Ottawa must do more to build ties with Canadians living abroad or risk losing the economic benefit of the country's large, educated, and sometimes influential, overseas population, according to a report from a think-tank on Canada's relations with Asia.

"As we have come to accept that overseas affiliates of Canadian corporations are net overseas assets that can generate long-term benefits for the country, now we need to consider the Canadian diaspora as a long-term asset to be cultivated, not spurned," said Kenny Zhang, of the Vancouver-based Asia-Pacific Foundation.

Mr. Zhang and his colleagues have found that Canadian tax, citizenship and voting rules contribute to a sense that there is a two-tier system that disadvantages Canada's expats.

Different rules "have in fact created two groups of Canadians: 'full fledged' Canadians residing in Canada and 'lesser' Canadians, or foreigners with Canadian passports, living abroad," he said in the report.

There are 2.7-million Canadians living overseas — proportionately more Canadians live abroad than citizens of the U.S., Australia, India or China — including some influential and successful businesspeople with strong ties to Canada.

In Hong Kong, for instance, telecoms billionaire Richard Li sits on the Asia Pacific Economic Cooperation Business Advisory Council and is well-known for his progressive views on the territory's move toward democracy. Mr. Li is also a regular visitor to Canada, where he began his working career with investment dealer Gordon Capital, and his philanthropy includes a $1-million donation to the Canadian National Arts Centre Foundation.

In nearby Macau, University of Toronto grad Lawrence Ho, the so-called "Prince of Macau" runs much of that city's gambling business, and has also been the recipient of numerous Asian business awards. Elsewhere, Canadian Don Lam of Vinacapital is the guru on investing in Vietnam.

But there are also many others who are often highly-skilled, and well connected to international networks of trade and commerce. The Asia Pacific Foundation found for instance that Canadians moving to Hong Kong are heavily concentrated among young people in professional positions or higher-level managerial jobs.

The Foundation's research indicated that the policy issues related to having so many Canadians living abroad extends into consular affairs, trade, innovation, health and finance.

Of particular current concern is a new law, set to come into affect in April that will prevent children born to or adopted by Canadians outside the country from passing citizenship on to their children if they are also born abroad - in other words children born to naturalized Canadians would not have the same citizenship rights as children of those born in Canada.

The new rules "will create a two-tiered system with children born or adopted overseas relegated to an 'inferior' class of citizenship," Mr. Zhang said. The controversy over the new legislation has been front page news in the main English language newspaper in Hong Kong where there are about a quarter of a million Canadian passport holders.

Suggestions in the Asia Pacific Foundation's report include that Canadians abroad should be consulted on changes to immigration and citizenship rules, and that consideration should be given to having a member of parliament to represent the interests of the approximately 9% of Canadians living overseas.

In a separate report last month, the Foundation also urged Ottawa to "embrace Chinese transnationalism."

"Canada will lose out in the global quest for talent in the knowledge-based economy unless it updates some of its ideas and policies on immigration," the report said.

Highly-skilled Chinese-Canadians are likely to return to their country of origin unless Canada can provide attractive career opportunities to match those in China, the report warned. Ottawa should also review taxation policies, rules on intellectual property rights and citizenship, to try to foster better relationships with Chinese-Canadians that return to China for work.

dmavin@nationalpost.com