It has been anticipated that the announcement on the selection of a new fighter jet for the Canadian military could be made in March/April 2022.
That choice remains to be made by two southern Ontario Members of Parliament, federal Procurement Minister Filomena Tassi and Defence Minister Anita Anand.
Their recommendation will go to Prime Minister Justin Trudeau and his federal cabinet deciding between the Texas-built Lockheed Martin F-35 and the Swedish Saab Gripen that would be manufactured in Halifax, Nova Scotia.
It’s widely believed that the F-35 will win because NATO’s interoperability requirements favour American aircraft. The F-35 could also win because U.S. officials will need to “certify” Canada’s procurement decision.
Uncertainty with Build Back Better
That decision could be delayed, however, because of the uncertainty around the legislative timeline for U.S. President Joe Biden’s Build Back Better Act and the implications its tax credit for electric vehicles (EVs) would have for Ontario’s automotive industry.
The Toronto Star has explained:
“Biden’s Buy America plan to almost double federal rebates, to as much as $12,500 (U.S.), for U.S. buyers of all-American EVs would effectively close the world’s biggest consumer market to EVs assembled in Canada or containing Canadian components.”
That article further notes that the auto assembly plants in Oakville, Windsor and Ingersoll “have basically been rescued by EVs.”
Biden and Senate Democrats had wanted the Act passed by Christmas, but Senator Joe Manchin, a crucial Democrat swing vote for the bill, opposes that the tax credit would only be directed toward union-made EVs.
Ford’s EV agenda
Meanwhile, the Canadian Press reports: “Doug Ford is pitching Ontario as the next electric vehicle manufacturing powerhouse, seemingly a far cry from the premier who three years ago cancelled incentives for people to buy them.”
Significantly that article observes: “Where some see contradiction, others see calculated election strategy.”
It further explains: “Ontario’s ‘Driving Prosperity’ plan focuses on repositioning the province’s auto sector to build electric vehicles, as well as establishing battery production here, taking advantage of critical minerals found in the Ring of Fire. It aims to build at least 400,000 electric vehicles and hybrids by 2030.”
That Conservative election calculus is undermined by Biden’s tax credit plan. It also poses a challenge for the federal (and presumably provincial) Liberals.
How the fighter jets fit in
Ottawa Citizen journalist David Pugliese, who reports on military issues, comments: “Enter the Liberal government’s 2017 policy designed to penalize a bidder on a defence procurement if they are doing ‘economic harm’ to Canada.”
Pugliese further argues:
“If the Liberals’ own policy is to be followed, the government will be required to consider U.S. actions and their effect on the Canadian economy during the next stage of evaluating the fighter jet bids.”
That means the American F-35 that Biden is pushing for Canada to choose could be at a disadvantage to the Swedish Gripen.
“That review could be the hammer [Finance Minister Chrystia] Freeland and [Trade Minister Mary] Ng need to convince the Americans to back off on the tax incentives that would penalize Canadian firms.”
That is a hammer Ford could also choose to pick up.
Ford has already said he himself will go “full tilt” to American governors to exempt Ontario and ensure Biden’s tax credit also applies to Ontario-made cars.
And the readout from a December 16th meeting between Trudeau and Ford notes:
“The Prime Minister and Premier discussed the implications of the United States’ Build Back Better Act, Canada’s work to vigorously defend its national interests, and the potential for economic growth as a result of the production of electric vehicles and batteries in Ontario.”
This issue may not be resolved by the time the writ for the provincial election is dropped in May.
Duncan Wood, a senior adviser to the Wilson Center’s Mexico Institute, believes Biden’s bill will pass with some version of the tax credit intact and that some accommodation with Canada will be found, but says: “I think it’s going to be a long process.”
Until that “long process” is settled, it’s possible the federal Liberals won’t announce their decision on Canada’s new fighter jet.
And the closer a provincial election gets, the more sense it might make for Doug Ford, with his Driving Prosperity plan and at least 124,000 auto manufacturing jobs in Ontario, to apply some pressure and speak against the F-35 as Canada’s next fighter jet.
Additional reading: The Canadian Centre for Policy Alternatives has called for the fighter jet purchase to be cancelled and for those savings to be redirected to “education, health care, human rights, environmental protection, housing, and future-proofing the Canadian workforce through industrial development strategies and skills development, among other initiatives that promote real human security.”