Sovereign Capability: Building a Canadian Dual-Use Industrial Commons

By Laurent Carbonneau
CCI Vice President of Policy and Advocacy

Earlier this year I co-wrote a policy paper on defence and dual-use technology policy with Matthew da Mota, senior policy analyst at The Canadian Shield Institute. This week the paper was published and we presented it at a conference in Ottawa. The paper itself is fairly dense policy writing, but Matthew wrote a short summary of what we were thinking about for Shield’s weekly newsletter. 

We thought it’d be interesting for the Mooseworks crowd too. So I’ll turn it over to Matthew here, and if you’re interested, sign up for The National Interest. They publish smart policy analysis on how to strengthen Canada’s sovereignty:

Canadian Shield Institute Chief Economist Kaylie Tiessen recently did some pretty simple math:

1. Start with Canada’s current level of defence spending, which just recently passed 2 per cent of GDP.
   
   
2. Take the government’s own forecast for future years, from the 2025 federal budget.
   
   
3. Assume that Prime Minister Mark Carney is serious about Canada’s goal of hitting a defence spending target of 5 per cent of GDP by 2035.

The chart looks like this:

If we actually do it, Canada will be spending a staggering $230 billion annually on defence spending, up from around $80 billion today.

Simply pouring a huge amount of money into defence procurement will not in itself drive the economy, if we don’t fix three essential deficits:

First, there’s Canada’s manufacturing capacity.

Second, there’s Canada’s retention and strategic use of intangible assets produced through defence R&D.

And finally, there’s the governance of emerging dual-use technologies.

Given the amount of taxpayer money involved, and what it means for Canada’s geopolitical stance in the wider world, we really need to get the policy right.

Earlier this year, I co-wrote a paper with Laurent Carbonneau, Vice-President of Policy & Advocacy at the Council of Canadian Innovators. Our two organizations are closely aligned, and we both work on issues at the intersection of defence policy and economic strategy.

It turns out that there’s been a fair bit of scholarship on the idea of knitting together manufacturing and R&D, and the idea has a name: “The Industrial Commons.”

The idea here is that it’s no good if you go all-in on R&D work, without also having local manufacturing capacity to go along with it. The government is already looking to foster innovation hubs tied up with the Defence Industrial Strategy, and there are real benefits in taking steps to ensure that high quality manufacturing is co-located in the same place as the R&D.

Essentially, if you’ve got people designing drones or quantum computing or aerospace technologies, it’s very useful to have the factory right down the road to build things. For one thing, the factories will likely have some excess capacity, which can be used by other innovators in the region, or potentially it can create positive spillovers for other non-defence use cases.

The “Industrial Commons” here is the idea of bringing together researchers (which is already a strength for Canada) alongside manufacturing (less of a strength for Canada, but we have some under-used capacity that we can retool). The whole is greater than the sum of its parts, and the shared industrial capacity for both research and production becomes a public resource — i.e. a commons.

You can read a lot more about  all of these ideas in the longer paper that we wrote, which is posted online here.

But in a nutshell, we propose three institutions to make this idea of a defence dual-use industrial commons happen in Canada:

1. Building manufacturing capacity around the new Defence Innovation Secure Hubs, designed for dual-use civilian and defence production.
   
   
2. A dual-use Intangible Asset Collective to acquire patents, attach IP and data retention requirements to public funding, and stop Canadian-funded research from flowing abroad.
   
   
3. A Strategic Standards Office to proactively shape defence procurement and interoperability standards, giving Canada more control and modularity over its defence and potentially dual-use systems.

The political will and capital are aligned now to take action on this. Without building a full ecosystem that can produce ideas, make things, govern strategically, and retain value, we risk spending money on immediate needs without building for the future.

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Laurent Carbonneau is CCI's Vice President of Policy and Advocacy. He can be reached at lcarbonneau@canadianinnovators.org. Mooseworks is the Council of Canadian Innovators' innovation policy newsletter. To get posts like this delivered to your inbox, sign up for CCI's newsletter here .