South Korea fused trade, industrial policy and defence into a single high-stakes bargain with Washington. Canada’s defensive posture now looks dangerously inadequate. (Policy Options)

Consequences of the recent annual meeting of Asia-Pacific Economic Cooperation (APEC) leaders in Gyeongju, South Korea, are already radiating outward — and Ottawa would be wise to take heed.

The headline out of Gyeongju was the conclusion of U.S.–South Korea tariff talks. But this was not a standard trade deal. It was a grand bargain. In exchange for a US$350-billion package of industrial investments, including money targeted specifically to shipbuilding, Seoul secured a cut in tariffs on automobile exports to the U.S. and more favourable treatment for its semiconductor sector.

The real breakthrough, however, was on the security side: U.S. President Donald Trump publicly supported South Korea’s plan to build and operate nuclear-powered submarines. Despite earlier reports that the submarines would be built at a shipyard in Philadelphia, South Korean officials say the subs are to be built locally with U.S. co-operation in gaining access to nuclear fuel.

This deal has implications for two of Canada’s most important and currently stalled files: the country’s tense trade relationship with the United States and the government’s submarine replacement project ...

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