The international order is undergoing a fundamental transformation. The United States is increasingly reluctant to bear the costs of global leadership, while China has little interest in assuming the responsibilities traditionally associated with hegemony. Rather than witnessing a straightforward transition from American to Chinese leadership, the world is entering an era in which no major power is willing to sustain the international order as a whole.
This transformation is producing a fundamental division between countries that remain committed to a rules-based international order and those that increasingly rely on power to achieve their objectives. Great powers often regard international rules as constraints on their freedom of action, while smaller and middle powers depend on those rules to protect their sovereignty and economic prosperity.
For Japan and Canada, this changing environment presents both a challenge and an opportunity. As advanced industrial democracies deeply integrated into the global economy, both countries have benefited enormously from an open and predictable international system. Yet neither possesses sufficient economic or military power to defend that system independently. Their shared vulnerability creates a compelling rationale for closer cooperation—and potentially for joint leadership of a broader coalition of middle powers.
Geoeconomics and the Limits of Interdependence
The growing importance of geoeconomics is perhaps the most significant characteristic of the emerging international order. Economic interdependence, once celebrated as a source of stability and mutual prosperity, has increasingly become an instrument of geopolitical competition.
Trade restrictions, investment controls, technological dependencies, and supply-chain vulnerabilities are now routinely employed to exert political pressure. The dysfunction of the World Trade Organization reflects a broader erosion of confidence in the capacity of international institutions to regulate economic competition.
Under these circumstances, economic security has become a central concern for national governments. Its fundamental objective is to develop the capacity to resist economic coercion and protect domestic economic and social stability.
Two concepts are particularly important: strategic autonomy and strategic indispensability.
Strategic autonomy refers to reducing excessive dependence on potentially coercive partners through diversification and resilient supply chains. Strategic indispensability, by contrast, involves developing technologies, products, resources, or market positions that other countries cannot easily replace. While autonomy reduces vulnerability, indispensability provides leverage.
Japan and Canada possess complementary advantages in pursuing these objectives. Japan has advanced manufacturing capabilities, sophisticated industrial technologies, and expertise in semiconductor-related industries. Canada possesses substantial natural resources, including critical minerals and energy, alongside technological capabilities and access to North American markets.
Cooperation between the two countries could therefore strengthen their collective strategic autonomy while enhancing their indispensability within global supply chains.
Japan’s Experience and Canada’s Strategic Importance
Japan’s experience demonstrates the importance of economic security policies. China’s restrictions on rare earth exports in 2010 exposed the risks of concentrated supply chains, prompting Japan to diversify procurement through investments in Australia and Malaysia.
Under Prime Minister Takaichi’s growth strategy, economic security has become an integral component of industrial policy. Public investment is intended not only to stimulate private-sector growth but also to strengthen resilience against external disruptions.
Nevertheless, Japan recognizes the limits of its economic power. Unlike the United States, China, or the European Union, Japan cannot exercise substantial influence simply through the size of its domestic market. Its strategy must therefore combine technological indispensability, strategic autonomy, and international partnerships.
Canada is particularly important in this context. Cooperation in critical minerals, energy security, advanced technologies, and industrial supply chains could provide Japan with greater resilience while creating opportunities for Canadian industries.
At the same time, both countries face the challenge of maintaining close relationships with the United States without becoming excessively dependent on American economic policies. The increasingly transactional nature of Washington’s approach to trade and investment makes diversification a strategic necessity even among longstanding allies.
Building a Coalition of Middle Powers
Bilateral cooperation, however, should be only the starting point. Japan and Canada should seek to establish themselves as the core of a broader coalition of middle powers committed to maintaining a rules-based international order.
Such a coalition would serve three principal purposes.
First, it would promote collective strategic autonomy through coordinated investment, supply-chain diversification, and mechanisms for responding to economic coercion. By pooling resources and capabilities, middle powers could reduce vulnerabilities that would be difficult to address individually.
Second, it would strengthen collective bargaining power. Individually, middle powers have limited influence over the behavior of great powers. Acting together, however, they can shape international standards, trade arrangements, and institutional rules. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), of which both Japan and Canada are members, provides an important foundation for such cooperation.
Third, a middle-power coalition should engage countries beyond the community of like-minded democracies. Strategic diversification cannot be achieved exclusively among countries sharing identical political values or security interests.
Engagement with the Global South is therefore essential. As American development assistance retreats, China has opportunities to expand its influence through the Belt and Road Initiative. Japan and Canada could cooperate with other middle powers to provide alternative sources of infrastructure financing, technological assistance, and development partnerships.
Such initiatives would not require developing countries to choose sides between competing great powers. Instead, they would expand their strategic options and strengthen the foundations of an inclusive international order.
From Bilateral Partnership to Institutional Leadership
A middle-power coalition cannot replace American military power or independently deter China. Japan’s security alliance with the United States will remain indispensable, just as Canada’s security relationship with Washington remains fundamental.
Nevertheless, economic security requires instruments different from those of military deterrence. Supply-chain resilience, technological cooperation, collective economic countermeasures, and institutional coordination are areas in which middle powers can exercise meaningful leadership.
Japan and Canada should therefore move beyond ad hoc bilateral initiatives toward a more institutionalized framework for geoeconomic cooperation. This could involve regular economic security consultations, coordinated strategic investments, collective responses to economic coercion, and closer cooperation with European and Indo-Pacific partners.
The central challenge is not to recreate the international order of the past. That order depended heavily on American leadership, which can no longer be taken for granted. Instead, middle powers must develop new mechanisms capable of sustaining international rules even when great powers are unwilling to uphold them.
Japan and Canada are uniquely positioned to lead this effort. Their complementary economic capabilities, shared commitment to international institutions, and experience in navigating relationships with great powers provide a strong foundation for strategic cooperation.
The future of the rules-based international order cannot depend exclusively on the choices of Washington and Beijing. It must also be shaped by countries willing to invest in collective resilience and institutional cooperation. Japan and Canada should be at the forefront of that endeavor.
Kazuto Suzuki is Professor at the Graduate School of Public Policy at the University of Tokyo, Japan, and Director of the Institute of Geoeconomics at International House of Japan. On October 14th, he gave a talk at CIPS titled “The Current Security Environment Facing Japan and Canada, and Future Prospects“.
