This study evaluates the health of the U.S.-Canadian defense industrial relationship, which is critically important as the U.S. Department of Defense expands the national technology and industrial base. The CSIS study team gathered and analyzed a wide range of quantitative data and conducted interviews with government and industry officials involved with bilateral cooperation on both sides of the border. In addition to looking at top-level history, legislation, policy, and trends, the study team undertook five sectoral case studies highlighting different aspects of the benefits from and challenges facing bilateral cooperation. The study finds that the benefits to both partners exceed what either could obtain solely by relying only on its own national resources. While the overall U.S.-Canadian defense industrial relationship remains sound, the study team identifies a range of recommendations to enhance its value to both partners.

In light of Section 881 of the National Defense Authorization Act for Fiscal Year 2017, which expanded the legal definition of the National Technology and Industrial Base (NTIB) to include the United Kingdom and Australia, this report informs NTIB partners on barriers and opportunities for effective integration. The expansion of the NTIB is based on the principle that defense trade between the United States and its closest allies enables a host of benefits, including increased access to innovation, economies of scale, and interoperability. In order to reap the greatest benefits of a new era of NTIB, this report uses the lessons learned from study of the present state of integration to identify areas of opportunity for policy reforms and greater cooperation.

The United States’ National Technology and Industrial Base (NTIB) is a congressionally-mandated policy framework that is intended to foster a defence free-trade area among the defence-related research and development sectors of the United States, Canada, Australia and the United Kingdom. To date, however, the NTIB has only managed to facilitate limited bilateral cooperation between some members, falling well short of its goal. The US defence export control regime is one of the biggest barriers to NTIB integration. Specifically, bureaucratic fragmentation, its failure to treat trusted allies differently from other partners and its leaders’ reluctance to attempt politically costly reform are significant barriers to progress. Canberra’s ability to maintain its own competitive military advantage and to serve as an effective ally of the United States in the Indo-Pacific is threatened by real and growing opportunity costs in an age of rapid strategic and technological change that Australia and Australian industry face as a result of slow NTIB implementation. Australian leaders should elevate NTIB progress to the political level and accelerate efforts to make a strategic case in Washington as to why extensive and ambitious implementation of NTIB’s original vision is urgently needed.