Canada eyes EU defence market in pivot from U.S. arms
The New York Times reported on Wednesday that Canada is engaged in advanced discussions with the European Union regarding participation in defence contracts. The article highlights that Canadian companies may gain access to the EU market as an alternative to U.S. military equipment suppliers.
The agreement on Canada's participation in the European defence industry "will bring contracts to Canadian manufacturers and help reduce dependence on the USA," according to the NYT. The newspaper indicates that the talks are at an advanced stage.
According to NYT sources, both Canadian and EU, the discussions involve Canada joining a new EU defence initiative. The objective is strengthening the EU defence industry and finding alternatives to U.S. arms supplies.
Alternative to the F-35
The NYT highlighted that Canada could become involved in projects such as the production of the Saab Gripen fighter jet, which competes with the F-35 aircraft produced by Lockheed Martin in the USA. However, it is important to note that the talks do not currently involve specific contracts.
Last week, Canadian media reported that Prime Minister Mark Carney commissioned a review of the £11 billion pounds plan to purchase F-35 aircraft from the USA and asked Defence Minister Bill Blair to review the contract with Lockheed Martin to determine whether it is the best investment from a Canadian perspective and whether there are better alternatives.
Defence White Paper
The European Commission published a defence white paper on Wednesday. The paper identifies areas for enhancement in Europe's rearmament, including air and missile defence, artillery systems, ammunition, and the Eastern Shield, which will strengthen land border protection.
The white paper, prepared by Lithuanian Defence Commissioner Andrius Kubilius, expands on the rearmament plan previously presented by EC President Ursula von der Leyen. It proposes a total expenditure of £703 billion. The paper also includes proposals for loans amounting to £131 billion for defence projects, relaxation of budget discipline for member states regarding defence spending, and potential reallocation of funds within the EU budget. The leaders of the 27 member countries will discuss the proposal at the Brussels summit on Thursday.
Components Originating from the EU
The EC proposed that 65% of the defence loan funding should be allocated exclusively to components originating from the EU. Nonetheless, there will be some flexibility if technology from the USA or the UK becomes challenging to replace. The white paper emphasised that the presence of U.S. armed forces in Europe has led to dependence on the USA.
Third countries that enter into a "security and defence partnership" with the EU will be eligible to participate in procurements.
According to the NYT, Canada may preferentially admit to the EU market as an alternative to U.S. suppliers.
Carney spoke with von der Leyen on Sunday, ahead of his visit to Paris and London. The Canadian Prime Minister wrote on platform X that the conversation "about the ReArm Europe Plan and Canada’s role in strengthening defence at home and abroad." Carney added that Canada is investing anew in defence and collaborating with allies.
The Financial Times reported on Wednesday that companies from the USA, the UK, and Turkey will be excluded from orders linked to the £130 bilion loan plan unless their governments finalise defence and security agreements with Brussels.
