Asia-Pacific leaders gather in San Francisco as tensions with China run high

The main event of this week's Asia-Pacific Economic Co-operation (APEC) summit in San Francisco — the first face-to-face meeting in a year between U.S. President Joe Biden and Chinese President Xi Jinping — will be over before APEC officially welcomes Prime Minister Justin Trudeau and other world leaders this afternoon.

If the two superpowers can't return to more traditional diplomacy, it could set back the entire APEC summit.

Both sides have worked hard in advance to ensure this meeting doesn't go too far offside, said Jonathan Berkshire Miller, director of foreign affairs, national defence and national security at the Macdonald-Laurier Institute. But Biden's also heading into an election year, he said, and China's threat to American interests is the one thing that "sells" on both sides of the aisle.

"What they're not looking for ... is a rapprochement, or some sort of grand bargain with China where they agree to put aside a lot of their differences," Miller said. "What it is, is a restoration of dialogue."

"The world cannot deal with conflict in three theatres right now," Miller said. Adding to the wars in Ukraine and Gaza would be a "nightmare scenario, and I think that's part of the reason why you see the United States and China, everyone ... realizing hey ... we've got to get back to some discussion."

The old geopolitical adage that says countries that trade with each other don't go to war is being tested.

From the shooting down of a spy balloon over North America to some uncomfortably close recent military encounters in the South China Sea, early warning signs of the potential for a serious military conflict between China and the U.S. are growing in number.

"Everybody's hoping for some kind of a floor under this relationship, some kind of a detente and understanding," said Vina Nadjibulla, the vice-president of research and strategy at the Asia Pacific Foundation of Canada. "No one wants to see escalation of tensions in the South China Sea or East China Sea over the Taiwan issue."

But if Biden's motives as summit host are too focused on containing China from a security perspective, that risks alienating other partners in the Indo-Pacific.

"The region is much more interested in economic collaboration and economic integration, trade investments," Nadjibulla said. "The big issue will really be, what does that U.S. commitment look like?"

Can Canada 'stop digging'?

Even as the U.S. re-engages with Beijing, Miller isn't sure the Trudeau government can afford to soften its tone on China at this summit.

"The political risk, domestically, is too high," he said.

Even a trip to Beijing by the environment minister for climate talks was unacceptable for the opposition Conservatives. At APEC, Canadian officials have no face-time scheduled with their Chinese counterparts.

If anything, the Canada-China relationship has gotten worse since the prime minister's tense exchange with Xi on the sidelines of the G20 talks a year ago. Since then, the two countries have expelled diplomats tit-for-tat. And now, Canada has an official inquiry underway to probe evidence of election interference by the Chinese Communist Party.

It's also hard for Trudeau's Liberals to make commitments to other countries if those countries believe a change of government is coming.

One year after the release of Canada's Indo-Pacific strategy, "things are looking really dark, to be honest," Miller said. It's basically become a "North Pacific policy" because it's less problematic for Ottawa to focus on Japan and South Korea than on its fraught relationship with China.

Trade talks with Southeast Asian partners have stalled because "they're still worried about the sort of 'values first' approach Canada promotes in the region," Miller said.

Those prospective trade partners noted how Canada accused India publicly of involvement in an extra-judicial killing, Miller said, and wondered what that could mean for other countries with skeletons in their closet. "Democracy is very scarce in this part of the world," he said.

So where does that leave Trudeau's strategy at this summit?

"Our goal is to stop the hole from getting deeper in Asia," said Carlo Dade, director of the trade and investment centre at the Canada West Foundation. 

A strategy of co-operating when necessary without not necessarily co-operating will face pushback from more hawkish opponents, but there would be economic consequences — like lost agricultural sales — if Canada doesn't engage with China, Dade warned.

"This is a long game and the long game involves playing the hand," he said.

Canada still outside Biden's club

On Thursday, President Biden is expected to host an event with the members of the Indo-Pacific Economic Framework for Prosperity (IPEF), a group focused on harmonizing standards to challenge and compete with China's economic dominance. 

American officials reminded reporters earlier this week that 12 APEC members are among the original 14 in the U.S.-led IPEF. They were vague on what sort of progress the group might be ready to announce.

Canada isn't part of these talks. Not yet, at least.

Key U.S. Democrats remain unwilling to support any trade deal that doesn't have enforceable labour and environmental protections and meet their expectations for "worker-centred trade." While other IPEF "pillars" focus on improving supply chains, lowering carbon emissions and fighting corruption, it's not clear how substantial those talks have been.

"[The IPEF is] not a real trade agreement," Dade said. "They're not setting up rules of origin, tariff cuts, agreements on movement of people, credentials recognition ... It would be a redundancy that I don't think [Canada needs.]"

"We have a real trade agreement with most of the countries around that table — the CPTPP [Comprehensive and Progressive Agreement for Trans-Pacific Partnership]," he added, referring to the former Pacific Rim trade agreement the Obama administration negotiated and the Trump administration withdrew from.

Ministers representing the member countries of the CPTPP, including the newly signed-up United Kingdom, were set to meet Wednesday in San Francisco. Canada takes over the presidency of this group next year.

Given the American track record, observers say, other partners can't be sure a new deal with Biden wouldn't be cancelled after the next U.S. election. Biden's latest IPEF push amounts to "face-saving for the Americans," Dade said.  

Still, "if the Americans are up to something, you wanna be in the room," Dade said, "even if it turns out to be nothing."

Belatedly, both the U.S. and the other key economy in the IPEF, Japan, have said they'd support Canada's participation. India — another powerful IPEF (but not APEC) member — is less likely to agree; diplomatic tensions between Ottawa and New Delhi over the death of Hardeep Singh Nijjar are running high right now.

For the Americans, there's no incentive to spend any political capital on fast-tracking Canada's request to join the IPEF.

"Canada does not help you make an impression in Asia. Canada does not bring anything of substance, even on the military front," Dade said. "We've chosen not to invest in those resources ... so it's no wonder that we're not at the table if we can't meet table stakes."

'Not the time to preach'

"The whole notion of a feminist foreign policy and all the things we heard in 2015 ... the world has changed. You need to read the room," said Goldy Hyder, president of the Business Council of Canada, who is in San Francisco this week for an APEC CEO summit happening alongside the political leaders talks. 

"Otherwise, I think we're going to be left at the table and we may even be left outside the room. And that's never a good day for Canada when that happens."

The business community, he said, wants to see Canada's government reflect the seriousness of the moment.

"This is not the time to go in and preach," said Hyder. "This is a time to be self-aware about where we are finding ourselves."

APEC markets want Canada's liquefied natural gas, potash, critical minerals and agricultural products, Hyder said. "Are we going to be able to promote Canada as a reliable partner that can deliver the goods and is serious about the world in which we're operating?" he added.

Hyder said he worries the Trudeau government may be tempted to frame APEC in the context of domestic politics.

"This is not an affordability conference," he said. "If you don't read that room, you're going to lose a lot of people that are important people for us. And you're going to lose us."

The APEC leaders also need to send a calming message to businesses around the world, Hyder said.

A lot of capital is frozen right now, he added, and unless confidence is restored and deployed, economic growth won't happen, and that risks more populist unrest.

The message the world needs to hear from APEC, Hyder said, is "everybody breathe, we're going to be all right ... It may be a little bit messy, but we're going to get through it."

U.S. officials weren't ruling out some kind of a consensus statement from APEC leaders by the end of the week. But no expectations were set.

Yves Tiberghien, a University of British Columbia researcher currently on sabbatical in Taiwan and Japan, told CBC News that every APEC country, including China, is facing internal struggles right now as their security establishments compete with economic and environmental ministries and businesspeople.

The APEC summit, he said, gives a bit of space to those working on economic and environmental issues.

"That can only be good," he said. "But the space is tenuous and it may just be a moment."