The Canadian Delegation to the NATO Parliamentary
Assembly (NATO PA) was proud to host the visit of its counterparts from the
Sub-Committees on Transatlantic Relations and Transatlantic Economic Relations
for two days of substantive meetings on the topics of Asia-Pacific defence and
security, and British Columbia’s unconventional energy sector. The visit was
hosted by Cheryl Gallant, M.P., head of the Canadian Delegation, and led
jointly by the Chair of the Sub-Committee on Transatlantic Relations, John Dyrby
Paulsen (Denmark), and the Chair of the Sub-Committee on Transatlantic Economic
Relations, Menno Knip (The Netherlands). Hugh Bayley (United Kingdom),
President of the NATO PA, also participated. The NATO PA delegation for this
visit consisted of 28 legislators from 14 allied countries.
Over the two-day program, the delegation met with
senior officials from the Government of Canada, and the Government of British
Columbia (BC) as well as independent experts and academics. The topics and
themes explored included the Asia-Pacific Gateway and Corridor Initiative,
security challenges for NATO countries emanating from the Asia-Pacific region,
and the current opportunities and implications of Canada’s unconventional gas
sector for NATO allies. Given the topics, the province of BC was an ideal
location to hold these meetings, as this province is the meeting point where
Canada’s oil and gas sector interconnects with its Asia-Pacific economic and
energy ambitions.
The visit concluded with a cultural program where
delegates experienced a tour of Thunderbird Park and the First Peoples Gallery
at the Royal British Columbia Museum. The guided tour was offered by Leslie
McGarry from the Victoria Native Friendship Centre.
Although the full North American program for the
joint Sub-Committees included meetings in Washington DC, USA, held prior to the
BC visit, the Canadian Delegation focused its attention on hosting the meetings
in BC, and therefore only participated in the Canadian leg of the program.
These meetings were conducted under the Chatham
House rule. The following sections summarize the key elements of these
discussions.
SUMMARY OF DISCUSSION
1.British Columbia: Canada’s Gateway to the Asia
Pacific
The NATO PA has long held an interest in the
political, economic, and security dynamics in the Asia Pacific region. Although
NATO itself does not have a role in the region, it has security partnerships
with a number of the region’s states. In addition, relations in general – and
any disputes in particular – among regional players have potential implications
for Allied security. Due to their geography, the Alliance’s North American
allies, Canada and the United States, both have a pacific vocation. Given that
Canada has long-standing diplomatic, economic, and demographic ties with the
Asia Pacific, Canada – and BC in particular – is ideally placed to share its
Asia-Pacific experience, knowledge and expertise with its European allies.
In Vancouver, the delegation met with a
representative from Transport Canada to discuss the Asia Pacific Gateway and
Corridor Initiative. The Initiative is a comprehensive project put in place to
increase the efficiency of moving goods between Canada and Asia. Increased
demand on both sides of the Pacific has required Canada to enhance the transportation
network connecting global supply chains between North America and the growing
Asian economies. For instance, delegates were told that without this
Initiative, Canada would not have been able to accommodate its rising trade
with China. Public-private partnerships have been essential to accomplishing
the goals of the Initiative. The project has, so far, generated roughly CAD 1.4
billion in investments from federal and provincial governments as well as from
the private sector.
In order to maintain Canada’s competitive edge and
respond to increasing trade traffic with Asia, upgrades to transport
infrastructure are a constant necessity. A major focus of the Initiative has
therefore been the modernization of Port Metro Vancouver, where delegates had
the opportunity to visit its downtown Vancouver location and meet with its
officials. Delegates were told that the three formerly independent main ports
in the Vancouver area have been consolidated into one administrative entity
(Port Metro Vancouver) in order to facilitate administration and build
synergies. The Vancouver port is the closet North American port to Asia, and
as the gateway from where goods enter and exit the North American continent,
important infrastructure implications are taken into account to facilitate
mobility. For instance, air, road and rail links are critical to keeping the
port at the centre of trade with Asia and moving freight to Eastern Canada, the
American Midwest and the Gulf of Mexico. Delegates were told that Port Metro
Vancouver has undergone a 40% increase in container traffic since 2006 and
continues to undertake a range of projects that will facilitate future growth.
2.Safe and Efficient Borders
The need to enhance border security while ensuring
trade efficiency at the border is a priority for both the Canadian government
and Canadian business. Delegates met with senior officers from the Royal
Canadian Mounted Police (RCMP) and the Canadian Border Services Agency (CBSA)
to discuss their role in securing the border while maintaining the efficient
movements of goods. The RCMP has federal, provincial and municipal policing
responsibilities in BC. With respect to matters of national security, the RCMP
plays a lead role in combatting human trafficking, human smuggling, organized
crime and terrorism. With respect to border security, the partnership between
the RCMP and the CBSA is crucial. As well, given that Canada and the United
States have a relatively open border, this also requires close cooperation with
American officials on border management. The two countries are collaborating on
a “Beyond the Border” initiative -- a long-term strategy to build a common
perimeter to counter illegal activity while streamlining the movement of goods
and people. For instance, new marine container examination facilities at Port
Metro Vancouver have improved inspection speeds. With respect to containers
entering Canada with a final destination in the US, both governments worked
closely to approve mutually agreeable standards and regulations which eliminated
the costly redundancy of having each country inspect the same containers. As
well, Canada’s customs, immigration and agricultural departments have merged
into a single agency and this too has facilitated the development of an
integrated border approach.
3.Asia-Pacific: Trade and Geopolitical Concerns
Canada’s closest trading partner is the US
although recent stagnation in trade between the two countries has led the
Canadian government to attempt to reduce its reliance on the US and seek new
markets. Asia is a key to Canada’s trade diversification strategy. Canada has
therefore been actively engaged in the Trans-Pacific Partnership talks and is
also negotiating a bilateral trade pact with Japan. Canada also participates in
the ASEAN Regional Forum. Delegates were told that the Government of Canada
must stay active in these regional fora, noting that it has been largely absent
from the region since 1995. These same experts maintain that continued
political engagement in regional institutions and summits could result in added
economic benefits for Canada.
Delegates were told that transpacific trade is now
three times greater than transatlantic trade and that nine of the world’s ten
largest ports are now located in Asia. Although Canada has growing commercial
interests in the Asia-Pacific region, it also has a number of geopolitical
concerns about the region. While the Asia-Pacific region is home to some of the
world’s most dynamic economies, it also includes some of the world’s most
active militaries, and the possibility of conflict by miscalculation and/or
miscommunication is high, particularly given the current range of maritime
trouble spots in the South China Sea. In particular, China’s so-called Nine
Dash line carves out a large maritime claim consisting of between 80% to 85% of
the South China Sea—a claim that conflicts with the assertions of several other
Asian counties. As a result, there are a range of international disputes in the
region involving maritime boundaries, fisheries, island sovereignty and ownership,
and access to energy. There are also grave and persistent tensions between
North and South Korea. North Korea itself continues to be a great source of
concern and it is considered highly unpredictable by all NATO allies. All of
this renders the security environment in the Asia-Pacific region both brittle
and uncertain.
Perhaps the most dramatic strategic shift in the
region is China’s growing ambitions and military capacity. For instance,
delegates were told that by next year, China will be the world’s greatest
shipbuilder. Delegates were told that after centuries of viewing the sea as a
barrier, the Chinese are beginning to explore the strategic opportunities
presented by it. China’s dependence on trade and imported energy has helped
precipitate this revolution in China’s strategic perspective and military
doctrine toward the Pacific. China’s ambitious naval build up is gradually
expanding its capacity to project power into blue water. As a result, the US
sees this as a direct threat to its naval supremacy and is seeking to counter
mounting Chinese capabilities.
Delegates were told that there remains a high
degree of strategic mistrust between the US and China. A need to pay greater
attention to developments along the Pacific littoral, prompted a new US
strategy towards the region which became known as the “pivot” or “rebalance”,
which can be understood as an adjustment to a new economic and strategic
reality in addition to a significant relocation of US naval assets to the
region. Further, the US approach has also seen a renewed diplomatic focus on
the Pacific. According to experts, the US naval fleet will need to develop an
effective strategy to counter China’s emerging anti-access/area denial
capabilities. China is also developing its cyber and satellite capabilities.
Delegates were told that China is now working on its force projection capacity
and is expanding its ambitions to the Indian Ocean. Further, experts suggested
that there should be more emphasis on the Indo-Pacific theatre given that much of
the Pacific maritime traffic is also moving through the Indian Ocean and the
Strait of Malacca—the key route linking East Asia to the Middle East and
Europe. This route is also a critical energy highway.
In the meantime, the US and Canada are managing
sharp reductions in military spending, while the Chinese defense budget is
increasing roughly at the rate of its GNP growth, though its naval capabilities
remain far from American capabilities. Other Asian countries like India and
Japan have also increased their defense budgets. Many countries in the region
including Vietnam, Indonesia, South Korea and Australia have also boosted
defense investment. Delegates were told that the Asia-Pacific is a submarine-rich
environment with over 200 submarines operating in its waters. Experts expressed
concerns over a potential naval arms race in the region with the tenuous
security situation creating an action/reaction approach when tense encounters
at sea occur. Delegates were also told that Russia is also deeply concerned
with the rise of China’s naval capabilities even as it continues to engage in
substantial arms trading with it.
In broad terms, Canada keeps a fairly low profile
in Asian security disputes including tensions between Japan and China. Experts
expressed concern with respect to the manipulation of nationalism by both China
and Japan and recommended that Canada not entertain this behaviour from either
country. Experts also recommended that Canada look beyond the traditional
hotspots and also focus on the non-traditional threats emanating from the
Asia-Pacific. For instance, terrorism is an ongoing challenge that could have
domestic implications. Delegates were told that a high level of immigration
from South Asia to Canada have included some individuals with extreme views.
For instance, those who sympathize with the Tamil Tigers have been known to
raise funds in Canada for their cause.
4.The Royal Canadian Navy’s Pacific Operations
The delegation visited Canadian Forces Base
Esquimalt, the homeport to Maritime Forces Pacific (MARPAC) and Joint Task
Force Pacific Headquarters (JTFP). MARPAC is responsible for the fleet training
and operational readiness of the Royal Canadian Navy (RCN) in the Pacific
Ocean, while JTFP is one of six regional joint task forces located across
Canada tasked with conducting continental operations. Delegates learned that
JTFP is responsible for all Canadian Armed Forces (CAF) operations in the
province of British Columbia including its western air and maritime approaches.
Commander JTFP commands the CAF response to any request by civilian authorities
for military intervention to provide emergency assistance or support in
critical incidents throughout the area of responsibility. The Victoria Search
and Rescue Region, for which Commander JTFP is also responsible, has an area of
responsibility that comprises the northeastern quadrant of the Pacific Ocean,
Yukon Territory as well as the province of British Columbia.
In discussions held with Canadian naval officers
and strategists at the base, the delegation had an opportunity to further
explore Canada’s Asian perspective, security developments in the region and how
Canada’s force structure is designed to meet these challenges. Delegates were
told that it is in Canada’s national interest that sea-lanes in the
Asia-Pacific remain open and the region itself become more prosperous and
stable. The RCN has visited a number of Asian ports and its forces have
participated in several key disaster relief efforts in the region following
Tsunami and earthquake disasters. At the time of the NATO PA visit, the CAF was
about to participate in the annual Rim of the Pacific (RIMPAC) Exercise, the
largest military exercise in the world, where it will have a command role.
Canada also has a set of Arctic obligations given
its expansive territory in the region. However, non-governmental experts
expressed concern that Canada’s Arctic fleet does not meet the necessary
requirements to carry out missions in the North. Canada’s ice capable fleet is
very limited and reinforcing it will be very expensive. The Arctic is of great
symbolic importance to Canada and Canada currently chairs the Arctic Council.
Further, Canada has also taken note of China’s growing interest in the Arctic.
China has now gained observer status in the Arctic Council—the result of a
targeted strategy of engagement with certain member countries.
5.British Columbia’s Energy Boom and Environmental
Concerns
The delegation also met with senior officials from
the Government of BC, the BC Oil and Gas Commission (the Commission), the
Canadian Society for Unconventional Resources, and an academic from the
University of British Columbia (UBC) to discuss a range of energy and
environmental issues linked to the dramatic expansion of the province’s
unconventional energy sector. Delegates were told that there exists a broad
expansion of energy production in Western Canada across a range of sectors
including shale gas, oil shale, oil sands, coal bed methane, hydroelectric
power, geothermal energy and biomass energy. As the scale and scope of Western
Canada’s oil and gas supplies have become evident, there has been growing
global interest in its potential and there is growing international
participation in developing these fields. In BC in particular, delegates were
told that the province has a huge endowment in natural gas and will become one
of the world’s most important producers. Moreover, some estimates suggest that it
could produce gas for as many as 200 years. Developing a capacity to transform
this gas into liquefied natural gas (LNG) will be the key to moving this energy
to global markets.
BC is also impacted by the unconventional oil and
gas sectors in Alberta and Saskatchewan. Ultimately Canada sees Asia as the
most promising market for its energy exports given the region’s increasing
demand as well as current price differentials. Moving oil and gas to the
Pacific coast would therefore require a series of pipelines, which would run
through BC.
Currently, there are two distinct pipeline
proposals under consideration: one to move bitumen and heavy oil from Alberta
to the west coast, and the other to move LNG from within BC to the coast. Fear
of oil and gas spills is the source of some resistance, with the memory of the
Exxon Valdez oil spill still fresh in citizens’ minds. There remain concerns
about the treacherous waters off of the BC coast and the potential damage an
oil spill might cause to this pristine environment which is also important for
fishery. Delegates were told that typically, pipeline spills are a result of
older pipelines and that the National Energy Board is currently studying this
issue.
There are also critics of unconventional oil and
gas extraction more generally. Delegates were told that the maintenance of the
province’s drinking water and bio-diversity are of crucial importance to the BC
population. Environmental concerns surrounding hydraulic fracturing persist and
according to experts, it is essential that the industry develop a strong code
of conduct, greater transparency and best environmental practices to protect
the environment and particularly potentially vulnerable water sources. Though technological
change is making more of these resources economically viable, it is also
uncovering techniques for more environmentally sound extraction. Though the
onus is on industry to achieve provincial standards, delegates were told that
the Commission has begun naming industries that fail to comply. The Commission
is also refining its research on the areas where industry should not operate.
Officials argued that fracturing wells employ very
high quality casings and engage in best practices to minimize the possibility
of well spills in forestland. BC has looked closely at the experiences in New
York and Texas which have helped shape the regulatory environment. The
Commission closely monitors water use in the industry and has shut down
facilities when drought conditions set in. It also demands the full disclosure
of chemicals used in the fracturing process to ensure maximum transparency.
Delegates were told that research is being conducted at UBC to create non-toxic
chemicals that could be used in the process in order to better safeguard the
environment. Delegates were also concerned with the potential for seismic
activity as a result of hydraulic fracturing. Experts emphasised the need to
fully understand the geological landscape of where exploration is occurring.
Usually, seismic activity caused by hydraulic fracturing is minimal: between -2
and 0 on the Richter Scale. The Commission does have earthquake experts among
its staff that monitor seismic activity in and around operations. Tremors
measuring 4 on the Richter Scale would result in an industry having to shut
down its wells. Delegates were told that to date, seismic activity has not
affected communities since drilling has taken place far from populated areas.
Overall, engaging with local populations affected
by drilling or pipeline construction is crucial to the success of current and
future energy projects. Delegates were told that failure to engage with local
and First Nations communities could lead to their derailment. Projects that may
encroach on First Nations land also need to be negotiated particularly with
respect to equitable royalty sharing arrangements.
Finally, Europe is interested in Canada’s
unconventional oil and gas boom for a number of reasons.
There is ongoing concern among NATO’s European allies regarding their own
dependence on Russian energy. This dependence allows Russia to manipulate its
energy prices to control states that it considers within its sphere of
influence and has also weakened the ability of some Western European states
from taking a tougher stance against the Russian government, particularly in
the wake of the crisis in Ukraine. As a result, some European states are
seeking to either develop their own energy sector while others are looking to
North America to potentially supply the energy they require. Delegates were told
that the Commission is sharing its own experience with other countries with
potential to develop these industries and has recently consulted with EU,
British and Polish officials. There is also potential for Canada to develop LNG
export facilities on the East coast from where Canadian firms could move LNG to
Europe.
Respectfully submitted,
Mrs. Cheryl Gallant, M.P.
Chair of the Canadian NATO Parliamentary Association (NATO PA)