Canada and UAE sign trade and defence deals to diversify economic ties

Analysis

Canada and the United Arab Emirates signed a comprehensive trade agreement and a suite of defence and energy deals on Tuesday, marking a significant step in Ottawa's push to diversify its economic partnerships away from the United States. Prime Minister Mark Carney and Abu Dhabi Crown Prince Sheikh Khaled bin Mohamed bin Zayed Al Nahyan presided over the signing ceremony during the crown prince's official visit. The agreements include the Comprehensive Economic Partnership Agreement (CEPA), which concluded negotiations in a record 47 days earlier this year, and memoranda of understanding on defence cooperation, energy, and diplomatic training. The CEPA aims to reduce or eliminate tariffs on more than 99 percent of current Canadian exports to the UAE, according to a statement from the Prime Minister's Office. It is expected to enter into force in 2027. The deal covers a wide range of sectors, including agriculture, industrial machinery, aerospace, forestry, fisheries, environmental services and engineering. "That means new markets for Canadian farmers growing pulses and canola, for manufacturers of industrial machinery and power generation equipment, for our world-class aerospace sector, and other Canadian innovators," the statement said.

Driven by U.S. trade tensions

The signing comes as Prime Minister Carney seeks to aggressively expand Canada's non-U.S. trade, a policy he has pledged to double over the next decade. This push follows heightened trade tensions with the United States under President Donald Trump, whose tariffs have rippled through the Canadian economy, and subsequent failed attempts to reach a new deal with Washington. "The agreement will also address non-tariff barriers, create a more predictable environment for trade and investment, and expand market access for Canadian goods and services," the Prime Minister's Office said. International Trade Minister Maninder Sidhu signed the CEPA alongside his UAE counterpart, Foreign Trade Minister Thani bin Ahmed Al Zeyoudi. In a statement, Al Zeyoudi said the deal unlocks potential for the private sector through improved market access and investment opportunities in high-growth sectors like logistics, communications, advanced technology and manufacturing. "All of which will support our pursuit of a resilient, diversified and globally connected economy," he said. The UAE is Canada's largest export market in the Middle East, with two-way trade valued at 3.5 billion Canadian dollars last year, growing at an annual rate of about 10 percent in recent years. The UAE is a major buyer of Canadian motor vehicles and parts, and machinery. The signing represents the final stage before parliamentary ratification, according to Canadian government sources.

READ MORE: Canada seeks trade deals at G20 amid tensions with United States

READ MORE: RCMP says it will deepen FBI ties despite warnings of over-reliance

Billions in pledged investment

The trade deal builds on substantial investment pledges from the UAE. Last year, the Gulf state committed to investing up to 70 billion dollars in Canada, a figure reiterated during the crown prince's visit. Minister Sidhu said on Tuesday that sum could include new investments in mining, logistics, energy and digital technology. "They are actively looking at deploying that as soon as possible," Sidhu said. "They'll have more to say publicly soon."

Alongside the economic agreement, the two countries launched a new strategic partnership establishing a framework for closer cooperation in energy, innovation, defence, security, sustainable development and diplomacy. The defence memorandum of understanding provides a framework for military education and training, policy dialogue, joint exercises, defence industry cooperation, cybersecurity and information exchange. Nosy Mag reported in October that Canadian parliamentary committees were examining defence policy and spending as part of broader security reviews. During a state dinner for the crown prince on Monday, Prime Minister Carney said the two countries are united in their determination to "build for the future." He noted that the partnership has grown substantially over the past year, a period that included his own visit to the UAE last November. At the conclusion of that visit, Carney said Ottawa was working on a one-billion-dollar project to expand critical minerals processing capacity in Canada.

Human rights and next steps

When asked about human rights concerns linked to the UAE, Minister Sidhu asserted that "human rights never takes a back seat with Canada." He added, "It's important that we continue to engage, being at those tables to make sure that we raise whatever we need to raise in terms of human rights." The leaders also discussed regional and international developments, including Middle East security and maritime navigation, and reaffirmed their commitment to dialogue and regional stability. Market analysts see the agreement as a medium-term risk mitigant for a Canadian economy heavily dependent on the United States. However, because the CEPA will not take effect until 2027, the export expansion effects for agricultural products, machinery and aerospace-related goods will not show up in actual trade statistics until at least the following year. For the UAE, the aim is to broaden its channels for investment destinations and technology inflows through economic partnerships with developed countries. The crown prince's visit included a motorcade escorted by four RCMP horses to Parliament Hill. The agreements mark a new phase in Canada-UAE relations, with both governments seeking to turn stronger political ties into expanded trade, investment and practical cooperation.

With files from The Canadian Press, CBC News and Al Jazeera