Prime Minister Mark Carney has made his goals for Canada explicitly clear: He wants to secure Canada’s seat at the table. And he wants to be sitting next to fellow “middle powers”.

These ambitions—expanding the country’s access to high growth export markets and attracting investments at home to double non-U.S. trade over the next decade, embedding Canada in global supply chains—require deeper, diversified relationships with middle-power countries around the world, beyond those in Canada’s existing alliances.

“For Canada to diversify its trading relationships and to reduce overreliance on the U.S., it needs to look at the Indo-Pacific. That’s where there is the greatest potential for deeper economic partnerships,” says Vina Nadjibulla, vice-president, research & strategy at Asia Pacific Foundation of Canada.

The Indo-Pacific region—made up of 40 countries, many of which are middle powers each with their own opportunities and challenges—is projecting significant global economic activity in the next two decades, poised to represent 50 per cent of the world GDP by 2040. Canada’s task is to move quickly to determine which countries in the region are best suited to forming meaningful partnerships.

Jonathan Berkshire Miller, co-founder and principal of Pendulum Geopolitical Advisory, says that like-minded democracies are the first stop for this diversification strategy, likening them to the “easy answers” on a test. 

“Plan A is, of course, to look to Europe, which is generally like-minded. Plan A+ would be to look to the democracies in the Indo-Pacific: so Japan, which is a G7 country, and South Korea, which is a G20 country, and one that we have a historic area of engagement with,” he says.

After years of what Berkshire Miller describes as Canada’s “inconsistent, episodic, and economic-focused” presence in Asia, the federal government has been ramping up its visibility in the region while also amplifying its brand on the global stage, at a time when the Indo-Pacific is gaining economic ground rapidly.

Kai Ostwald, director of the Institute of Asian Research at UBC School of Public Policy and Global Affairs, says that Canada’s global strategy has caused countries in the region to take note.

“There has been momentum with more PM visits, with more high-level ministerial visits, with trade delegation visits, and of course, Carney’s speeches, that together with the chaos in the U.S. has been, I think you could say, game changers for Canada’s profile in large parts of Asia, in that there is a real interest in hearing more from Canada and having Canada at the table—in a way that, over the course of my career, I’ve never experienced before,” Ostwald says. 

“That means this is a really opportune time to continue building.”

The shift from trading to partnering

To build relationships with Indo-Pacific countries, Nadjibulla says Canada needs to move away from a transactional approach to trade toward more comprehensive partnerships.

She says that the like-minded democratic nature of certain countries, in addition to their economic importance to Canada, make them primary partner prospects. “With Korea, Japan, Australia, New Zealand, we can have comprehensive strategic partnerships that look at everything from economy to intelligence sharing to defence industrial production.”

In an era of weaponized supply chains and enhanced geopolitical competition, the line between trade policy and security policy has thinned. “Economic resilience, national security, and our foreign policy are much more linked now,” Nadjibulla says.

“Trade is important. It’s one of the lifebloods of international relationships. But in this part of the world, security talks pretty heavily,” Berkshire Miller adds. He suggests that defence spending can help balance out an emphasis on trade, to ensure Canada is not coming off as overly opportunistic or mercantile in its rush to reduce its reliance on the U.S. as a partner.

A timely example of this is the Canadian Patrol Submarine Project (CPSP), where the federal government is procuring 12 submarines for the Royal Canadian Navy to replace its aging fleet and has narrowed down to two bidders: Thyssen Krupp Marine Systems (TKMS), supported by Germany and Norway, and Hanwha Ocean, support by South Korea. 

In mid-April, the Canadian government went back to the bidders and requested they “improve their offers” to enrich the benefits Canada will accrue, following which Hanwha Ocean committed to partnering with Canada’s Automotive Parts Manufacturers’ Association (APMA) to build industrial and military vehicles in Canada with local auto parts and workers should their bid win.

“It’s something new for Canada to so clearly link a defence procurement initiative with industrial strategy and, in this case, auto strategy,” Nadjibulla says. “But it makes sense, given the situation that our auto sector finds itself in as part of the trade dispute with the U.S.”

“Part of the benefit of spending more on defence is that, not only are there opportunities for Indo-Pacific countries to play in our defence market, but vice versa, for our companies to engage in the Asian market,” Berkshire Miller says.

He identifies the production of drone components for maritime domain awareness as an example of areas where Indo-Pacific countries have a need that Canada can help fill. 

“A lot of countries in Asia are littoral, they’re on the ocean and have a need for those types of capabilities, even if it’s not for conflict, for managing their maritime domain,” he says.

The ‘predictability premium’

Beyond defence—in sectors ranging from critical minerals to energy to AI and digital technologies—experts agree that Canada needs to identify where it can partner with countries to leverage each other’s expertise to build complete supply chains together. Here, Canada can be more competitive as a secure, reliable partner, if not the most affordable option.

“We’re definitely not in an era anymore where the only thing that matters for all trade is efficiency,” Ostwald says. “There still are some sectors where efficiency, where cost is the primary consideration. And then there are other areas that are strategically more sensitive, where there is a clear willingness to pay a premium for predictability, or for some other sort of benefit.”

He points to critical minerals as an example. “I’ve heard Canada come up a couple times with critical mineral exploration, and that’s not so much as a direct supplier, but as a partner in the development process of critical minerals on the ground in Southeast Asia, for example.” 

He says the benefit comes not just from Canadian know-how, but Canadian reliability and values. “And there’s awareness that that probably costs more, that Canada is not going to be the cheapest bidder.”

Berkshire Miller says that in the case of critical minerals, it can’t be a question of return on investment, but broader geopolitical imperatives. “That’s the challenge that we have to sell to countries like Japan and Korea,” he says.

“Everyone has to understand that you’re not going to [extract and refine these minerals] at a great profit, and you’re doing it for a collective group of interests, to wean yourself off of vulnerable supply chains.”

The future economy

Nadjibulla wants Canadian policymakers and business leaders to think about “moving up the value chain and positioning ourselves in critical nodes of supply,” in the case of critical minerals as well as other growing markets such as energy and digital technologies.

“The Indo-Pacific is the part of the world that has the greatest demand for energy, especially growing economies like in Southeast Asia, Indonesia, or even India, which is one of the largest importers of fossil fuels around the world,” she says. A Wood Mackenzie report states that the region represents 85 per cent of the global power demand growth in 2026.

“Because of that, there is even a greater need to accelerate the transition to renewables and green energy,” Nadjibulla says. “So there’s a lot of innovation. There is a lot of dynamism in the region when it comes to electrification, to moving even to nuclear.”

Even before getting to a place of significant reliance on clean energy, Nadjibulla sees opportunity for Canada to go from the 19th largest supplier of Liquified Natural Gas (LNG) in the world to fourth or fifth, through intentional partnerships with Southeast Asia. “Asia in particular will continue to need LNG, which is obviously transition fuel, but it is a far cleaner fuel than coal, which still powers a lot of energy demand in Asia,” she says, including not just China and India, but also Indonesia and Vietnam.

“This is a two way street,” Nadjibulla continues. “It’s about genuine partnerships, where we would also be benefiting from enormous expertise and innovation that is now happening in that part of the world.”

This is particularly true when it comes to digital technologies and AI. “We are leaders when it comes to foundational research [in AI], but we haven’t been able to really translate that into commercialization and industrial lead,” Nadjibulla says. 

“This is where we would need to partner with countries like Korea or economies like Taiwan, which are manufacturing superpowers. There’s a natural synergy and complementarity between what we bring to the table in terms of research, the ideas, and the know-how, with the manufacturing and industrial capacity of these countries.”

And there’s no time to waste. “With AI, we have to really move quickly, or we will miss the boat,” she continues. “Already we’re seeing that initial lead that we had is slipping, because other countries are really investing massively into this.”

The cost of delaying

Experts share the sentiment that it’s “now or never” for Canada to meaningfully partner with these countries.

“The costs of another retreat would be really significant,” Ostwald says. “Canada was a latecomer to the Indo-Pacific, [in terms of] articulating an Asia-focused strategy. … Given this upwards trajectory, the attention [on Canada right now], and the reputation as a fair weather friend, another course correction at this point that thins Canada’s engagement again would be really hard to come back from, in my opinion.”

“For us not to tie ourselves deeply into the supply chains, into the investments, would be a massive mistake,” Berkshire Miller agrees.

He notes that the significant competition in the region makes it so that Canada doesn’t just need to engage, but “double or triple or quadruple down”.

“The challenge of ambition is channeling that ambition and making it operational,” Berkshire Miller says. “And when it comes to Asia, that won’t mean a couple of big trips. It’ll mean constant trips at different levels. It will mean really incentivizing the private sector. [And it will mean] making tough choices, because you can’t be everywhere.”

Beyond committing to the region, Ostwald also urges Canadian decision-makers to “get the time frame right.”

His greatest concern is that, with sights set on short-term returns, the government and policy makers will rethink the value of investing in the Indo-Pacific, “at the expense of being well-positioned in a decade or two to meet what is a fundamental change in geopolitics and geoeconomics.”

Nadjibulla adds that this is equally something crucial for Canadian business leaders to understand. “Governments can only do so much in encouraging diversification,” she says. “At the end of the day, businesses make decisions based on opportunities and bottom line. And now the risks and challenges of doing business in the U.S. are going up, and it’s genuinely making businesses look at, particularly the Indo-Pacific, much more seriously.”

“At the moment, we have the most educated workforce, but not the most productive one, and we have a lot of natural resources, but we’re not able to actually deploy them in a way that makes us competitive as an economy,” she says. “So what’s at stake is our future, our prosperity, our security, and our sovereignty.”

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