:

 

 

Monday Nov. 14th, 1988

the Other Press

Page 5

 

 

Free Trade, How Will It Affect
Canada and the United States
Militarily.

 

by Ernie Regehr

 

Military production firms in
Canada fear "free trade" will not
give them increased access to the
gigantic US military market.
Others worry it will tie Canadian
military industry more tightly into
the American military economy --
and, therefore, tie Canada more
tightly into American security
policy. Both concerns need
attention.

While negotiators (at time of
writing) continue to haggle over
the finishing touches to a legal text
for the Canada/US free trade
arrangements, the US Pentagon
and Congress are increasingly
interested in reducing Canadian

military sales to the US -- despite

the Canada/US Defense
Production Sharing Arrangements
(DSPA). In what the Financial
Post described as "one of its more
glaring gaps," the proposed deal
“failed to expand -- or secure --
Canada’s decades-old special
access to Washington’s defense
budget, this year worth nearly. US
$300 billion.” On top of that, the
Pentagon, under pressure of
Congress, is reviewing its current
practices of buying military
components from Canada and
elsewhere. US deficit- cutting
means pressures on Pentagon
spending, and Congress wants to
keep. as much possible of that
spending at home -- there are
currently 10 separate legislative
proposals before it which would
restrict Canadian military sales to
the US.

The proposed free trade
agreement will not touch this
element of US protectionism. And
that, in turn, may increase the

- political price to Canada of

maintaining access to the US
military market. Access to that
market has always had a political
price. During the nuclear weapons
debate of the early 1960s, the Air
Industries Association of Canada
argued in favour of accepting
nuclear weapons in Canada on
grounds this would solidify access
to the US military market. "We
cannot," said the AIAC president
of the day, "go on expecting
Washington to take politically
difficult decisions that face us. If
we don’t take nuclear arms we
must be prepared to face the
consequences."

The point was Canadian access
to the US military market is a
"break", a privilege perhaps that
comes in a spirit of co- operation
that must be reciprocated. Twenty
years later the AIAC was making
the same point with regard to "Star
Wars’.. They said -the
government's failure to provide
active support to the Strategic

Defense Initiative meant Canadian
firms were being locked out of the
SDI market. The Pentagon, they
said, is "bitter" and has closed the
door on Canadian SDI contracts
(although not completely). And
even though Canada is currently

answer will be when the request
comes?

Canada has been paying other
political costs for military trade,
arranged, but not free, through the
DSPA. The DSPA call fora "rough

 

A free trade agreement will not
reduce any of the political costs of military trade,
but it could add some new ones.

running a substantial military trade
deficit with Washington, a US
lobbyist told the Financial Post,
"Canadian firms still have to
expect to lobby hard for every
contract they get in Washington.”

Without guaranteed access to
the US military market, Canada
must constantly negotiate (or
lobby for) such access. And to
negotiate you have to have
something to throw into a deal --
the two prominent Canadian
offerings being a) increased
Canadian military purchases in the
US, and b) political co-operation.
Canada has been providing both of
these for a long time, in a variety of
ways.“

The US buys military
commodities in Canada neither out
of altruism nor necessity, but out of
self interest. Part of it is simply
cost-cutting -- external
competitors, Canadian, European,
or Japanese, encourage American
firms to control costs as well. In
the long run, however, the
Americans see military production
co-operation as integral to military
policy co-operation. US support
for the DSPA has been premised
primarily on the need for a
continental approach to defense,
and, as the ATAC already knew in
the 1960's, continued access to the
US market rests on a continuing
spirit of co-operation. Referring to
Canada’s concern over the
Pentagon’s review of imports, the
Financial Post says " Ottawa
believes Canada should have been
exempted from the review because
of its special and deep-rooted
tradition of close military
co-operation with the US...."

The more determined Congress
becomes in reserving the US
military market for American
firms, the greater will be the
political price of securing
continued Canadian access to the
same market. Shared defense
production that is based on a spirit
of policy co- operation is unlikely
to suffer much nonco-operation
from the junior partner. Past

Canadian co-operation has:

included, notably, cruise missile
testing. If a continued market for
Canadian military products is
related to testing the next
generation of cruise missiles
(stealth and supersonic), is there
any doubt what the Canadian

balance” on military trade, which
means extensive Canadian
purchases in the US. American
influence over Canadian
procurement, and over the military
roles filled by this equipment, is
well documented. The equipment
itself comes with military roles and
policies built in, and through that
with political assumptions about
military threats -- when you stock
your Armed Forces with American
equipment, you also equip them
with American perceptions of
threat.

Added to this is the fact that an
industry oriented primarily toward
the American market inevitably
contributes to the full range of
American military equipment --
which in turn means that Canadian
industry develops a stake in
continued American deployments
and may very well blunt Canadian
political opposition to those same

weapons (e.g. the cruise missile, ~

the MX missile, the Minuteman
missile and so on). Finally, the
development of a significant
military production industry in
Canada that is oriented, not to
production for Canada, but to
export markets, inevitably leads to
efforts to reduce dependence on a
single market, the Pentagon, and to
efforts to diversify by pursuing
sales in the third world more
aggressively -- giving Canada a
growing stake in the international
arms trade.

A free trade agreement will not
reduce any of these political costs,
but it might add others -- the
inter-church coalition on global
economic issues, GATT-Fly,
suggests two.

A free trade deal that provides
the US with equal access to
Canadian natural resources will
not only deplete those resources,
without an opportunity for
Canadian supply management to
protect future Canadian needs, but
it will make Canadian resources
key strategic resources of the US
and mobilize them in support of
America’s conventional and
nuclear arsenals. Secondly, a free
trade agreement could add
pressures to make military
production central to Canadian
industrial strategy. While the
agreement will in general view
government subsidies to industry
(say, as a means of attracting

industry to less industrial regions
of the country) as unfair
competition, and thus prohibit such
subsidies, support to military
industries will be an exception. In
order to assure a defense industry
capacity, both sides will reserve
the right of public intervention on
military industries, particularly the
right to subsidize them. If this is so,
itcould mean that when the federal
government contemplates
regional industrial incentives, the
only instrument available will be

the subsidization of military
industries -- resulting in a built-in
prejudice toward using military
production as an instrument of an
industrial strategy. Thus it would
be perfectly acceptable to
subsidize Litton Industries to move
to Nova Scotia to produce
antiaircraft weapons components,
but it would not be acceptable to
subsidize Sydney Steel
Corporation to diversify the
civilian economy of the Atlantic
region.

 

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