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HomeAsiaSecuring Canada’s Supply Chain in the post-pandemic World

Securing Canada’s Supply Chain in the post-pandemic World

Minister Freeland and Deputy Prime Minister and Minister of Foreign Affairs of Vietnam, Pham Binh Minh, met at the ASEAN meetings and underlined the strong ties between Canada and Vietnam. Source: Global Affairs Canada’s Facebook Page

Even before the pandemic, international companies with manufacturing in China and the privately-owned Chinese companies were moving their production base to Vietnam, among other locations in Southeast Asia. The key decision in moving manufacturing from one country or region to another includes the cost-benefit analysis, ease of doing business in a country, and the political stability – among other things.  

Guest Author: Aadil Brar


The COVID-19’s most disruptive impact has been on international travel and supply chains. The first supply shock of the pandemic was meted to the medical supplies. This has followed disruption to all of Canada’s international supply chains.   

The world of policy experts and journalists has been abuzz with chatter about what the post-COVID-19 trade will look like. One thing that can be said for certain is that COVID-19 is bound to transform global trade.

President Trump’s escalation of trade tensions with China, Canada, the European Union, and other countries has stirred the debate about supply chains and global trade. The COVID-19 pandemic and China’s actions during the crisis has ensured that major economies will look to reduce supply chain dependence on one country – China.

The COVID-19 pandemic has exposed serious vulnerabilities in Canada’s supply chains. The shortage of personal protective equipment for front-line doctors, nurses and medical workers has topped the news across the Canadian media.

Canada has taken some steps to ensure steady supply of essential goods from international markets during the pandemic. Minister Mary Ng announced that Canada has signed agreements with Australia, Brunei, Chile, Myanmar, New Zealand, and Singapore to ensure “open and connected supply chains throughout the pandemic”. Prime Minister Justin Trudeau spoke to India’s Prime Minister Modi on the “vital need to keep supply chains open for medical equipment and other critical supplies, as well as the need for increased international cooperation to accelerate the development of diagnostics, treatments, and potential vaccines”

Ottawa was swift to announce measures to secure Canada’s critical domestic industries from being bought out by state-owned enterprises or individuals with ties to a foreign government. Similar measures have been announced by Australia, Japan, and India. Because of COVID-19, 40 economies have imposed export restrictions on medical supplies and 150 countries have imposed international and domestic travel restrictions.

Prior to the pandemic, Canada was working on diversifying its trade partnerships through new alliances and agreements. In 2017, the Comprehensive Economic Trade Agreement with the European Union, and in 2018, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, entered into force. The impact of both these agreements has been mixed so far, but these agreements have laid the foundation for comprehensive collaboration between Canada and other countries in Asia.

“Canada needs to build alliances with like-minded countries to maintain open international supply chains. This could mean mutual strategies to address threats among the alliance, and pledges of assistance to individual members. Such alliances would supplement and work in concert with existing and future trade agreements” Daniel Schwanen and Glen Hodgson of the C.D Howe Institute said in a memo.

Even before the pandemic, international companies with manufacturing in China and the privately-owned Chinese companies were moving their production base to Vietnam, among other locations in Southeast Asia. The key decision in moving manufacturing from one country or region to another includes the cost-benefit analysis, ease of doing business in a country, and the political stability – among other things. The rising cost of labour in China has marked up the cost of production in recent years, making it viable to seek better options for a manufacturing base.    

Moving the manufacturing base from China to Vietnam hasn’t been a smooth sail, the Wall Street Journal reported, “The specialized supply chains that made China a production powerhouse for smartphones and aluminum ladders and vacuum cleaners and dining tables are nowhere near as developed in Vietnam.” Despite the challenges, Vietnam and India still offer economies that can be reliable sources of supply chain diversification for Canadian companies.  

On September 10 2019, the conclusion of the exploratory discussion on the Canada-ASEAN Free Trade Agreement was announced in Bangkok. The group of ASEAN countries together make up as Canada’s sixth-largest trading partner. ASEAN countries include: Indonesia, Thailand, Singapore, Malaysia, Philippines, Vietnam, Brunei, Cambodia, Myanmar, and Laos.

According to a World Bank report released earlier in April, Vietnam is the only country in the ASEAN group of countries that can maintain positive GDP growth of +1.5% despite the pandemic bringing global trade to near collapse.

Wayne Farmer of the Canada-ASEAN business council said “If Canada signed a deal with ASEAN, it would have access to a market of more than 642 million consumers with a combined economy of $2.8 trillion. With an average annual GDP growth of 5.4% in recent years, ASEAN is now the fifth-largest economy in the world and on track to become the fourth-largest by 2030, after the U.S., China, and the European Union.

According to a survey by the Asia-Pacific Foundation in 2018, 63% of Canadians support an FTA with ASEAN, which is up from 40% in 2014. In 2018, Canada’s two-way trade with Vietnam was at $6.46 billion. 

About 66% of the Canadians support an FTA with India, according to the same survey by Asia Pacific Foundation.

China will remain the hub for manufacturing technological products such as Apple iPhones and MacBook computers because China still offers the best options to manufacture those goods. Automation of manufacturing will reduce further the dependence on labour in China, making it feasible for companies to stay put in the country. However, the COVID-19 pandemic and a potential second-term for US President Trump will grow the trade uncertainties and accelerate the movement of companies from China to other locations in Southeast Asia and South Asia.

It was Nixon’s visit to China that paved the way for a new relationship with the US. Similarly, Former Prime Minister Pierre Trudeau’s visit in 1973 shifted the gears of Canada’s relationship with China. Trade agreements can only lay a roadmap for Canadian companies, but it will take action by the political leadership for them to actually walk on it.


About the Author: Aadil Brar is a freelance journalist. His reporting has appeared in the BBC, the Diplomat, Devex, and other publications. His work can be view at www.aadilbrar.com. You can follow him on Twitter at @aadilbrar.

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Panel 4: Pathways to Manage Non-Proliferation in the Middle East (4:30 PM - 5:45 PM ET)

The Western powers have failed to effectively manage the increasing threat of proliferation in the Middle East. While the international community is concerned with Iran’s nuclear program, Saudi Arabia has moved forward with developing its own nuclear program, and independent studies show that Israel has longed possessed dozens of nuclear warheads. The former is a member of the treaty on the Non-Proliferation of Nuclear Weapons (NPT), while the latter has refused to sign the international agreement. 

On Middle East policy, the Biden campaign had staunchly criticized the Trump administration’s unilateral withdrawal from the Joint Comprehensive Plan of Action (JCPOA), more commonly known as the Iran Nuclear Deal and it has begun re-engaging Iran on the nuclear dossier since assuming office in January 2021. However, serious obstacles remain for responsible actors in expanding non-proliferation efforts toward a nuclear-free zone in the Middle East. 

This panel will discuss how Western powers and multilateral institutions, such as the IAEA, can play a more effective role in managing non-proliferation efforts in the Middle East.  

Panelists:

Peggy Mason: Canada’s former Ambassador to the UN for Disarmament

Mark Fitzpatrick: Associate Fellow & Former Executive Director, International Institute for Strategic Studies (IISS)

Ali Vaez: Iran Project Director, International Crisis Group

Negar Mortazavi: Journalist and Political Analyst, Host of Iran Podcast

David Albright: Founder and President of the Institute for Science and International Security

 

Closing (5:45 PM – 6:00 PM ET)

Panel 3: Trade and Business Diplomacy in the Middle East (3:00 PM - 4:15 PM ET)

What is the current economic landscape in the Middle East? While global foreign direct investment is expected to fall drastically in the post-COVID era, the World Bank reported a 5% contraction in the economic output of the Middle East and North African (MENA) countries in 2020 due to the pandemic. While oil prices are expected to rebound with normalization in demand, political instability, regional and geopolitical tensions, domestic corruption, and a volatile regulatory and legal environment all threaten economic recovery in the Middle East. What is the prospect for economic growth and development in the region post-pandemic, and how could MENA nations promote sustainable growth and regional trade moving forward?

At the same time, Middle Eastern diaspora communities have become financially successful and can help promote trade between North America and the region. In this respect, the diaspora can become vital intermediaries for advancing U.S. and Canada’s business interests abroad. Promoting business diplomacy can both benefit the MENA region and be an effective and positive way to advance engagement and achieve foreign policy goals of the North Atlantic.

This panel will investigate the trade and investment opportunities in the Middle East, discuss how facilitating economic engagement with the region can benefit Canadian and American national interests, and explore relevant policy prescriptions.

Panelists:

Hon. Sergio Marchi: Canada’s Former Minister of International Trade

Scott Jolliffe: Chairperson, Canada Arab Business Council

Esfandyar Batmanghelidj: Founder and Publisher of Bourse & Bazaar

Nizar Ghanem: Director of Research and Co-founder at Triangle

Nicki Siamaki: Researcher at Control Risks

Panel 2: Arms Race and Terrorism in the Middle East (12:00 PM - 1:15 PM ET)

The Middle East continues to grapple with violence and instability, particularly in Yemen, Syria and Iraq. Fueled by government incompetence and foreign interventions, terrorist insurgencies have imposed severe humanitarian and economic costs on the region. Meanwhile, regional actors have engaged in an unprecedented pursuit of arms accumulation. Saudi Arabia and the United Arab Emirates have imported billions of both Western and Russian-made weapons and funded militant groups across the region, intending to contain their regional adversaries, particularly Iran. Tehran has also provided sophisticated weaponry to various militia groups across the region to strengthen its geopolitical position against Saudi Arabia, UAE, and Israel. 

On the other hand, with international terrorist networks and intense regional rivalry in the Middle East, it is impractical to discuss peace and security without addressing terrorism and the arms race in the region. This panel will primarily discuss the implications of the ongoing arms race in the region and the role of Western powers and multilateral organizations in facilitating trust-building security arrangements among regional stakeholders to limit the proliferation of arms across the Middle East.

 

Panelists:

Luciano Zaccara: Assistant Professor, Qatar University

Dania Thafer: Executive Director, Gulf International Forum

Kayhan Barzegar: Professor and Chair of the Department of Political Science and International Relations at the Science and Research Branch of Azad University

Barbara Slavin: Director of Iran Initiative, Atlantic Council

Sanam Shantyaei: Senior Journalist at France24 & host of Middle East Matters

Panel 1: Future of Diplomacy and Engagement in the Middle East (10:30 AM-11:45 AM ET)

The emerging regional order in West Asia will have wide-ranging implications for global security. The Biden administration has begun re-engaging Iran on the nuclear dossier, an initiative staunchly opposed by Israel, while also taking a harder line on Saudi Arabia’s intervention in Yemen. Meanwhile, key regional actors, including Qatar, Iraq, and Oman, have engaged in backchannel efforts to bring Iran and Saudi Arabia to the negotiating table. From a broader geopolitical perspective, with the need to secure its energy imports, China is also expected to increase its footprint in the region and influence the mentioned challenges. 

In this evolving landscape, Western powers will be compelled to redefine their strategic priorities and adjust their policies with the new realities in the region. In this panel, we will discuss how the West, including the United States and its allies, can utilize multilateral diplomacy with its adversaries to prevent military escalation in the region. Most importantly, the panel will discuss if a multilateral security dialogue in the Persian Gulf region, proposed by some regional actors, can help reduce tensions among regional foes and produce sustainable peace and development for the region. 

Panelists:

Abdullah Baabood: Academic Researcher and Former Director of the Centre for Gulf Studies, Qatar University

Trita Parsi: Executive Vice-President, Quincy Institute for Responsible Statecraft

Ebtesam Al-Ketbi: President, Emirates Policy Centre​

Jon Allen: Canada’s Former Ambassador to Israel

Elizabeth Hagedorn: Washington correspondent for Al-Monitor

Panel 4: Humanitarian Diplomacy: An Underused Foreign Policy Tool in the Middle East (4:30 PM - 5:30 PM ET)

Military interventions, political and economic instabilities, and civil unrest in the Middle East have led to a global refugee crisis with an increasing wave of refugees and asylum seekers to Europe and Canada. Moreover, the COVID-19 pandemic has, in myriad ways, exacerbated and contributed to the ongoing security threats and destabilization of the region.

While these challenges pose serious risks to Canadian security, Ottawa will also have the opportunity to limit such risks and prevent a spillover effect vis-à-vis effective humanitarian initiatives in the region. In this panel, we will primarily investigate Canada’s Middle East Strategy’s degree of success in providing humanitarian aid to the region. Secondly, the panel will discuss what programs and initiatives Canada can introduce to further build on the renewed strategy. and more specifically, how Canada can utilize its policy instruments to more effectively deal with the increasing influx of refugees from the Middle East. 

 

Panelists:

Erica Di Ruggiero: Director of Centre for Global Health, University of Toronto

Reyhana Patel: Head of Communications & Government Relations, Islamic Relief Canada

Amir Barmaki: Former Head of UN OCHA in Iran

Catherine Gribbin: Senior Legal Advisor for International and Humanitarian Law, Canadian Red Cross

Panel 3: A Review of Canada’s Middle East Engagement and Defense Strategy (3:00 PM - 4:15 PM ET)

In 2016, Canada launched an ambitious five-year “Middle East Engagement Strategy” (2016-2021), committing to investing CA$3.5 billion over five years to help establish the necessary conditions for security and stability, alleviate human suffering and enable stabilization programs in the region. In the latest development, during the meeting of the Global Coalition against ISIS, Minister of Foreign Affairs Marc Garneau announced more than $43.6 million in Peace and Stabilization Operations Program funding for 11 projects in Syria and Iraq.

With Canada’s Middle East Engagement Strategy expiring this year, it is time to examine and evaluate this massive investment in the Middle East region in the past five years. More importantly, the panel will discuss a principled and strategic roadmap for the future of Canada’s short-term and long-term engagement in the Middle East.

Panelists:

Ferry de Kerckhove: Canada’s Former Ambassador to Egypt

Dennis Horak: Canada’s Former Ambassador to Saudi Arabia

Chris Kilford: Former Canadian Defence Attaché in Turkey, member of the national board of the Canadian International Council (CIC)

David Dewitt: University Professor Emeritus, York University

Panel 2: The Great Power Competition in the Middle East (12:00 PM - 1:15 PM ET)

While the United States continues to pull back from certain regional conflicts, reflected by the Biden administration’s decision to halt American backing for Saudi Arabia’s intervention in Yemen and the expected withdrawal from Afghanistan, US troops continue to be stationed across the region. Meanwhile, Russia and China have significantly maintained and even expanded their regional activities. On one hand, the Kremlin has maintained its military presence in Syria, and on the other hand, China has signed an unprecedented 25-year strategic agreement with Iran.

As the global power structure continues to shift, it is essential to analyze the future of the US regional presence under the Biden administration, explore the emerging global rivalry with Russia and China, and at last, investigate the implications of such competition for peace and security in the Middle East.

Panelists:

Dmitri Trenin: Director of Carnegie Moscow Center

Joost R. Hiltermann: Director of MENA Programme, International Crisis Group

Roxane Farmanfarmaian: Affiliated Lecturer in International Relations of the Middle East and North Africa, University of Cambridge

Andrew A. Michta: Dean of the College of International and Security Studies at Marshall Center

Kelley Vlahos: Senior Advisor, Quincy Institute

Panel 1: A New Middle East Security Architecture in the Making (10:30 AM -11:45 AM ET)

The security architecture of the Middle East has undergone rapid transformations in an exceptionally short period. Notable developments include the United States gradual withdrawal from the region, rapprochement between Israel and some GCC states through the Abraham Accords and the rise of Chinese and Russian regional engagement.

With these new trends in the Middle East, it is timely to investigate the security implications of the Biden administration’s Middle East policy. In this respect, we will discuss the Biden team’s new approach vis-à-vis Iran, Yemen, Saudi Arabia, and Israel. The panel will also discuss the role of other major powers, including China and Russia in shaping this new security environment in the region, and how the Biden administration will respond to these powers’ increasing regional presence.

 

Panelists:

Sanam Vakil: Deputy Director of MENA Programme at Chatham House

Denise Natali: Acting Director, Institute for National Strategic Studies & Director of the Center for Strategic Research, National Defense University

Hassan Ahmadian: Professor of the Middle East and North Africa Studies, University of Tehran

Abdulaziz Sagar: Chairman, Gulf Research Center

Andrew Parasiliti: President, Al-Monitor