Canada in need of a comprehensive industrial strategy

by Maj (ret'd) CORNELIU. CHISU, CD, PMSC, FEC, CET, P. Eng. Former Member of Parliament Pickering-Scarborough East In an uncertain world, Canada needs to have a plan for the future. A plan that is realistic, and takes care of the interest of Canadians first. Just as the giant south of the border takes time to think ahead for the future of the nation, despite the fact that it is politically embroiled in a polarized fight. The United States has made it clear that it would pursue an aggressive industrial strategy to ensure its competitiveness vis-à-vis China in key advanced industries and technologies. The reality is that the United States has a plan and Canada does not. Instead of focusing on a dream world and fantasy projects Canada should seriously think about its own industrial strategy. In the context of rising geopolitical tensions Canada would be ill-advised not to prepare for the resurgence of the importance of industrial policy. The need to do that is evermore pressing with the ongoing conflict in Europe and the rising tensions in South East Asia. Essentially, there are three families of technologies that will be of particular importance over the coming decade: first, computing-related technologies, including microelectronics, quantum information systems and artificial intelligence; second, biotechnologies and bio-manufacturing; and third, new, efficient, non-polluting energy technologies. However, it is also important that we do not lose elementary manufacturing skills, which were outsourced overseas for cheap, short term gain. Canada must find a solution for itself in terms of its industrial policy. It should not necessary be by means of central economic planning lead exclusively by the government of the day, with many political interests involved. The solution must be one which maximally limits political interference, is based on the positives of a "free-market" dynamic, and acts in symbiosis with the government. Today we need to be aware of the dynamic interaction between technological change and national security. In the context of intense technological rivalry and national-security imperatives, any future industrial policy needs to take into consideration: the semiconductor industry, critical minerals, the pharmaceutical industry (vaccines for example), and it must ensure key supply chain resiliency. However, no policy has value if there is no clear way of implementing it. Americans have successfully done so before, and even Canadians, during WW2 under the leadership of a competent engineer, have done it well. Obviously, there is a need of somebody as well oriented and capable as C.D. Howe was. We should never forget to learn from the past, and we can learn a lot from Howe. During a crucial time in Canadian history, he was able to transform the Canadian economy from agriculture-based to industry-based. During the Second World War, his involvement in the war effort was so extensive that he was nicknamed the "Minister of Everything". The question is: Is there a modern-day C.D. Howe in Canada when we really need one? and what does this all mean for Canada? To be sure, there will be some North American integration on industrial policy and supply chain resiliency. That is only common sense and we need to take it into consideration. In an era of protectionism, a politically influenced globalist economy and recent geopolitical issues to complicate matters, it would be a mistake to think that the Americans will carry the day for us. What is abundantly clear today is that the United States seem to have a robust, comprehensive and ambitious industrial strategy with a clear roadmap to implement it; while Canada is tinkering in the margins of both. One wonders where the priorities of the Trudeau government are today. The challenge is clearly two-fold: First, it has yet to articulate, coherently and in detail, what Finance Minister Chrystia Freeland calls Canada's "muscular" industrial strategy; and second, we need to raise the degree of sophistication and policy focus that is necessary to implement what is said. Unfortunately, there are no signs of real action, only a slew of lawyer-generated wordings with no real substance. Lately we have seen a trumpeted movement on electric vehicles, in which the federal government has made important strides in attracting key investments in the automotive sector and parts of the EV supply chain. This has made labour and provincial politicians ecstatic. The question is whether the Canadian market is ready for them, and whether the heavy subsidies from public money are worth it. Yes, electrical vehicles are interesting, but several key questions arise regarding their suitability for Canada and just how 'green' they are. For example, how well do they work over the long distances and low temperatures in Canada? And how environmentally friendly are the batteries they use? There are more questions, but I think these two penetrate to the heart of the matter. Furthermore, providing subsidies to companies in one sector is not a comprehensive industrial strategy. Nor is it a substitute for reimagining our national environment for innovation. It only adds to our already overgrown bureaucratic structures. As a key component in an industrial strategy, we need a modern incarnation of what used to be corporate labs. There, industrial research was conducted through collaboration between governments, universities and businesses, leading to real innovation at scale in the economy. Canadian policy makers need to think strategically about fundamental and common-sense actions rooted in Canadian reality. In the context of national-security considerations and intense strategic competitiveness at the technological level, they should identify sooner rather than later, what sectors a modern Canadian industrial strategy should focused on. We really do need to be clear, right now, on our key objectives and outcomes for Canada. The question is: How will Canada ensure clarity of purpose, consistency in execution, and long-term commitment to the protection of our economic vibrancy, national security, and the well-being of all Canadians? I'll leave it to you to reflect on that.