By Paul Vieira


OTTAWA-An all-party Canadian legislative committee on Thursday called for the Liberal government to augment current defense-spending plans to reach the threshold agreed to by western allies - 2% of gross domestic product.

The recommendation from a majority of members on the parliamentary defense committee is the latest pressure point on defense spending for Prime Minister Justin Trudeau's administration, with business leaders and former officials warning that failing to do so would have both security and trade implications.

Canada is one of the few countries without a plan to reach the 2% target as agreed upon last decade by members of the North Atlantic Treaty Organization. According to NATO figures, Canadian defense spending is expected to reach 1.37% of GDP this year, or the lowest among Group of Seven economies.

In April, Canadian Defense Minister Bill Blair said the government would increase military expenditures that would push up spending to 1.76% of GDP by 2030. On Wednesday, Foreign Minister Melanie Joly said she "fully believes" Canada would meet the 2% target, citing plans to acquire new submarines and other military equipment. "We understand the NATO target, and we understand our allies' objectives."

During a visit this week to Ottawa, NATO Secretary-General Jens Stoltenberg said that, while pleased Canada intends to increase defense outlays, "I continue to expect that all allies should meet the guideline of spending 2% of GDP," he told an Ottawa audience. "The reality is that now we need to prioritize defense investments to respond to a more dangerous and challenging security environment."

Also weighing in this month was the Business Council of Canada, which represents chief executives at blue-chip Canadian companies. The group warned in a letter to Trudeau that the country risked "diplomatic isolation, in terms of both Canada's security and economic partnerships" unless he ramps up defense spending.

The committee's report recommended that Canada honor its 2% defense spending commitment, and to allocate 20% of the military budget on capital equipment. The report cited witness testimony, from experts such as Christyn Cianfarani, the head of the Canadian Association of Defence and Security Industries, that Canada has failed to meet the NATO targets - agreed upon in 2014 - and "has never set out a plan to meet them."

Kelly Craft, America's former ambassador to Canada, said Ottawa's failure to meet the 2% NATO target could be a sticking point with the White House in the event Donald Trump - who Craft supports - wins a second term. "The bottom line is Canada needs to step up," said Craft, who Trump appointed to the diplomatic post in Ottawa. "Canada needs to spend more on its own defense." Her remarks were made at a Toronto think tank event this month.


Write to Paul Vieira at paul.vieira@wsj.com


(END) Dow Jones Newswires

06-20-24 1123ET