Tag Archives: Trade

Mark Collins – World Defence Spending 2015/2016

A tweet–US$, Canada steady at no. 15 (what do we buy–only part of defence spending–for it?):

Mark Collins, a prolific Ottawa blogger, is a Fellow at the Canadian Global Affairs Institute; he tweets @Mark3Ds

Mark Collins – We Have a Winner! RCAF Fixed-Wing SAR: 16 Airbus C295W for $2.4B

Initial cost, after a twelve-year process! Further to this post,

New RCAF Fixed-Wing SAR Plane Choice Real Soon?

a deal at long-last done (note at end of post additional refueling, transport roles which the government does not mention for some reason):

Airbus chosen to build Canada’s new search planes, ending 12-year procurement odyssey
16 Airbus C-295 aircraft announced by ministers, head of air force at CFB Trenton

The Canadian military will receive new fixed-wing search and rescue planes in a two-step procurement that will cost taxpayers $4.7 billion over the next two decades.

The selection of European defence giant Airbus end a 12-year, frustrating odyssey that spans three governments.

Defence Minister Harjit Sajjan, Public Works Minister Judy Foote and the Commander of the Royal Canadian Air Force, Lt.-Gen. Michael Hood, announced the deal at the country’s largest military air base in Trenton, Ont., which is also one of the principal search and rescue stations.

Conservatives made ‘political’ decision to cut military flying time in 2014, Laurie Hawn says

The first phase — with a pricetag of $2.4 billion — involves the purchase of 16 C-295W aircraft modified for search and rescue missions.

A training simulator, to be located in Comox, B.C., and 11 years of in-service support and maintenance [with a Canadian company, see below] will be included.

An additional in-service support program will have to be negotiated with Airbus. That cost is estimated at $2.3 billion.

Taken together, the combined price tag is considerably more than the $3.8 billion approved by the former Conservative government in 2011, and higher still from the original $3.1 billion price tag affixed to the plan when Paul Martin’s government first announced it in 2004.

The turbo-prop C-295 is in use in 15 countries, mostly for military transport but also for maritime patrol and anti-submarine warfare…

It was Paul Martin’s Liberal government that started the competition in 2004 [as a “major priority”! see top right here]…

…the first planes are expected to arrive in 2019 and the final delivery will take place in 2022 — 18 years after they were originally ordered [emphasis added, but after procurement intention announced–no order in 2004].

It cannot have hurt Airbus that the C295W has Pratt & Whitney Canada engines whereas the main competitor, the Leonardo-Finmeccanica (company’s new name) C-27J, does not.

Image:

c295w.jpg
Canada Selects Airbus C295W for Fixed-Wing Search and Rescue
Photo Credit: Hand-out / Airbus Defence and Space

From the government’s new release–jobs! jobs! jobs!


Following a rigorous, open and transparent competition, the Government of Canada today announced the awarding of a contract for $2.4 billion to Airbus Defence and Space to replace Canada’s fleets of CC115 Buffalo and legacy CC130 Hercules aircraft. The company has partnered with Newfoundland-based PAL Aerospace for maintenance and support services [emphasis added, PAL website here].The contract will provide a complete, modern and technologically advanced search and rescue solution, including maintenance and support services up to 2043.

As part of this contract, Airbus will provide 16 C295W aircraft, equipped with advanced technology systems, to support Canada’s search and rescue operations, construct a new simulator-equipped training centre in Comox, British Columbia, and provide ongoing maintenance and support services. The contract also includes options to extend the maintenance and support services for an additional 15 years. Should Canada choose to exercise these additional options, the contract value would increase to $4.7 billion.

The new technology being acquired includes state-of-the-art communications systems that will allow search and rescue personnel to share real-time information with partners on the ground. Using integrated sensors, crews will be able to locate persons or objects, such as downed aircraft, from more than 40 kilometres away, even in low-light conditions.

As part of its proposal Airbus Defence and Space has committed to make investments in the Canadian economy equal to the value of the contract, creating and maintaining good middle class jobs. Through Canada’s Industrial and Technological Benefits Policy [website here], the company will incorporate many of Canada’s leading aerospace firms into its global supply chain and establish strategic partnerships with Canadian companies to ensure the aircraft are supported in Canada by Canadians. This work will help grow Canada’s innovative and strong aerospace sector, while providing well-paying jobs for the middle class and those working hard to join it [emphasis added, last phrase is now really hurl-worthy]…

Related Products

Backgrounder: A modern and effective search and rescue solution for the Canadian Armed Forces 
Backgrounder: Fixed-wing search and rescue aircraft procurement process
Infographic: Procuring Canada’s future fixed-wing search and rescue aircraft 
Infographic: Capability

Associated Links

Public Services and Procurement Canada: Fixed-Wing Search and Rescue Aircraft Replacement 
National Defence: Investing in Equipment 
Royal Canadian Air Force:  Search and Rescue Search and Rescue in Canada: A shared responsibility
Innovation, Science and Economic Development Canada: Industrial and Technological Benefits

And from the Airbus news release–note additional roles near end:


The C295W features substantial Canadian content. Every C295 is powered by Pratt & Whitney Canada engines, pilots and technicians will be trained at a new facility developed by CAE in Comox, BC, and the electro-optical systems for FWSAR will be provided by L3 Wescam of Burlington, ON. In-service support for the life of the program will be provided by AirPro, a joint venture between Airbus Defence and Space and PAL Aerospace of St John’s, Newfoundland. In-service support will be conducted by Canadians in Canada.

[Simon] Jacques [Head of Airbus Defence and Space in Canada] added: “About 20 percent of the aircraft is already Canadian, meaning that it already serves as a global ambassador for the skills, innovation and expertise of Canadians. Now it will get to serve them directly.”

Canada’s C295Ws will be delivered starting three years after contract award. In service, they will join five Airbus CC-150 aircraft used in the air-to-air refueling, transport [emphasis added–why doesn’t the government mention those subsidiary roles?], and VIP travel roles.

When the contract is finalized, 185 C295s will have been ordered by 25 countries…

Something else to keep in mind–the RCAF’s 32 older-model Hercules are being followed-on by just 17 new C-130Js, so the RCAF has always wanted the new SAR aircraft to be able to double when necessary as a tactical transport in order to keep that capability up (see e.g. 424 Transport and Rescue Squadron):


Air force Col. Dave Burt, director of aerospace requirements, said at the time [2004] that search and rescue was the priority, adding that the service wanted “something that is smaller and (more) cost efficient than a Hercules but still has some of the transport-type qualities that a Hercules has.”

Although the aircraft would be used for search and rescue, there may be room to have them perform a secondary role of airlift if that is deemed feasible, Burt added…

Something that has not been mentioned for years for no good reason that I can understand.

Mark Collins, a prolific Ottawa blogger, is a Fellow at the Canadian Global Affairs Institute; he tweets @Mark3Ds

Mark Collins – The Russian Way of–Hybrid–Warfare

A very interesting analysis of how the Bear works–both at home and abroad–at War on the Rocks:

Russia’s Hybrid War as a Byproduct of a Hybrid State

Whether or not “hybrid war” is the right term — a battle probably lost for the moment —Russia is indeed waging an essentially political struggle against the West through political subversion, economic penetration, espionage, and disinformation. To a degree, this reflects the parsimonious opportunism of a weak but ruthless Russia trying to play a great power game without a great power’s resources. It also owes much to Moscow’s inheritance from Bolshevik and even tsarist practices. But a third key factor behind it is the very nature of the modern Russian state, as I discuss in my new report, Hybrid War or Gibridnaya Voina: Getting Russia’s Non-Linear Military Challenge Right.

One distinctive aspect of recent Russian campaigns, from political operations against the West to military operations in Ukraine, has been a blurring of the borders between state, paramilitary, mercenary, and dupe. The Putin regime evidently believes that it is at war with the West — a geopolitical, even civilizational struggle — and is thus mobilizing every weaponizable asset at its disposal. This extends to mining society as a whole for semi-autonomous assets, from eager internet trolls and “patriotic hackers” to transnational banks and businesses to Cossack volunteers and mercenary gangsters…

The “hybridity” of Russian operations…reflects a… hybridity of the Russian state. Through the 1990s and into Putinism, Russia either failed to institutionalize or actively deinstitutionalized — however you choose to define it.

Today, Russia is a patrimonial, hyper-presidential regime, one characterized by the permeability of boundaries between public and private, domestic and external. As oligarch-turned-dissident Mikhail Khodorkovsky put it:

[W]hat distinguishes the current Russian government from the erstwhile Soviet leaders familiar to the West is its rejection of ideological constraints and the complete elimination of institutions.

Lacking meaningful rule of law or checks and balances, without drawing too heavy-handed a comparison with fascism, Putin’s Russia seems to embody, in its own chaotic and informal way, Mussolini’s dictum “tutto nello Stato, niente al di fuori dello Stato, nulla contro lo Stato” — “everything inside the State, nothing outside the State, nothing against the State.”..

In Russia, state institutions are often regarded as personal fiefdoms and piggy banks, officials and even officers freely engage in commercial activity, and the Russian Orthodox Church is practically an arm of the Kremlin. Given all that, the infusion of non-military instruments into military affairs was almost inevitable. Beyond that, though, Putin’s Russia has been characterized — in the past, at least — by multiple, overlapping agencies, a “bureaucratic pluralism” intended as much to permit the Kremlin to divide and rule as for any practical advantages. This is clearly visible within the intelligence and security realm, from the intrusion of the Federal Security Service (FSB) — originally intended as a purely domestic agency — into foreign operations, as well as in the competition over responsibility for information operations…

Moscow must also be considered the master of “hybrid business,” of developing illegal and legal commercial enterprises that ideally make money, but at the same time can be used for the state’s purposes, whether technically private concerns or not. Russian commercial institutions not only provide covers for intelligence agents and spread disinformation, but acting notionally on their own initiative, they are also used to provide financial support to political and social movements Moscow deems convenient. For instance, Marine Le Pen’s anti-European Union Front Nationale in France received a €9 million loan from a bank run by a close Putin ally. Similarly, the election of the Czech Republic’s Russophile President Miloš Zeman was partially bankrolled by the local head of the Russian oil company Lukoil — allegedly as a personal donation…

So, it is not simply that Moscow chooses to ignore those boundaries we are used to in the West between state and private, military and civilian, legal and illegal. It is that those boundaries are much less meaningful in Russian terms, and they are additionally straddled by a range of duplicative and even competitive agencies…

Dr. Mark Galeotti is Senior Research Fellow at the Institute of International Affairs Prague, and Principal Director of the consultancy Mayak Intelligence. He has been Professor of Global Affairs at New York University, a special advisor to the British Foreign & Commonwealth Office and head of History at Keele University in the United Kingdom, as well as a visiting professor at Rutgers—Newark, Charles University (Prague), and MGIMO (Moscow). Read his new report, Hybrid War or Gibridnaya Voina: getting Russia’s non-linear military challenge right.

Working towards Bad Vlad? Related:

Julian Lindley-French – Closing NATO’s Deterrence Gaps

Mark Collins, a prolific Ottawa blogger, is a Fellow at the Canadian Global Affairs Institute; he tweets @Mark3Ds

Mark Collins – International Arms Trade: Look Ma! No Canada

A tweet:

Brits rather punching above their weight.

Mark Collins, a prolific Ottawa blogger, is a Fellow at the Canadian Global Affairs Institute; he tweets @Mark3Ds

Mark Collins – Dragon Devouring Eurotech, German Section–Obama Steps In

Further to this post, the outgoing US president gets tough (our PM noticing?):

Obama Moves to Block Chinese Acquisition of a German Chip Maker

The intervention in a Chinese company’s bid to buy a German semiconductor company, Aixtron [website here], comes after Chinese companies have spent billions to acquire technology in Europe and the United States. American officials have increasingly moved to stop such deals, but Chinese companies have shown growing adeptness in getting around those restrictions to strike up relationships that could someday lead to greater access to technology.

A statement from the Treasury Department said the administration blocked the purchase of the American portion of Aixtron’s business because it posed a national security risk relating to “the military applications of the overall technical body of knowledge and experience of Aixtron.”

It wasn’t clear whether other parts of the deal could be salvaged. Officials at the German chip company and its would-be Chinese buyer, the Fujian Grand Chip Investment Fund [website here], did not immediately comment.

By rejecting the deal, the Obama administration showed how far it would go to keep China from using its wallet to acquire sensitive technology from the West. It blocked previous Chinese technology purchases only indirectly, using an advisory panel of government and intelligence officials who can discourage — but not directly kill — foreign deals. That same panel earlier expressed skepticism over the Aixtron deal.

Last year the United States accounted for more than one-fifth of Aixtron’s sales. And nearly one-fifth of its more than 700 employees are based in the United States.

That indirect strategy kept Mr. Obama from looking like a free-trade opponent, especially when the company in question was not American, and softened any potential response from Beijing. But Aixtron and its Chinese suitor tested that strategy by plowing ahead despite the panel’s concerns, forcing Mr. Obama to act…

Related:

Chicom State-Owned Firms’ Investment in US: a Good Thing?

Mark Collins, a prolific Ottawa blogger, is a Fellow at the Canadian Global Affairs Institute; he tweets @Mark3Ds

Mark Collins – With Serious Chicom Links: "Influential Chinese-Canadians paying to attend private fundraisers with Trudeau"

Further to the end of an earlier post,

Chinese business leaders laud ‘golden era’ for Canadian relations

Canada, China at dawn of golden decade [at Chicom mouthpiece, Global Times]

Illustration: Liu Rui/GT

Oh, that cuddly panda.

The Globe and Mail continues its excellent reporting on the Dragon’s influence activities in this country:

The Liberal Party is employing an under-the-radar strategy that taps into the power of Justin Trudeau to generate tens of thousands of dollars from cash-for-access events at the homes of wealthy Chinese-Canadians that provide intimate face-time with the Prime Minister that can be used as business currency at home and in China.

Attendance figures suggest the party collects a minimum of $50,000 per event from donors – and up to $120,000 – in a system that revolves around rich entrepreneurs in Vancouver and Toronto, home to large Chinese-Canadian business communities with people willing to shell out $1,500 per ticket to meet Mr. Trudeau in a private setting.

Some of the guests and hosts at the intimate fundraisers are well-connected to China’s ruling Communist Party…

Related: Trudeau defends fundraiser as effort to attract Chinese investment

Related: Trudeau attended cash-for-access fundraiser with Chinese billionaires

Former Liberal cabinet minister Raymond Chan, who was Mr. Trudeau’s British Columbia fundraiser in the 2015 election campaign, helps with fundraising activities on the West Coast, while Toronto business consultant Richard Zhou is a key organizer of these events in Ontario.

Mr. Chan was at the most recent Trudeau fundraiser, which was held on Nov. 7 at the West Vancouver mansion of B.C. developer Miaofei Pan, a multimillionaire from Wenzhou province who immigrated to Canada a decade ago. More than 80 guests got their pictures taken with Mr. Trudeau at the $1,500 per ticket event, including Mr. Chan.

Mr. Pan told The Globe and Mail he lobbied the Prime Minister to make it easier for well-heeled investors from China to come to Canada. He said he told Mr. Trudeau the program put in place by the former Conservative government was “too harsh.”

In exchange for permanent residency, rich immigrants must invest $2-million and are subject to strict audits…

A Chinese government agency in Mr. Pan’s hometown that builds ties with and keeps tabs on expatriate Chinese, supplied photos of the Trudeau-Pan event to media in China. The Foreign and Overseas Chinese Affairs Office of the Wenzhou People’s Government promotes China’s interests abroad, according to former Canadian diplomat and China expert Charles Burton.

“That is an agency of the Chinese Communist Party,” Mr. Burton told The Globe and Mail. “The fact that the photos appeared in the [Wenzhou Metropolis Daily] in China suggests that the people who participated in that activity must have been tasked by the Chinese state to try and promote the Chinese position with influential people in Canada. In this case, our Prime Minister.”

Mr. Pan is honorary chair of a Chinese-Canadian organization that is an unabashed backer of Beijing’s territorial claims in the South China Sea and East China Sea [emphasis added, see “Ethnic Chinese Abroad: Once a Dragon, Always a Dragon Says Beijing“]…

In Toronto, Mr. Zhou is the chief Liberal ambassador to deep-pocketed Chinese-Canadian business executives. His web biography says he is also a consultant to the state-supervised Beijing International Chamber of Commerce. He did not respond to phone calls or e-mails, but Mr. Caley confirmed that Mr. Zhou is a “volunteer fundraising co-chair in Ontario.”

Mr. Zhou helped arrange a May 19 fundraiser at the home of Chinese Business Chamber of Commerce chair Benson Wong at which Mr. Trudeau was the star attraction, an event attended by Chinese billionaire and Communist Party official Zhang Bin. A few weeks later, Mr. Zhang and his business partner donated $200,000 to the Pierre Elliott Trudeau Foundation and $50,000 to erect a statue of Mr. Trudeau’s father…

But nothing to see here, folks. Just move on. Very relevant:

“China’s government is not Canada’s friend”

The Dragon’s Grasp on Canadian Chinese-Language Press…

The Dragon vs the Press: Covert (Canada); Overt (Hong Kong)

How Convenient: “Ontario minister Michael Chan defends China’s human-rights record”

Up-Sucking to the Dragon While Beijing Tries to Devour Canada

Top Dragon’s Anti-Corruption Drive, Chicom Spooks in Canada Section

The Dragon and the Beaver: Ottawa in Cloud Cuckoo Land

To sum it all up:

The Definitive Dragon Trying to Devour Canada Post

Smile!

selfie.jpg
(David Parkins/The Globe and Mail)

Selfie on.

The phrase “useful idiot” almost springs to mind.

Mark Collins, a prolific Ottawa blogger, is a Fellow at the Canadian Global Affairs Institute; he tweets @Mark3Ds

Mark Collins- RCN Canadian Surface Combatant, Irving, Intellectual Property…and Espionage (plus fighters and Trump)

Further to these posts,

RCN Canadian Surface Combatant: Intellectual Property Brouhaha

Irving Halifax Has Lead Evaluating RCN Canadian Surface Combatant Design/Weapons Systems Bids

Irving Working with BAE Systems: Implications for RCN Canadian Surface Combatant?

some important points about the IP issue and its implications–including for new RCAF fighters too–are made in this piece (do read it all):

The Canadian Government, Defense Procurement, and Software: Out of Phase with Western Defense Development and Modernization?

The Liberal regime needs to be cognizant that Canada will always be a modest sized customer in the world arms market.

As such, unique and irregular Canadian requirements and unorthodox procurement processes will sharply inflate cost and create long term issues of sustainability.

Kludgey Canadian equipment that fails to meet reasonably anticipated expectations from allies raise doubts as to the credibility of Canada’s commitment to collective defense.

The Case of the Canadian Surface Combatant Program: Software Transfer as a Non-Starter

The Canadian Surface Combatant (CSC) program demanded that bidders hand overtheir intellectual property (IP) and data to prime contractor Irving Shipbuilding, including “foreground and background data” and software source code.

While it is no longer a disqualifier to not do so up front, this demand raises major issues for suppliers.

Requiring a bidder’s a priori disclosure of IP and data to a private company (and potential competitor!) like Irving shipbuilding is highly irregular.

The details required are down to specifications for the last nut, bolt and screw, including tools used and part numbers. While the intent may be to deprive the vendor of follow-on revenues for maintenance and upgrades, it is far more damaging to the world shipbuilding industry.

Serious questions arise as to how (if at all) the data can be safeguarded by the contractor and/or the Canadian government, and its leakage to both adversaries and other competitors. While the intent is that provision of this data enables Irving Shipbuilding to walk away from the vendor for future upgrades and maintenance, it has many other consequences.

The IP requirement means that the prime contractor and Canadian officials will be able to become a competitor to all bidders. Because they will be the only party to see everyone’s IP, Canadians will be able to aggregate the data, cherry pick and reverse engineer IP and designs from all bidders.

This goes beyond depriving vendors of follow-on revenues.

It means that Canada, and particularly Irving Shipbuilding, will have the unfair advantage of seeing the issues, flaws and best features in all bidder’s designs.

Canada would then be in a prime position to offer maintenance and support to not just the CSC, but for all vendor’s products, potentially becoming a competitor to every bidder, not to mention building its own next generation ship from bidders’ designs.

Whether it is the intent of the Government of Canada to facilitate this is not known.

Indisputably it is an unfair competitive advantage handed to anyone who has access to the data…

Apparently no one at DND or Irving Shipbuilding thought about how they would build a CSC without access to commercial electronics like devices from Xilinx, Intel, IBM, Freescale, Siemens, TSMC, etc. None of these firms will consent to their technology being handed over and if that is a condition, they will likely bar the use of them in the CSC program, causing bidders to find new and, as yet, non-existent sources.

Even if bidders agree to these terms, only one whom will be successful will still have to deal with the likelihood of theft of their IP and the likelihood that their software, intentionally or otherwise, will be compromised. Canadian government institutions and firms have a sorry record of protecting their intellectual property in this regard.

IP Security and the Threat of Theft from Non-Liberal Regimes

The U.S. was recently victimized by a Canadian subsidiary of United Technologies who illegally handed over to the PRC software intended to be used in their Z-10 military helicopter on the pretext of bidding for a civilian helicopter contract. That incident will weigh heavily on any decision to permit disclosure of sensitive US technologies to Canadian subsidiaries.

The very fact that it is now known that bid documents will contain sensitive IP that can compromise every bidder’s product will make Canada and Irving Shipyards a high priority intelligence target for Russia, China, Iran, North Korea [emphasis added], etc. facing threats from the bidder’s home countries [see also on China: “Chicom State-Owned Firms’ Investment in US: a Good Thing?“].

Compromise of CSC bidding documents data in Canada will result in the damage not just to CSCs, but also to other operators of the same platform — potentially creating a nightmare for every country foolish enough to authorize their vendor to release the IP.

And a bonanza for Chinese military shipbuilders eager to clone the best designs…

The Fighter Case in the Broader Context

The larger question is whether such IP giveaway for the privilege of bidding will be replicated in other government procurements like the replacement Fighter program.

If so, the U.S. can make it difficult simply by refusing to allow release of APIs and other interfaces, resulting in a low level of integration into U.S. systems, making the CSC and F/A-18 Super Hornets effectively unintegrated “one off” pieces in the age of network centric warfare.

Upgrading the systems ex post to U.S. standards for security to enable them to work closely together will likely be costly (if permissible at all) and be subject to stringent licensing terms — frustrating the original IP “hand over” requirement.

The U.S. may limit Canada’s access to compiled modules and ban Canada from updating mission data files altogether…

The Coming of the Trump Administration

The Trump Administration will also be zeroing in on Canadian defense procurement demands like “100% offset” requirements and take a close look at how those deals required of Boeing if the F/A-18 Super Hornet “interim” buy goes ahead [on those new fighters: “What Stinking RCAF Fighter “What Stinking RCAF Fighter “Capability Gap” for NORAD and NATO?“]…

Danny Lam is an independent analyst based in Calgary…

Mark Collins, a prolific Ottawa blogger, is a Fellow at the Canadian Global Affairs Institute; he tweets @Mark3Ds