The aerospace sector is under threat from ambitious international competitors and the space agency has "foundered" for a decade, says a review of one of the country's biggest industries.

The aerospace report calls on the Harper government to beef up spending to develop space technology, diverting the money from other research programs.

It also urges Ottawa to be more aggressive in promoting Canada's aerospace industry abroad and to negotiate co-operation agreements with emerging industry players, such as China and India.

Canada should be proud of its status as a global aerospace power, said David Emerson, the former cabinet minister who led the wide-ranging review.

The country will lose its competitive position in the industry if it sits back and doesn't invest, he warned in the two-volume report.

"Times have changed," Emerson told a news conference.

"It's fair to say that the past, and our successes in the past, cannot simply be replicated going forward," he said.

"We're going to have to change and adapt to new global realities."

Hindustan Aeronautics Ltd., an Indian state-owned company, is heavily involved in building helicopters and plans to eventually develop its own fighter planes and commercial aircraft.

Industry watcher Suzanne Benoit, CEO of Aero Montreal, notes that Hindustan hasn't gone heavily into commercial markets yet, but it's only a matter of time.

The Chinese are also developing their own industry, although it could take 15 to 20 years to catch up to global competitors.

Focus on selling abroad

To maintain Canada's stature in the market, Emerson says the prime minister needs to sell new technologies abroad and use his position to make aerospace a top government priority.

"Presidents, prime ministers and senior officials around the world help open doors for their nations' aerospace firms by highlighting those firms' strengths and successes" says Emerson.

"The right combination of business acumen, cutting-edge research, and government policies will allow Canada to remain an aerospace power for decades to come."

Canada is currently home to the world's fifth-largest aerospace industry by a measure of gross domestic product.

The review recommends that Ottawa spend $10 million in each of the next three years to bolster the work of the Canadian Space Agency.

The money, says Emerson, can be found within the current budget of the Strategic Aerospace and Defence Initiative.

The report, divided into two categories, makes 17 recommendations for supporting the country's aerospace sector and eight for its space industry.

One controversial recommendation is a call for a loosening of export controls on sensitive technologies, which carries with it the potential for leaks of intellectual property that could upset Canada's key aerospace partner, the United States. Such a move, if handled badly, could also threaten national security.

Those controls, however, may be "unduly sweeping and rigid," the review, said. This could lead to the loss of business to companies from countries with more balanced export-control regimes that are able to sell to Russia, China and elsewhere.

Space program has 'foundered'

Canada's space program must also be reinvigorated, said the second-volume of the report, suggesting that the Harper government doesn't always recognize the importance of space technologies and their benefits, particularly for national security and the broader economy.

"Over the last decade, the Canadian space program has foundered," said Emerson.

"There's been some lack of clarity around priorities and an uneven performance in the implementation of projects," he added. "This cannot continue."

The report recommends that the Canadian Space Agency's core funding be stabilized over a 10-year period.

The agency's budget for 2011-2012 was $442.3 million.

As well, the review recommended that the government allow for "space-related commercial activity" where it's safe to do so, including exploration projects and space tourism.