National Security Post-COVID: Part 1

3 minute read

By Bill James, Senior Advisor

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Does COVID-19 illustrate the need to reform Canadian economic policy and industrial strategy to strengthen national security?

The most fundamental obligation of a national government is to protect the safety and security of its citizens. Canadians can be proud that our governance structures, institutions and the individual sacrifices of millions of workers have allowed us to relatively successfully navigate the COVID-19 pandemic thus far. At the same time however, the pandemic has laid bare the degree to which the health, safety and economic security of all Canadians can be impacted by events outside our country and by decisions taken elsewhere particularly in countries with different priorities and values. In recent days, it has become more evident than ever, that self protection, pursuit of economic advantage, and different values and perspectives can lead to interruptions and unreliability of essential trade and supply chains in times of economic and political challenge.

As a smaller, relatively open economy, Canada’s existing economic and regulatory policies in several important sectors have left it at the end of a long, intentionally offshored supply chain which has been structured to minimize cost and maximize corporate profit. While Canada will always depend on trade with other countries, the necessary conditions for safeguarding Canadians’ security are evolving, in a direction where economic aggression may exceed traditional military threats.

Canada’s experience in procuring basic personal protection equipment (PPE) such as masks and gloves during COVID-19 has provided a useful and painful illustration of the vulnerabilities of current industrial policy and supply chain structures: At the inception of the crisis, when Canada’s domestic PPE stockpiles were insufficient, additional foreign supply became unreliable, often diverted to higher bidders or sequestered for domestic use by exporting countries. For example, South Korea implemented measures to restrict exports in February, with its Finance Minister indicating that “The government will make sure that 90% of total mask production in South Korea will be supplied within the country,” “Around 140 companies that produce masks can provide 10 million masks a day, which means that 9 million masks will now be available for domestic sales.” Western governments such as Canada navigated a “wild west” international procurement competition, pitting normally allied countries against one another. Facing continued shortages, poor quality imports, and limited domestic supply, Canada was forced to ration its available PPE and effectively shut its economy down at unprecedented economic cost, as part of the necessary strategy to conserve medical capacity and mitigate the spread of the virus among Canadians.

To date, in part to the rapid deployment of masks and availability of testing supplies, densely populated South Korea has experienced only 282 COVID deaths on a population of more than 50 Million as compared to more than 2660 for Canada’s population of 36 Million. Fast forward a few months to today, and the Canadian government is now promoting a “Made in Canada” manufacturing strategy for PPE as the best way to ensure we can secure the PPE supply required to withstand a second wave of infections during the flu season this fall. While made in Canada PPE may be an achievable solution in this circumstance, if Canada is to emerge from the COVID experience as a more secure and economically resilient nation, a broader and fundamental review of our economic vulnerabilities, trade alliances, and dependencies in areas such as technology, medicine, advanced manufacturing and foreign ownership, is called for.

Part 2 will explore an example of the evolving risks faced by Canadians. Whether Canada should, for example, continue to be indifferent as to which countries control the supply of our most essential medications? Read it here.