Canada's submarine decision should not derail strategic partnership with South Korea

Jonathan Berkshire Miller

It was clearly disappointing to Seoul that Hanwha Ocean lost out in its bid to supply Canada’s next-generation submarines. The failure to secure the contract, which was announced earlier this month ahead of the NATO summit in Ankara, meant that South Korea was losing a significant opportunity to supply defense equipment to a key partner, G7 member and Five Eyes member.

However, this one procurement decision should not be allowed to negatively impact a developing strategic partnership that has already grown to be significant for both parties.

Defense procurement, by definition, is competitive. There are going to be winners and losers. A strategic partnership, however, should be viewed over a period spanning decades. Perhaps one benefit of the submarine decision is to remind both Ottawa and Seoul of their obligation to grow and expand defense cooperation between them beyond large-scale procurements.

Since 2018, the Canada-South Korea relationship has made tremendous strides. Once largely considered a trade-based partnership, the relationship has transitioned toward becoming a strategic partnership.

Canada's Indo-Pacific strategy, released in 2022, designated South Korea as a key player in the region. Since then, the two countries have increased the scope of their cooperative efforts. They now engage in cooperation on several issues including defense, intelligence, critical minerals, supply chain resiliency and advanced technologies including artificial intelligence (AI) and cybersecurity. High-level dialogue has become more common. Defense cooperation has also increased. Canadian warships regularly sail together with ships of the South Korean Navy. In addition, both countries actively contribute to multinational military operations across the Indo-Pacific Region.

While historically based upon trade relationships, the partnership is increasingly grounded in shared security interests. That represents a positive reflection of today’s geopolitics.

North Korea presents a continued threat to peace and security. Pyongyang continues to expand its nuclear and missile capabilities and engage in cooperation with Russia on military matters. Similarly, Canada is experiencing an escalating array of security concerns extending from the Arctic to the Indo-Pacific. Both countries face challenges posed by China's growing assertiveness and aggressive use of cyberattacks, foreign interference, disinformation campaigns and the exploitation of economic dependencies.

Neither country is isolated in confronting these challenges. Russia's attack on Ukraine has illustrated how conflicts in other regions can create global economic and security consequences. China's navy has been increasing its presence around Taiwan and in the East and South China Sea in a threat to the global supply chains vital to the Canadian and Korean economies. Additionally, North Korea's expanding military partnership with Moscow serves to illustrate the interconnection between Europe’s security and the security of the Indo-Pacific.

Therefore, like-minded middle power nations must build alliances to counter these shared threats. South Korea has emerged as one of the world's most dynamic defense-industrial producers. Companies such as Hanwha Aerospace, Hanwha Ocean, Hyundai Rotem and Korea Aerospace Industries have established reputations for delivering complex systems rapidly at competitive prices. Their expanding exports across Europe, Australia and Southeast Asia reflect more than just market competitiveness — they indicate that South Korea is an increasingly integral part of allied defense capabilities.

Canada should consider this growing industrial base an opportunity rather than simply through the lens of competition for procurement opportunities. Although Hanwha Ocean may have lost out in Canada's submarine competition, many other procurement opportunities remain available.

Canada's long delayed modernization of its armed forces will involve significant investment in a wide range of areas including naval systems, munition production, autonomous systems, aerospace and maintenance and sustainment facilities. Many of those areas require technological and manufacturing expertise offered by South Korean companies that have a proven track record of establishing local production bases, transferring technology and building long-term industrial partnerships with international customers.

From Ottawa’s perspective, this represents an alignment with Canada’s emerging objectives regarding rebuilding sovereign defense industrial capacity while creating diversified sources of supply outside its traditional North American and European suppliers.

There is also considerable logic supporting participation by Seoul. Canada can provide access to vast amounts of critical minerals necessary for defense manufacturing, a highly skilled labor force, world-class research universities and privileged access to North American markets via NAFTA/USMCA. AI, quantum technologies and the advanced materials that will shape future defense capabilities are increasingly part of Canada’s defense industrial sector.

Rather than seeing defense trade as unidirectional export activity, both governments should seek to achieve true industrial integration. Joint research and development projects should form the foundation of a greatly strengthened partnership. Universities, defense labs and private industry can collaborate on emerging technologies such as autonomous maritime systems, AI, quantum sensing, cybersecurity and space security. Those types of collaborations will yield strategic benefits for many years to come while minimizing reliance on vulnerable global supply chains.

Another area where Canada and South Korea should explore additional cooperation is in maritime issues. Both countries are Pacific Rim nations with growing interests in areas like defending sea lines of communication for global trade, enforcing sanctions on North Korea and maintaining freedom of navigation. Frequent naval exercises. improved intelligence sharing, coordinating maritime domain awareness and expanded cooperation on underwater surveillance technologies will enhance deterrence while enhancing regional stability.

Finally, Canada and South Korea should investigate possibilities for collaborating within larger multilateral frameworks.

Both have engaged deeply with NATO. Both work very closely with the U.S. and Japan. Both increasingly cooperate with Australia and European partners on various defense industrial related initiatives. With those larger networks becoming more intertwined, Canada and South Korea can emerge as key contributors connecting North America with the larger Indo-Pacific security architecture.

Successful strategic partnerships are formed on shared interest, mutual trust and understanding that today’s security challenges require sustained multi-domain cooperation.

It is understandable that there is some disappointment surrounding Hanwha Ocean’s unsuccessful submarine bid. However, it should not define Canada-South Korea defense cooperation.

Instead, it should motivate both governments to look beyond one contract opportunity.

The future of the relationship will not be defined by who builds Canada’s submarines. Rather it will be defined by whether Ottawa and Seoul understand that the strategic challenges facing both countries in the 21st century necessitate deeper collaboration than any single procurement decision can create.

Jonathan Berkshire Miller is a senior fellow with the Ottawa-based Macdonald Laurier Institute, and principal of Pendulum Geopolitical Advisory.