I would like to thank the Asia Pacific Foundation of Canada [APFC] for this opportunity to speak on the theme of Canada-Asia Relations: The Way Forward. I want to focus on two key themes: transformation and communications.

Transformation

Change is clearly a constant in all aspects of international affairs and the success of our foreign policy may be measured by our ability to deal with it.

Adaptation to change is best achieved when we are able to take a more long-term view in our analysis so that we perceive trends well in advance. In this way, government and business are best able to generate strategies, using all of our intelligence and wit, as well as diplomatic and other tools to influence change in directions that serve our national interests.

Because the nation-state and government institutions continue to matter, I will focus primarily on a number of key bilateral relations of importance to Canada, starting with China.

China

Twenty years have elapsed since the beginning of the seminal reforms promoted by the late Deng Xiaoping. The result has been an expansion of economic activity and opportunity with few parallels in history. Without a doubt, this has been an engine that is producing greater individual opportunity and freedoms, as well as goods and services. It has also given birth to a more self-confident and internationally engaged China. There is a legitimate debate about the impact of this growing influence on the region and the world, and equally active speculation on how this will transform China domestically. There can be little doubt, however, that how China resolves the contradictions, to choose an old Marxist word, between the predilection for control of the state, and the aspirations for individual freedom that inescapably accompany individual prosperity, is one of the most important questions of the first decades of our new century.

Canadian interests in this regard clearly compel us to engage China across the full range of issues, bilateral, regional and international. These include encouraging greater Chinese adherence to a rules-based international system that will, among other things, increase for China the benefits of globalization and trade liberalization.

Such engagement must also push China in the direction of providing greater individual political and social freedoms, and fostering respect for human rights -- admittedly, a slow and often painstaking process. Recent actions by Chinese authorities in dealing with political dissent and matters such as religious beliefs -- matters that are in the realm of private opinion -- should be part of China's past, not indicative of China's future.

A most important tool of Canadian diplomacy has been high-level contact. Since 1994, Canada and China have conducted at least one annual high-level visit in either direction, as well as numerous visits by ministers, premiers and governors. Prime Minister Chrétien visited China in 1994, 1996 and 1998 and, as of this moment, at any rate, is scheduled to visit again in November 2000, heading Team Canada Mission. Chinese guests have been equally diligent in fostering the relationship, with both President Jiang and Premier Zhu leading the way.

I expect that this high-level attention will continue in the years to come. The cadence and level of contacts and the richness of the agenda have few parallels in Canada's diplomacy.

Transformations in a country as dynamic as contemporary China take many forms. The leadership succession schedules for 2002 will provide clear indications of China's future direction, and therefore will be the subject of much speculation, in advance, and much analysis, when completed.

China's accession to the WTO [World Trade Organization] could be a world-shaping event. That process of accession has not been easy or rapid -- there continue to be bumps on the road. For Canada, accession will mean, of this we have no doubt, a substantial increase in opportunities for trade and investment for Canadians.

Because the modern trade agenda moves so far beyond tariff and non-tariff barriers, WTO membership will also serve to lock in vast swathes of China's economic transformation, and promote further reforms. That is good news for China's growing private sector, which is driving a greater and greater share of the country's economic growth. And in an era of globalization, sustained economic reforms -- and predictable rules both at home and abroad -- are also critical to the future of a China seeking a role on the world economic stage.

There is also a security dimension to Canada's relations with China. Our prosperity and that of many of our close friends and allies, our transpacific trade, our immigration flows, depend on peace and security in the Asia Pacific region. So, the situation across the Straights is of tremendous significance to Canada. The Chinese people have throughout history shown themselves to be capable of great creativity, political as well as artistic. Despite the reiteration of a strongly worded position on Taiwan in the recent Chinese statement on defence, we are convinced that with creativity and flexibility, a peaceful path to a solution that recognizes the legitimate aspirations of Chinese people on both sides of the Taiwan Strait will, over time, be developed and implemented.

Japan

Let me turn briefly to Japan.

On one level, one could refer to Japan as a case of "transformation-in-waiting" since years of reform and restructuring have had, according to many Japanese sources, limited achievement.

The Japanese economy grew only 0.5% in FY 1999, although it shows some signs of recovery. The World Bank estimates that Japan will achieve moderate growth of 1.2% in FY 2000, while most private forecasts project slightly higher growth. However, concerns remain about sustainability. A mountain of fiscal stimulus through seven large supplementary budgets has yet to produce the hoped for results.

Financial-sector reform and deregulation continue, but outside the financial sector, many of the government's deregulation efforts are incremental rather than fundamental.

And so, pessimism prevails in many quarters. We see, however, four important engines of transformation.

In Japan, as in many other places, a major structural change is taking place as the manufacturing-based economy gives ground to the emerging high-technology sectors. Efficiencies from increased competition, productivity growth and job creation from the "new economy" will become important sources of future growth. Underestimating the energy and capabilities of Japan's dynamic private sector is a no-win game.

The second harbinger of serious change and reform is seen in Japan's efforts at revitalizing the administration of government through the largest overhaul of the administrative structure in Japan's postwar history. This will involve, for example, a reduction of ministries from 22 to 12 and a substantial strengthening of the Cabinet Office. The stated objectives -- and we believe that over time, these will be achieved -- include increasing the accountability of Japan's political class and institutions, and replacing, in many areas, administrative guidance with market rules.

The third highly significant transformation is in the area of trade policy. In light of recent trade studies that call for a multilayered trade policy, Japan is now seriously considering bilateral/regional agreements as a complement to its traditional reliance on an exclusively multilateral approach to trade liberalization. The Keidanren, JETRO, MITI and a growing segment of Japan's business community are strongly, and publicly, in support of this highly significant policy orientation.

As a result, Japan and Singapore are slated to begin trade negotiations in the coming months. While Japan and Korea are currently focussing on negotiating an investment agreement by the end of this year, a completed analysis of the effects of a potential FTA may serve as a basis for discussions in the future. Private-sector studies of FTAs with other countries, e.g. Mexico and Chile, have been under way. In the case of Canada, the Canada-Japan Business Committee (CJBC) at their annual business meeting in Tokyo in May 2000, called for concrete steps toward free trade and the creation of task forces to study the prospects for bilateral trade liberalization. These private-sector task forces are expected to bring forward recommendations to the next meeting of the CJBC in Canada in May next year. As a result of Japan's recent shift in trade policy, in a few months or years, the trading landscape of Asia Pacific and Japan's links with other partners will be significantly different from what they are today.

Japan has also taken on a larger external role over the last decade. For Canada, this has been highlighted by PKO operations in the Golan Heights, which we have undertaken together. Japan's willingness to engage in this manner and with respect to human security issues has been evident in our growing co-operation in the area of peace and security. Building on a bilateral symposium on peace and security co-operation held in Vancouver in 1998, Canada and Japan have been working together on such issues as human security, peacebuilding, peacekeeping, conflict prevention, de-mining, small arms and assistance to the victims of land mines. During the Team Canada mission to Japan in September 1999, Canada and Japan held a joint symposium on Peacebuilding for Development, which brought together our respective NGO [non-governmental organizations], communities, aid agencies, academics and ministries of foreign affairs. This November, Canadian and Japanese civil society and government experts will gather again to explore further bilateral co-operation in peace and security. This progressive opening of Japan's diplomacy on issues of international security should not be underestimated.

All of these transformations put paid to the popular belief that stasis is the order of the day in Japan. While they do not describe all aspects of the modern Japanese experience -- there are still serious problems on the fiscal front, in the modernization of the services sector, in overcoming the last effects of the bubble economy -- Japan will remain a key player whose evident size and strengths justify an ever-active Canadian partnership.

Indonesia

The third major arena for national transformation in Asia, and of great significance to Canada, is Indonesia.

Since 1998, Indonesia has experienced dramatic political change. The ride has been rough, and we are concerned that it will remain so in the medium term, but the mere fact that Indonesia has not collapsed under these tremendous strains is testimony to the strength and vital energies of the country. After decades of authoritarian rule, Indonesia held its first democratic national elections in 1999. The new parliament, in which no single party holds a majority, chose a compromise candidate in President Wahid.

Unrealistically high hopes for the Wahid presidency have not been fulfilled but despite continuing challenges, the transition to democracy and reform in Indonesia is making some modest headway. Steps have been taken with respect to addressing the legacy of past human rights abuses, but more must be done. A process is in place to deal with separatist pressures in Aceh, which has had modest success and continues to move forward. In Maluku province, an uneasy peace has prevailed since early August, following communal violence that has left more than 4 000 dead and 700 000 displaced since January 1999.

While civilian control over the military leadership in Jakarta appears to have been achieved, control over officers and soldiers in the field remains problematic. There is still a long way to go for President Wahid to achieve his goal of greater professionalism and respect for human rights in both the military and the police.

And even as Indonesia navigates its way through the process of democratization, efforts are under way to implement a massive decentralization program, due to take effect in January 2001. This is of considerable interest and concern to the Canadian business community, and thus the government. Canadians hold $8 billion in assets in Indonesia. How decentralization will affect taxation, land rights, environmental policy, access to public services, and many other issues, has yet to be made clear. We will continue our discussions with the Indonesian government on these key questions.

Human rights and political development will continue to be at the centre of our relations with Indonesia. Indonesia has made very significant progress in establishing national human rights institutions, a process that we will continue to support strongly.

Indeed, through our development assistance programs, Canada will continue to assist Indonesia through a variety of reform agendas. The reform process is real but fragile and a successful outcome is by no means assured. One thing is certain: Indonesia cannot succeed without an appropriate level of understanding and support from the international community.

India

I'd like to use this opportunity to say a few words about Canada and India.

As everyone in this room is well aware, India's decision to conduct nuclear tests in 1998 seriously undermined a relationship that had been building constructively for many years, capped in 1996 by the Prime Minister-led Team Canada and Governor General visits. International condemnation was enunciated in UNSC Resolution 1172 of June 1998, which set out 13 benchmarks through which India (and Pakistan) were to abandon their nuclear power ambitions. In Canada, we implemented a series of economic measures, and we continue to press both India and Pakistan to roll back their nuclear capability. The security of the world has been affected through what, in our view, is an egregious breach of the global arms control and disarmament regime.

At the same time, it must be recalled that India, the home of one sixth of humanity and the homeland of a growing component of Canada's national fabric, a vigorous democracy and rapidly expanding economy, remains a very important political and economic player. This is especially so given truly historic transformations that it too is now undergoing -- deregulation, a growing middle class, and tremendous advances in information technology. Without compromising our steadfast opposition to India's nuclear weapons programs, Canada stands ready to engage India in co-operative exchanges in other areas, to our mutual benefit. We are also considering a much more proactive strategy to pursue dialogue with Indian officials and civil society on non-proliferation and the human security agenda. There must be consistent messages to Canadian business, including the increasingly influential Indo-Canadian community, that the Indian market offers huge prospects for them, which the government is fully prepared to support.

DPRK

My concluding comments on bilateral relations deal with North Korea.

Canada welcomes the co-operative and constructive steps taken by the leaders of the Republic of Korea and the Democratic People's Republic of Korea to reduce tensions and foster co-operation on the Korean peninsula. The Inter-Korean Summit of June 13 to 15 was an unprecedented historical development and provides the possibility for resolving the conflict between North and South that has persisted for half a century, as well as opening the DPRK to co-operation with the world outside.

The process deserves broad international support and encouragement. The recent awarding of a Nobel Peace Prize to President Kim Dae-jung is but one dramatic means it. For its part, Canada has recently dispatched a mission led by Senator Lois Wilson, which also signalled our willingness to engage more broadly with North Korea. To that end, Canada has recognized the DPRK as a state, which allows us more formal channels of communications.

We have recently held talks, in Beijing, at the level of officials, to set the ground rules for establishing diplomatic relations. Once these are completed, we will be in a position to move forward with a modest bilateral agenda, one driven by considerations of reciprocity -- which we accept will be asymmetrical -- and the promotion of national interests.

I envisage expanded political contacts; increased people-to-people exchanges, including among academics, artists, athletes; business interests; continuing humanitarian assistance, and perhaps a modest development assistance program.

The attitude of the DPRK authorities, and the access they will provide Canadians, will have a considerable influence on what we can do with North Korea, and when we can do it. But first and foremost, there are important strategic reasons to engage, and there is strong public support in Canada for such engagement. So we will press on with active diplomacy, and work to get results.

Communications

Let me say a final word on communications.

Despite the best efforts of the Asia Pacific Foundation of Canada, not to mention generations of missionaries, business people, academics, journalists and diplomats, the fact of the matter is that there is still a large gap between what Canadians and the peoples of Asia know about each other, and what they should know about each other. It is no doubt a recognition of this reality that persuaded the APFC to make branding an important theme of this Asia Pacific Summit. The sense is that, to use today's vocabulary, our brand image in Asia, while extremely positive in general terms, has not accurately reflected the country that we are, nor the strengths that we have wanted to present to the world. Thus, while our image as a source of raw materials and natural resources, a country of immense natural beauty and pristine environment may help us to sell into some specific markets, it likely results in our missing political and economic opportunities in other areas. Similarly, while we send more than $1 billion in development assistance to the region, the specific nature of our contribution often seems undervalued or under-recognized in recipient countries.

At the same time, I believe that many Canadians have lost sight of the dynamics of Asia. Most media coverage remains focussed on the difficulties faced during the crisis or the upheavals in some countries that the crisis triggered. Rarely is coverage ever given to the growing numbers and frequency of success stories, from the impact of our human security agenda, to the achievements of Canadian SMEs [small and medium-sized enterprises]. As we do not advertise our strengths, we miss opportunities to encourage Asians to "Think Canada", and this not only in the areas of economics and trade.

All of us, the APFC, the business community, the media, and DFAIT, must look at the issue of better communications. We must find a way to heighten the profile of Asia in Canada, while simultaneously working on our own overall image in Asia and within specific countries.

This should clearly be a priority for the coming years, as the "Asia Pacific age" has not ended. The transformations indicated above will assure that the region will continue to build on its strengths. It is our job to ensure that we continue to be part of the process.

Thank you.

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