OTTAWA — The Canadian government is sending a pointed message it is ready to use military equipment purchases as a wedge against U.S. protectionist actions.
The move could benefit European and other non-U.S. companies that hope to supply the Canadian military.
President Donald Trump has slapped a new tariff on Canadian lumber and has threatened similar action against its dairy products. Trump has also said he wants to renegotiate the NAFTA agreement between Mexico, Canada and the U.S.
In addition, the U.S. Commerce Department is currently investigating Boeing’s complaint that Canadian government subsidies allow Bombardier Aerospace of Montreal to sell its C Series commercial aircraft at below-market prices.
But U.S. firms are the largest suppliers of equipment to the Canadian Forces and Canadian government officials are now examining how to use that to deter some U.S. trade sanctions.
In response to Boeing's complaint about Bombardier, Canada has broken off discussions with the company about the proposed purchase of 18 Super Hornets.
But Boeing's actions could jeopardize more than just that acquisition.
Canada will release its new defense policy on June 7. It is expected to outline new purchases of billions of dollars worth of equipment, including tactical helicopters, aerial refuelling tankers and unmanned aerial vehicles.
Boeing is interested in all of those programs.
But because of its trade complaint, Canada is now reviewing all dealings it has with the company for military products, Steven MacKinnon, parliamentary secretary to Public Services and Procurement Minister Judy Foote, said June 1.
Canada is also asking aerospace and defense firms it deals with to put out the message about the importance of the U.S.-Canada industry relationship.
"We call on all of our industry partners to speak with one voice about the interconnectedness of the defense industry supply chain between Canada and the United States," Defence Minister Harjit Sajjan told industry representatives May 31 at the CANSEC defense trade show here.
"We need your help in making the clear case of ensuring goods continue to flow freely across our two countries," he added. "We need your voices to articulate the consequences should our borders be closed."
Sajjan said Boeing's actions have hurt its relationship with Canada, and he called on the company to withdraw its complaint against Bombardier. "It is not the behavior of a trusted partner," he said in an unprecedented speech to industry representatives.
But Boeing is not backing down. On June 1 it cancelled the announcement it planned to make naming the members of its Canadian industry team who would contribute to the Super Hornet program.
"Due to the current climate, today is not the most opportune time to share this good news story," Boeing noted in a statement.
No new date has been set for the announcement.
But Sajjan said Canada only wants to deal with "trusted industry partners," a comment picked up on by European defense representatives here.
They say they are ready to step in if Canada moves away from U.S. equipment purchases.
European firms are already making inroads. In December, Airbus won a contact to provide a fleet of new search and rescue aircraft to the Royal Canadian Air Force.
Airbus is also promoting an aerial refuelling aircraft for the RCAF and expects to face Boeing as one of its main rivals in that upcoming competition, company officials say.
In addition, Leonardo used the CANSEC show to announce a teaming arrangement with Canadian firms for a proposed modernization program for the RCAF's search and rescue aircraft.
The RCAF will also need a replacement for its Griffon helicopters, Sajjan has said.
Leonardo is looking at a number of platforms for that program when it is announced. Its main competition is expected to be in the U.S.
"The trade dispute with the Americans has potential to open up new opportunities," said one European industry source. "We are keen to see how this plays out in the coming months."
David Pugliese is the Canada correspondent for Defense News.
