Photo by: Master Sailor (MS) Marilou Villeneuve-Last, Canadian Armed Forces Photo

POLICY PERSPECTIVE

by Mike Petric and Isabella Aung-Camilleri

October 2026

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Table of Contents

• Executive Summary
• Canadian Global Affairs Institute

Executive Summary

• Canada should turn growing Indo-Pacific ties into Defence industrial partnerships, led by five priority partners
  • Reshaping of trade, alliances and industrial supply chains presents a unique opportunity for middle powers like Canada
• The Indo-Pacific defence market is large and growing
  • Fourteen markets account for 99% of addressable spend, or about C$455B in total defence spending in 2025
  • Japan, South Korean and Australia are contemplating defence spending targets toward 3% of GDP or more by the 2030s
• Canada's engagements in the region have not produced matching industrial results, yet
  • Since 2021, Canada has held dozens of ministerial and senior0official meetings and signed many agreements
  • Nevertheless, the region's share of total Canadian defence exports fell from 8.0% to 5.9% and the value of export permits has remained flat since 2020
• Five anchor partners offer the strongest fit for direct exports and partnership (co-development and sourcing)
  • Japan, Australia, South Korea, Singapore and New Zealand lead; all providing opportunity and posing low or modest risks
• Seven emerging partners offer selective upside with more complexity and higher risk 
  • India, Indonesia, Malaysia, The Philippines, Thailand, Vietnam and Taiwan
  • Political challenges, localization rules, budget limits and integrity risks call for focused approaches with these emerging partners
• Canadian firms are not starting from zero, and should build on links that already exist
  • Canada has much to offer the region spanning the sensors, subsystems, sustainment, training and simulation, space, communications, design and engineering capabilities and more
  • Major regional trade shows in 2027 and 2028 give firm direct access to buyers

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Canadian Global Affairs Institute

The Canadian Global Affairs Institute focuses on the entire range of Canada’s international relations in all its forms including trade investment and international capacity building. Successor to the Canadian Defence and Foreign Affairs Institute (CDFAI, which was established in 2001), the Institute works to inform Canadians about the importance of having a respected and influential voice in those parts of the globe where Canada has significant interests due to trade and investment, origins of Canada’s population, geographic security (and especially security of North America in conjunction with the United States), social development, or the peace and freedom of allied nations. The Institute aims to demonstrate to Canadians the importance of comprehensive foreign, defence and trade policies which both express our values and represent our interests. 

The Institute was created to bridge the gap between what Canadians need to know about Canadian international activities and what they do know. Historically Canadians have tended to look abroad out of a search for markets because Canada depends heavily on foreign trade. In the modern post-Cold War world, however, global security and stability have become the bedrocks of global commerce and the free movement of people, goods and ideas across international boundaries. Canada has striven to open the world since the 1930s and was a driving factor behind the adoption of the main structures which underpin globalization such as the International Monetary Fund, the World Bank, the World Trade Organization and emerging free trade networks connecting dozens of international economies. The Canadian Global Affairs Institute recognizes Canada’s contribution to a globalized world and aims to inform Canadians about Canada’s role in that process and the connection between globalization and security. 

In all its activities the Institute is a charitable, non-partisan, non-advocacy organization that provides a platform for a variety of viewpoints. It is supported financially by the contributions of individuals, foundations, and corporations. Conclusions or opinions expressed in Institute publications and programs are those of the author(s) and do not necessarily reflect the views of Institute staff, fellows, directors, advisors or any individuals or organizations that provide financial support to, or collaborate with, the Institute.

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