Canadian Defense Industry as a Part of the U.S. Military Industrial Complex

Since the beginning of World War II, Canada and the United States have engaged in intensive defense industrial cooperation that has resulted in the integration of their defense industries. The official term used for explaining this phenomenon is a North American defense industrial base. The driving force behind this integration were the top U.S. defense companies, which opened their numerous branches and subsidiaries in Canada, and took command positions in the Canadian defense industry. The U.S.-Canadian defense industrial relationship has been incrementally institutionalized in several framework agreements. In 1956 and 1963, the United States and Canada entered into the Defense Production Sharing Agreement, and the Defense Development Sharing Agreement. Additionally, in 1993, the United States has designated Canada as part of the U.S. defense industrial base. Canada is unique among U.S. allies in that it is both a leading purchaser of major U.S. weapon systems and a key supplier of subsystems, components, and materials to the U.S. defense industry. Because of the high level of integration between the two economies at the sub-tier level, as well as the flow of goods between parent companies and subsidiaries, there is a much higher level of cross-border trade in parts and components between the U.S. and Canadian defense firms than the official SIPRI defense-trade statistics suggest. This article surveys the peculiarities of the Canadian defense industry, its contribution to the North American defense industrial base, the history of Canada-U.S. defense industrial cooperation, the division of labor in North America in the field of arms production, Canadian industrial capabilities, as well as the volume and dynamics of arms trade between two countries.