New fighter jet competition to have national 'economic interest' requirement

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The long road to replacing Canada's aging fighter jets took a surprising turn Tuesday as the federal Liberal government added a caveat to its latest battle of the bidders: contenders deemed to be harming the country's economic interests will find themselves at a "distinct disadvantage."

The plan is to replace the Royal Canadian Air Force's current fleet of CF-18 with 88 sleek, modern new planes, Procurement Minister Carla Qualtrough and Defence Minister Harjit Sajjan told a news conference – a contract worth between $15 billion and $19 billion.

But the economic-interests test, still in the development stages with the help of the aerospace industry, was an unexpected twist that appears to have raised as many questions as answers.

The government also confirmed Tuesday that it is walking away from plans to buy 18 Super Hornets from U.S. aerospace firm Boeing amid a bitter trade dispute with Montreal-based rival Bombardier. Canada will instead buy 18 second-hand F-18s from Australia to deal with what the Liberals call a critical shortage of jets until the entire fleet can be replaced.

While the full cost and delivery schedule are still being ironed out, the move will ultimately save time and money, Sajjan insisted.

The deal must still be approved by the U.S. government, which originally sold the F-18s to Australia and retains control over the transfer of such arms.

During question period Tuesday, Conservative Leader Andrew Scheer blasted Prime Minister Justin Trudeau's plan to buy old, second-hand aircraft that are of a similar vintage to the planes the government is replacing.

"If the prime minister is so keen on buying fixer-uppers, will he come over?" Scheer quipped. "I have an old minivan I would love to show him."

But it was the Conservatives themselves who made a hash of the fighter-jet file and created the need for an interim fleet, Trudeau retorted.

Gen. Jonathan Vance, Canada's chief of the defence staff, was also on the dais at Tuesday's news conference alongside Qualtrough, Sajjan, Transport Minister Marc Garneau and Economic Development Minister Navdeep Bains. The Australian aircraft are safe and will meet Canada's needs, he insisted.

"Make no mistake, these aircraft will work fine and those aircraft are very much needed," Vance said.

The decision to walk away from the interim Super Hornets ‒ which carried an estimated price tag of $6 billion – was hardly a surprise, considering the government's recent anti-Boeing rhetoric. But it remains to be seen how Boeing will be impacted by the economic-interest test, since the Chicago-based aerospace giant has major operations in Canada.

Boeing has already made it clear it's eager to enter the Super Hornet into the competition, despite its chilly relations with Ottawa over Bombardier. Qualtrough said the competition would be transparent and open to all, and that the new test will apply to all major military purchases in future.

But the ministers didn't dispute the notion that Boeing could be already at a disadvantage.

"The purpose of this new policy is to clearly demonstrate that anyone that wants to engage Canada, if they cause economic harm, will be at a distinct disadvantage," said Bains.

"That's the objective. This is really about our national interest. Our economy. And good-quality jobs in Canada."

Boeing will review the government's announcement, including the new economic-harm test, before deciding on next steps, company spokesman Scott Day said in an email.

At the same time, Day noted that Boeing employs 2,000 Canadians, including many in Winnipeg, conducts business with 560 local companies, and contributes $4 billion to the economy each year.

"If you look at Boeing's record in Canada, I think you have to let our record speak for itself."

That touches on one of the main questions with the new test, said defence analyst David Perry of the Canadian Global Affairs Institute: how the test is applied to companies like Boeing, which already have large interests in Canada.

"That will be fascinating to see because there will be an extraordinary amount of subjectivity in that," Perry said.

"They have the trade action and complaint against Bombardier. But they also do billions of dollars of economic activity in Canada every year. How do you weigh those two things?

"I think that will be extraordinarily difficult."

The contenders

There are five potential replacements for Canada's aging CF-18 fleet. Here's a closer look at what's known about the contenders:

F-35 – Lockheed Martin, U.S.

Largely overlooked in Tuesday's news about a new competition to find a CF-18 replacement was confirmation that the F-35 is back in the running. The move represents the latest twist in the stealth fighter's history in Canada, which included a promise by the previous Conservative government to buy it in 2010 and Justin Trudeau's promise in 2015 to do precisely the opposite. The F-35 continues to face some developmental challenges and questions about cost, but a number of allies are already receiving it. For all those reasons and more, the stealth fighter can again be considered a front-runner.

Super Hornet – Boeing, U.S.

The Super Hornet is a newer, larger and much more modern variant of the CF-18s that Canada operates, and is primarily used by the U.S. Navy and Australia. It was first flown in the 1990s; proponents note that, unlike the F-35, it has a proven track record. That appeared to sell the Liberal government, which planned to buy “interim” 18 Super Hornets until Boeing launched a trade complaint against Canadian rival Bombardier. Now, because of its older technology and uncertain production future, and the aforementioned trade dispute, the Super Hornet could be in for a tough battle in what promises to be a lengthy competition.

Typhoon – Eurofighter, European consortium

The Typhoon has largely flown under the radar, but is built by a consortium of European companies that includes Airbus, which recently offered to buy a majority stake in Bombardier's C-Series passenger jets. It's too early to tell whether that will be an advantage, but it can't hurt. Still, the Typhoon, which is operated by Germany, Spain, Italy, the U.K. and several Middle Eastern countries, doesn't have a long track record.

Rafale – Dassault, France

The Rafale has been used by the French military since the mid-2000s, and was recently sold to India, Egypt and Qatar. The aircraft has flown missions in Afghanistan, Libya, Mali, Iraq and Syria. Dassault's main pitch is offering to transfer intellectual property and create manufacturing jobs in Canada. But dissenters have questioned the Rafale's compatibility with North America's air defence system, Norad, as well as its cost.

Gripen – Saab, Sweden

The Gripen was built almost entirely in Sweden and is likely the dark horse in a competition to replace the CF-18s. The aircraft does not have a long operational history and is not widely used outside of Sweden, but is said to be relatively inexpensive to operate. Like with the Rafale, there are questions about compatibility with Norad.