Since 2022, NATO has moved beyond setting spending targets and begun to shape defence industrial production in member countries. The action plan agreed to at the Vilnius Summit, the industrial capacity pledge signed at Washington, the two-tier, 5 per cent budgetary commitment adopted at The Hague, and the procurement framework unveiled at the 2026 Ankara Summit together amount to an Alliance industrial policy. Canada has so far treated these commitments primarily as a fiscal question. Affordability, however, is only part of what is at stake. The other part is industrial, and concerns what Canada builds, to whose standards and through which programs.
This policy paper argues that the emergent NATO industrial policy is as much a market opportunity as a fiscal obligation for Canada. Canada’s defence industry, built on smaller firms supplying components into Allied supply chains, is well positioned to exploit the openings created at the Ankara Summit, including the NATO Engine, the counter-drone marketplace, and the published demand signal. The paper recommends that Ottawa (1) concentrate its industrial effort on the segments where Canada already competes, above all the processing of critical minerals; (2) enter the horizontal channels opened at Ankara and join multinational programs while their terms are still being set; (3) define what it will count under the 1.5 per cent budgetary category and file the national implementation plan the Washington pledge requires; and (4) use its place inside both the European and North American industrial tracks to negotiate access rather than merely watch the boundary between them.
