Ottawa announced last week that it has entered negotiations with Sweden’s Saab AB to buy its GlobalEye surveillance planes, rejecting comparable aircraft from U.S. defence contractors Boeing and L3 Harris Technologies.
The planes will be variants of Bombardier’s long-range Global 6500 jets, which are built in the GTA.
The U.S. firms were surprised by the decision and are hoping Canada has a change of heart. That’s unlikely given that Saab is expected to employ about 3,000 Canadians building the plane in Canada if its gets the contract, strengthening the country’s capability in advanced aviation with a product that has export potential.
Ottawa last week also reached an agreement for Germany to import one million tonnes of liquified natural gas per year for as long as two decades from a proposed LNG terminal off the B.C. coast. The deal would reduce Germany’s reliance on Russian gas and expand Canadian energy exports beyond the U.S.
The potential landmark deals are consistent with the Carney government’s repeated vows to reduce Canadian reliance on the U.S. both as both a customer and a supplier. The U.S. traditionally accounts for about three-quarters of Canadian exports.
Canada is building its own next-generation destroyers in Halifax. It will buy up to 12 submarines from either a German-Norwegian consortium or a South Korean shipbuilder in a decision expected this month. Both bidders, like Saab, are promising to expand Canada’s industrial capabilities if they win the contract.
And with negotiations on a renewed Canada-U.S.-Mexico free trade agreement approaching, the U.S. has cited as an “irritant” Canada’s second thoughts about buying F-35 fighter jets from U.S. defence contractor Lockheed Martin.
Ottawa is contractually obligated to buy 16 of those planes but is taking a close look at Saab’s Gripen jets to fill out what had been an order for 88 F-35s. Saab would train Canadian engineers to build the Gripen in Canada and transfer the plane’s technology to Canada.
Yet the day after the GlobalEye announcement, Prime Minister Mark Carney was in New York touting Canada as America’s best economic and defence partner.
With its abundance of raw materials and finished goods that are key to the U.S.’s domestic economy and defence capabilities, “a Canada Strong will help make America great again,” Carney told U.S. financiers in a keynote address to the Economic Club of New York.
“There are several opportunities that Canada and the United States should seize to work together and compete with the rest of the world,” Carney said.
Carney has embraced the concept of a Fortress North America, asserting that Canada, the U.S. and Mexico together can compete more effectively with China, the European Union and other major economies than if the three amigos went their separate ways.
It was a head-spinning moment. Which is it, “elbows up” in decoupling the Canadian economy from the U.S., or continued economic and defence integration?
Actually, it’s both, and it will be interesting to see if that’s possible. It will be years before we know, in contrast to the flurry of ambitious intentions expressed by the government since it came to power just over a year ago.
Certainly, Canada is the U.S.’s largest source of imported electricity, oil and natural gas. And its aluminum, forest products and potash go into U.S. cars, crops, homes and aircraft, including F-35 components made in Ontario and Quebec.
Canada’s status as a leading supplier to its sole contiguous neighbour, also the world’s largest economy, is not going to change. Carney might as well say so lest anyone think he imagines otherwise from his determination to double non-U.S. exports by 2035.
What is markedly different is the speed with which Canada is befriending other allies as trade and security partners and with a China it has viewed with suspicion. To succeed in a world trading order disrupted by the U.S., Canada will need a “dense web of international partnerships abroad,” Carney said.
Canada already has more formal trade agreements than most major economies, covering about 1.5 billion consumers. It plans to double that in trade pacts it is negotiating with India, Thailand and the Philippines, and with two enormous regional trade groups, the Association of Southeast Asian Nations, known as ASEAN, and Mercado Común del Sur, or Mercosur, the South American trade pact.
But Canada will need continued if not increased U.S. investment along with global funding if it is to achieve Carney’s goal of one trillion dollars in Canadian investment over the next five years in energy, transportation and data infrastructure and defence.
And trade opportunities beyond the U.S. have been opened to Canadian business before, notably with Trudeau-era European Union and Asia Pacific trade pacts, only for Canadian firms to stick to markets they know in Ohio, Illinois and Pennsylvania.
For the Canada-U.S. relationship to substantially improve, Canadian businesses will have to become far more intrepid.
