Euro­pean de­fence firms court Canada

Edmonton Journal - - CANADA - DaviD Pugliese

U.S. Pres­i­dent Don­ald Trump’s tirade against Canada and threats to pun­ish the coun­try could un­der­mine ef­forts by Amer­i­can firms try­ing to sell fighter jets and other mil­i­tary equip­ment to the Cana­dian Forces, warn de­fence and in­dus­try an­a­lysts.

One Euro­pean firm, Air­bus, has al­ready been talk­ing with Cana­dian of­fi­cials to pitch its plan to build fighter jets in Que­bec as it po­si­tions it­self to win the $16-bil­lion deal to re­place CF-18 air­craft.

An Ital­ian aerospace firm, Leonardo, is look­ing at build­ing he­li­copters in Nova Scotia as it moves to­wards ne­go­ti­a­tions for a searc­hand-res­cue air­craft mod­ern­iza­tion project the Depart­ment of Na­tional De­fence says will be worth be­tween $1 bil­lion and $5 bil­lion.

Trump has hit Cana­dian alu­minum and steel with tar­iffs, claim­ing their im­port is a threat to na­tional se­cu­rity. Af­ter the week­end G7 meet­ing and Prime Min­is­ter Justin Trudeau’s reaf­firm­ing that Canada would re­cip­ro­cate with tar­iffs on spe­cific U.S. prod­ucts, Trump vowed more eco­nomic grief that will “cost a lot of money for the peo­ple of Canada.”

Trump’s move comes at a time when Euro­pean firms are court­ing the Cana­dian gov­ern­ment, par­tic­u­larly on big-ticket de­fence items such as air­craft and war­ships. Bil­lions of dol­lars in new pur­chases are po­ten­tially at stake and Euro­pean firms had a strong pres­ence at the re­cent CANSEC mil­i­tary equip­ment trade show in Ot­tawa.

“Trump cer­tainly isn’t help­ing U.S. de­fence com­pa­nies who want to sell to Canada,” said Martin Shad­wick, a de­fence an­a­lyst in Toronto. “It would be very dif­fi­cult at this point from a po­lit­i­cal op­tics point of view for the gov­ern­ment to an­nounce award­ing con­tracts to any Amer­i­can firm.”

Shad­wick said whether that sit­u­a­tion will con­tinue for the next sev­eral years, when for in­stance the de­ci­sion on new fighter jets is sup­posed to be made, would de­pend on any fur­ther ac­tions by the pres­i­dent. Two U.S. air­craft, the Boe­ing Su­per Hor­net and the Lock­heed Martin F-35, are among the top con­tenders in that jet com­pe­ti­tion. The other three air­craft are from Euro­pean com­pa­nies.

An ear­lier trade dis­pute with Canada has al­ready back­fired on Boe­ing and the Trump ad­min­is­tra­tion, cost­ing the U.S. bil­lions in fighter jet sales. Last year Boe­ing com­plained to the U.S. Com­merce Depart­ment that Cana­dian sub­si­dies for Que­becbased Bom­bardier al­lowed it to sell its civil­ian pas­sen­ger air­craft in the U.S. at cut-rate prices. As a re­sult, the Trump ad­min­is­tra­tion brought in a tar­iff of al­most 300 per cent against Bom­bardier air­craft sold in the U.S.

In re­tal­i­a­tion, Canada de­cided against buy­ing 18 new Su­per Hor­net fighter jets from Boe­ing. That deal would have been worth more than US$5 bil­lion.

Christyn Cian­farani, pres­i­dent of the Cana­dian As­so­ci­a­tion of De­fence and Se­cu­rity In­dus­tries, said it is too early to de­ter­mine the im­pact of the U.S. tar­iffs on the do­mes­tic de­fence in­dus­try. “Tar­iffs are never good for trade or busi­ness,” she added.

“CADSI is mon­i­tor­ing the is­sue and con­sult­ing our mem­bers to bet­ter un­der­stand the po­ten­tial im­pact to Cana­dian firms, both in terms of the direct im­pact of any tar­iffs and the more in­di­rect, long term im­pact on sup­ply chains and mar­ket ac­cess,” she said.

There is growing con­cern that Cana­dian avi­a­tion firms could be hurt by Trump’s alu­minum tar­iffs.

Canada is the largest ex­porter of alu­minum and steel to the U.S.


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