the various governance committees. Canadian and European officials also continue to advocate for ratification of the agreement by the 12 EU member states that have not yet done so in their respective parliaments.
The EU market represents an unprecedented opportunity for Canadian businesses. As a bloc, the EU is the world’s second largest economy (with a combined GDP of around C$19 trillion in 2020) and Canada’s second largest trading partner after the United States. It is also the world’s second largest import market for goods, with annual imports valued at more than Canada’s GDP, as well as being the world’s largest importer of services.
On September 21, 2017, CETA was provisionally applied, which brought into force most economically significant parts of the agreement (tariffs, origin and tariff-rate quotas, services commitments, temporary entry commitments, government procurement obligations). However, pending ratification by all EU member states of the agreement, most of the provisions of the Investment Chapter, including investor-state dispute resolution mechanism and some provisions in the Financial Services Chapter related to portfolio investment, and resolution of investment disputes in financial services, have not yet entered into force.
CETA is a comprehensive trade agreement, covering virtually all sectors and aspects of Canada-EU trade. Approximately 98% of the EU’s tariff lines (more than 9,000 tariff lines) on Canadian goods have been duty-free since provisional application began (up from 25%). An additional 1% of EU’s tariff lines will become duty-free over a 7-year phase out period (by January 2024). Bilateral merchandise trade in 2020 was 17.4% higher than 2016. Canadian merchandise exports grew by 25.4% during the same period.
CETA’s outcomes in areas such as services, investment, labour mobility and government procurement are also highly ambitious. Canadian providers of services are benefiting from the greatest access the EU has ever provided in a trade agreement, as well as the most ambitious commitments on temporary entry for business purposes that the EU has ever granted.
Once in force, CETA will also provide Canadian investors with greater openness, stability, transparency and protection for their investments in the EU. CETA’s Investment Chapter reaffirms government’s right to regulate in the public interest, including in areas such as the environment, labour, health and safety. It establishes a permanent tribunal whose members are appointed for a fixed term, thereby providing for higher independence and accountability. It also establishes a permanent appellate tribunal, which will ensure greater coherence and consistency in the interpretation of the agreement. It includes rigorous and binding ethical requirements for members of both tribunals, which will contribute to the tribunal’s independence, and investors will no longer play a role in the appointment of tribunal members (members will be appointed by Canada and the EU).
To date, 15 EU member states have ratified CETA: Latvia (February 2017); Denmark, Croatia (June 2017); Malta (July 2017); Estonia, Czech Republic (October 2017); Spain, Portugal (December 2017); Lithuania (April 2018); Sweden (May 2018); Finland (August 2018); Austria (May 2019); Slovakia (November 2019); Luxembourg (May 2020) and Romania (November 2020).
Among the 12 member states that have not yet ratified CETA, [REDACTED].
There is no deadline for ratification and provisional application can continue indefinitely.
Implementation and other trade issues
Prior to and during the implementation of CETA, several issues have arisen on both sides. The EU has raised concerns with Canada’s import policies for European cheese, protection for certain geographical indications of wine and foodstuffs as well as access to the Canadian market for wine and spirits. Notably, EU requests go beyond the negotiated outcome of CETA, however, [REDACTED]. Meanwhile, Canada has raised concerns about the EU’s lack of implementation of CETA’s transparency requirements in relation to temporary entry for business persons; a 3-year delay in the implementation of the EU’s conformity assessment protocol commitments under the agreement; as well as various non-tariff barriers affecting the market access for Canadian agricultural exports such as beef, pork, wheat and canola. [REDACTED].
Impact of the Pandemic
Bilateral merchandise trade with the EU dropped 8.6% in 2020 compared to the pre pandemic level in 2019. Imports by Canada from the EU dropped by 12.0%, but Canadian exports to the EU remained relatively stable, down by only 1.3%. This exceptional performance is notable when compared to a 11.9% contraction of total Canadian merchandise exports to the world.
Prior to the pandemic, bilateral merchandise trade between Canada and the EU-27 reached a historic high of $99.1 billion (€66.7 billion) in 2019, or 28.5% higher when compared to 2016, the year before CETA came into provisional application. Canadian merchandise exports to the EU went up 27.0% from 2016-2019, while imports from the EU rose 29.3%.
Despite the challenges brought on by the pandemic, CETA continues to work as intended, encouraging greater trade between Canada and the EU.
Since the provisional application, the Trade Commissioner Service (TCS) has actively promoted the agreement to Canadian businesses through targeted outreach, information seminars and digital communications aimed at increasing awareness and utilization of the agreement. The utilization rate for Canadian exports (by value) to the EU increased from 52% in 2018 to 57% in 2020. The utilization rate for EU exports to Canada increased from 38% in 2018 to 56% in 2020.
As of August 5, 2021, the TCS, through its regional offices in Canada and missions abroad, has organized and/or presented at over 465 CETA-related initiatives.
- Canada and the United Kingdom intend to launch negotiations toward a bilateral free trade agreement (FTA) in late 2021 or early 2022. The aim is to conclude negotiations within 3 years.
- Separately, Canada and the other Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) parties are considering the United Kingdom’s potential accession to the CPTPP.
The United Kingdom benefited from the Canada‑European Union Comprehensive Economic and Trade Agreement (CETA) until the end of December 2020, when it left the EU. In advance of its departure, the United Kingdom sought to rollover or replicate as many existing EU FTAs as possible on a bilateral basis to ensure a level of continuity in its global trade arrangements and to maintain preferences negotiated on behalf of the larger EU single market.
To facilitate post-Brexit trade, Canada and the United Kingdom concluded and brought into force the Trade Continuity Agreement on April 1, 2021. Parallel negotiations towards the United Kingdom’s accession to CPTPP and the anticipated bilateral FTA negotiations with the United Kingdom present an opportunity to shape Canada’s post-Brexit terms of trade with the United Kingdom. In a bilateral meeting on June 11, on the margins of the G7 Leaders’ Summit, prime ministers Johnson and Trudeau welcomed the launch of the process for U.K. accession to the CPTPP, and the 2 leaders agreed to redouble their efforts to secure a comprehensive bilateral FTA. At this time, despite the United Kingdom’s very active interest in pursuing new trade agreements to demonstrate global engagement outside of the EU (e.g. even considering joining the Canada-U.S.-Mexico Agreement), it is still developing its domestic regulations and trade policy frameworks. This includes defining the new relationship between the United Kingdom and the EU, which remains the United Kingdom’s largest trade partner. This will influence the United Kingdom’s approach in future trade negotiations.
In public consultations held March 12 to April 27, 2021, Canadians across a broad range of sectors indicated support for both initiatives to ensure a strong, more competitive economic relationship with the United Kingdom.
New bilateral free trade agreement
The Canada- United Kingdom Trade Continuity Agreement preserves the main benefits of the CETA, which no longer applied to the United Kingdom as of January 1, 2021 when it left the EU. Under the terms of the agreement, Canada and the United Kingdom have committed to launch new negotiations on a comprehensive bilateral FTA within a year of its entry into force, and seek to complete them within 3 years. [REDACTED].
U.K. CPTPP accession
Designed for expansion, the accession of new economies to the CPTPP would secure access to new markets and support the establishment of common rules in the Asia-Pacific region and beyond. The United Kingdom was the first economy to submit its formal request to accede to the CPTPP (February 1, 2021). China (September 16) and Taiwan (September 22) have subsequently submitted formal requests. Other economies including the Philippines, South Korea and Thailand have also publicly expressed interest in joining the agreement.
On June 1, CPTPP parties (i.e. CPTPP members for which the agreement has entered into force, including Canada) reached consensus to launch the accession process with the United Kingdom. CPTPP parties are now preparing for the first Accession Working Group meeting, where they will determine whether the United Kingdom is able to meet the rules of the agreement. Once parties are satisfied with the United Kingdom’s ability to meet the established rules, the parties will initiate negotiations on the specific terms of the United Kingdom’s accession to the agreement. CPTPP parties have not yet set a date to discuss the requests from China and Taiwan.
- The Canadian government and the Biden Administration collaborate on issues of mutual interest, including the pandemic response, economic recovery and growth, climate change, diversity and inclusion, and international security.
- U.S. positions on cross-border energy infrastructure and protectionist trade policies are not always aligned with Canadian interests and can give rise to bilateral irritants.
Political and social context
Since taking office on January 20, 2021, theBiden Administration has been largely focused on addressing a range of domestic issues, including tense partisan and racial relations, the impact of the COVID-19 pandemic, immigration pressures and a fragile economic recovery. More than a year after nationwide protests erupted following the murder of George Floyd at the hands of the Minneapolis police, and more than 8 months after the insurrection at the Capitol, the American public remains deeply polarized. Republicans and Democrats are increasingly divided on many issues, including racial and economic inequality, public health measures, and immigration.
Within this context, President Biden has proposed 3 ambitious legislative plans (rescue, infrastructure and family) as part of his budget for fiscal year 2022 and in support of his progressive Build Back Better agenda. Taken together, the plans seek to invest in employment creation, infrastructure, climate action, child care and education, public health and other social services, while reforming the tax code.
COVID-19 has taken a heavy toll in the United States, especially in areas with lower vaccination levels. The pace of vaccination continues to increase as more workplaces require employees to get the shots.
In February 2021, Canada and the United States committed to a Roadmap for a Renewed U.S.-Canada Partnership, which served as the blueprint for a whole-of-government approach to Canada‑U.S. relations. In particular, the Roadmap prioritizes.
- Combating COVID-19, including support for relevant multilateral organizations such as the World Health Organization (WHO) and the United Nations (UN).
- Building back better with our shared vision for a sustainable economic recovery.
- Accelerating our climate ambitions, including through a new High-Level Ministerial Dialogue on Climate.
- Advancing diversity and inclusion through combatting systemic racism and gender-based discrimination.
- Bolstering security and defense by modernizing North American Aerospace Defence Command (NORAD), expanding the U.S.-Canada Arctic Dialogue, and supporting our shared commitment to transatlantic security.
- Building global alliances by reviving the North American Leaders’ Summit (NALS) and working through multilateral organizations, including the UN, the G7, G20, the World Trade Organization (WTO), NATO, and the Five Eyes.
Canada and the United States share one of the largest and mutually beneficial trading relationships in the world, with nearly US$2 billion worth of goods and services crossing the border each day. Canada is among the 4 largest U.S. trading partners (with the European Union, Mexico, and China), while the United States is by far Canada’s foremost trading partner, representing 72% of Canada’s exports.
In the trade relationship, Canada’s efforts are focused on ensuring the effective implementation of the Canada-United States-Mexico Agreement, strengthening supply chain resiliency, and resolving bilateral irritants. Canada is also seeking to establish enhanced collaboration with the United States to address global trade challenges, including with respect to China and the WTO. The Biden Administration’s ‘worker-centric’ trade policy remains closely linked to domestic priorities and tendencies toward protectionism persist.
International security and foreign policy
Canada and the United States have a long history of cooperating to confront the security challenges that threaten North America. Canada and the United States are steadfast allies in promoting global peace and security. Canadian and U.S. law enforcement cooperation is extensive, and our militaries work alongside each other as partners in the NORAD and as allies within the North Atlantic Treaty Organization (NATO).
Continental defence must meet emerging and diverse threats, including those associated with an increasingly accessible and active Arctic region. Our mutual objectives of continental defence and of global peace and security have led to close cooperation and integration of defence and national security agencies. NORAD modernization is a key file for the Biden Administration.
President Biden believes the United States will have a more lasting and consequential impact on regional and global challenges when it works in concert with partners. The foreign policy challenges identified by the United States include building back from COVID-19, global migration, democracy vs. authoritarianism, China, Russia and Iran. With respect to NATO, President Biden is committed to modernizing the alliance.
The United States completed its evacuation and relocation operations in Afghanistan on August 30, 2021, ending what President Biden called “20 years of war in Afghanistan – the longest war in American history.”
Climate and energy
Canada and the United States have pledged to explore opportunities to align policies and approaches to create jobs, while tackling climate change and enhancing adaptation and resilience to climate impacts. The 2 countries are committed to working together to advance shared goals on clean energy, emission reductions and net zero targets. They also agreed to protect businesses, workers and communities in both countries from unfair trade by countries failing to take strong climate action. Canada’s priorities also include supporting its energy sector and defending key cross-border energy infrastructure projects (e.g. Line 5, electricity transmission lines).
In January 2020, Canada and the United States agreed on a Joint Action Plan on Critical Minerals Collaboration to advance work to secure supply chains for critical minerals in key manufacturing sectors. The Biden Administration continues to prioritize the development of secure critical mineral supply chains, for which Canada remains a key bilateral partner.
Renegotiation of the 1964 Columbia River Treaty, a bilateral flood control and hydropower agreement, is underway.
As of August 9, Canada is allowing entry of fully vaccinated U.S. citizens and permanent residents currently residing in the United States for discretionary (non‑essential) travel to Canada. On October 15, the U.S. announced new measures that will allow fully vaccinated travelers to enter the United States from Canada and Mexico at land borders and ferry Ports of Entry for non-essential purposes starting November 8. While the vaccination requirement will also apply to air travellers arriving in the U.S. effective November 8, there will be no requirement for a negative PCR result as is required for entry into Canada (for Canadians and any foreign nationals).
Canada and the United States have 2 well managed boundary disputes in the Beaufort Sea and over the legal status of Canada’s Northwest Passage.
On July 20, President Biden formally announced the nomination of David Cohen as the U.S. Ambassador to Canada, pending confirmation by the Senate.
Supporting facts and figures
According to a pre-COVID estimate from the Migration Policy Institute, there are about 800,000 Canadians citizens living in the United States.
The Canada-U.S. border is the longest international border in the world. The terrestrial boundary is 8,891 kilometers long. It is also the longest non-militarized terrestrial border in the world.
Canada-U.S. defence collaboration includes a high degree of inter-operability and military cooperation. At any given time, there are approximately 700 Canadian Armed Forces members serving in the United States, including some in command positions.
In the first quarter of 2021, bilateral trade in goods and services was $237.8 billion.
In 2020, Canada was the United States’ largest destination for goods and services exports (14.5%), third largest source of imports (11%), third largest source of inward foreign direct investment (FDI) (11%) and fourth largest destination for outward U.S. FDI (7%).
Canada is the largest, most secure, foreign source of energy for the United States, in 2020 supplying 60% of its crude oil imports, 98% of natural gas imports, 93% of electricity imports, and 28% of uranium imports. In 2020, the Canada-U.S. bilateral energy trade totaled $109.8 billion, including a $62.1 billion surplus for Canada. Canada exported 91% (by value) of its global energy exports to the United States.
According to a 2020 study commissioned by the Business Roundtable, an association of U.S. CEOs, trade with Canada supported 7.8 million U.S. jobs, which works out to 3.9% of U.S. employment or roughly one in 25 jobs – more than from any other single trading partner.
Canada’s diplomatic and commercial network in the United States includes the Embassy in Washington D.C., 12 consulates general, 3 trade offices, and 14 honorary consuls. Alberta, Quebec and Ontario also have representatives posted in the United States.
- Renewed impetus in the Canada-U.S. bilateral relationship provides important opportunities to advance shared objectives in support of bilateral trade and address global trade challenges, but U.S. domestic politics and tendencies towards protectionism will continue to generate irritants.
- Effective CUSMA implementation, including Mexican labour reform, is crucial to the success of the North American partnership and post‑pandemic economic recovery.
Canada and the United States share one of the largest and most mutually beneficial trading relationships in the world. Nearly US$2 billion worth of goods and services cross the border daily. This remained true even during the pandemic, with 2020 trade flows remaining above 85% of 2019 levels. Canada-U.S. trade is built on long-standing binational supply chains, whereby roughly 60% of U.S. imports from Canada are intermediate goods that ‘feed’ American supply chains for final goods. Canada’s reliability and predictability is critical not just for our mutual prosperity but also our regional and national security.
As part of the Roadmap for a Renewed U.S.‑Canada Partnership announced in February 2021, Canada and the United States committed to reinforce the bilateral economic relationship, including by supporting inclusive economic recovery and strengthening Canada-U.S. supply chain security. However, U.S. domestic policy goals and protectionist tendencies will be the single largest driver behind its international trade policy priorities. Efforts to support, protect, and ‘bring back’ investment, jobs and manufacturing through re-shoring or near-shoring initiatives will remain central to U.S. economic recovery and national security objectives – whether through financial incentives or enhanced domestic procurement requirements. Early actions by President Biden focused on maximizing the use of American-made products in domestic procurement, and efforts to expand Buy America requirements are likely to be even stronger in the context of political pressure to ensure pandemic recovery funds are used to stimulate economic activity in the United States.
As a part of its focus on economic recovery and infrastructure spending, the Biden administration has sought to expand Buy America provisions through various legislative vehicles, with strong bipartisan and industry support. This is of significant concern for Canada, as it is a large supplier of many of the goods that would be covered by new or broader domestic content requirements. This reinforces the need for the Government of Canada to continue to work with Canadian and U.S. allies and stakeholders (unions, the private sector, Capitol Hill and the administration) towards a binational solution whereby Canada is carved into: (1) any expanded Buy America requirements (e.g. construction materials); and (2) any existing or expanded Buy America requirements attached to U.S. infrastructure stimulus spending.
The Canada-U.S.-Mexico Agreement
CUSMA entered into force on July 1, 2020, reinforcing the strong economic ties between the three parties and enhancing North American competitiveness. Effective enforcement of the agreement is crucial to enable continued support for regional free trade. The primary focus for the United States is ensuring Mexico effectively implements its labour reform efforts, particularly with respect to freedom of association and collective bargaining. To this end, the U.S. administration has actively pursued cases under the U.S.-Mexico Rapid Response Labor Mechanism (RRLM) to address concerns at specific facilities. Canada and the United States are actively supporting labour reform programs and activities in Mexico, and have committed $27.5 million and $180 million respectively to this effort.
Overall CUSMA implementation is proceeding well, but certain irritants exist. For example, on May 25, 2021, the United States requested the establishment of a dispute settlement panel regarding Canada’s administration of its dairy tariff rate quotas, and on June 18, 2021, Canada requested a panel to address continued illegal U.S. global safeguards on imports of Canadian solar products.
On automobile rules of origin (which determine the national source of a product), a difference of interpretation arose at the time of CUSMA’s entry into force regarding a U.S. reinterpretation of the regional value content requirements for core auto parts. The U.S. reinterpretation deviates from the CUSMA text, creating concerns for the North American auto industry and negatively affecting Canada’s value proposition when it comes to new investment or vehicle production mandates. Canada and Mexico have advocated for a solution, but it has become clear that a change in the United States position will only be possible through dispute settlement. Mexico requested CUSMA dispute settlement consultations with the United States on August 20, 2021. Consultations are to take place by September 19 and Canada will participate as a third party.
The softwood lumber dispute remains one of the longest standing Canada-U.S. trade irritants. Duties on Canadian softwood lumber exports to the United States are a significant burden for Canadian producers, and also negatively impact U.S. consumers and home builders. Canada’s position remains that a new softwood lumber agreement is in the best interests of both countries, and Canada is prepared to re-engage in negotiations to discuss realistic proposals that would be acceptable to Canadian industry. The U.S. government and industry have yet to signal a willingness to re-engage. Canada will continue its legal challenges against U.S. duties at the World Trade Organization (WTO) and through NAFTA Chapter 19 and CUSMA Chapter 10 binational dispute settlement mechanisms.
Global trade challenges
A renewed Canada-U.S. economic partnership has provided an opportunity to engage in discussions towards increased collaboration on global trade challenges, including those that affect North American competitiveness. In particular, there is considerable interest in working closely together on China-related trade and economic issues such as economic coercion, industrial subsidies, overcapacity and state-owned enterprises, forced labour, and enforcement actions. As chair of the Ottawa Group, Canada is also uniquely placed to engage with the United States to facilitate discussions on WTO reform and advance towards meaningful outcomes on both WTO negotiations and the Appellate Body impasse.
- The United Nations (UN) and its system of funds and programs, technical bodies and specialized agencies is a vital component of the global governance architecture. However, the system now faces 21st century challenges that it was not designed to address, mainly shifting global power dynamics, perennial funding problems, and governance issues.
- As the ninth-largest contributor to the UN, Canada has a prominent role to play in reinforcing the UN system by supporting reforms to make it more efficient and relevant, as an effective platform for protecting Canadian interests and advancing foreign policy objectives.
Canada’s UN engagement is an impactful and necessary means to work with partners to strengthen the institutions, treaties, arrangements and norms that are central to a rules-based international system. It supports Canada’s democratic values, underpins its security and prosperity, and enables it to contribute to governance and agenda setting that advance domestic and foreign policy objectives that touch on every facet of Canadian society.
The COVID-19 pandemic has demonstrated the central role of the UN system in shaping and implementing collective responses to complex global challenges. UN Secretary-General António Guterres’ leadership, through his plan to address the health emergency, quickly and effectively mobilized a large-scale comprehensive response to the socio‑economic impact of the pandemic. The reappointment of Guterres for a second term (2022-2027) will maintain leadership continuity at a critical juncture.
Overview of UN bodies and mandates
The UN is the only international organization with universal membership (193 member states). It was designed to address global security, economic development, and humanitarian issues.
The key political organs include: the General Assembly (GA), the Economic and Social Council (ECOSOC), the Security Council and the International Court of Justice (ICJ), and a system of technical agencies, funds and programs. The GA and ECOSOC host negotiations and enable dialogue among member states on issues of shared concern such as the 2030 Agenda and its Sustainable Development Goals (SDGs). The UN Security Council (UNSC) has the power to declare threats to international peace and security, authorize the use of force, impose sanctions and mandate UN peacekeeping missions. The ICJ codifies and develops international law on a wide-variety of subjects.
UN Development System (UNDS) entities and UN specialized agencies are part of the UN that most directly impact citizens. The UNDS, includes the UN High Commissioner for Refugees (UNHCR), the World Food Program (WFP), and the UN Development Program (UNDP), provides critical support to assist the poorest and most vulnerable countries and implements the SDGs. Specialized agencies and other UN affiliated bodies, including the International Atomic and Energy Agency, International Telecommunications Union, World Health Organization, Food and Agriculture Organization, and the International Civil Aviation Organization and Secretariat of the Convention on Biological Diversity (both headquartered in Montréal), are sources of technical knowledge and develop international standards in their respective areas of expertise.
The UN also addresses climate change by assessing climate science, facilitating negotiations for an agreement under the UN Framework Convention, and providing assistance to countries to reduce emissions and to build climate resilience.
Key challenges for the UN system
The UN faces several pressing challenges, including the resurgence of great power dynamics, significant financial challenges due to arrears and commitments to provide long‑term, flexible and predictable voluntary funding, expanding mandates and zero nominal growth policies supported by major donors including Canada, and the need to modernize outdated structures and practices.
The UNSC is confronted with an increasing volume of complex crises, but its reputation and effectiveness are frequently hampered by the national interests of the five permanent members (P5) and the use or threat of the veto. More broadly, polarization outside the UN among states is hindering the ability within it to agree on specific actions on pressing global public policy challenges.
The Biden Administration is taking significant steps toward U.S. re-engagement with the UN. However, the legacy of the previous administration and domestic American antagonism toward the UN have not been entirely overcome. At the same time, China is taking an increasingly assertive posture, including in UN negotiations, where it, supported by other authoritarian states, attempts to shift the discourse away from internationally-agreed norms on human rights, international development cooperation, and economic regulations. It has also deliberately attempted to undermine and re-shape some standard-setting bodies. This is increasingly a terrain where our adversaries are fully engaged and requires vigilance by Canada and partner countries.
The UN’s protracted financial crisis also has an impact on its effectiveness. Paying a share of the UN’s costs is a core obligation of membership. Assessed contributions cover the UN regular budget (US$ 3.2 billion for 2021), the peacekeeping budget (US$6.37 billion covering 12 active peacekeeping missions) and the international criminal tribunals (US$87.4 million for 2021). However, as of August 18, 2021, member states owed approximately US$5.6 billion in unpaid assessed contributions. The United States continues to be the largest debtor, with arrears of approximately US$3.14 billion.
Canada is the ninth-largest contributor to the UN regular budget and has an assessed share of 2.734%. The top 3 contributors are the United States (22%), China (12.005%), and Japan (8.564%). Canada also pays assessed and voluntary contributions to key UN specialized agencies, funds and programs. Canada has always paid its assessed contributions to the UN system on time, in full, and without conditions.
During his first term, Secretary-General Guterres advanced a substantial package of reforms aimed at making the UN a more agile, effective, efficient, transparent and accountable organization. Significant progress has been made on these despite challenges, notably the COVID-19 pandemic and resistance from within the system and by certain member states. A strengthened Resident Coordinator System at the country level facilitates a coherent and coordinated UN response to development and humanitarian challenges. Improved system-wide functions and mechanisms have enhanced transparency and accountability. Significant reforms to the UN’s peace and security architecture have helped pivot the UN from crisis-response to prevention. There is also stronger management oversight, an emphasis on gender parity and a focus on innovation.
Key areas of focus for Canada at the UN
UN reform and re-design are a priority for Canada, as a strong, well-functioning UN system helps protect Canada’s national interests.
Key areas of focus have included governance reform at the board level of UN funds, programs and agencies; representation of Canada at key elected bodies; COVID-19 recovery efforts; financing for development; climate change; promoting national and local ownership for inclusive conflict prevention and peacebuilding; and humanitarian action. Advancing gender equality and protecting and promoting human rights are cross-cutting priorities.
North Atlantic Treaty Organization
- North Atlantic Treaty Organization (NATO) is central to Euro-Atlantic security, and essential to international stability. The alliance is a cornerstone of Canada’s international defence and security policy. Canada is an active NATO member, contributing substantially to the alliance’s core tasks and missions.
NATO has 3 main tasks: (1) collective defence among the 30 allies; (2) crisis management within and beyond NATO’s borders; and, (3) cooperative security through partnerships. NATO serves as the primary forum for transatlantic consultation and cooperation on major national and regional security challenges. 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 military threat. In turn, Canada is committed to the defence of NATO allies. As alliance decisions are made by consensus, NATO membership gives Canada a voice [REDACTED] on issues related to Euro-Atlantic security.
Key issues facing the alliance
Burden sharing: Fair NATO burden sharing, in particular the progress of each ally in reaching the aspirational guideline of spending 2% of GDP on defence, continues to be an issue of importance for the United States. Canada’s defence spending was reported as 1.45% of GDP in 2020‑2021. Canada engages in advocacy to ensure its significant operational contributions to NATO and defence spending increases are recognized as critical elements of burden sharing.
Afghanistan: On April 14, in parallel to the U.S. announcement that it would withdraw its troops from Afghanistan by September 11, NATO announced the end of its Resolute Support Mission in Afghanistan. [REDACTED]
Climate and security: NATO is seeking to better address the security implications of climate change, and facilitate the “greening” of allied military activities. At the 2021 NATO Leaders’ Summit, Canada proposed to establish and host a NATO Centre of Excellence on Climate and Security. Global Affairs Canada and the Department of National Defence are working toward the establishment of a centre by 2023, at the earliest.
Canada and NATO
A founding NATO member, Canada has a strong voice within the alliance and is well positioned to influence important NATO policy areas and promote action on Canadian priority issues (e.g. women, peace and security). Canada continues to make significant contributions to NATO missions, operations and activities, including:
- Leading the enhanced Forward Presence battlegroup in Latvia.
- Commanding the Standing NATO Maritime Group One, and deploying a frigate on a continual basis to patrol allied waters.
- Deploying personnel to Kosovo Force and NATO Mission Iraq.
- Deploying 6 fighter jets each autumn to conduct air policing of the Black Sea.
- The sixth-largest financial contributor to NATO common budgets; Canada contributed $230 million in FY 2020/21.
- An effective and well-functioning G7 remains in Canada’s direct interest.
- The annual Leader’s Summit and ministerial meetings offer important venues for Canada to promote and coordinate pressing economic, trade, security and political issues among broadly like-minded countries.
- The June 11-13 Cornwall Leaders' Summit concluded with positive outcomes on climate financing, vaccine sharing and girls' education while reinforcing strong leader-level commitment to G7 coordination and action.
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 issues.
The G7 is comprised of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. Since 1977, the EU has been invited to attend. Russia was a member (G8) from 1997 to 2014 until its expulsion due to the illegal annexation of Crimea.
G7 and the international context
G7 members have historically been bound together by respect for human rights, democracy and the rule of law, and commitment to a rules-based international system. [REDACTED].
The real value of the G7 lies not just in the members’ ability to reach consensus on pressing global, peace, security and economic issues, but to have open and frank discussions on common challenges and points of division, in order to influence global decision-making.
G7 trade and investment ministers’ track
For this year’s G7, the United Kingdom has introduced, for the first time, a dedicated trade and investment track, including three ministerial meetings and an ambitious set of policy priorities: World Trade Organization (WTO) reform (with a focus on dispute settlement, transparency, plurilaterals and special and differential treatment), climate and nature, trade and health, digital trade principles, women’s economic empowerment and competitive neutrality (level playing field issues and forced labour). The G7 Trade and Investment Ministers Meetings (TIMM) on March 31 and May 27-28 provided an opportunity for ministers to discuss their respective trade policy priorities and offer their views on the United Kingdom’s proposed areas of focus, [REDACTED]. G7 ministers are scheduled to meet for the third and final time on October 22 in London, England. The United Kingdom’s key objectives for October include ministerial endorsement of G7 digital trade principles and a set of G7 best practices on forced labour, as well as a forward plan on WTO reform, including G7 collaboration ahead of the WTO 12th Ministerial Conference (MC12) in November of this year.
Canada and the G7
Canada has hosted 6 G7 summits, most recently in 2018 in Charlevoix, Québec. Canada is next due to host the G7 in 2025.
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. 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 influential non-G7 countries. The G7 also offers Canada a privileged opportunity to engage and cooperate when confronting common geopolitical challenges with a relatively likeminded group. For example, Canadian advocacy led to strong support for the Declaration Against Arbitrary Detention in State-to-State Relations in the G7 Foreign and Development Ministers’ Communiqué.
Canada has used the G7 to effectively advance its vision for COVID-19 response and recovery, tackling climate change and addressing the disproportionate impact on women and marginalized groups (including through the continuation of the Gender Equality Advisory Council, a Canadian innovation from 2018), including Indigenous peoples.
The 2021 UK G7 Presidency
Consistent with the United Kingdom’s overall approach to showcase “Global Britain” in this post-Brexit year, the United Kingdom has sought [REDACTED] the G7 by promoting its shared democratic values. Response to COVID-19 pandemic has remained central to all discussions.
The June 11-13 G7 Summit allowed G7 countries, along with guest partners (Australia, India, South Korea and South Africa) to project unity and leadership in addressing key global issues from response to COVID-19, climate change and global economic recovery. The G7 agreed to a range of key commitments, including: a collective commitment to share more than 2 billion vaccine doses with low- and middle- income countries; to launch a Pandemic Preparedness Partnership to reduce the vaccine development cycle from 300 to 100 days; new financial and sectoral commitments to address climate change, including a commitment to mobilize US$100 billion per year in climate finance support (Canada announced a doubling of its past commitment, to $5.3 billion over 5 years); and a $2.5 billion pledge to the Global Partnership for Education (including a new Canadian investment of $300 million over five years). Leaders also reaffirmed a willingness to advance core issues including media freedom, an end to arbitrary detention, ending forced labour, countering disinformation and strengthening the Rapid Response Mechanism (a legacy of Charlevoix and which Canada continues to host/lead).
The United Kingdom has convened virtual or in-person G7 ministerial meetings, including: foreign and development; digital and technology; trade; climate, energy, and environment ministers; interior; transport; and science. G7 health and finance ministers have each convened on a monthly basis since the onset of the pandemic. In addition to communiqués issued after ministerial meetings, G7 foreign ministers have also issued 9 statements on emergent issues.
The 2022 German G7 Presidency
Germany will hold the G7 Presidency in 2022 and notionally plans to host the Summit June 26-28. Germany has yet to announce planned priorities due to its upcoming September 2021 elections. However, Germany has indicated that pandemic response and preparedness, equitable access to vaccines, climate action and economic recovery will likely remain central to the G7 agenda in 2022
- Canada’s membership in the G20 –
a group that represents 80% of global GDP – remains fundamental to address issues of economic growth and financial stability.
- Italy assumed the Presidency in December 2020. An Extraordinary Leaders’ Meeting on Afghanistan took place on September 28. The Leaders’ Summit will take place from October 30 to 31 in Rome. The 2022 President is Indonesia.
- The 3 last 2021 G20 ministerial meetings will also take place in October: trade, finance, and joint health and finance.
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. 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 80% of global GDP. In response to the 2008 global financial crisis, the G20 was elevated to leader level.
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 expanded its focus, including to health, environment/climate change, food security, gender and women’s entrepreneurship, education and training, migration/displacement, culture and tourism. Though cautious to avoid 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, the G20 traditionally hosts a range of annual ministerial meetings coinciding with the priorities of the presidency.
2021 Italian G20 Presidency
Under a three-pronged framework of people, planet and prosperity, Italy is aiming to make meaningful progress on international climate action and promote clean energy (including in their role as COP26 partner country with the United Kingdom); strengthen the rules-based trade order; further backstop global financial systems and address the financial needs of developing countries; and, promote gender equality and women’s economic empowerment.
G20 Trade Ministers’ Meeting
Italy’s G20 priorities are being advanced in the trade track along 3 lines of action: (1) a multilateral trade and investment agenda for sustainable recovery, with a focus on strengthening global supply chains, promoting trade in services and level playing field issues; (2) World Trade Organization reform; and (3) increasing the presence of micro, small and medium enterprises (MSMEs) in global markets. To date, there has been little progress on concrete outcomes from the trade and investment track, with the focus on sharing perspectives on each of the issues. The only concrete outcome identified so far is a set of non-binding guidelines to support MSMEs and entrepreneurship, which Italy will advance for ministers’ endorsement. G20 trade ministers have yet to meet this year, with the first and only Trade and Investment Ministers’ Meeting scheduled for October 12, 2021 in Sorrento, Italy. The agenda is expected to cover all policy priorities, followed by the endorsement of a joint communiqué.
Canada and the G20
Given its make-up, the G20 remains an important platform for Canada to influence global economic, financial, and trade policy issues. 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, open, rules-based trade and investment as a means of enhancing prospects for sustainable growth. However, consensus can be difficult to achieve with many diverse interests and perspectives at the table.
Canada, through its own leadership efforts within the G20 and in other forums, can continue to bring a practical and results-focused voice to the table. In this respect, there will be important opportunities to use the G20 platform to promote support for developing countries, including through linkages with the Canada-led Financing for Development in the Era of COVID-19 and Beyond Initiative at the United Nations. At the G20, Canada promotes the importance of economic opportunity for all citizens, including women and youth; reinforces a commitment to rules-based trade; and supports action on climate. Canada has also supported discussions on equitable access to vaccines, therapeutics and diagnostics in response to the COVID-19 pandemic.
World Trade Organization
- Since its founding in 1995, the World Trade Organization (WTO) has played a critical role in improving the stability, predictability and openness of the international trading system. WTO rules have led to the lowering of tariffs with key trading partners and the creation of disciplines pertaining to other aspects of international trade.
- However, the WTO currently faces a number of challenges and is in need of reform in order to strengthen and modernize the organization.
The WTO is at the core of the rules-based multilateral trading system. It provides its 164 members with a forum for administering the global system of trade rules; negotiating new or updated rules; settling trade disputes between members through binding dispute settlement; and reviewing members’ trade polices. Amidst growing global trade protectionism and the erosion of respect for international cooperation, the WTO remains the main global institution to uphold the rules‑based multilateral trading system. Its 60+ agreements, which are binding on all WTO members, provide a baseline for other international trade rules, including bilateral and regional free trade agreements.
The WTO is of strategic importance for Canadian trade objectives and has been a critical forum for Canada to secure market access for Canadian goods and services, and advance other trade interests on the broadest possible basis. The WTO 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 limited leverage as a medium-sized economy.
The last comprehensive round of WTO negotiations, the Doha Development Agenda, was launched in 2001, covering a broad range of issues and has been stalled since 2008. Many members, including Canada, consider it to have failed. WTO members have achieved some successes over the past 2 decades, including conclusion of a multilateral agreement on trade facilitation in 2013.
Multilateral negotiations involving all members have continued on certain issues, such as agriculture and fisheries subsidies, albeit without results to date. Plurilateral negotiations, which involve subsets of WTO members, have become an attractive alternative. Plurilateral negotiations (also known as joint statement initiatives) are ongoing in the areas of e-commerce, services domestic regulation and investment facilitation.
The Ottawa Group on WTO reform
The multilateral trading system is facing unprecedented challenges that point to an urgent need for WTO reform. Since 2016, the United States has blocked new appointments to the Appellate Body to fill vacancies, which means that the WTO’s dispute settlement system is unable to hear appeals, rendering panel decisions unenforceable. In addition, the stalemate in multilateral negotiations has resulted in WTO rules not keeping pace with global economic developments, such as digital trade, the role of non-market economies, and shifts in agricultural production. [REDACTED].
Against this backdrop, and given the importance it places on rules-based trade, Canada has taken a leadership role in WTO reform. This includes chairing the Ottawa Group (established in October 2018), as a forum for 14 like-minded WTO membersFootnote 12 to discuss ideas and proposals to reform the WTO. Trade ministers and vice ministers of the Ottawa Group meet regularly.
By virtue of its diverse and representative membership, the Ottawa Group is in a unique position to help deliver the pragmatic and creative leadership that the WTO requires. Throughout the pandemic, the group’s efforts to carve out a role for the WTO in adapting to emerging issues demonstrate that it can be a useful forum. In June 2020, Ottawa Group members endorsed a joint statement outlining a 6-point action plan to respond to the COVID-19 pandemic, including actions on transparency, predictability, trade facilitation, and e-commerce. In this context, Canada and the EU are working on a WTO Ministerial Declaration on Trade and Health to facilitate trade in essential medical goods and enhance the capacity of the trading system to deal with public health crises.
The WTO Appellate Body impasse
Due to ongoing U.S. blockage of new appointments to the Appellate Body (AB), in December 2019, the AB lost quorum to hear appeals, which effectively enables a member to appeal a panel report “into the void” and prevent the adoption of a binding decision. This situation is detrimental to many WTO members, including Canada. Binding dispute settlement has facilitated the resolution of key Canadian trade disputes with partners, especially the United States (e.g. country of origin labelling for beef and pork, softwood lumber).
Multilateral discussions to find a permanent solution to the AB impasse have not made progress. [REDACTED].The United States has long argued that the AB has failed to function as originally intended, noting “judicial over‑reach” concerns about interpretations of particular provisions in the WTO agreements by dispute settlement panels and the AB.
Canada’s objective is to find a long-lasting multilateral solution that includes the United States. In the interim, Canada and 24 other WTO members have established the Multi‑Party Interim Appeal-Arbitration Arrangement, which operates within the framework of existing WTO rules and provides for binding dispute settlement and access to appellate review in disputes amongst its participants, as long as the AB is unable to hear appeals.
12th WTO Ministerial Conference (MC12)
The ministerial conference, which normally meets every 2 years, is the highest WTO decision-making body. Canada is represented by the Minister of International Trade at these conferences. MC12 was originally scheduled to take place in June 2020 but was postponed to November 30 to December 3, 2021, due to COVID-19. Delivering meaningful outcomes by MC12 will be very challenging; however, members are working toward conclusion of plurilateral negotations on domestic regulation for services. MC12 also represents an opportunity to lay the groundwork for future negotiations and institutional improvements.
In the meantime, deep divides remain on how the WTO can best respond to the pandemic. Some members are adamant that a broad waiver of intellectual property rules is essential to facilitate vaccine production and distribution, while others are deeply opposed.
International financial institutions
- International financial institutions (IFIs) play a critical role in financing and enabling social and economic development in middle-income, poor and fragile states. They also reinforce global economic stability through policy actions, loans and grants to governments and investments in the private sector.
- Canada is a major shareholder in IFIs, supporting the fundamental role they play in upholding the rules-based system and in reinforcing developing partner countries capacities. IFIs also provide a platform to advance foreign, development and trade objectives including on issues such as women’s economic empowerment, climate change and good governance.
IFIs include both 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, exercising their comparative advantage via supporting social spending, financing growth related investments (e.g. infrastructure) and facilitating private sector engagement. For its part, the IMF is responsible for fostering global monetary cooperation, securing financial stability and facilitating international trade.
IFIs are an integral part of the international financial architecture, providing needed financial resources to middle-income countries (through loans) and the poorest countries, including fragile states (through concessional loans and grants). Most IFI capital is guaranteed by donor member states so they can provide preferred interest rates to borrowing members.
IFIs are providing critical support to the global COVID-19 response, with the MDBs collectively having allocated nearly US$300 billion. In total, since the beginning of the COVID-19 crisis, the IMF has supported 86 countries with almost US$140 billion, including through emergency assistance and precautionary lines of credit, while MDBs have approved a combined US$152 billion.
Canada and the 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. Canada’s relationship with all the IFIs is co-managed by Global Affairs Canada and Department of Finance Canada. 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. Governors are responsible for Canada’s of these institutions including their strategic policy direction, accountability, institutional effectiveness, financial and programming decisions. 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, and oversee their general operations.
International Monetary Fund
Canada is the 11th largest shareholder of the IMF. The IMF’s primary objective is to enable the stability of the international monetary system through economic surveillance and policy advice; lending programs to address balance-of-payments problems; and technical assistance and training. Canada has actively advocated for the provision of substantial and rapid financial assistance for vulnerable countries at the IMF in response to COVID‑19, including small island developing states. In August 2021, the IMF approved a US$650 billion allocation of special drawing rights (SDR), a special reserve currency that IMF members can exchange for other currencies. The G7 has committed to channelling US$100 billion of the SDRs that they received to vulnerable countries.
World Bank Group
The World Bank Group (WBG) is Canada’s largest development partner institution. The scale and scope of its operations provides a cost effective way to advance Canadian development priorities. It consists of the International Bank for Reconstruction and Development (IBRD) that lends to middle-income countries, the International Development Association (IDA), which provides finance to the world’s poorest countries; the International Financial Corporation, its private sector arm; and the Multilateral Investment Guarantee Agency, which provides political risk insurance. insurance. In December 2019, Canada pledged a grant of $1.271 billion over 3 years plus a 25-year US$575 million low-interest loan.
African Development Bank
Canada is the fourth largest non-regional shareholder of the African Development Bank (AfDB). The AfDB group is majority owned by African countries. In October 2019, Canada agreed to contribute US$253.4 million; in 2021, Canada committed to accelerate its payments over 3 years rather than 8 to help the bank better respond to the pandemic. The African Development Fund (ADF) within the AfDB provides loans or grants to the lowest income countries. In 2019, Canada committed $355.2 million over 3 years to replenish the ADF.
Inter-American Development Bank
The Inter-American Development Bank (IDB) is the largest source of multilateral development financing for Latin America and the Caribbean. Canada is its 3rd largest
non-borrowing member, and 6th largest shareholder overall. Negotiations for a general capital increase for the IDB are expected to begin over the coming twelve months.
Asian Development Bank
Canada is the seventh largest and second non‑regional shareholder of the Asian Development Bank (ADB) currently. The Asian Development Fund (ADF) provides grants to the ADB’s lower-income developing member countries. In 2020, Canada committed a contribution of $120.5 million over 4 years to the ADF.
Caribbean Development Bank
Canada is a founding member of the Caribbean Development Bank (CDB) and its largest non-regional shareholder. Canada committed to contribute $80.41 million to the CDB Special Development Fund between 2021 and 2024, the largest among all members.
European Bank for Reconstruction and Development
Canada has been a major donor to the European Bank for Reconstruction and Development (EBRD) from its inception. Its mandate has evolved from supporting post‑Cold War recovery and economic development in Central and Eastern Europe to supporting its countries of operation in their transition to sustainable market economies by promoting private sector development and entrepreneurship.
Asian Infrastructure Investment Bank
Established in January 2016 and based in Beijing, the Asian Infrastructure Investment Bank (AIIB) is focused on infrastructure financing in Asia. China holds 30% of the AIIB’s shares. Its creation reflects in part a frustration by China with the United States’ slowness in providing it a wider seat at the table in the IMF and WBG, but also the real needs that exist in the region. In March 2018, Canada joined the AIIB with a 0.995% shareholding.
- The African Union (AU) is the most important multilateral forum on the continent. Robust engagement with the AU is key to advancing Canada’s multilateral and bilateral interests in the region, including trade.
- Canada is accredited as a permanent observer to the AU and provides funding for AU development assistance and peace and security initiatives.
With 55 member states, the African Union (AU) leads Pan-African efforts to advance peace and security, governance, climate change, trade and integration on the continent. The AU is key to understanding how Africa’s political leadership is responding to regional challenges (including the COVID‑19 pandemic) and where Canada can play a constructive role. The AU has been a lead partner in the negotiations for the African Continental Free Trade Area (AfCFTA) which Canada hopes to eventually benefit from, and for which it provides technical support.
The AU is led by a rotating chair selected annually from the heads of its member states. President Tshisekedi of the Democratic Republic of Congo is the current chair, while President Macky Sall of Senegal will take on the chair role in 2022. This will provide an opportunity for Canada to further deepen its engagement with the AU, given its close relationship with Senegal. The administrative arm of the AU is the AU Commission and it is headed by an elected chair (currently the former Prime Minister of Chad, Moussa Faki Mahamat).
In addition to the AU, 8 regional economic communities, recognized by the AU, play an important role in advancing regional integration and cooperation. Canada engages directly with 4 of these: Economic Community of West African States (ECOWAS); Intergovernmental Authority for Development (IGAD); East African Community (EAC); and Southern African Development Community (SADC).
Africa is an area of geo-strategic competition between global powers including China, Russia, Gulf States, the United States, the United Kingdom, Turkey, France and the European Union. Canada’s direct engagement with the AU strengthens its relationships with African leaders, and provides an opportunity to position itself strategically as a valuable political, trade and development partner.
Canadian diplomatic representation
Canada is accredited as a permanent observer to the AU. Currently represented by its ambassador to Ethiopia and Djibouti, [REDACTED] and preparing to hold regular high-level consultations with the AU, both of which have been delayed by the COVID-19 pandemic and current events in Ethiopia. The consultations will provide a platform for advancing Canada’s interests such as COVID-19 response and recovery, trade and investment opportunities, peace and security, development, climate change, governance and digital innovation. In July 2021, Minister Garneau held a call with Chairperson Faki, during which they reaffirmed their mutual interest in the high-level consultations.
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); with trading commencing on January 1, 2021. Canada is supporting the negotiation, establishment and implementation of the AfCFTA via funding to the African Trade Policy Centre (ATPC) ($15.2 million; 2021-2025). This also provides Canada with the ability to engage early in trade policy discussions to identify downstream trade and investment opportunities. The creation of this integrated market for the free movement of goods and services will help African nations accelerate economic growth.
Peace and security
The AU leads regional peacekeeping and conflict prevention efforts on the continent. Its current peacekeeping missions include: the AU Mission to Somalia (AMISOM), the AU Mission for Mali and the Sahel (MISAHEL), the (AU-authorized) Regional Coordination Initiative against the Lord’s Resistance Army (RCI-LRA) and the Multinational Joint Taskforce against Boko Haram (MNJTF). AMISOM is the largest peace operation in the world. There is a dynamic interface between AU and UN peacekeeping efforts.
The AU is also active in advancing the women, peace and Security agenda.
The AU adopted the theme of “Silencing the Guns: Creating Conducive Conditions for Africa's Development” in 2020. It underscores the nexus between good governance, stability and development. It also calls attention to economic security and the vital links between sustainable and inclusive economic growth, job creation, conflict prevention, and peace and security.
AU pandemic response
The AU coordinates the continental response to the COVID-19 pandemic. Cyril Ramaphosa, President of the Republic of South Africa, serves as the AU Champion on COVID-19 and has established a Commission on African COVID-19 Response. The AU’s Africa Centres for Disease Control and Prevention have a Joint Continental Strategy for COVID‑19.
Funding for AU initiatives
Canada supports the African Union Commission (AUC) through a $5 million grant (2017-2021) and $10 million general grant (2020-2024) to support AU priorities of capacity building, gender equality and women’s empowerment, and women, peace and security. Canada is providing more than $13.5 million to also support the Africa CDC’s response to COVID-19, including supplying N95 masks, equipment and strengthening capacities of local laboratories across the region for quality COVID-19 testing.
Since 2016, the AU has undertaken a reform process to address a number of issues, including its financing, governance and structure, as well as coordination issues with African regional organizations and improving connections with the United Nations. Canada is supportive of these measures, but recognizes that the capacity to fully implement this ambitious reform agenda remains a challenge.
Asia-Pacific Economic Cooperation
- Canada is a founding member of the Asia-Pacific Economic Cooperation (APEC) forum. Its 21 members account for approximately 61% of global GDP.
- Increased and sustained engagement allows Canada to play an agenda-setting role at APEC. Canada last hosted APEC in 1997.
APEC is Asia’s preeminent forum on matters of trade and the economy. It operates as a nonbinding, consensus‑driven, multilateral institution with a focus on promoting sustainable growth and prosperity among its 21 member economies.Footnote 13 APEC seeks 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.” Its work 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 in the APEC region. APEC’s agenda is broad, ranging from customs procedures and regulatory reform, to women’s economic empowerment and the digital economy.
APEC initiatives and priorities often complement the work of multilateral forums such as the G7, G20, Organisation for Economic Co-operation and Development (OECD), Association of Southeast Asian Nations (ASEAN) and the World Trade Organization (WTO).
Canada in APEC
APEC provides Canada an opportunity to further strengthen trade and economic ties with the Asia-Pacific’s most dynamic economies. APEC is also the only trans-Pacific regional organization of which Canada is a member that hosts an annual leader-level summit. It provides a critical platform to pursue regional objectives, including trade liberalization and market reforms, broader foreign policy goals, such as fostering regional commitment to the rule of law and upholding human rights standards. Canada also leverages APEC to advance its 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 a broad agenda ranging from customs procedures and regulatory reform, to women’s economic empowerment and the digital economy.
In recent years, Canada has played an instrumental role in pressing for governance reforms, focusing on streamlining APEC’s complex and expansive organizational structure.
Four out of five of Canada’s top trade partners are members of APEC: the United States, China, Mexico and Japan. In 2019, prior to the global pandemic, APEC accounted for 83.3% of Canada’s merchandise trade, 55% from economies other than the United States.
2020 was a challenging year for APEC economies due to the global pandemic. Canada’s merchandise trade with APEC economies fell 11.7% between 2019 and 2020. However, merchandise trade has since rebounded strongly. As of March, Canada’s trade with APEC economies was 14% above pre-pandemic levels.
Hosting APEC is a significant commitment and the responsibility is rotated amongst members each year, but not in any prescribed order. In addition to the Annual Economic Leaders’ Meeting (or “Summit”), host countries organize meetings of APEC ministers responsible for foreign affairs, trade and finance, as well as “sectoral ministerials” in areas such as transportation, tourism, health and SMEs.
New Zealand is hosting APEC virtually in 2021 with Thailand due to host in 2022. In August 2021, U.S. Vice-President Kamala Harris offered the U.S. as APEC host for 2023 and Peru recently received approval for 2024. South Korea is confirmed as APEC host for 2025. There is considerable interest for Canada to announce it will host APEC as it last did so in 1997. By 2023, 14 of 19 APEC economies that are able to host (Hong Kong and Chinese Taipei are excluded) will have hosted twice; some 3 times. Only Canada, Brunei, Mexico, Papua New Guinea and Russia have hosted once.
APEC Business Advisory Council (ABAC)
Private sector engagement, a key APEC pillar, is advanced through ABAC, which represents the interests of the APEC business community. The annual APEC CEO Summit and regular industry dialogues provide opportunities for business leaders to interact with APEC leaders. Each APEC leader can appoint up to 3 ABAC members. Canada’s current ABAC representatives include: Janet De Silva (CEO, Toronto Region Board of Trade); Tim Dattels (Co-Managing Partner, Senior Partner and Co-Head of Asian Business, TPG Capital in Hong Kong); and Joseph S. Fung (Venture Capitalist in Hong Kong).
APEC has faced headwinds in its 32-year history, but none as significant as those it has confronted in 2020-21 which included an unprecedented global pandemic, escalating geopolitical tensions between China and the United States, trade disputes between Korea and Japan, and a hardening of China’s position on Hong Kong and Chinese Taipei (Note: APEC nomenclature guidelines dictate the use of Chinese Taipei when referring to Taiwan). Despite these challenges, APEC is advancing work on an implementation plan for its twenty-year vision document that outlines APEC’s core long-term goals: The APEC Putrajaya Vision 2040. The Implementation Plan is expected to be presented to APEC leaders for endorsement in November 2021.
New Zealand’s established priorities for its 2021 APEC Presidency have included a strong emphasis on inclusive, digitally enabled and sustainable post-pandemic recovery. Canada works with New Zealand to advance issues of common interest such as women’s economic empowerment, trade related intiatives targeting indigenous communities, climate change issues, and support for the multilateral trading system.
The APEC Economic Leaders’ Meeting (AELM) is scheduled to take place during the week of November 8, 2021. Canada’s Prime Minister and ministers of foreign affairs and international trade normally attend.
Association of Southeast Asian Nations
- Southeast Asia’s growing strategic importance in the Indo-Pacific calls for Canada to deepen regional engagement with the Association of Southeast Asian Nations (ASEAN).
- Canada seeks to elevate its relationship with ASEAN from dialogue partner to strategic partner, and join the East Asia Summit and the ASEAN Defence Ministers Meeting Plus.
- ASEAN-Canada free trade agreement (FTA) negotiations are expected to be launched at the ASEAN Economic Ministers-Canada Consultations in October.
ASEAN is a regional organization comprising 10 member statesFootnote 14. Despite widely different governance models among its members, member countries cooperate to advance regional goals related to security, economic and social issues. ASEAN countries continue to face development challenges, ongoing human rights and rules-based governance concerns, and growing inequality, all of which have been exacerbated by the COVID-19 pandemic.
ASEAN and the Indo-Pacific
Intense strategic competition between the United States and China directly affects ASEAN countries, who are under increasing pressure to take sides and align on key issues. As such, ASEAN has begun to nurture a multi-polar power dynamic in the Indo‑Pacific, with ASEAN at the core of the regional security, political and economic architecture. This includes:
- the ASEAN Regional Forum (security dialogue for ASEAN and 17 other countries, including Canada);
- the East Asia Summit (a forum for strategic dialogue among the leaders of ASEAN and 18 other countries);
- the ASEAN Defence Ministers Meeting Plus (a forum for defence and security cooperation for ASEAN and eight other countries); and
- the Regional Comprehensive Economic Partnership (a free trade agreement between ASEAN and 5 other countries expected to come into force in 2022).
The February 2021 military coup, the ongoing civil conflict, and the resulting humanitarian and security crisis in Myanmar continue to pose a major challenge to ASEAN’s unity. ASEAN’s consensus-based approach and principle of non-intervention are being severely tested. Nevertheless, ASEAN is attempting to play a central role in the international response to the Myanmar crisis and agreed to a “Five-Point Consensus” in April 2021. The plan calls for an end to violence and the release of detainees, the appointment of a special envoy to broker inclusive dialogue, and ASEAN coordination of international humanitarian assistance.
From 2018-2021, Myanmar served as Canada’s country coordinator in ASEAN. Canada has so far been successful in balancing its policy response toward Myanmar with its commitment to strengthening Canada‑ASEAN relations; there has been no discernable impact on Canada’s relations with ASEAN.
Canadian engagement with ASEAN
Canada is one of ASEAN’s 11 Dialogue partners, with access to dedicated ASEAN processes and meetings such as the annual Post-Ministerial Conference (to which the Minister of Foreign Affairs is invited), the ASEAN Regional Forum, and annual consultations between Canada and ASEAN economic ministers. Canada’s prime minister was also invited, as a guest of the chair, to 3 consecutive ASEAN leaders’ summits.
To advance its economic, security and development interests in the region, Canada seeks to:
- elevate the ASEAN-Canada dialogue partnership to a strategic partnership;
- join the East Asia Summit; and
- join the ASEAN Defence Ministers Meeting Plus.
While there is currently a moratorium on membership expansion of the East Asia Summit, making it difficult for Canada to join, Canada has been granted observer status to expert working groups of the ASEAN Defence Ministers Meeting Plus and continues to work toward eventual accession. The Prime Minister has been invited to participate virtually in an ASEAN Business and Investment Summit on October 25 related to the annual summit meetings.
The 2021-2025 ASEAN-Canada Plan of Action includes a commitment to explore cooperation in maritime capacity building, connectivity, meeting the United Nations 2030 Sustainable Development Goals, and on economic issues.
Given ASEAN’s significant economic potential – with its growing middle class, rapid industrialization and emergent role in global supply chains – Canada is exploring opportunities to enhance commercial engagement, including the possibility of a Canada-ASEAN free trade agreement (FTA). ASEAN has identified the launch of negotiations with Canada as a priority for 2021. The development of a reference paper to outline the scope of a possible FTA was completed in September and will be presented to trade ministers at the Canada‑ASEAN Economic Ministerial meeting in October.
Development programming in ASEAN
In addition to multilateral and global programs operating in ASEAN with Canadian funding support, Canada maintains 4 direct bilateral development programs in Indonesia ($13.5 million), Myanmar ($27.6 million), the Philippines ($9 million) and Vietnam ($9 million). These efforts are complemented by an ASEAN regional development program ($5 million) that provides opportunities to all ten member states. In particular, the ASEAN Regional Development Program contributes to:
- developing ASEAN human capital (e.g. life-long learning, the protection and rights of vulnerable populations such as migrant workers); and
- strengthening ASEAN regional stability (e.g. peace and security initiatives, gender equality, disaster management).
Key initiatives include a $10 million fund for scholarships and educational exchanges, Canada’s contribution of $3.5 million to the COVID-19 ASEAN Response Fund, and $8.5 million to support the women, peace and security agenda in the region.
- The complex and increasingly polarized multilateral environment of the Americas requires Canada to engage strategically in those organizations that offer the best opportunities to advance its foreign policy priorities, including the leader level Summit of the Americas.
Canada is a respected and influential multilateral player in the Americas, and engages in the region’s multilateral bodies to advance democracy, security, human rights, responsible trade and investment, and to combat global challenges such as COVID-19 and climate change.
The region features multiple multilateral organizations, many with overlapping mandates and activities. A recent survey identified 180 multilateral groupings in the Americas. Canada strategically engages with relevant institutions to best advance its core interests and values.
Summits of the Americas and the Organization of American States
Organizations centred around the Summit of the Americas process and the Organization of American States (OAS) make up the inter-American system.
The OAS is the primary political forum in the Americas, with 34 active member states and a mandate consisting of 4 pillars aligned with Canada’s long-standing interests in the region: democracy, human rights, development and security. Many member states place a high degree of importance on this institution. OAS meetings and annual general assemblies, the next of which will take place virtually from November 10 to 12, offering opportunities for Canada to shape and advance a shared agenda with regional partners, as well as deepen bilateral relations with key partners in the region. OAS instruments and bodies, such as the Inter-American Democratic Charter, a largely Canada-driven initiative aimed at defending democracy, and the Inter-American Commission on Human Rights (IACHR), are among the most forward-looking of their kind. OAS electoral observation missions are also considered a model globally.
Summits of the Americas bring the highest level of political attention to hemispheric issues and allow leaders to meet, generally every 3 years, to provide guidance on pressing challenges. The United States has announced that it will host the next summit in early summer 2022. It can be expected the summit will address post COVID-19 pandemic recovery and challenges to democratic governance. Canada is engaged with its partners in the region in support of an agenda that serves to unify, rather than divide, its members. Some of the challenges relate to increased political polarization as it poses challenges for multilateral efforts to address authoritarianism, democratic crises (e.g. Nicaragua, Venezuela, Haiti), governance and corruption.
However, the OAS faces the limits and challenges inherent to multilateral organizations. It is weakened by ideological divisions and polarization in the region between left and right-leaning governments or populist leaders, as well as by an inclination to over-extend its mandate, modest budget (US$79 million in 2020), and limited institutional capacity. Canada works to reinforce the OAS’s effectiveness by emphasizing sound management and financial sustainability and by focusing the organization on its core policy roles.
Other regional organizations
Canada engages with, but is not necessarily a member of, other sub-regional organizations, as well as sub-regional bodies and informal groupings that complement formal efforts.
Smaller sub-regional groupings are of increasing importance to Canada’s engagement in the hemisphere. The Caribbean Community (CARICOM) is the oldest of these and has been adept at leveraging its voting bloc in larger organizations like the OAS and the United Nations. Canada is also a regional observer to the Central American Integration System (SICA), which does not function effectively as a bloc but is key to Central America’s economic development and integration.
The Pan American Health Organization (PAHO), the Economic Commission for Latin America and the Caribbean (ECLAC) and the Inter-American Development Bank (IDB) are also policy and programming partners for Canada in the hemisphere, including on efforts to address the COVID-19 pandemic.
Canada monitors other multilateral initiatives that foster political, economic or sometimes ideological cooperation in the region, including the Community of Latin American and Caribbean States (CELAC), the Bolivarian Alliance for the Peoples of our America (ALBA), and the Forum for the Progress and Development of South America (PROSUR). None of these initiatives has yet evolved to threaten the pre-eminence of the OAS in the region.
Canada has been negotiating a free trade agreement (FTA) with Mercosur (Argentina, Brazil, Paraguay, Uruguay) since 2018. Canada is an active observer of the Pacific Alliance (Chile, Colombia, Mexico, Peru) and is seeking to become an associated state through negotiation of an FTA. Both are major trading blocs important for strategic Canadian trade and investment interests in the region.
The emergence of informal groupings, such as the Lima Group (not currently active) or the Group of Friends of the negotiation process on Venezuela, is focused on supporting democracy in Venezuela. Such groupings have influenced multilateral dynamics in the Americas, and have proven useful to adopt temporary measures to complement the work of formal bodies, when warranted.
Canada’s regional focus
The promotion and defence of democracy and human rights have been a hallmark of Canada’s multilateral engagement in the region. Canada helps fund electoral observation missions and recently participated in an OAS Permanent Council Good Offices Mission to address the political crisis in Haiti. Canada’s leadership on Venezuela and Nicaragua has strengthened its voice and credentials among likeminded states.
Canada is active in initiatives and programs to fight corruption and advance hemispheric security, including through its Americas‑focused Anti-Crime Capacity Building Program, which has provided more than $12 million to strengthen anti-corruption policies and regulatory frameworks in the Americas. Over the past year, support provided by the Program through INTERPOL has led to more than 161 arrests and the identification of over 31 criminal organizations engaged in human smuggling operations across the Americas. Canada has also established good economic ties through trade agreements and development programming aimed at inclusive and clean growth.
Through its inter-American regional program, with a budget of $15 million per year, Canada collaborates with multilateral institutions such as the OAS, PAHO, the IACHR and the IDB to deliver international assistance focused on governance, health, gender equality, inclusive growth and climate change. Through PAHO, the program was also instrumental to Canada’s response to the COVID-19 crisis in the Americas and contributed $50 million to support readiness and access to vaccines. There are ongoing calls for Canada to assist with climate change mitigation and adaptation, innovation for development finance, and the equitable distribution of vaccines.
- Multilateral space bringing together the largest number of countries after the UN, within which Canada has significant influence.
- Allows for the advancement of Canada’s priorities in terms of democracy, human rights, gender equality and the French language.
- Advocacy required to improve the organization’s performance, efficiency accountability and relevance.
- National-level (Quebec, New Brunswick, Ontario) and bilateral (particularly France) collaboration.
The Organisation internationale de la Francophonie (international organisation of La Francophonie) (OIF) brings together 88 member and observer states and governments from 5 continents. The OIF implements multilateral Francophone cooperation with the Assemblée parlementaire de la Francophonie (parliamentary assembly of La Francophonie), Agence universitaire de la Francophonie (university agency of La Francophonie), TV5MONDE, Association internationale des maires francophones (international association of Francophone mayors) and Université Senghor (Senghor university) in Alexandria.
With an annual budget of approximately $100 million, the OIF’s programming is oriented toward promoting the French language, democracy and human rights; supporting education, higher education and research; and fostering economic cooperation to bolster sustainable development. Most of the funding is for youth, women and people in developing countries, 59% of which for Africa.
While the Francophone world shares a number of common values, it faces challenges in putting them into practice. Crisis situations, breakdowns of democracy and respect for human rights (gender equality and LGBTQ2+) are regularly discussed within the bodies.
Since becoming Secretary General of La Francophonie in 2019, Louise Mushikiwabo, from Rwanda, has undertaken a plan to transform the organization (18 major projects over 2 years / 2020–2022) in order to improve its operations, increase its credibility and enable more ambitious and effective action in the service of Francophone populations. In alignment with Canadian priorities, the 4 major axes of the roadmap are the promotion of French in international organizations and in the digital sphere, youth, gender equality and political activity.
Isabelle Hudon has been the Prime Minister of Canada’s personal representative for La Francophonie (Sherpa) since 2019. [REDACTED].
Canada’s significant influence
Canada is the second-largest donor to La Francophonie after France, with annual contributions totalling nearly $42 million in 2020–2021.
It was also a leader in developing La Francophonie’s political, economic and cooperation mandates.
A number of Canadians have been secretary general or administrator, the second-highest position in the OIF. For example, Geoffroi Montpetit, the current administrator, was appointed in February 2021.
Canada is home to the headquarters of the Institut de la Francophonie pour le développement durable (La Francophonie institute for sustainable development) in the city of Québec and the Agence universitaire de la Francophonie in Montréal. More than 30 Canadian institutions are members of the agency. Montréal, Québec and 3 federations of municipalities are active within the Association internationale des maires francophones. The legislative assemblies of Canada and 9 provinces are members or associates of the Assemblée parlementaire de la Francophonie, and the Canadian branch currently serves as its first vice-president.
Canada’s influence within the OIF is strengthened by the presence of New Brunswick and Quebec as member governments and Ontario as an observer. The OIF is the only international organization with provincial participation of this kind.
Canada has already hosted 3 Francophonie Summits: city of Québec in 1987 and 2008 and Moncton in 1999.
La Francophonie: a space for advancing Canadian priorities
Canada’s active participation in La Francophonie enables it to advance its foreign policy priorities, particularly in terms of democracy, human rights, gender equality and the French language.
The digital transformation, a central theme of the next Francophonie Summit, is a promotional tool that Canada uses strategically to increase its presence and influence, particularly through the TV5MONDEplus digital platform, launched in 2020 thanks to Canada’s $14.6 million investment.
Toward a more transparent, relevant and efficient organization
Canada combines advocacy and concrete actions to improve the performance, efficiency accountability and relevance of the OIF and its institutions. Canada’s interventions are particularly focused on demanding more transparency, better management practices and a strategic reframing of the OIF’s actions. It also supports the organization by sharing expertise, for example on results-based management.
These efforts have led to notable progress in transparency, results management and the modernization of administrative and financial management tools. Canada’s continued active participation is still needed to ensure the OIF fully meets Canadian expectations regarding good governance and relevance for the people of La Francophonie.
A deliberate expansion of the OIF to protect its added value
Over the past 20 years, [REDACTED], the OIF has seen its membership increase by more than 60%. The geographic diversity of applications submitted in recent years demonstrates the appeal of La Francophonie. [REDACTED]. In May 2019, the Secretary General established a focus group to examine directions and governance in order to make determinations on issues fundamental to La Francophonie’s future, including its expansion. A pause in new memberships was instituted until the outcomes of this process are known, anticipated at the next Summit to take place in Djerba, Tunisia, in the fall of 2022.
Canada supports a rigorous membership process in which the French language and the values of democracy, respect for human rights and gender equality are central elements. It is also in favour of maintaining the 3 statuses (member, associate member, observer) to help the organization retain its effectiveness. [REDACTED].
18th Francophonie Summit
In the context of OIF members’ concerns related to the current political situation in host-country Tunisia and to ensure that the Summit take place in optimal conditions, the Sherpas recommended on October 12 to postpone for the 2nd time the 18th Francophonie Summit, which was scheduled to take place in Djerba in November 2021 (after having been postponed from 2020 due to COVID-19). Important elements that will be presented to the heads of state and government at the Summit, now expected to take place in the fall of 2022, include the results of the OIF transformation plan, proposed directions on the organization’s future expansion and renewal or replacement of the SG.
- Canada is a long-standing and active member of the Commonwealth, and is the second-largest contributor based on assessed contributions.
- The Commonwealth has the potential to be an increasingly important multilateral forum as its members continue to become economically more powerful, and are united by shared democratic values.
The modern Commonwealth has 54 member states, representing 2.4 billion people on 5 continents, most with historic links to the United Kingdom. The Commonwealth Secretariat’s 2020-2021 budget is £40.2 million (approximately $70 million).
The Commonwealth includes 3 intergovernmental organizations:
- The Commonwealth Secretariat;
- The Commonwealth Foundation, whose role is to empower civil society and support people’s participation in democracy and development; and
- The Commonwealth of Learning (COL) hosted by Canada in Burnaby, B.C., whose remit is open-distance education and learning in the Commonwealth, with a focus on girls. Given the importance of remote learning in the COVID context, the COL is a useful platform for advancing Canadian interests.
The Commonwealth is facing important challenges, including [REDACTED] competing member priorities (e.g. small states members advancing specific agenda and priorities of their own; proliferation of mandates taken on by the Commonwealth Secretariat), and decreasing financial resources. Despite current challenges, Canada values its engagement in the Commonwealth as it strengthens our relations with the other member states, particularly small developing states, while demonstrating our support for multilateralism and the rules-based international system. Canada sees the following areas as being the Commonwealth’s value added:
- 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 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 financial and climate resilience.
Queen Elizabeth II is the overall Head of the Commonwealth. Dual British-Dominican national Baroness Patricia Scotland is Secretary General. Her first term is due to expire at the next Commonwealth Heads of Government meeting (CHOGM). She is widely expected to seek a second, 4-year term. [REDACTED]. No member state has formally put forward a challenger candidate, but the expectation is that a strong alternate candidate from Africa will soon be declared.
The High-Level Group 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 and will come into effect immediately after CHOGM, subject to their endorsement by heads of states. Canada’s High Commissioner in London represents Canada at the Commonwealth Governing Board.
Canada’s investments in the Commonwealth
A founding member, Canada is consistently among the top 3 contributors with the United Kingdom and Australia. In 2020/21, Canada provided $10.73 million in core funding, including $8.13 million in assessed contributions to the secretariat and foundation and $2.6 million in long-term institutional support to the Commonwealth of Learning, and $550,000 for the Commonwealth Foundation to support civil society organizations in response to the COVID-19 pandemic. In 2014, Canada suspended voluntary funding to the Commonwealth Fund for Technical Cooperation (managed by the secretariat) to demonstrate its concern with the Commonwealth’s inaction regarding the human rights situation in Sri Lanka, and with ongoing governance issues. Funding has not resumed and this remains an irritant with the organization, even if Canada is still contributing to the core budget of the secretariat through its assessed contribution.
Canada’s active participation in diverse Commonwealth bodies has contributed to a better integration of gender equality and a more sustainable and inclusive approach to development. In recent years, Canada has also consistently called for reforms to ensure that the Commonwealth is “fit for the 21st century”, and has thus played a prominent role in championing the High-Level Group recommendations, and in improving the mechanisms in place to ensure due diligence in terms of financial management.
The 2022 CHOGM (date TBD)
Twice postponed due to COVID-19, the next CHOGM will be held in Rwanda when the conditions allow for heads of state to do so safely and securely. A Commonwealth Foreign Affairs Ministers’ Meeting was held on September 16, 2021. Another is expected prior to CHOGM, which Canada’s foreign minister would be invited to attend.
Host Rwanda has identified “Delivering a Common Future: Connecting, Innovating, Transforming” as its overall theme. Other key issues expected to be discussed are: [REDACTED]; the endorsement by leaders of the High-Level Group recommendations; media freedom; and the implementation of the London 2018 CHOGM commitments, including the Commonwealth Blue Charter (Canada’s Department of Fisheries and Oceans is the Champion for the Ocean Observations Action Group).
Organisation for Economic Co-operation and Development
- The Organisation for Economic Co‑operation and Development (OECD) provides evidence-based and peer-reviewed policy analysis that informs economic and social policy decisions in Canada and its 37 other member countries.
- Canada contributes actively to the work of the OECD, including on trade and investment, inclusive growth, digitalization, international taxation, climate change and the environment, and international aid.
- Mathias Cormann was appointed the new Secretary-General on June 1, 2021.
Established in 1961, the OECD has 38 member countries (the European Union is a non-voting member) representing approximately 62% 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 300 committees, working groups and other bodies focusing on various OECD work areas (e.g. economics, trade, science, education). The OECD’s work is supported by a secretariat comprising 3,500 staff from its member countries.
The OECD budget is €386 million (2019). Canada is the seventh largest contributor, paying 3.5% of the core budget ($18 million annually in assessed contributions).
Four issues impacting OECD priorities at present include: (1) pandemic recovery; (2) economic fragility and the importance of inclusive and sustainable growth; (3) the interconnectedness of the global trading system; and (4) the digital transition. Over the course of the pandemic the OECD has been focused on providing policy analysis and encouraging international cooperation to address the impacts of the pandemic and encourage a green and equitable recovery.
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. In the context of the pandemic, OECD discussions and analysis on securing businesses, maintaining jobs and education, and stabilizing financial markets and economies showcase its strong value proposition.
Colombia became the 37th member of the OECD in April 2020 and Costa Rica its 38th member in May 2021. The OECD also reaches out to non-members and has special programs for key partners and regional initiatives. Specific guidance on how it will engage with China was approved in May 2021, co-facilitated by Canada.
Canada and the OECD
The OECD is an important multilateral platform for Canada, particularly in encouraging policies that promote inclusive societies, and foster cooperation in pandemic recovery. It offers a principled forum to share best practices, and gain insights from likeminded economies.
Canada’s current priorities for the OECD include the digital economy; climate change and natural resources management; trade liberalization and inclusive growth; and sustainable development with a focus on development financing.
Canada is working with other member countries to strengthen OECD governance and efficiency, including maintaining budget discipline and ensuring that it remains a member-led organization that delivers on the priorities of member countries. Canada advocates for a representative and diverse Secretariat, and gender equality considerations in all OECD policymaking. It is also a champion for innovation in public policy-making.
The World Economic Forum
- Over 50 years, the World Economic Forum has evolved to become an influential platform for convening private- and public-sector leaders to shape global, regional and industry agendas.
- Canada actively engages with the Forum through participation in Forum-related events and bodies, collaborating on strategic reports and issues and funding specific initiatives. The Forum’s Annual Meeting at Davos generally takes place in January and is attended by a Canadian delegation selected by the Prime Minister.
The World Economic Forum is a not-for-profit foundation that identifies global issues that would benefit from 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.
While often perceived as elitist, the Forum has succeeded in becoming a consequential venue for fostering innovative partnerships and for focusing the attention of private sector leaders on the high risks of “short-termism”, and their role in supporting solutions to global issues like sustainability, inequality, technological disruption, and environmental, social and corporate governance.
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 Chrystia Freeland and Mark Carney 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 Norwegian Foreign Minister, is the President of the Managing Board and de facto number two in the organization.
The Forum’s flagship Annual Meeting at Davos generally takes place in January, although this was disrupted by the pandemic in 2021. 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.
The WEF’s annual meeting in Davos and regional meetings offer opportunities to promote domestic initiatives to an international audience through the participation in public sessions, and to connect with a wide range of influential actors through bilateral and pull-aside meetings.
Forum Working Structure
The Forum has established a range of “Platforms”, led by stewards – senior leaders from the public and private sectors – to foster dialogue and 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 WEF Stewards. For example, the Minister of Small Business, Export Promotion and International Trade serves as a Steward of the WEF Platform on the Future of Trade and Global Economic Interdependence, 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 (GFCs), grouped in expertise-based thematic councils, provide strategic insights, scientific evidence, forward guidance and multidisciplinary understanding of major global issues, Canada is well-represented on the GFCs at the senior official level from across government and by Canadian civil society and private sector leaders.
The Forum has opened two centres: the Centre for the Fourth Industrial Revolution (4IR) in San Francisco, which explores how science and technology policies can benefit society and how to counter the disruptive impacts of new technologies; and the Centre for Cybersecurity in Geneva, which seeks to foster international dialogues and collaboration to address systemic cybersecurity challenges and improve digital trust.
Recent WEF Initiatives
Since March 2020, the WEF has hosted a series of multi-stakeholder virtual dialogues on the implications of the COVID-19 crisis. In June 2020, Klaus Schwab and HRH The Prince of Wales, launched the “Great Reset” initiative, which aims to mobilize ideas to “build a more inclusive, sustainable and resilient future”. Canada’s Minister of Foreign Affairs has been part of these privileged discussions.
The Forum provides a multi-layered platform to advance Canadian priorities and shape the Forum’s agenda. It offers a unique ecosystem that brings together players from political, business, academic and civil society.
Canada’s involvement with 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 specific reports and initiatives. Canada also attends the Forum’s Annual meeting in Davos and regional meetings.
Global Affairs Canada senior engagement with the Forum has focused on initiatives related to trade and investment, development financing, food security, humanitarian assistance, resilience-building, and the Arctic. Recent high level Canadian engagement includes the Minister of Small Business, Export Promotion and International Trade’s participation in a meeting of the Trade and Global Economic Interdependence Leadership Group to help establish priorities for international public-private cooperation on trade and investment.
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