Lawyers expect to play a key role in helping Canada achieve its recently announced CA$500-billion Defense Industrial Strategy, designed to reduce reliance on the United States in the wake of threats to its sovereignty from President Donald Trump.
Canada’s sweeping plan, announced by Prime Minister Mark Carney on Feb. 17, offers a roadmap for the country’s largest military buildup in decades, aiming to reach NATO’s 2% GDP defense target in 2026, and 5% by 2035.
The Defense Industrial Strategy (DIS) marks Canada’s first-ever defense-industrial strategy, and like Europe's similar plan, suggests the country can no longer count on the U.S., economically or militarily. It calls for the creation of a new Defense Investment Agency (DIA) to coordinate the process and cut red tape, provide $180 billion for defense procurement and $290 billion in defense-related capital investment over the next 10 years.
Lawyers say legal support will be needed to assist clients with government contracts and procurement, corporate and commercial transactions, and to help them navigate regulations and compliance, intellectual property issues, Indigenous law, and employment and labor laws.
“Lawyers will be essential advisers to clients in these and other corporate and commercial matters," Norton Rose Fulbright Canada partners Jenna Anne de Jong and Edward Anido said. “They will support the structuring of joint ventures, strategic partnerships with Indigenous participants and foreign allies, and corporate restructurings to meet Canadian ownership thresholds necessary for procurement eligibility or to implement strategic alliances.”
In procurement, for example, Canada will be reforming its industrial and technological benefits policy framework from an emphasis on key industrial capabilities to a narrower set of “sovereign capabilities,” designed to incentivize strategic investments, expand domestic R&D and encourage the development and protection of Canadian-owned IP, they said.
The DIS, among other things, is aimed at building "national champions" in Canadian defense and promoting meaningful Indigenous participation in defense supply chains.
The agency, headed by former Royal Bank of Canada executive Doug Guzman, is tasked with cutting red tape and following a “Build, Partner, Buy” procurement framework that will emphasize building in Canada, partnering with trusted allies through tech transfer deals and integrated supply chains, and buying abroad only as a last resort.
The government has predicted the DIS will create 125,000 jobs, increase Canadian defense exports by 50%, boost the share of defense acquisitions awarded to Canadian firms to 70%, and grow Canadian defense industry revenues by 240%.
Russel Drew and Alan Sarhan, Canadian partners with DLA Piper, said in an email that companies operating in the defense space often require significant support in the technically demanding areas of technology transfer and export controls.
Canadian companies operating in defense are almost always touching U.S. or other foreign rules, they noted.
“Managing the overlapping regimes requires specialized knowledge in the applicable geographies," they said. “Foreign investment review is intensifying as national security scrutiny increases, and sanctions compliance has become a continuous supply chain obligation, not a transactional exercise.”
The rapidly evolving regulatory environment will be challenging, they added.
“Canada is accelerating its defense ambitions and approach faster than certain parts of the regulatory infrastructure can currently absorb," they said. “Lawyers need to help clients structure compliantly around current constraints rather than wait for the system to catch up.”
Kerri Lui, a partner at McCarthy Tétrault with expertise in energy and defense, said it will be important for lawyers in the sector to stay on top of new developments and to stay “creative and flexible” in giving strategic advice.
“The rate of change in the current geopolitical environment requires countries around the world, including Canada, to continue fine-tuning their approach to defense procurement. And those changes can create uncertainty for industry participants and investors, particularly new entrants," she said.
While the rate of change is greater than what we have seen historically,” she added, “helping clients navigate uncertainty is what we do best as lawyers.”
Canada’s Defense Industrial Strategy reflects a global trend toward rearmament, industrial sovereignty, and long‑term defense industrial investment driven by geopolitical instability and supply-chain vulnerability.
Mar 1
Deal Summary
