Canada x Indo-Pacific 6th Ed.

8 December – 12 January

EXECUTIVE SUMMARY

$753M Bombardier deal and Buy Canadian policy starts implementation; PM Carney visits Beijing. Taiwan unveils $40B defense supplement as PRC rehearses total blockade. Trump signals $1.5T defense budget after ordering Venezuela intervention and demanding Greenland. Japan approves record $58B budget; Emerging links between $41B submarine deal to a Hyundai (or European) plant in Canada. AUKUS Pillar II narrows focus to four priority areas. BlackBerry provides secure comms for ASEAN. Canada should join GCAP.

Summary of Key Action Items For Policy Makers and Industry Executives

Immediate (Next 30 Days)

Canada: Await Defence Industrial Policy release; conduct gap analysis on policy when released, submit for DND Collaborative Networks funding opportunity by 19 Jan.

Taiwan: Register for Canada-Taiwan R&D Funding Opportunity by February 19.

US: Review DIU opportunity for prototyping Geomagnetic Airborne Unmanned Survey System (GAUSS)

Singapore: Consider submitting for Cap Vista Accelerator Program for early detection of Lithium-ion battery anomalies and containment of thermal runaway (offers exposure to both European and SE Asian markets).

South Korea: Track latest Rep. of Korea delegation outcomes in Ottawa.

India: Submit input to India Trade Agreement consultation by January 27

Medium-Term (2026)

Japan: Map capabilities against SHIELD procurement roadmap and watch for new ISA/Tech Transfer framework

US: Monitor USMCA review (scheduled for July 2026) as litmus test for Canada-U.S. defense-industrial relationship and audit exposure to U.S. Buy American push.

Strategic (2026+)

GCAP: Position for Canadian sub-system expertise entry using Japan Tech Transfer Agreement and engage w other GCAP partners.

Nuclear Propulsion: Canadian nuclear engineering firms (explore and deepen) South Korea partnership opportunities

Southeast Asia: ID opportunities for In-Service Support capabilities (including ISS training and simulation) for regional fighter modernization programs.

AUKUS Pillar II: No expanded membership until priorities set; focus on specific solutions not broad innovation.

CANADA: Defense Dollars, Buy Canadian, and Beijing

$753M Bombardier Contract: Government of Canada awarded Bombardier the Global 6500 multi-role aircraft contract, signaling commitment to domestic aerospace capabilities.

Buy Canadian Takes Effect amid Defence Industrial Policy wait: Buy Canadian policy officially launched December 16. The defense community awaits details of the Defence Industrial Policy and whether it will have sufficient focus.

Carney’s China Visit: PM Carney attended a Chinese reception December 19 and visits China this week, attempting to balance economic necessity with geopolitical tensions.

Watch: How Buy Canadian affects procurement officer behavior at the micro-level. Carney’s specific language in Beijing on balancing trade diversification with PRC tensions.

TAIWAN: $40B Defense Supplement and Blockade Rehearsals

Taiwan Dome Initiative: President Lai Ching-te announced $40B supplemental defense budget (2026-33) for island-wide air and missile defense. U.S. FY2026 NDAA (signed Dec 18) codifies US-Taiwan drone co-production, shifting from buyer-seller to industrial partnership.

Justice Mission 2025: PRC sanctions western defence firms and related individuals over the holidays and launched blockade exercise December 29-30, deploying 14 PLA Navy and 14 Coast Guard vessels to rehearse quarantine of Taiwan’s major ports at a very consequential time - during Western holiday periods.

Non-Red Supply Chains: Taiwan targets 50,000 non-Chinese drones goal while PRC debuts Tianma-1000 cargo drone. Taiwan's Ministry of National Defense plans to procure 48,750 military drones by 2027, part of a broader 100,000+ unit procurement program excluding PRC origin components. Separately, Taiwan aims for 180,000 drones annual production capacity by 2030 and an unnamed Taiwanese manufacturer is potentially seeking partnerships in Canada.

Watch: What shape will industrial cooperation take? Where will production sites be located? How will the plan ensure to include system integration and AI-driven C2 for drone swarms. Will it be open to non-US and non-Taiwanese firms?

Action: Canada-Taiwan 2025-2026 Collaborative Industrial R&D Call offers up to $500K reimbursement for joint projects in Advanced Manufacturing, Clean Tech, Digital Tech, or Quantum. Canadian registration deadline: February 19, 2026. (https://nrc.canada.ca/en/irap/about/international/?action=view&id=264)

UNITED STATES: $1.5T Budget, Venezuela, and SHIELD

Defense Budget Increase: President Trump signals intent to raise U.S. defense budget to $1.5T by 2027.

Venezuela Operation: U.S. military operation January 2 to remove Maduro regime strikes at PRC interests in the western hemisphere. China has invested significant funds in Venezuela. Immediately following, President Trump focused on Greenland raising eyebrows everywhere.

SHIELD Contract: Missile Defense Agency awarded SHIELD (Scalable Homeland Innovative Enterprise Layered Defense) contract to MDA Space, positioning the Canadian-headquartered firm in U.S. layered defense architecture.

DJI Reprieve: Department of Commerce temporarily lifted planned DJI crackdown ahead of Xi-Trump summit in April. FCC ban remains in place; Commerce withdrawal serves as bargaining chip.

Missile Pac Exercises: Joint interoperability drills with Australia and Canada and others in Hawaii. Included South Korea, Japan, the Philippines showing some more traditional activities and collaboration on this side of the planet.

Watch: PRC retaliation or pressure ahead of April summit. U.S. pressure on Denmark regarding Greenland; implications for Canadian Arctic sovereignty and NORAD modernization demands given administration was emboldened by recent ops.

JAPAN: Record Budget and the Canada-Japan Cooperation No One is Talking About

FY2026 Defense Budget: Takaichi Cabinet approved record 9.04 trillion yen ($58B), the 12th consecutive increase. Japan’s SHIELD program allocates $640M for autonomous maritime systems and UAVs.

Canada-Japan Defense Cooperation: July 2025 Information Security Agreement followed by National Security Advisors meeting. Canadian Ambassador to Japan cited upcoming Defense Equipment and Technology Transfer Agreement in New Year’s message.

GCAP Acceleration: Global Combat Air Programme targets 2035 operational date, and the Italians are reportedly interested in bringing Canada and others in to the program..

China Export Ban: Beijing banned dual-use exports to Japan, affecting rare earth magnets and electronics. While ostensibly focused on military applications, there is likely to be an impact on vehicles and electronics.

Watch: Toyota and Advantest supply chain impacts. Whether Ottawa leverages Tech Transfer Agreement for GCAP/AUKUS Pillar II entry. Agreement terms on modification Freedom of Action.

Action: Canadian firms with IP in AI, UAV C2, or Maritime Domain Awareness should map capabilities against SHIELD procurement roadmap. Barrier to entry dropping with ISA and Tech Transfer Agreement.

SOUTH KOREA: Nuclear Submarines and the Automotive Grand Bargain

Nuclear Submarine Program: Defense Minister Ahn Gyu-back confirmed 2026 roadmap for domestic nuclear-powered submarine construction following U.S. summits and Trump’s support for collective capabilities.

$41B Submarine Deal: Canadian Patrol Submarine Project evolving into industrial package deal. Team Korea delegation including Presidential Chief of Staff Kang Hoon-sik and Hyundai executives visiting Ottawa in January. Reports indicate PM Carney linked submarine contract (Korea’s Hanwha/HD Hyundai vs. Germany’s TKMS) to 100% industrial offset, specifically requesting Hyundai automotive plant in Canada.

Canada-Korea Defense Cooperation: Asia Pacific Foundation of Canada held a meeting December 16 in Vancouver on cooperation pathways.

Watch: Nuclear propulsion as third track in 2+2 Ministerial Dialogue given South Korea’s domestic nuclear-powered sub program and Canada’s AtkinsRéalis/Westinghouse ecosystem. Next Foreign and Defence Ministerial Meeting for SDCP (Security and Defence Co-operation Partnership) intelligence sharing and joint R&D language. Whether Hyundai commits to Canadian manufacturing facility.

Action: Canadian EV supply chain and nuclear engineering firms should track Korean delegation meetings in Ottawa. Package deal creates cross-sector entry points. TKMS needs German/European industrial commitments (Volkswagen/PowerCo, Siemens) to match Korean automotive and energy offsets. They appear to be on track with the recent release of their Team Website.

AUSTRALIA: Sovereign Capabilities and AUKUS Focus

AUKUS Pillar II Narrowing: Reports indicate U.S. and UK looking to narrow Pillar II from 8 areas to focused priorities, likely Undersea Capabilities, Quantum, AI, and Hypersonics. Other country participation predicated on more narrow, specific focus that’s outcome driven and will serve existing members of AUKUS.

Littoral and Autonomous Maneuvers: Australia greenlighting construction of sovereign Medium Landing Craft and boosting MQ-28A Ghost Bat funding, solidifying transition to island-hopping capabilities and AI-driven unmanned combat aircraft.

Watch: AUKUS entry now competitive race to solve specific bottlenecks in four priority areas. Technologies in general cyber or information sharing face tightened integration path.

Action: Align with Big Four priorities and proactively pitch things. Pitch specific solutions to Undersea, Quantum, AI, or Hypersonics challenges rather than broad emerging tech capabilities.

OTHER REGIONAL DEVELOPMENTS

Southeast Asia Fighter Modernization: Philippines to Indonesia moving toward 4.5 and 5th-gen platforms. Opportunity in In-Service Support, pilot training, and sensor integration where Canadian industrial base is globally competitive.

Singapore: RSN conducted maritime drills in ASEAN-US Maritime Exercise (Dec 9-13) while simultaneously running urban counter-terrorism exercise with PLA demonstrating impressive flexibility.

New Zealand: Wellington establishing agreements with Japan to deepen cooperation including provisions to share supplies, and an information sharing agreement like Canada’s.

India: Canada opened public consultations on India Trade Agreement (through Jan 27, 2026). APF Canada Track 1.5 Dialogue confirms shared focus on maritime security and counter-influence operations. Canadian defense and dual-use firms should engage on maritime domain awareness and space-based ISR.

Malaysia: National Defence Industry Policy launching early 2026, targeting self-reliance. Reports emerged in December of Malaysia using BlackBerry SecuSUITE for secure communications during October ASEAN summit. Precedent provides proof of concept for Canadian cybersecurity and encryption firms in ASEAN government contracts. Malaysia also announces it will release a defence industrial policy in 2026.

Thailand: Canada-Thailand FTA consultations underway. Focus on advanced manufacturing and digital infrastructure suggests opening for defense-adjacent technologies. Thailand’s ISR and aerospace component procurement accelerating as they diversify from Chinese-only systems.

UPCOMING EVENTS

Space Summit 2026 | February 2-3 | Singapore

Singapore Airshow 2026 | February 3-6 | Singapore

Canada-in-Asia Conference 2026 | February 10-11 | Singapore

Subsea Security & Defence 2026 | February 10-13 | Singapore

Grants, Accelerators & Procurement Opportunity Tracker

In talking with a few clients and friends, I’ve decided to start a tracker for procurements, grants and funding opportunities and other initiatives that are 1. Export relevant 2. Linked to dual-use tech or deeptech/innovation. Here’s a start:

If you have items you think should be covered, send them my way. For the full tracker, please get in touch with us.

Did we miss something? If so, let us know.