Canada’s Indo-Pacific Strategy (IPS) — a “whole-of-society" effort to guide action and ambition in a region responsible for a third of global economic activity — turned two years old yesterday.
In its short life, the ambitious C$2.3-billion strategy has weathered dramatic diplomatic disputes, defence-spending scrutiny, and tensions in the Taiwan Strait and South China Sea, and accelerated Canada’s progress on regional trade, security, and diplomatic engagement.
Two years on, the Asia Pacific remains home to some of the world’s largest and fastest-growing economies. But the region’s dazzling growth forecasts have dimmed of late. S&P Global downgraded its real GDP growth projection for the region (excluding China) to 4.2 per cent in 2025, a decrease of 0.7 percentage points compared to 2023.
Ottawa’s implementation updates are useful in gauging the successes and setbacks of the IPS, especially as looming tariffs, potential conflicts, and demographic factors threaten to sap some of the region’s dynamism.
On trade, one door opens — and another one closes
Canada’s trade with the Indo-Pacific is booming. In 2023, merchandise trade with the region was valued at C$257 billion, up 13.7 per cent from C$226 billion in 2021.
The recent conclusion of negotiations on a Canada-Indonesia Comprehensive Economic Partnership Agreement is a win for Ottawa. If a trade agreement is ultimately inked with ASEAN, Canada would be linked to 17 out of 26 Indo-Pacific economies through trade or investment agreements.
Through the IPS, Ottawa has appointed an Indo-Pacific envoy and an Indo-Pacific trade representative. ‘Team Canada’ trade missions have been revived, with a mission heading to Indonesia and the Philippines next week, followed by Australia in February. The federal government also opened Canada’s first Agriculture and Agri-Food Office in the region in Manila earlier this year.
There have been challenges. Canada and India paused negotiations on a preliminary trade agreement in September 2023 over diplomatic tensions. Canada’s accession to the Digital Economic Partnership Agreement with New Zealand, Singapore, South Korea, and Chile also remains up in the air.
Additionally, the IPS earmarked C$750 million for FinDev Canada, Canada's bilateral development finance institution. Two years later, FinDev hasn’t publicly partnered with any clients in the Indo-Pacific, with its projects ostensibly confined to Africa, Latin America, and the Caribbean.
Canada on the defensive
The IPS has breathed new life into Ottawa’s defence and security engagement in the region. Canada has established ‘2+2’ foreign and defence meetings with South Korea, partnered with Australia on emerging missile threat defence, expanded its naval presence in the Indo-Pacific (including increased transits of the Taiwan Strait), and upped military co-operation with Japan.
Ottawa also recently established a consolidated Cyber Command and has dispatched cyber attachés to Canberra, Seoul, Singapore, Taipei, and Tokyo.
Some allies, however, seemed to be focused on the bottom line: over the last year, Ottawa has come under fire for failing to spend the equivalent of two per cent of its GDP on defence, the NATO benchmark.
As part of Canada’s Defence Policy Update, the federal government has set aside at least C$60 billion for 12 advanced submarines. A South Korean company, Hanwha Ocean, is a “strong contender” to secure the contract, which would see the first vessel ready by 2035.
Defence minister Bill Blair has said that Canada will hit the NATO mark by 2032, which may be cold comfort to skeptical lawmakers in the U.S. and Europe.
Competing with China
Canada has picked its spots in co-operating with China, which it labelled an “increasingly disruptive global player” in 2022.
The Kunming-Montréal Global Biodiversity Framework was an example of rare Canada-China collaboration. Adopted in 2022 at a conference chaired by China and hosted by Canada, the framework aims to “halt and reverse nature loss.”
High-level visits and talks have ticked up between the two countries as well, with Canadian ministers responsible for foreign affairs, agriculture, and the environment all travelling to China since 2023.
