What we heard – Consultations on CSA coverage under the Government Procurement Chapters of the Canada-EU Comprehensive Economic and Trade Agreement and the Canada-UK Continuity Agreement

Context

From 2017 to 2022, the Government of Canada conducted consultations with the Canadian space sector as part of the evaluation of the temporary commitment to include Canadian Space Agency (CSA) procurement related to Satellite Communications (SATCOM), Earth Observation (EO) and Global Navigation Systems (GNSS) as part of Government Procurement obligations under the Canada-European Union (EU) Comprehensive Economic and Trade Agreement (CETA) and the Canada-UK Trade Continuity Agreement (Canada-UK TCA).

Consultations

Consultations took place through various means, including bilateral meetings, confidential written submissions, group discussions, and industry association meetings. Over the course of the consultations, over 550 organizations in the CSA's Canadian space sector database were invited to provide their views on the issue. From 2017 to 2022, almost 70 organizations provided input on their experience. Input was received from major space companies, SMEs, universities, and research organizations.

In addition, through the annual Space Sector Survey, the CSA collected statistics on Canadian organizations' experience in accessing European contracts covered by CETA and the Canada-UK TCA (post-Brexit). Specifically, the survey asked respondents to report on the number of bids on EU, EU member state, and UK contracts that were covered by the trade agreements, and of the successful bids, the contract title, value and sector of activity. To date, no Canadian organization reported receiving a European contract covered by the trade agreements.

Disclaimer

This report reflects the essence of the perspectives raised during consultations. It is not intended to imply consensus on the part of participants. The views expressed are those of participants and should not be construed as representative of the positions or views of the Government of Canada.

What we heard

The following summarizes key themes based on "what we heard" from organizations.

• Space procurement is a matter of strategic national interest: Organizations believe that space procurement should be considered a strategic investment in Canada. They believe this aligns with the mandates of the CSA and Innovation, Science and Economic Development Canada (ISED) to support Canadian industry in a highly innovative sector.
• Canadian organizations rely on government procurement: Organizations underlined the relatively small government space budget in Canada and noted that few opportunities are available. These organizations believe that supporting Canadian entities through domestic government procurement is essential to ensure industry remains competitive and grows. Organizations would like Canadian content requirements to be applied to CSA procurement.
• Market access to Europe is important: Organizations stressed that access to foreign space markets is critical. These organizations identified Europe as a key market for space exports. Organizations believe access would be best leveraged through direct mission collaboration with European counterparts. For example, Canada's relationship with European Space Agency (ESA) was often cited as a type of collaboration that should continue as it provides meaningful industrial opportunities for the space sector.
• The global space market is highly competitive: Organizations questioned whether there is truly a leveled playing field with Europe, citing that in their experience, European space companies are often heavily supported by, or have a direct relationship with, their national governments. In their experience, Canadian companies are competitive with European organizations on a technical basis, but not always on a cost basis given these relationships. As a result, some organizations had the impression that they would need to open foreign offices to level the playing field and benefit from European government procurement. Other factors such as labour costs, transportation costs, and foreign exchange were also cited as aspects that could impede a level playing field.
• Market access should be reciprocal: Organizations were concerned about reciprocity. They expressed that it is not clear which major European space agencies were covered by the Government Procurement chapter of CETA. Organizations also expressed the view that the structure of major EU space programs would require that Canada become a partner in these programs through significant investment before procurement for these programs would be open to Canadian companies. In their experience, there is no evidence of increased opportunities through the EU space program, EU member state space procurement or the UK under these trade agreements. This is consistent with the results from the CSA Space Sector Survey.
• Commercial relationships between small and large space companies are important: It is important for small companies to get into the supply chains of large space primes. Organizations indicated that these relationships are often difficult to form, and that increased opportunities to be involved in government procurement (with both Canadian and European companies) could facilitate forming these relationships.
• Alternative industrial policy options could be considered: Organizations underlined that government space procurement had typically been exempt either directly or indirectly from trade agreements. Other organizations suggested that alternative options could be considered to increase competition, while still benefiting Canadian organizations. Some examples provided include applying concepts such as the Industrial and Technological Benefits (ITB) policy, reducing Canadian content requirements, and earmarking contracts for SMEs.
• Other aspects of the trade agreements are beneficial: Outside government procurement, a number of organizations identified benefits from trade agreements related to business-to-business sales (e.g. tariff relief).
• Enhanced communication regarding trade agreement application: Organizations expressed the view that additional government action is required to inform Canadian businesses about opportunities under trade agreements so that they can adequately benefit.