The federal government’s recent announcement that Canada would not be taking part in the United States ballistic missile defence (BMD) program has, for some, come as a bit of a surprise.

Last year, by all accounts, the government seemed to be moving in a direction that would have had Canada taking part. Shortly after releasing the 2005 federal budget, however, the decision regarding BMD came in as a solid “no.”

For now, Canada is still involved in aerospace defence through monitoring and tracking capacities that are carried out as part of the North American Aerospace Defense Command (NORAD).

It is still unclear what role Canada would have played in the U.S. BMD program had the government decided to take part. Despite this, some feel the decision may have repercussions in terms of U.S./Canada relations, and could even affect companies in the defence industry.

Missing Out
Ron Kane, vice-president of the Aerospace Industries Association of Canada (AIAC) (Ottawa, ON), says that part of the problem with the government’s decision is not the decision itself, but how it came about.

“One of the disappointments there, was that we did not see the Canadian government really having a dialogue with the Canadian public, and putting in front of Canadians the business case, both from a foreign and defence policy standpoint, and economic standpoint in terms of why signing on board of missile defence is a good thing,” he says.

From the aerospace industry’s point of view, Canada is potentially losing out on two fronts: overall relations with U.S. partners, and economic opportunities. Kane cites satellites, targeting, tracking systems, ground-based systems, infrastructure, simulation and testing of new materials — areas where there might have been a significant amount of work that could have been captured by Canadian industry.

In August 2004, Kane says the AIAC had a “missile defence industry day” that brought industry representatives together with representatives from Boeing Co. (Chicago, IL) and its missile defence partners. The event was intended to show potential Canadian participants what their piece of the BMD program would look like, and to match the needs of the missile defence partners with the capabilities of participating space and defence firms.

Based on that meeting, Kane notes, the AIAC feels that as many as two dozen Canadian companies with technologies and systems could have taken part in the missile defence program. If those companies find themselves locked out of U.S. contracts and trade, the aerospace industry could be significantly affected. According to AIAC statistics, in 2003 this sector employed approximately 75,000 people, while racking up revenues of more than $21 billion and exporting over $16 billion.

“Eighty per cent of what our industry produces is exported,” says Kane. “And 65 per cent of what we produce overall goes to the United States. So we’re highly dependant on that U.S. marketplace. Anything that disrupts two-way trade will have an effect on our industry.”

James Fergusson, PhD, director of the Centre for Defence and Security Studies at the University of Manitoba (Winnipeg, MB) agrees that economic opportunities may be lost because of Canada’s decision not to participate. He points to newer, high-tech systems such as space-based sensors, which are becoming integrated throughout various areas of defence.

“Now, we won’t compete for any of those,” says Fergusson. “All that will be closed to Canada, and more likely a good chunk of military space — period — will be closed to Canada, because these systems will have missile defence functions, as well as other functions, and because we’re not in missile defence, then we have no right to know what’s going on.”

He adds that the economic impact of the government’s decision may also be felt indirectly. Without Canadian government involvement, many companies will conclude that they have no chance of success in any BMD venture.

“Real or imagined,” he says, “that’s what they believe.”

Friendly Relations
Fergusson agrees with Kane that Canada’s decision may also indirectly affect industry by straining the critical U.S./Canada relationship, one that has all too much of the uncomfortable intimacy of family.

“We’re so close to one another that the overall relationship will continue,” he says. “But when you have these types of things, you know families, when they fight, they tend to get very personal about it.”

Fergusson says the potential danger from this fallout might be a lack of U.S. support, particularly from middle-level civil servants who will not want to stick their necks out for Canadian companies.

Kane notes that by not being perceived as a “strong and supportive ally,” Canada might not only lose out on other defence contracts, but also lose its leverage in terms of industry trade relations.

He cites the U.S. Department of Defense (DOD) authorization bill as an example. Two years ago, proposed amendments to this legislation could have restricted industry outside the United States from participating in U.S. defence procurement. Currently, 50 per cent of that procurement must be from a domestic source, with the attempted changes raising that level to 65 per cent.

Moreover, the wording of the bill included the U.S. and Canada in the definition of the national technology industrial base. The proposed changes removed Canada from that definition.

Though these amendments did not make their way into the bill, Kane argues that they reveal Americans’ changing perceptions of Canada in the wake of military decisions such as not participating in the war in Iraq. By not supporting the U.S. on such security issues, Canada could lose its ability to argue against these types of changes and marshal U.S. partners to ensure that such measures do not take effect.

Threat Perception
But not everyone thinks the impact of Canada’s decision not to take part in the BMD program is so clear.

David Rudd, president and executive director of the Canadian Institute for Strategic Studies (Toronto, ON) — an independent organization that analyses and interprets strategic issues relating to defence and security — says no one can know how our lack of involvement will affect industry and disagrees that it will negatively impact on our involvement in defence.

“We’re part of the integrated warning and assessment infrastructure there in Cheyenne Mountain,” he says, referring to our part in NORAD. “The detection of a missile and the tracking of that missile to its target are the first two steps of interception. And we’re part of that.”

Rudd argues that the aerospace industry in North America is integrated between Canada and the U.S. If a major technology comes along that could be useful to the U.S., it will buy it, he says.

“Industry’s free to do what industry wants to do, because the North American defence market is considered to be a single market,” he says.
Rudd also questions the actual threat ballistic missile attack poses to North America.

“Irresponsible countries have a way of becoming somewhat a little bit more responsible if there’s a choice of attacking the United States or losing their own hold on power — which they would,” he says.

While the threat of a ballistic missile attack may be low, or even non-existent, Fergusson questions the validity of such an argument as a reason for not to take part in the BMD program.

“The Americans are building this anyway,” he says. “It’s sort of like we stick our head in the sand and say, well, you know, we’ll just pretend it’s not here. Well, it’s going to be here, and if there’s a one chance in a million that we might be attacked, it strikes me we have an interest in trying to be able to defend ourselves.”


By Amber Lepage-Monette