Canada trade minister says trade talks with Taiwan are part of a larger Indo-Pacific strategy

Canada's decision to enter formal bilateral trade talks with Taiwan is part of a broader strategy for the Indo-Pacific region, its minister of international trade told CNBC Tuesday.

The two sides agreed on Feb. 7 to begin formal negotiations on a trade agreement in order to strengthen trade and investment.

"I was able to launch what we call FIPA —  it's a foreign investment, protection arrangement with Taiwan, but it is very much a part of Canada's Indo-Pacific strategy for diversification into the region," Mary Ng, the trade minister told CNBC's "Squawk Box Asia" on Tuesday.

"We went out to the Canadian people and had a very broad consultation before getting to this point, which is launching into this dialogue," she added.

Bilateral trade between Canada and Taiwan reached $5.82 billion in 2022, according to Taiwan's official statistics. Taiwan is Canada's 13th largest trading partner globally, and its 5th largest trading partner in Asia.

Taiwan's exports to Canada amounted to $3.3 billion last year, and Canada exports to Taiwan amounted to $2.52 billion in the same period, according to that data.

The agreement would "establish more resilient supply chains in the post pandemic era, jointly support the rules-based international economic and trade order," Taiwan's ministry of foreign affairs has said.

Besides Taiwan, the country is also exploring growth opportunities in the region, said the Canadian minister. She said there are ongoing talks with the 10-member Southeast Asian ASEAN bloc on various trade areas for cooperation.

"You'll see in the Indo-Pacific strategy that Canada laid out a very comprehensive plan for how we are going to grow in the region," noted Ng.

"This region is the fastest growing," she said. "By 2030, you're going to have a significant part of the growing middle class. By 2040, I think the numbers are somewhere like half of the world's middle class ... in the region."

"The Indo-Pacific region will play a critical role in shaping Canada's future over the next half-century," Canada said in its long-awaited Indo-Pacific strategy released in November.

"Encompassing 40 economies, over four billion people and $47.19 trillion in economic activity, it is the world's fastest growing-region and home to six of Canada's top 13 trading partners," the official plan stated, highlighting significant opportunities "for decades to come."

Canada's Indo-Pacific strategy also underlined its approach to China, a critical part of its framework.

"China is an increasingly disruptive global power. Key regional actors have complex and deeply intertwined relationships with China," the plan stated. "Canada's Indo-Pacific Strategy is informed by its clear-eyed understanding of this global China, and Canada's approach is aligned with those of our partners in the region and around the world."

China considers Taiwan a breakaway province and says it has no right to conduct foreign relations. In recent years, there have been increased tensions between both sides over Beijing's military activities near the island.

The trade minister said Canada "still stands by its one China policy," and that climate change is one area that both sides could engage in.

"But there's absolutely areas where Canada will stand and lead with its value …. our democratic values standing up for human rights, standing up for the rule of law," said Ng.

"There are going to be areas that Canada will absolutely challenge China on. But diversification for me as the trade minister is the job and that is growing into this very dynamic market," she added.