State of the world

[ * ] An asterisk appears where sensitive information has been removed in accordance with the Access to Information Act and Privacy Act.

I. Overview

Global overview

Issue

• A complex and destabilizing global landscape has repercussions for Canada’s international agenda.
• While economic growth and development has lifted hundreds of millions of people out of poverty in recent decades, the COVID-19 pandemic has undermined progress and contributed to greater global uncertainty. It has also accentuated challenges to institutions, alliances, practices, and norms, while demonstrating the importance of international cooperation.

Background

Diverse interrelated geostrategic trends are imposing new strategic choices on Canada’s foreign and defence policies. [ * ]

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 inequalities 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 United Nations (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. [ * ] With the development of new vaccines, though inequitably distributed across the globe, there is a new focus among policymakers on the future strategic landscape and opportunities to revitalize a strained rules-based system.

Geopolitical competition, peace and security

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[ * ] The return to power of the Taliban in Afghanistan has raised concerns about human rights, terrorism, and regional stability. Violent extremists (e.g., Daesh, Boko Haram, Al-Qaida) continue to threaten peace and security, compounded in fragile states with low resilience. Protracted crises, notably in Syria, Libya, the Democratic Republic of Congo, Lebanon, Venezuela, Iraq 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 (SDGs) 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, [ * ] 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. [ * ]

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 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 LGBTQ2I 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, such as encrypted messaging services, 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 will affect 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 estimates 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 per cent). The fall in foreign direct investment (FDI) flows to low- and middle-income countries was more acute - excluding flows to China, which fell by over 30 per cent in 2020.

Trade flows did better than expected in 2020 and are expected to further rebound 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 World Trade Organization (WTO), has struggled to accommodate emerging economic players and global issues. One major challenge is the ongoing digital and technological transformation. The rising pace of innovations and power of big technology companies, represent challenges for policymakers, notably as a growing share of economic activity is conducted digitally. The disruptions of the pandemic have also encouraged states to review their exposure to global risks and the resilience of key international supply chains, notably for critical minerals, bio-manufacturing (pharmaceuticals, vaccines), food, and high tech products and services. In some countries, pandemic-related measures may signal a sustained shift toward industrial policies and the goal of relative economic self-sufficiency.

Meanwhile, international development remains an important domain for geopolitical influence among leading powers, [ * ] 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.

Global economy

Issue

• The global economy is experiencing a dramatic rebound from the COVID-19 pandemic-induced recession. However, as a group, advanced economies are rebounding much faster and are expected to emerge from the pandemic with far less economic impacts than most emerging and developing economies.
• The Canadian economy is forecasted to grow by 6.1 per cent in 2021 and 3.8 per cent in 2022 (OECD), driven in part by 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: growing social and economic inequalities, potential inflation, exposure of highly indebted states, and COVID-19 variants’ impacts on recovery.

Background

Global growth

The most recent quarterly economic outlooks released by the International Monetary Fund (IMF) and Organisation for Economic Co-operation and Development (OECD) have both significantly upgraded prospects for global economic growth since the start of the year. The IMF’s current expectation is that after contracting by 3.3 per cent in 2020, the global economy is projected to grow by 6 per cent in 2021, and by 4.9 per cent in 2022. While this represents a much better outcome than previously feared, the OECD reports that global income “will still be some US$3 trillion less by the end of 2022 than was expected before the crisis hit.”

Both institutions also warn about similar broad risks in the recovery, including 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 U.S., are expected to move more quickly towards closing the gap with what had been their pre-pandemic growth trend. Meanwhile, many emerging market and developing economies, [ * ] face significant economic scarring in the form of lost growth relative to what had been forecast before the pandemic, many of them taking years to recover.

Limited global access to vaccines to date increased vulnerability to COVID-19 and the potential for new variants, which will jeopardize the recovery – especially in emerging and developing countries. Inconsistent roll-out of vaccines will add to the stop-start nature of re-openings and the uneven, uncertain global economic recovery ahead. It will also continue to disproportionately impact vulnerable countries and people in precarious work.

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 vaccinations, 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. 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 that 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 prices have risen rapidly to feed the accelerating demand for goods, housing, and the prospect of easing mobility restrictions. The turbulence and lingering uncertainty have put pressure on the public finances and economic activity of commodity exporters, especially in the developing world, and food prices are also on the rise, resulting in a significant growth in malnutrition and risk of famine in some Least Developed Countries (LDCs).

While improved, employment 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.

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.

For Canada, this would include continued support for the rules-based trading system (e.g., WTO Ottawa Group leadership), as well as strategic engagement with key trade partners, most notably the U.S., by advancing issues of mutual benefit such as leveraging the Canada-United States-Mexico Agreement (CUSMA) on supply chain realignment, increasing North American competitiveness, and pursuing labour reform. There will also be a continued need to better promote existing free trade agreements across Canada, especially larger and more recent agreements such as the Comprehensive Economic and Trade Agreement (CETA) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), to help Canadian exporters leverage the trade preferences secured in these agreements.

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Much of the spending on recovery plans is being financed through increased debt. In February, the Institute of International Finance estimated that overall government debt reached 105 per cent of global GDP in 2020, up from 88 per cent in 2019. This rise was largely driven by massive spending by advanced economies, which undoubtedly blunted the effects of the downturn. Debt in emerging markets and developing economies, with less space to manoeuver, have also mounted, though in large part due to output drops. 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 responding 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.

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 to 3.7 per cent in July, the highest level in a decade, and sharply up from 2.2 per cent rise in March. The Bank of Canada, like many central banks, has stated that the current high inflation is due to temporary factors including base-year effects from deep price declines in some goods and services at the outset of the crisis a year ago, 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.

While the global recovery continues to progress, variant-driven COVID-19 outbreaks, particularly in developing countries where infection rates are surging, could still weaken this economic momentum over the medium-term. Accelerating the distribution and delivery of the vaccine among low- and middle-income countries will remain important to avoid a slower, “two-track” global recovery.

II. Global issues

Canada-United States relations

Issue

• The Biden Administration has demonstrated willingness to collaborate with Canada on issues of mutual interest, including pandemic response, economic recovery and growth, climate change, diversity and inclusion, and international security.
• [ * ]
• The Roadmap for a Renewed U.S.-Canada Partnership was announced in February 2021 and has served as a useful tool to drive progress across a range of key areas of the bilateral relationship.

Background

Political and social context

Since taking office on January 20, 2021, the Biden 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. [ * ]

Within this context, the Biden administration has proposed three ambitious legislative plans, totaling US$5.6 trillion. The American Rescue Plan was signed into law in March 2021, and the Infrastructure and the Family plans are currently making their way through Congress.

On August 10, 2021, the Senate adopted the US$1.2 trillion Infrastructure Investment and Jobs Act. The House of Representatives must adopt the package before it is sent to President Biden for signature. Senate Democrats are also pursuing a separate “human infrastructure” package that would include support measures related to childcare, education, and other social services outlined in President Biden’s budget proposal. This package is not expected to garner support from Republicans and will likely have to be passed along partisan lines.

Given the Democrats’ thin hold on Congress (50-50 split in the Senate; eight-seat majority in the House), [ * ]

Trade

Canada is among the four largest U.S. trading partners (with the European Union, Mexico, and China), while the U.S. is by far Canada’s foremost trading partner, representing 72 per cent of Canada’s exports. There is close integration in many sectors of Canada and the U.S.’ economies, and ongoing efforts to align regulatory systems to the extent possible will be an important part of enhancing Canada’s competitiveness in global markets.

In the trade relationship, Canada’s efforts are focused on ensuring the effective implementation of the Canada-United States-Mexico Agreement (CUSMA), strengthening supply chain resiliency, and defending Canadian trade and economic interests (including responding to looming Buy America provisions that could affect Canadian commercial interests and finding a mutually agreeable solution to the softwood lumber dispute). [ * ]

International security and foreign policy

Canada and the U.S. have a long history of cooperating to confront the security challenges that threaten North America. Canada and the U.S. are steadfast allies in promoting global peace and security. Canadian and American law enforcement cooperation is extensive, and our militaries work alongside each other as partners in the North American Aerospace Defence Command (NORAD) and 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 and a bilateral priority, as reflected in a joint statement on August 14, 2021.

President Biden believes the U.S. will have a more lasting and consequential impact on regional and global challenges when it works in concert with partners. [ * ] Several of these issues are linked to the crisis in Afghanistan, which has absorbed significant time and attention of the U.S. and its international partners, including Canada. President Biden has also stated his commitment to modernizing the NATO alliance.

Climate and energy

Canada and the U.S. have recently pledged to explore areas for greater policy alignment on job creation, while also tackling climate change and enhancing adaptation and resilience to climate impacts. The two countries are committed to working together to advance shared goals on clean energy, emission reductions, and net zero targets.

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 U.S. agreed on a Joint Action Plan on Critical Minerals Collaboration 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. Canada and the U.S. have completed ten rounds of negotiations on renewing the Treaty, including the most recent round in June 2020 where Canada tabled a proposal.

Border management

As of September 8, 2021, Canada allows entry to Canada of fully vaccinated American citizens and permanent residents currently residing in and traveling from the U.S. for discretionary purposes. The U.S. is keeping existing border measures in place for the time being, which allow Canadians to enter by air regardless of their purpose of travel and their vaccination status, but not by land unless subject to certain exemptions. The U.S. position largely stems from the worsening COVID-19 situation across the U.S. An Expert Working Group comprising senior officials from Canada and the U.S. has been in place since June 2021 to collaborate on the safe and sustainable reopening of the shared border.

Canada and the U.S. have two well-managed boundary disputes in the Beaufort Sea and over the legal status of Canada’s Northwest Passage (NWP). Canada considers the NWP internal waters, while the U.S. claims the NWP to be a strait used for international navigation giving all foreign vessels a right of transit. These differing views are generally well-managed, including through the 1988 Arctic Cooperation Agreement, under which the U.S. has agreed to request permission for its icebreakers to navigate through the passage, while Canada has agreed to facilitate such navigation.

Representation

On July 20, 2021, President Biden formally announced the nomination of Mr. David Cohen as U.S. Ambassador to Canada, pending confirmation by the Senate. Mr. Cohen’s confirmation is not expected until late September or October 2021, as there are multiple steps in the ambassadorial confirmation process.

Annex – Full text of the roadmap for a renewed U.S.-Canada partnership

February 23, 2021
Ottawa, Ontario

“It is in the shared interest of the United States and Canada to revitalize and expand our historic alliance and steadfast friendship to overcome the daunting challenges of today and realize the full potential of the relationship into the future. The Roadmap for a Renewed U.S.-Canada Partnership announced today establishes a blueprint for an ambitious and whole-of-government effort against the COVID-19 pandemic and in support of our mutual prosperity. It creates a partnership on climate change, advances global health security, bolsters cooperation on defense and security, and it reaffirms a shared commitment to diversity, equity, and justice. Bound by history and geography, the partnership between the United States and Canada endures because we invest in each other’s success.”

President Joe Biden
Prime Minister Justin Trudeau
February 23, 2021

Combating COVID-19

The top priority of the President and the Prime Minister is to end the COVID-19 pandemic. They agreed to strengthen comprehensive and cross-sectoral efforts to control the pandemic, collaborate on public health responses, and build resilience against future outbreaks.

The Prime Minister and the President committed to working closely together to defeat the virus, including by surging the health and humanitarian response to the global pandemic, responding to new variants, following expert advice, and supporting global affordable access to and delivery of COVID-19 vaccines, including through the COVAX Facility.

The leaders emphasized their strong support for the multilateral institutions that are on the front lines of COVID-19 response, including the World Health Organization (WHO) and UN development agencies, and committed to rapidly fulfilling national pledges to COVAX.

They agreed on the importance of a transparent and independent evaluation and analysis, free from interference, of the origins of the COVID-19 outbreak, and to work together toward the development and use of swift, effective, transparent, and independent means for investigating such outbreaks in the future.

They also recognized the importance of urgent global action to advance health security, counter biological threats, and prevent the next pandemic and agreed to leverage existing pandemic preparedness arrangements and platforms, such as the North American Plan for Animal and Pandemic Influenza, the Global Health Security Agenda and the Global Partnership Against the Spread of Weapons and Materials of Mass Destruction.

They further agreed on the need to improve international institutions for global capacity for pandemic preparedness and response, including by working to strengthen and reform the WHO, and the Pan American Health Organization (PAHO), and exploring the establishment of a permanent facilitator for high consequence biological threats within the office of the UN Secretary-General and a sustainable health security financing mechanism.

They discussed emerging outbreaks, including the Ebola outbreaks in West and Central Africa and agreed on the importance of a robust global response and partnership with regional organizations, such as the Africa Centres for Disease Control and Prevention, to build health security capacity for the future.

They agreed on the importance of countering biological threats, whether naturally occurring, deliberate, or accidental and to advancing policies and practices domestically and through health, foreign assistance, and threat reduction programs to improve biosafety, biosecurity, and biological norms for mitigating biological risks associated with life sciences research and biotechnology advances.

The President and the Prime Minister recognize coordinated border policies remain central to controlling COVID-19 and new variants while promoting economic growth and recovery.

Both leaders agreed to take a coordinated approach based on science and public health criteria when considering measures to ease Canada-U.S. border restrictions in the future.

The two leaders agreed to strengthen the U.S.-Canada Action Plan on Opioids recognizing the rise in drug use and overdoses in both of our countries as a result of the devastating COVID-19 pandemic.

Building back better

The Prime Minister and the President share a vision for a sustainable and inclusive economic recovery that strengthens the middle class, creates more opportunities for hard working people to join it, and ensures people have good jobs and careers on both sides of the border. They also recognized the opportunity for clean growth driven by workers, communities, businesses, and innovation.

The leaders agreed on the need to build back better together in a way that addresses the disproportionate impacts on women, youth, underrepresented groups, and Indigenous peoples.

As COVID-19 has rolled back many of the hard-won gains women have achieved over past decades, the President and Prime Minister committed to implement measures to support women’s full and equal participation in the workforce, including with respect to early learning and childcare.

The President and the Prime Minister also considered the impact of the pandemic on small businesses. The United States and Canada announced joint initiatives to accelerate economic recovery of small and medium-sized enterprises (SMEs), with a focus on supporting women-owned and minority/Indigenous-owned SMEs, by leveraging the United States-Mexico-Canada Agreement (USMCA) SME chapter and the Small Business Development Center (SBDC) model.

The two leaders launched a strategy to strengthen Canada-U.S. supply chain security and agreed to reinforce our deeply interconnected and mutually beneficial economic relationship.

The leaders also agreed to work together to build the necessary supply chains to make Canada and the United States global leaders in all aspects of battery development and production. To that end, the leaders agreed to strengthen the Canada-U.S. Critical Minerals Action Plan to target a net-zero industrial transformation, batteries for zero-emissions vehicles, and renewable energy storage.

The leaders recognized the important economic and energy security benefits of the bilateral energy relationship and its highly integrated infrastructure. To further advance climate priorities, they agreed to renew and update the existing Memorandum of Understanding (MOU) on energy between the U.S. Department of Energy and the Department of Natural Resources Canada to enhance cooperation on sustainable and equitable energy transitions, clean energy innovation, connectivity and low-carbon transportation.

The leaders also agreed to strengthen cooperation under the Energy Resource Governance Initiative (ERGI), a multinational effort to foster international cooperation on the minerals and metals that make the energy transition possible.

The Prime Minister and the President acknowledge the impact of international regulatory cooperation on enhancing economic competitiveness and well-being while maintaining high standards of public health, safety, labor/labour, and environmental protection.

Accelerating climate ambitions

The President and the Prime Minister expressed their commitment to strengthened implementation of the Paris Agreement, including by working together and with others to increase the scale and speed of action to address the climate crisis and better protect nature.

Recalling the Agreement's call to pursue efforts to limit global temperature increase to 1.5 degrees C., they will work in tandem, and encourage others to achieve net zero emissions no later than 2050.

The Prime Minister and the President expressed their commitment to have their two countries work together on cooperative action ahead of the U.S.-hosted Leaders’ Climate Summit that will allow both countries to increase their climate ambition. The President, in addition to acknowledging Canada’s new strengthened national climate plan and its globally ambitious price on pollution, reiterated his aim to have ready the U.S. nationally determined contribution (NDC) in advance of the Summit and welcomed the Prime Minister’s aim to announce the enhanced 2030 emissions target for its NDC by the Summit as well.

The President also restated his commitment to holding polluters accountable for their actions. Both the President and the Prime Minister agreed to work together to protect businesses, workers and communities in both countries from unfair trade by countries failing to take strong climate action.

Both leaders agreed to launch a High Level Climate Ministerial, which will coordinate cooperation between the United States and Canada to increase ambition aligned to the Paris Agreement and net-zero objectives. This Ministerial will also explore opportunities to align policies and approaches to create jobs, while tackling climate change and inequality, and enhancing adaptation and resilience to climate impacts.

The leaders reaffirmed the shared commitment to reducing oil and gas methane emissions to protect public health and the environment, as guided by the best science.

The leaders also agreed to take a coordinated approach to accelerating progress towards sustainable, resilient, and clean energy infrastructure, including encouraging the development of cross-border clean electricity transmission. To advance this work, the President affirmed the goal for the United States to achieve a net-zero carbon pollution free power sector by 2035 and the Prime Minister reaffirmed the goal for Canada to achieve 90 per cent non-emitting electricity by 2030.

Given the integrated nature of the road transport, maritime, and aviation sectors, the President and Prime Minister agreed to take aligned and accelerated policy actions, including efforts to achieve a zero-emissions vehicle future.

The leaders committed to work with Canadian and American public and private financial institutions to advance the adoption of climate-related financial risk disclosure and align financial flows with climate goals, including the achievement of a prosperous net-zero emissions economy.

The leaders also recognized the ecological importance of the Arctic National Wildlife Refuge. In particular, they agreed to work together to help safeguard the Porcupine caribou herd calving grounds that are invaluable to the Gwich’in and Inuvialuit peoples’ culture and subsistence.

The Prime Minister and the President agreed to be partners in protecting nature, including by supporting Indigenous-led conservation efforts.

The two leaders agreed to work together on environmental restoration and conservation efforts, and to advancing nature-based climate solutions.

In advancing climate solutions and protecting nature, both the President and the Prime Minister agreed on the importance of doing this work with Indigenous peoples, sub-national governments, workers, and stakeholders including civil society, youth, business and industry.

Advancing diversity and inclusion

The Prime Minister and the President discussed their shared commitment to addressing systemic racism, unconscious bias, gender-based discrimination, barriers for persons with disabilities, and all other forms of discrimination and exclusion.

The two leaders expressed their shared determination to implement more effective, equitable, and inclusive approaches to community safety, criminal justice, and law enforcement. They will direct their agencies to focus on modernizing approaches to community safety and addressing issues of systemic racism and discrimination, including through meaningful engagement with civil society and community leaders. The work will also consider innovative approaches to implementing institutional and community-based prevention, intervention, and diversion initiatives, including prioritizing the provision of adequate support and services to individuals facing mental health challenges or addiction.

The leaders agreed that promoting gender equality and empowering women and girls is the most effective approach to eradicating poverty and building a more peaceful, more inclusive, and more prosperous world. They also committed to ensuring that women are not left behind by COVID-19, including by addressing the she-cession caused by the pandemic through investments and policies to support women’s full participation in the workforce. They agreed to exchange best practices in feminist public policy and the advancement of gender equity. They will do so by engaging policy actors from Canada and the United States, within and outside of government, to consider child benefits, early learning and childcare, pay equity, and women’s entrepreneurship, among other issues.

The leaders reaffirmed their commitment to combat systemic racism and discrimination, and agreed to work together to share best practices and promote diversity and inclusion within both public and private sectors.

Bolstering security and defence/defense

The President and the Prime Minister agreed that collective security is a shared responsibility.

The leaders agreed on the importance of investment in modern, ready, and capable forces in line with their commitments to NATO under the 2014 Wales Summit Defence/Defense Investment Pledge. Such investments enable effective contributions to NATO, United Nations, and other global missions.

The Prime Minister and the President agreed to expand cooperation on continental defence/defense and in the Arctic, including by modernizing the North American Aerospace Defense/Defence Command (NORAD). They directed their Ministers of Foreign Affairs and National Defence and Secretaries of State and Defense to meet in a 2+2 Ministerial format to further coordinate our joint contributions to collective security.

The President and the Prime Minister reaffirmed their determination to work together to counter terrorism and violent extremism in all forms, both at home and abroad. In this context, the leaders agreed to enhance cooperation to counter exploitation of social media and the Internet by terrorists, violent extremists, and hate groups, strengthen information sharing to improve our respective prevention strategies addressing domestic violent extremism, and enhance reciprocal sharing on known and suspected threats.

Canada and the United States will enhance law enforcement collaboration by reestablishing the Cross-Border Crime Forum to facilitate cooperation among law enforcement bodies, including strengthening information sharing between the two countries and addressing justice reform, as well as cross-border law enforcement challenges to make communities safer. The challenges include, but are not limited to tackling illegal cross-border flows of firearms, drugs, and currency, as well as organized crime, mass marketing fraud, and human trafficking. In this context, the President and Prime Minister noted their common objective to reduce gun violence and directed officials to explore the creation of a cross-border task force to address gun smuggling and trafficking.

The two countries will launch an expanded U.S.-Canada Arctic Dialogue to cover cross-cutting issues related to continental security, economic and social development, and Arctic governance.

Canada and the United States will increase cooperation to strengthen cybersecurity, and to confront foreign interference and disinformation. As part of their efforts to protect critical infrastructure in North America, the two countries will implement a Framework for Collaboration on Cybersecurity in the Energy Sector to enhance the security and resiliency of our cross-border energy infrastructure.

Building global alliances

The Prime Minister and the President affirmed their shared commitment to addressing global challenges, and reiterated their firm commitment to the United Nations, G7 and G20 as well as NATO, the WTO, and the Five Eyes community.

The leaders agreed to work towards reviving the North American Leaders’ Summit as a recommitment of solidarity between the United States, Canada, and Mexico.

They also agreed to expand cooperation with respect to the promotion of democracy, human rights, and media freedom in our hemisphere and around the world. The Prime Minister committed to partnering with the United States on a Summit for Democracy as well as through the Media Freedom Coalition.

[ * ]

President Biden condemned the arbitrary detention of Michael Kovrig and Michael Spavor and committed to work for their release.

The two leaders discussed their shared concern about Russia’s egregious mistreatment of Aleksey Navalny and its repression of democratic processes, gross violation of Ukraine’s sovereignty and territorial integrity, and destabilizing policies around the world. They also reviewed the situations in Venezuela, Myanmar, Iran, Yemen, and the Middle East.

The leaders expressed their common concern about the global migration crisis, commitment to providing safe haven to refugees and asylum seekers, and determination to work together to strengthen efforts in these areas, including refugee resettlement. Recognizing the sources of instability and irregular migration in Central America, the leaders also agreed to work together to expand support for capacity building in affected countries.

[ * ]

[ * ]

Arctic and Antarctic

Issue

• The Arctic is central to Canada’s national identity, prosperity, and security.
• Global issues, including climate change, natural resource development, scientific research, and shipping impact Canada’s national interests in the Arctic, and underpin current efforts to position Canada as a long-term leader in shaping polar affairs.
• [ * ]

Background

Arctic

Climate change and technology are increasing access to the Arctic’s natural resources and waterways, and both Arctic and non-Arctic states are actively expanding their footprint across the region. [ * ]

[ * ]

Canada, alongside likeminded Arctic allies, is committed to maintaining the Arctic as a region of peace and stability grounded in internationally agreed rules and norms. This goal is advanced through the Arctic and Northern Policy Framework (ANPF), which was co-developed with Canadian territorial, provincial, and Indigenous partners. The ANPF’s international commitments are supported by investments of $29.4 million over five years (2020-2025) to enhance Canada’s global leadership in the Arctic.

Arctic Council

The Arctic Council brings together eight Arctic states (Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden, and the U.S.) and six international Indigenous organizations to advance sustainable development and environmental protection in the Arctic.

The Russian Federation is the current Chair of the Council (2021-2023), [ * ] As Chair, Russia is promoting cooperation in four areas: Arctic people, including Indigenous peoples of the North; environmental protection, including climate change; socio-economic development in the region; and, strengthening the Arctic Council. [ * ]

Continental defence and North American Aerospace Defence Command (NORAD)

[ * ]

NORAD is a Canada-U.S. organization tasked with aerospace warning and control, and maritime warning for North America. NORAD operates early-warning radars that provide limited visibility of aerospace activity in the Arctic, and the system requires upgrading. Canada has made several large investments in core capabilities vital to strengthening the Canadian Armed Forces’ ability to detect, deter, and defend against threats to Canada.

Arctic agreements and disputes

Recent years have seen the conclusion of several legally-binding agreements such as the Agreement to Prevent Unregulated High Seas Fisheries in the Central Arctic Ocean, the International Code of Safety for Ships Operating in Polar Waters, and a global ban on heavy fuel oil in Arctic waters.

Canada continues to work toward resolving its three Arctic boundary disputes with the U.S. and Denmark. Since 2018, the disputed maritime boundaries in the Lincoln Sea and sovereignty over Hans Island are being dealt with under the Canada-Denmark Joint Task Force on Boundary Issues. The Beaufort Sea dispute with the U.S. will be resolved in due course, in accordance with international law.

In May 2019, Canada filed its Arctic submission on the outer limits of the continental shelf with the UN Commission on the Limits of the Continental Shelf (CLCS). The submission includes approximately 1.2 million square kilometres of seabed and subsoil and includes the North Pole. The submission overlaps with those of Russia and Denmark and is expected to overlap with the upcoming U.S. submission. Overlaps are a normal part of the process to define the continental shelf, and Arctic Ocean coastal states have committed to resolving these in an orderly and peaceful manner in accordance with international law. In March 2021, Russia filed two Addenda with the CLCS, revising and significantly expanding its outer limits such that they now abut Canada’s 200 nautical mile exclusive economic zone and triple in size the overlap with Canada. [ * ]

The waters of Canada’s Arctic Archipelago, including the Northwest Passage (NWP), are internal waters of Canada, including by virtue of Canada’s historic title under international law. However, some countries, including the U.S., China, and others, hold different views regarding the legal status of some of those waters. Nevertheless, the 1988 Arctic Cooperation Agreement requires the U.S. to obtain Canada’s consent for entry for its icebreakers.

Antarctica

There is growing global interest in Antarctica due to the region’s economic, environmental, and strategic importance. Decision making through the Antarctic Treaty—the key multilateral forum for Antarctic governance—is increasingly important and interconnected to other global interests.

Canada acceded to the Antarctic Treaty in 1998 as a non-Consultative Party; as such, Canada cannot vote on decisions adopted. Canada is developing an application to seek Consultative Party (decision-making) status.

[ * ]

International dimensions of the COVID-19 response and recovery

Issue

Canada’s engagement in the world has been significantly impacted by COVID-19, and Canada will be expected to continue supporting the global effort to respond to and recover from the pandemic.

Background

The past two years have seen the global community take action across a range of fields to address the international implications of COVID-19. As part of the broader global effort, Canada has focused on: fighting the pandemic, managing financial stresses and stabilizing economies, supporting the most vulnerable, and reinforcing recovery.

To fight the pandemic, Canada focused on strengthening capacities at home and abroad in a manner that also reinforces delivery of the health-related UN Sustainable Development Goals. This has involved 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. Since February 2020, Canada has announced over $2.6 billion in international assistance as part of the global response to COVID-19, of which 76 per cent has been disbursed as of August 2021. This includes more than $1.3 billion in funding for the ACT to support equitable access to COVID-19 tests, treatments and vaccines. A significant portion of Canada’s COVID-19 response to date has also involved pivoting planned and operational international assistance programming, where possible, to support the pandemic response. As of August 2021, Global Affairs Canada has been able to direct approximately $541 million in existing resources to COVID-19 initiatives. Canada has also reinforced the delivery of pandemic and health-related international assistance, with a focus on the poorest and most vulnerable populations.

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 OECD to identify sound economic practices. 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. Canada increased its loan commitment to the International Monetary Fund (IMF)’s Poverty Reduction and Growth Trust from $2 billion to $3 billion to help meet unprecedented demand from low-income countries for financial support to address crisis needs and is supporting the IMF’s allocation of US$650 billion in Special Drawing Rights to increase fiscal space for low-income and other vulnerable countries. Through the Ottawa Group and bilaterally, Canada has also worked to foster sustainable supply chains by advocating for unrestricted exports of critical health products and services, including personal protective equipment and essential workers.

To support the most vulnerable and reinforce recovery, Canada has focused on the humanitarian response and addressing longer-term socio-economic impacts of the pandemic in developing countries. Canada’s support under this pillar has focused in particular on agriculture, food security, nutrition, access to education, promoting economic recovery and growth, peacebuilding – including to support women peacebuilders and to combat violence against women, 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 provided critical on-the-ground support to those unable to return to Canada. 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 4,811 loans totalling $20 million were disbursed to Canadians in distress.

Diplomatic response to COVID-19

Canada has also engaged constructively to leverage and enable effective responses by multilateral institutions in which it is a member, as well as plurilateral groupings. Early in the crisis, Canada established a Ministerial Coordination Group on COVID-19. 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 UK 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 international assistance response.

On international trade, Canada has worked closely with likeminded countries at the 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.

Vaccine donations

As of August 30, Canada has delivered over 63.7 million doses to provinces and territories and is holding a further 10.7 million centrally. There is sufficient supply to provide a full series to all Canadians currently eligible for vaccination (66.4 million doses) and to maintain a strategic inventory for interim needs (4.5 million). As vaccination uptake among the Canadian population increases, domestic demand for vaccine supply has been decreasing, while international need remains high. Donating excess vaccines has proven useful to promote global vaccine equity and global health, and minimize wastage before doses expire.

Canada’s preferred donation strategy remains to donate doses via the COVAX Facility [ * ] As of August 16, 2021, Canada has donated 40.7 million doses via COVAX, which includes 13 million from G7 commitments, 17.7 million from the bilateral Advance Purchase Agreement (APA) with AstraZeneca, and 10 million Janssen doses.

COVAX’s strong preference is to receive doses directly from the manufacturer. For doses that have already arrived on Canadian soil and cannot be donated through COVAX, Canada has developed a contingency donation mechanism for bilateral donations. For these donations to be effective, recipient governments need to have authorized use of the specific vaccine type, use English or French-language labelling, and have the health system capacity to administer the doses rapidly. The recipient also needs to indemnify the vaccine producer and Canada. As of August 30, Canada has donated 696,980 doses of AstraZeneca through bilateral agreements with Trinidad and Tobago, Saint Vincent and the Grenadines, Jamaica, and Ecuador. Further donations to Peru and Barbados are pending.

In exceptional circumstances, COVAX may consider receiving doses that have left the manufacturer’s custody. The Facility has signaled willingness to work with Canada on a legal framework for the donation of surplus Moderna doses that are already on Canadian soil. An agreement is not yet in place and the final number of doses is still to be determined, but is likely to be at least 4.1 million.

The Government of Canada is closely and continuously monitoring domestic need for vaccines to determine timely allocations of doses for donations to maximize public health benefits.

Looking ahead

Global efforts will remain two-pronged during 2021: 1) concerted action to limit the spread of the pandemic as new, more virulent strains emerge; and 2) focusing on addressing the long-term impacts of the pandemic on 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.

Consular issues

Issue

Global Affairs Canada manages a range of complex and high-profile consular cases and issues that require engagement by the Minister of Foreign Affairs and exceptionally by the Prime Minister.

Background

Global Affairs Canada responds to an annual average of 230,000 routine consular cases (e.g., passport and citizenship applications, routine requests for information, etc.) involving Canadians abroad.

Typically, about three per cent (or approximately 6,700) of new cases opened each year require enhanced consular support to help Canadians through difficult events or situations abroad. These can include cases involving arrest and detention, child and family-related cases, or medical assistance and deaths. Demand for consular services required in the context of international crises can escalate quickly, as was demonstrated at the start of the COVID-19 pandemic, and following the Taliban’s takeover in Afghanistan.

Canadians requiring consular assistance abroad can access 260 points of service across 150 countries. The majority of consular services are provided by trained consular officers working in Canada’s network of missions abroad. In locations where Canada does not have a mission, services can be offered through the global network of honorary consuls or by partner missions with which Canada has a service-sharing agreement (e.g., Australia).

Complex consular cases

The following factors can contribute to the complexity of a consular case:

• Vulnerability (children, people with disabilities, members of marginalized groups including religious, ethnic, LGBTQ2, and other characteristics);
• Dual nationality (where the host country does not recognize an individual’s Canadian citizenship and limits the provision of consular services);
• Denial of consular access to a detainee;
• Poor conditions of detention;
• Death penalty;
• Allegations of mistreatment or torture in detention; and/or,
• Allegations of espionage or terrorism.

While complex cases occur anywhere in the world, those in China and Syria are currently among the most challenging.

[ * ]

Syria

The consular cases of Canadians detained by Kurdish authorities in northeastern Syria represent a uniquely challenging issue. Canada’s Embassy in Damascus closed in 2012 and Canadian officials do not travel to this region due to security concerns. As a result, Canada’s ability to provide consular assistance is extremely limited. The Government of Canada repatriated an orphaned child from the region in October 2020. This remains the only repatriation effort the government has undertaken.

Emergency management

Over the past ten years, the geostrategic environment in which consular services are provided has become significantly more complex and costly. There has been a steady rise in the number of large-scale emergencies requiring Global Affairs Canada emergency management services due to the implications for Canada, Canadians, and Canadian interests. In 2020-2021, this included support for the government-wide response to the downing of Ukraine International Airlines Flight 752 and the repatriation of approximately 62,500 Canadians and permanent residents from 109 locations around the world in the early stages of the COVID-19 pandemic. Successive crises over the past ten years have resulted in important innovations that have streamlined consular assistance (e.g., leveraging technology for outreach to Canadians abroad), but also severely strained existing capacities.

Communications and parliamentary considerations

Most emergency situations involving Canadians, and many consular cases, generate considerable media and parliamentary attention. It is not always in the interest of the government, or concerned parties that are subject to consular assistance, to have their cases made public. Global Affairs Canada, Public Safety, and partner agencies collaborate on these cases to manage the communications, legal, and reputational risks to the government and other concerned parties. Personal information of Canadians is protected by the Privacy Act, which restricts the government’s ability to publicly comment on individual cases in detail.

Arbitrary detention initiative

Canada is leading a global initiative against arbitrary detention for diplomatic leverage. This practice represents a fundamental threat not only to Canadians but to citizens from all countries that are traveling, living, and doing business abroad. The initiative aims to reinforce the rules-based international order and protect human rights and freedoms. Since the initiative’s launch in February 2021, Canada has garnered support from partners from every region of the globe to stand against this unacceptable practice. The initiative invites Canada’s allies to take action against this practice, to raise the cost to nations who engage in such practices, and ultimately end arbitrary arrest, detention, and sentencing for diplomatic leverage. Canada’s Declaration Against Arbitrary Detention in State-to-State Relations is now endorsed by 65 countries and the European Union. Multilaterally, the G7 and the UN Working Group on Arbitrary Detention also support the Declaration and its associated Partnership Action Plan, which establishes six areas of cooperation and voluntary measures states may wish to support in order to deter the practice of arbitrary arrest, detention, and sentencing in state-to-state relations.

Economic security transition

Issue

Economic-based national security threats pose significant risks to Canada’s recovery, long-term prosperity and competitiveness. [ * ]

Canadian position

Ensuring Canada has a modern and comprehensive framework to counter efforts by hostile actors to exploit Canada’s economy is essential to ensuring Canada’s long-term economic prosperity and national security, including rebuilding after COVID-19. [ * ]

Background

Canadian context

Foreign investment and global trade are critical drivers of the Canadian economy and those of like-minded partners. Given Canada’s population, geography, highly skilled workforce, world-leading scientific and academic institutions, and advanced economy, access to international markets and capital are critical for economic growth, and recovery post COVID-19.

[ * ]

Hostile tactics range from foreign direct investment in sensitive sectors (including critical infrastructure and emerging technology), to theft of advanced research, both through espionage by hacking corporate networks and the transfer of sensitive dual-use technology with military and intelligence applications. National security concerns may also manifest through procurement at the federal, provincial/territorial, and local levels. For example, procurement activities can provide adversaries with access to sensitive sites or data; and, goods or services procured for critical infrastructure can enable espionage and disruption.

Canadian academic and research institutions are targeted by hostile states who leverage their nationals, including students and visiting faculty, foreign talent recruitment programs, and research partnerships to gain access to sensitive Canadian knowledge and research.

[ * ]

The publicized risk of espionage to businesses, research centres, and health organizations involved in Canada’s pandemic response have heightened the profile of these issues in the public domain. For example, in May 2020, the Communications Security Establishment (CSE) and Canadian Security Intelligence Service (CSIS) released a joint statement regarding the heightened cyber security, foreign interference, and espionage threats during the pandemic, including to Canada’s health sector, as adversaries shifted focus to priorities such as pandemic response. Significant outreach efforts have been undertaken by the national security community to raise the awareness of stakeholders, and to provide threat mitigation advice.

Public Safety Canada is examining gaps in legislation, regulation and governance. Targeted stakeholder consultations were held in spring and summer 2021, [ * ]. In addition, National Security Guidelines for Research Partnerships have been issued, and the Investment Canada Act National Security Review Guidelines were updated to increase transparency around the types of foreign investments that may trigger a security review. [ * ]

Strategic considerations

A number of major policy and legislative initiatives have been undertaken by Canada’s partners in recent years to counter economic security threats. In 2018, the United States passed the Foreign Investment Risk Review Modernization Act and the Export Control Reform Act that identified critical technology, critical infrastructure and sensitive personal data as categories of assets that trigger additional national security safeguards if they are to be acquired by foreign actors. In the United Kingdom, the 2021 National Security and Investment Act significantly expanded its ability to intervene in certain types of transactions if there are national security concerns. This includes mandatory pre-notification by the foreign investor, which will apply to specific sectors, and strengthened penalties for non-compliance. Australia also modernized its foreign investment framework in 2020 to include mandatory pre-notification, including investments in sensitive “national security businesses” (e.g. critical infrastructure, defence or intelligence supply chains).

In considering the existing limitations of Canada’s toolkit and options for modernizing Canada’s overall economic security framework, [ * ]

III. Key issues

Strategic overview: Canadian Armed Forces (CAF) operations and activities

Issue

Canada’s security and prosperity depend on global stability and credible domestic defence. The Canadian Armed Forces (CAF) carries out domestic and international operations and activities to defend Canada’s security, interests, and values and to contribute to international peace and stability.

Background

As the international landscape continues to shift, many current threats and challenges transcend national borders. Increasingly, instability abroad can directly undermine Canada’s security and prosperity. Defending Canada and Canadian interests demands both robust domestic defence and active engagement abroad.

Canada emphasizes multilateral cooperation through alliances, partnerships and multilateral fora to advance its global defence objectives. Canada’s contributions to international operations reflect our commitment to international peace and security and burden sharing.

To deploy the CAF abroad, the Government of Canada exercises the Crown prerogative (the powers and privileges accorded by common law to the Crown). The Crown prerogative may be exercised by Cabinet, the Prime Minister, the Ministers of Defence and Foreign Affairs jointly, or by the Minister of National Defence alone. The sensitivity, complexity, and risk to CAF members are factors in determining the level of authorization required. For a ministerial authorization, it is customary to inform the Prime Minister of the decision.

Domestic and continental operations and activities

Defending Canada is the CAF’s top priority with two main lines of effort. The first is to defend Canada’s sovereignty, including through surveillance and control of Canadian territory and its approaches. The second is to assist civilian authorities in natural disaster response, search and rescue, pandemic response, and other domestic emergencies.

Continental defence and support to the North American Aerospace Defense Command (NORAD) are key priorities for the CAF in the defence of Canada. CAF members are postured across Canada at all times to ensure the military can respond to any challenges to our sovereignty on very short notice.

Support to civilian authorities is the second line of effort, which is governed by the National Emergency Management Framework. Authorities are granted by the Minister of National Defence upon receipt of advice from the Deputy Minister and the Chief of the Defence Staff, and following receipt of a Request for Assistance (RFA) from a province/territory or another Minister of the Crown. Operation LENTUS is the CAF response to natural disasters in Canada (e.g., flooding, wildfires). Operations LASER and VECTOR are current domestic operations related to Canada’s whole-of-government pandemic response and national vaccine roll-out.

International operations and activities

International operations and activities enable the CAF to contribute to a more stable and peaceful world where threats to our national security are addressed far from our borders, military conflicts are deterred, Canadian values and multilateralism are promoted, and the rules-based international order is maintained. Support for international operations, including through the UN, NATO and coalitions, reinforce Canada’s reputation as a reliable partner and responsible global actor and allow the Government of Canada to pursue its foreign policy priorities and promote its strategic interests.

Key CAF operations are highlighted below.

Latin America and the Caribbean

Defence engagement in Latin America and the Caribbean reinforces North American security, builds regional capacity, supports Canadian prosperity and enhances peace and security.

Operation CARIBBE is Canada’s contribution to a U.S.-led multinational campaign against illicit trafficking in the Caribbean Sea, the Gulf of Mexico, and the eastern Pacific Ocean. The CAF has deployed Royal Canadian Navy ships and Royal Canadian Air Force aircraft on Op CARIBBE since 2006.

Operation ACKEE is a Global Affairs Canada (GAC)-funded, CAF capacity-building operation in the Caribbean Basin focused on developing the Jamaican Defence Force Counter Terrorism Operations Group and operationalizing the Caribbean Special Tactics Centre as a regional Special Operations Forces Centre of Excellence.

Canada also contributes to security in Latin America and the Caribbean through the Military Training and Cooperation Program (MTCP), which delivers training and capacity building (e.g., language training, peace support operations, professional development) to member countries.

Europe

NATO is the foundation of Canada’s defence relations in Europe and the Alliance is a cornerstone of Canada’s defence policy. Canada contributes to NATO missions to advance our shared goals and to contribute to burden sharing.

Operation REASSURANCE is Canada’s contribution to NATO’s assurance and deterrence measures in Central and Eastern Europe and includes serving as lead nation for the enhanced Forward Presence battle group in Latvia, contributing a warship to one of NATO’s Standing Maritime Groups, and deploying fighter aircraft in support of NATO Air Policing missions. Canada currently commands and contributes the flagship for one of NATO’s four Standing Naval Forces (Standing NATO Maritime Group One) and will lead the mission until December 2021. These Standing Naval Forces provide the Alliance with a continuous naval capability and form the core of NATO’s maritime readiness. Canada has also deployed a Royal Canadian Air Force squadron to Romania in support of NATO Air Policing until December.

Under Operation UNIFIER, Canada has provided training and capacity building to the Security Forces of Ukraine since 2015. To date, the CAF has trained more than 28,000 Security Forces personnel.

Operation KOBOLD is Canada’s contribution to NATO’s peace support operation in Kosovo (KFOR). Canada has contributed to KFOR since 2008 and [ * ] CAF members are currently deployed.

Asia Pacific

As a pacific nation, Canada is committed to being a reliable player in the region through consistent engagement and strong partnerships that balance national security and regional objectives.

Since the end of hostilities over 70 years ago, the U.S. and Canada have worked together to promote peace and security on the Korean Peninsula. Canada is the largest contributing nation after the U.S. to the UN Command in Korea, which plays an important role in maintaining the Korean Armistice Agreement.

Under Operation NEON, the CAF routinely deploys warships, maritime patrol aircraft and personnel in support of the multinational effort monitoring UN Security Council sanctions against North Korea.

Through routine naval deployments under Operation PROJECTION, Canada conducts training, exercises and engagements with foreign navies and other international security partners in Southeast Asia.

Middle East

The Middle East contains three active areas of conflict (Syria, Iraq and Yemen). Canada’s military engagement in the Middle East is rooted in the whole-of-government Middle East Strategy, which was developed in response to the ongoing crises in Iraq and Syria, and their impact on Jordan and Lebanon.

Under Operation IMPACT, Canada contributes to the U.S.-led global coalition against Da’esh and NATO Mission Iraq, and provides training and capacity building to Iraqi Security Forces, the Jordanian Armed Forces and the Lebanese Armed Forces. Canada commanded NATO Mission Iraq for the first two years of the mission, from 2018-2020.

A number of smaller missions also help advance Canada’s regional priorities in the Middle East. Under Operation PROTEUS, the CAF is working with the U.S. Security Coordinator to help build the capacity of the Palestinian Authority Security Forces and promote security coordination between Israel and the Palestinian Authority.

Operation CALUMET is Canada’s support to the Multinational Force and Observers (MFO), an independent peacekeeping operation in the Sinai Peninsula.

Operation JADE is Canada’s contribution to the UN Truce Supervision Organization (UNTSO). Operation JADE is Canada’s longest-running overseas commitment and [ * ] CAF members are currently deployed on the mission as military observers to the Golan Heights and Lebanon.

As part of Operation FOUNDATION, CAF members serve within a variety of U.S. headquarters in Tampa Bay, Florida, Qatar, Bahrain, and United Arab Emirates to help counter terrorism.

Under Operation ARTEMIS, Canada contributes personnel and assets (air and naval) to the Combined Maritime Forces and Combined Task Force 150, a U.S.-led naval partnership to combat terrorism and promote maritime security in the Arabian Sea and the Indian Ocean.

Africa

Security challenges in Africa, such as terrorism, irregular migration and kidnapping for ransom, have implications far beyond the continent. The UN, among other international actors, is actively engaged in addressing these issues. In Africa, the CAF work through a whole-of-government approach to advance Canada’s objectives, including Canada’s commitments to UN peacekeeping operations.

Canada currently deploys military personnel to three UN missions in Africa: MINUSMA in Mali (Operation PRESENCE), UNMISS in South Sudan (Operation SOPRANO) and MONUSCO in the Democratic Republic of the Congo (Operation CROCODILE). Under Operation PRESENCE, Canada also provides episodic tactical airlift support to UN missions out of the UN Regional Service Centre Entebbe in Uganda since August 2019.

Under Operation BARKHANE, Canada supports French-led counterterrorism operations in the Sahel through the provision of episodic airlift support.

Canadian Defence Attachés

Canada maintains 46 Canadian Defence Attaché (CDA) offices worldwide, accredited to over 150 countries. CDAs establish meaningful relationships with international partners and allow Canada to build greater situational awareness, enhance interoperability and operational effectiveness, reinforce the capacity of partners, and exchange lessons learned and best practices. CDAs support broader strategic defence objectives through the provision of timely and valued information on defence issues. CDAs help establish new defence relationships and strengthen existing partnerships. The CDA network also helps to deliver military training and capacity-building to MTCP’s 68 member countries.

Cybersecurity

Issue

The Cyber threat landscape is rapidly evolving, often outpacing governments’ ability to adjust regulatory and policy frameworks. As such, governments are increasingly being challenged to both secure their networks and information holdings, mitigate the most pressing threats and assist victims of cyber incidents.

Canadian position

Cyber security can no longer been seen as the sole responsibility of governments. Internationally, Canada, in consultation with its like-minded partners, will need to continue to emphasize the need for international norms and the prevention of safe-havens where cyber-criminals can operate without consequence. [ * ]

Background

Our dependence on information technology creates risks, in terms of crime, the integrity of basic communications and economic systems, and the protection of information. Crime facilitated by the internet is the most significant risk to economic recovery, as it can impact everyone from individual Canadians to small and large enterprises, through to municipalities and critical infrastructure systems.

Cyber security considerations are currently being applied across a wide array of issues in order to better position the Federal Government’s response to critical cyber security incidents.

Examples include:

• [ * ]

Strategic considerations

Canada’s economic recovery, and future economic growth, lies in the development of updated legislative and regulatory regimes, new tools, technologies and business models. Strategic considerations to ensure a stable online future for Canadian business include:

• [ * ]

Cyber strategy review: Public Safety Canada is completing its review of Canada’s current cybersecurity strategy. The review will highlight where legislative, policy and resource gaps exist in the federal government’s response to issues of cybersecurity. [ * ]

Canadian extremist travellers

Issue

Starting in early 2013, significant numbers of Canadians began leaving the country to fight on behalf of terrorist organizations around the world, with a large number of Canadian Extremist Travelers (CETs) ending their journeys in Iraq or Syria and joining Da’esh. Many of those who went to Iraq or Syria are now located in Kurdish-controlled detention camps and prisons in Syria. Should the camps suddenly close or the prisoners escape in large numbers, there could be a sudden and unexpected demand for CETs to return to Canada.

Canadian position

[ * ] When there is a decision to assist a CET to return to Canada (e.g. for humanitarian reasons), the Canadian Security and Intelligence (S&I) community has a rigorous process to assess and mitigate the risk a CET may pose. It can be difficult to successfully arrest and charge returning CETs due to complex legal and evidentiary issues. As such, returning CETs can represent a risk to the safety and security of Canada and Canadians.

Background

More than [ * ] have departed Canada to join or support various terrorist organizations around the world since 2013. More than [ * ] went to the Syria-Iraq region to support the terrorist activities of Da’esh or other al-Qaeda linked entities. The others, approximately [ * ], are either elsewhere in the world or dead. While few, if any, seem to have planned to return to Canada, this changed as Da’esh lost control of its territory and the Kurdish authorities established detention camps and prisons in Syria to house foreign fighters, including approximately [ * ].

Some CETs do occasionally decide to return to Canada. [ * ]

Most CETs that remain in Syria [ * ] cannot leave because they are in detention in a Kurdish camp or prison, or because the land border crossings create personal risk of arrest, trial and in some cases a death sentence if they cross into Turkey or Iraq. If they do manage to make it out of Syria, [ * ]

[ * ]

Strategic considerations

[ * ]

While Canadian law enforcement continues to build cases against some CETs known to be alive today, investigating and prosecuting these individuals is inherently challenging. Identifying witnesses who can, and are willing to, provide admissible evidence can be difficult.

The Avoiding Complicity in Mistreatment by Foreign Entities Act (2019) acts as a protection for the CETs and avoids Canadian security and intelligence and law enforcement community involvement in any mistreatment at the hands of foreign entities. The assessment of the risk of mistreatment can be a key factor in determining whether it is possible to collect sufficient evidence to lay charges against a CET.

[ * ] This creates the risk that CETs returning to Canada go free upon their return, [ * ]

Sanctions

Issue

Canada’s sanction regime rests on three pieces of legislation: 1) the Justice for Victims ofCorrupt Foreign Officials Act (JVCFOA); 2) the Special Economic Measures Act (SEMA); and 3) the United Nations Act.

Autonomous sanctions are an important complement to Canada’s foreign policy tools for maintaining and restoring international peace and security, combatting corruption, and promoting respect for norms and values, including human rights.

Background

Canadian sanctions aim to bring about a change in policy or behaviour by the target states, individuals, or entities. Sanctions place restrictions on the activities 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:

The 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, Russia, Saudi Arabia, South Sudan, and Venezuela under the JVCFOA.

The Special Economic Measures Act (SEMA)

The SEMA came into force in 1992 and allows Canada to impose sanctions against foreign states, as well as individuals and entities related to foreign states.

The SEMA can be used in four types of situations: 1) a 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) when gross and systematic human rights violations have been committed by the state; and 4) acts of significant corruption.

Measures under the SEMA could include: prohibitions on dealings of property by persons designated under the Act; restrictions or prohibitions on trade; an arms embargo; 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 the SEMA on 13 countries: Belarus, China, Democratic People’s Republic of Korea, Iran, Libya, Myanmar, Nicaragua, Russia, South Sudan, Syria, Ukraine, Venezuela, and Zimbabwe.

The United Nations Act (UNA)

The UN Security Council may decide what measures member states shall take to restore or maintain international peace and security. A decision by the Security Council imposes a legal obligation on UN member states to introduce the measures into domestic law. Twelve countries are currently subject to UN sanctions: Central African Republic, Democratic Republic of the Congo, Democratic People’s Republic of Korea, Iran, Iraq, Lebanon, Libya, Mali, Somalia, South Sudan, Sudan, and Yemen.

In Canada, these sanctions are imposed through regulations under the United Nations Act. Canada also imposes UN sanctions against individuals and entities associated with terrorist activities, including Da’esh, Al-Qaeda, and the Taliban.

Sanctions implementation

Sanctions are implemented through the regulations. Imposing new sanctions requires reliable and credible open-source information that meets the legal threshold in the Acts. These are time and resource-intensive processes, and require the engagement of the Department of Justice and the Treasury Board Secretariat. [ * ]

Global Affairs Canada is the focal point for coordinating the government's overall approach to sanctions imposition and management. Budget 2018 provided funding for Global Affairs Canada to create a dedicated sanctions coordination unit, including funds for the development of sanctions policy, coordination with international partners, and providing guidance to Canadians on sanctions obligations. [ * ] Canada continues to enhance collaboration with like-minded countries (in particular the U.S., EU, and UK) and seeks to coordinate announcements of new measures of mutual interest.

Global hot spots

Issue

There are several crises and complex situations around the world with repercussions beyond their borders, and which may affect the global landscape in important ways. The following situations are of particular note, including because of Canada’s investments and engagement.

Background

Ukraine

The 2019 election of President Zelenskyy represented a political shift in Ukraine. [ * ]

Support to Ukraine’s security sector (including defence reform) is the flagship area of Canada-Ukraine cooperation. Through Operation UNIFIER, the Canadian Armed Forces military training mission to Ukraine, Canada has invested over $100 million and trained nearly 30,000 Ukrainian security forces personnel. Canada has also been supportive of Ukraine’s new international initiative, the Crimea Platform. The Crimea Platform is a top foreign policy priority for President Zelenskyy and aims to bring Crimea-related issues to the forefront of international discussions by gathering leaders and foreign ministers to discuss the ongoing occupation of Crimea, increase international pressure on Russia, and coordinate international responses. Since Russia’s illegal annexation of Crimea in 2014, Canada has provided over $480 million to support reform efforts, meet humanitarian needs, and promote Ukraine’s sovereignty and territorial integrity.

Lebanon

[ * ] The last year has seen successive prime ministers-designate, first Mustapha Adib, and then Saad Hariri - fail to form government. [ * ] Former Prime Minister Najib Mikati became prime minister-designate on July 26, 2021, and reached an agreement on a Cabinet with President Michel Aoun on September 10, 2021. His efforts to form a government are ongoing as he requires a vote of confidence from parliament to be confirmed as prime minister.

Canada is one of the top five bilateral donors in Lebanon and has committed $427 million for Lebanon since 2016 as part of Canada’s Middle East Strategy. This includes $314 million in humanitarian assistance, $71 million in development assistance, and $42 million in security and stabilization assistance. Canada’s assistance in Lebanon covers a wide range of services, geographies and vulnerable groups, including Syrian refugees and Lebanese host communities. This includes the provision of emergency food, safe drinking water, skills training, agricultural support as well as health services. The Canadian Armed Forces also provide training and capacity-building to the Lebanese Armed Forces through Operation IMPACT and contribute military observers to the United Nations Interim Force in Lebanon (UNIFIL) through Operation JADE.

Haiti

[ * ] Authorities continue to investigate who orchestrated President Jovenel Moïse’s assassination and in September, the prosecutor sought to question Prime Minister (PM) Ariel Henry. Prime Minister Henry declined the invitation, dismissing the prosecutor, the justice minister, and another senior government official. In parallel, Prime Minister Henry secured an agreement with some political leaders to form a transition government, led by himself, with a view to holding elections and constitutional reform by end of 2022. The international community supports Prime Minister Henry’s efforts. [ * ]

The communities hit by the August 14th 7.2 magnitude earthquake struggle to recover. The quake killed 2,300 people, injured 12,800, and damaged about 70 per cent of the health infrastructure in the affected area. Tropical Storm Grace wrought more damage in late August and insecurity in the gang-controlled areas hamper humanitarian access. The United Nations is appealing for USD187.3 million in humanitarian funding. Canada has contributed $5.75 million in response and an additional $2 million in matching funds.

[ * ] It is Haiti’s second-largest bilateral donor with an annual development assistance budget of approximately $89 million and is the second largest single-country contributor to humanitarian appeals (the U.S. ranks first on both fronts). Haiti is Canada’s largest recipient of aid in the Americas. Canada works closely with allies to support a clear path to elections, and to address underlying impediments. This includes working within the “Core Group”, representatives of the U.S., France, Spain, EU, Brazil, Germany, UN, and Organisation of American States. Canada also seeks to support Haiti via multilateral engagement at the United Nations and the OAS. There are approximately 2,700 registered Canadians in Haiti and a strong Haitian diaspora community in Canada, primarily in the province of Québec.

Ethiopia

[ * ]

Conflict between the TPLF and federal forces appears to be intensifying again, and humanitarian conditions in Tigray and neighbouring Amhara and Afar regions are worsening. Ethiopia noted that undue foreign pressure is not appreciated calling on international partners to work with Ethiopia. On August 23, the National Electoral Board of Ethiopia (NEBE) announced that the second electoral round would be held on September 30, 2021, and the speaker of the House of Peoples Representatives announced that the new government would be formed on October 4, 2021. On September 7, the East African regional body, the Inter-Governmental Authority on Development (IGAD), asked South Sudan's president, Salva Kiir, to mediate the conflict. President Kiir's office has indicated he has accepted the offer. There have been serious allegations of atrocities and violations of human rights, humanitarian and refugee law committed by all parties and the conflict appears to be spreading to surrounding regions of Amhara and Afar. The international community has also become more vocal in its condemnation of the conflict. Volatile and prolonged conflict, surging ethnic violence, competition for resources and power at the expense of democracy could reverse progress to strengthen regional security and development, and catalyze a wider crisis with the potential to spread to neighboring countries (e.g. Eritrea), destabilizing the entire Horn of Africa.

Venezuela

The Maduro regime maintains a strong hold on power, including on key institutions of state and the security forces. [ * ] Systematic human rights violations (notably to persecute dissent) and a collapsed economy have led over 6 million Venezuelans to leave the country. The Venezuela crisis, which includes increasing transnational crime, illicit trafficking, and the involvement of illegal armed groups, is eroding security, democratic governance and destabilizing the region. Since 2019, Canada has committed $200 million and hosted the Donors Conference in Solidarity with Venezuela Refugees and Migrants (June 2021) to help host countries respond to the needs of Venezuelan migrants, their host communities, and respond to needs inside Venezuela.

In August 2021, the regime and main opposition parties agreed to a negotiation process facilitated by Norway and hosted by Mexico. The opposition is seeking improved electoral conditions and humanitarian relief, while the regime is seeking international recognition, recovery of its assets abroad, and sanctions relief. [ * ] However, the opposition announced it will participate in the regional and municipal elections on November 21, notwithstanding no commitment from the regime that the process will be free and fair. This is the sixth negotiation process since 2013. [ * ]