Opinion – Uproar over federal income tax proposals – have alternatives been considered?

By Theo van de Kletersteeg

A good many of Canada’s small business community, notably farmers, incorporated professionals and small business owners are upset over one or more of the income tax changes proposed by Finance Minister Bill Morneau. Change upsets the status quo, and creates winners and losers, and the current proposals are no different. With the federal government being in chronic deficit, it should be no surprise that it is looking for new sources of revenues, and this time, rather than increasing taxes on the middle classes even more, it appears to have found a possible source of revenues that would be paid for by entrepreneurs and professionals, in other words, people of above-average incomes. The current government’s strategy of extracting higher levels of income taxes from upper income Canadians has both merits and significant potential long-term pitfalls neither of which will be discussed here.

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Unique ARKTOS craft seems just what Canada needs to boost its SAR capabilities

By Brian Dunn

It looks like something out of the movie Jurassic Park, but the ARKTOS Craft offers a solution to many of the challenges facing northern shipping and search and rescue (SAR) operations where thick ice and/or shallow water are often impediments to normal day to day operations. In essence, it’s a lifeboat that can travel on ice and is much more versatile than a hovercraft.

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Canada’s Defense Policy Review: Full Speed ahead on NSS

By K. Joseph Spears

On June 7, 2017 Canada’s Liberal government released its 113-page Defence Policy Review entitled Strong Secure Engaged. The review was a culmination of a year-long process that sought input from Canadians along with that of our allies, parliamentarians and subject matter experts. The goal was to set the stage going forward to 2027 to provide a roadmap for Canada’s Defence policy in a changing world and signify priorities and sustained funding for these policy goals. It also provides a twenty year funding commitment that is set out in the document. The day before, Canada’s Minister of Global Affairs announced a new direction in foreign policy that arguably interacts with the Defence policy review. Both of which demonstrate the need for Canada to have a robust naval capability.

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A warming Arctic – Canada’s need for Marine Response

K. Joseph Spears

The summer of 2017 has seen the Arctic continuing to warm with sea-ice diminishing by both extent and volume. The last decade has seen a constant Arctic warming trend that has resulted in increased global interest in the region and increased marine activities which bring with it increased marine risks. The Arctic is a region that has very little marine infrastructure and organic marine response capability. This past year, the Finnish ice breaker Nordica departed from Vancouver on July 4 to make the earliest eastbound transit through the Northwest Passage arriving in Nuuk, Greenland on July 29. The year 2016 saw the non-ice-strengthened cruise ship Crystal Serenity making history, completing a successful and well-publicized NW Passage transit. The vessel will be doing the same again this year to a sold-out capacity of 1,000 passengers with the assistance of escort vessel RRS Earnest Shackleton. The future is here: Increasing international marine traffic in our Arctic waters presents challenges to Canada’s ability to manage its ocean space, and challenges existing Canadian marine response capability, which includes search and rescue (SAR).

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Project Resolve resolving a Canadian naval capability gap

K. Joseph Spears

Canada’s Navy was founded in 1910 and has a long and illustrious history through two world wars, the Cold War and into the 21st century, a century which has seen a war on terrorism and piracy. In a complex threat environment, navies have become increasingly important and relevant globally. Over time, Canada’s Royal Canadian Navy (RCN) pioneered a variety of naval capabilities including the use of large helicopters from small warships, in support of antisubmarine warfare. Canada’s RCN is an integral part of NATO and works closely with allied partners around the world in support of counterterrorism and force projection maintaining the security of global maritime shipping, which is the foundation of international commerce.

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Defending Canada’s Arctic in the 21st century – a review of Strong Secure Engaged, Canada’s new Defence Policy

K. Joseph Spears

The government of Prime Minister Justin Trudeau announced a Defence Policy Review in 2016. This was to be the first review of Canada’s Defence policy in many years, with the most recent white paper on Defence published in 1994. The review sought the input of Canadians in an extensive engagement and outreach process. The advice of Parliamentarians and our Allied and NATO partners were sought in the formulation of policy. The Minister of National Defence hosted a series of roundtables around the country to discuss the subject matter with experts prior to the formalizing the policy by releasing it on June 7, 2017. The resulting 113-page document, Strong Secure Engaged, sets out a blueprint for Canada’s Defence policy into the future to 2027. It talks about anticipating, adapting and acting on future Defence threats. It also speaks to the funding commitments required to give effect to these Defence requirements. While National Defence represents the single largest Budget item, Canada spends only one per cent of its GDP on Defense and is far from meeting the NATO prescribed 2 per cent of GDP. Of 28 NATO countries, Canada ranks among the lowest in terms of Defence spending as a percentage of GDP.

One of the core functions of Canada’s military is the defense of the realm. In other words, the protection of Canada’s land and ocean space and our maritime approaches. Canada has one of the world’s largest land and ocean area – 9.3 million square kilometers of oceanspace, and 244,000 kilometres of coastline, much of this in Arctic territory where there is little or no infrastructure. It is a monumental undertaking for a country of 38 million people to maintain surveillance and marine domain awareness over this vast region. The challenge is immense, and the threats are difficult to predict in a warming Arctic where international activity is increasing. Canada no longer has the luxury of multiyear sea-ice to restrict activities in its Arctic region which used to curb international activities and force projection by other countries, unless they had invested substantial Arctic capability such as airlift and icebreaking capability. The policy document specifically mentioned this undefinable threat: “Climate change, combined with advancements in technology, is leading to an increasingly accessible Arctic.”

The policy review recognizes that there needs to be sustained funding to fund critical infrastructure and capabilities to protect our sovereignty and security. The review made specific reference to the Arctic. It moved away from specifically referencing sovereignty to more functional terms such as monitoring and surveillance. The policy acknowledges NATO is paying increasing attention to Russia’s ability to “project force” from the Arctic and says Canada will be ready to “deter and defend,” should the need arise. This takes capability to operate in the arctic.

As Arctic waters open up, increased marine traffic will require Canada to be able to respond with search and rescue missions. In Canada, search and rescue is led by the Department of National Defence which deploys dedicated air assets, among which are recently purchased fixed-wing SAR aircraft. These will operate from bases in southern Canada.

The policy review continues to support an Arctic naval presence and holds that the Royal Canadian Navy’s Arctic Offshore Patrol Vessels (AOPV) will work with the Canadian Coast Guard and allied partners to help ensure non-naval research, tourist and commercial vessels are supported in the Arctic. AOPV vessels are being built at Irving’s shipyard in Halifax represent the first element of the surface combatant program of the National Shipbuilding Procurement Strategy (NSPS, since renamed “NSS”) that has been underway since 2010. It is believed that at least five AOPV vessels will be delivered. AOPV vessels have limited icebreaking capabilities, but have the ability to carry a helicopter for ice reconnaissance and potentially antisubmarine warfare, and will be ice-strengthened for Arctic operations.

The operational role of these vessels is still being developed, but will include a multi-mission capability supporting general government operations, in additional to a naval function. The first vessel of the new Harry DeWolf class-designated vessels will be commissioned in late 2018. As part of Canada’s maritime defense policy, a refueling port is being developed at the former mine site at Nanisivik on Baffin Island at the entrance to the eastern Northwest Passage. Nanisivik Naval Station is not going to have much in the way of port infrastructure other than a seasonal refueling docking facility. This facility is critical for AOPV operations, given the great distances to travel in Arctic regions when operating from southern bases.

The policy review notes the challenges in monitoring the vast region: “In addition to being a vast, sparsely populated area, satellite coverage at extreme northern latitudes and the nature of the polar ionosphere create unique issues for sensor and communications capabilities, …” In order to address these challenges, the review stresses coordinating sensor information collection and the key role of data integration from sensor information generated by drones, submarines, satellites, and personnel.

The review also stresses the important role to be played by the Inuit- and First Nations-led Canadian Rangers which are embedded in the communities throughout the Canadian Arctic, who are an invaluable asset to Canada. The review seeks to expand their training and improve their ability to support other branches of the Canadian Armed Forces. Recent Arctic military operations have shown that the Canadian Rangers and their local knowledge combined with the latest in technology is of key importance to future operations. It also recognizes the importance of engaging Northern communities in operational exercises both with Canada and our defense partners.

Among the numerous challenges in operating in Canada’s Arctic, one of the most critical remains reliable communications, including satellite coverage of the region. In addition, marine domain and situational awareness and tactical movement are two others that are specifically addressed in the review. The policy review seeks to develop a new radar system and sensor system using the latest in technology.

There are challenges in operating in Canada’s Arctic waters from a Defence as well as commercial shipping standpoint. The Defence Policy Review takes a realistic view of the situation and provides an overarching policy direction, with funding allocated to achieve these policy goals by acquiring the necessary infrastructure and capability. Canada also recognizes that involving local communities through the Canadian Rangers is a key component of its strategy moving forward. By bolstering its Defence capabilities in the Arctic, Canada will increase its ability to defend the realm, will get closer to meeting its NATO and NORAD obligations, and will ensure that Canada’s economic potential is realized in the region.

Joe Spears is an Honorary Ranger of 2 CRPG Second Ranger Patrol Group based in Nunavik (Northern Quebec). He has spoken at Northern Watch conference hosted by the Defense Research and Development Canada at Dalhousie University Centre for Foreign Policy Studies. Joe can be reached at joe.hbmg2@gmail.com.

OPINION – NAFTA: Are we ready to deal with the onslaught of curveballs the U.S. will throw at us?

By Theo van de Kletersteeg

At a July 25 news conference in Ottawa, CBC reporter David Cochrane asked the PM if he was prepared to accept a renegotiated NAFTA deal that did not contain a dispute resolution mechanism. Mr. Trudeau responded by stating that his government’s goal is to conclude a “renegotiated and improved NAFTA agreement that will grow our economies and help our citizens”, and one which will contain a fair dispute resolution mechanism. Some journalists quoted an unnamed “senior Canadian official” who reportedly said that the PM considers the current dispute resolution chapter (Chapter 19) in NAFTA to be a “red line”, and would walk away from the negotiations if the U.S. insisted on abolishing Chapter 19, as it has demanded. Chapter 19 provides for multinational tribunals to rule on disputes when a NAFTA member wishes to impose anti-dumping duties on exports from another NAFTA member. The provision has been a thorn in the side of the U.S. – of the 71 cases brought before the tribunals over the years, almost 60 per cent sought redress from duties imposed by the U.S.

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Cross-Border Institute: Committed to building better borders

The Cross-Border Institute (CBI) at the University of Windsor is dedicated to research, education and public outreach related to the movement of people, goods and services across the Canada-U.S. border. It takes a multi-disciplinary perspective, incorporating engineering, economics, the social sciences, management and law. Drawing on the expertise of the University’s faculty, its goal is to find practical solutions to real world problems.

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Customs implementation delay could help freight forwarders achieve needed changes

By Alex Binkley

A delay by Canada Border Services Agency in the implementation of an electronic tracking system for freight forwarders handling imports and exports gives Canadian International Freight Forwarders Association more time to help the Agency get the process right.

After several years of working on the implementation of its e-Manifest system, which is aimed at expediting the movement of freight through customs facilities at land borders as well as ports and airports, CBSA announced May 23 a year-long pause in implementation as it tried to fix its operational problems.

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Sovereign wealth funds: Alberta versus Norway and Saudi Arabia

By R. Bruce Striegler

In its simplest terms, a sovereign wealth fund (SWF) is a government-owned investment fund established for the purpose of protecting or boosting the national economy. Its funding is derived from resource-related revenues, other government sources such as surplus in balance of payments, proceeds from privatization of one or more public sector entities, receipts from exports, governmental transfers and other sources. These funds invest in real and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such as private equity fund or hedge funds.

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