The EU–Canada partnership is gaining momentum just as ties with Washington grow more tenuous
Image Source: Anadolu/Contributor Getty Images
In June, the 20th EU-Canada Summit was held in Brussels, heralding a new era of transatlantic cooperation.
The Summit took place just a day before the 2025 NATO Summit in The Hague, where allies agreed to raise defence spending targets from 2 percent to 5 percent of Gross Domestic Product (GDP), an area where Canada has remained a consistent laggard, spending only 1.3 percent of its GDP on defence. It also came on the heels of the G7 Summit in Canada that was overshadowed by United States (US) President Donald Trump’s abrupt departure in light of escalating tensions in the Middle East.
Against this backdrop of intense geopolitical instability and American retrenchment from the Euro-Atlantic theatre, the key deliverable from the EU-Canada Summit was the signing of an EU-Canada Security and Defence Partnership (SDP). As Europe seeks to ramp up its defence in light of Russian aggression and American disengagement, the agreement will strengthen Canada’s role in Europe’s advancing defence architecture by allowing Canadian participation in the EU’s new defence procurement programme, the ReArm Europe - Readiness 2030 plan. This initiative aims to leverage €800 billion in defence spending, and includes the €150 billion Security Action for Europe (SAFE) instrument. The SDP is the first step for Canadian companies to access SAFE, although a second agreement will need to be signed before Canada can partake in the programme at the same level as EU manufacturers.
The SDP, modelled along the lines of a similar EU-UK agreement signed in May, will enable Ottawa’s access to Europe’s burgeoning defence market while diversifying away from the US.
A 2022 industry review revealed that half of Canada’s military equipment is exported to the US, while Canada spends 70 percent of its defence equipment budget on American military gear. The SDP, modelled along the lines of a similar EU-UK agreement signed in May, will enable Ottawa’s access to Europe’s burgeoning defence market while diversifying away from the US. This, in turn, will bolster its defence industrial base and manufacturing to also more effectively meet NATO requirements and capabilities.
The SDP establishes an all-comprehensive institutionalised framework for cooperation and strategic consultations across the full spectrum of security and defence. This ranges from maritime and space security to defence industrial cooperation and interoperability, emerging technologies, hybrid threats, counterterrorism, arms control, foreign interference, and more, addressing traditional security threats as well as emerging strategic domains. Even though the EU already has seven previously signed SDPs (including the latest one with the UK), Canada is its first such agreement in the Americas building on decades of trust and close bilateral ties evident in Ottawa’s contributions to the EU’s Common Security and Defence Policy (CSDP) missions and Permanent Structured Cooperation (PESCO) projects on military mobility. Beyond defence, Canada and the EU also vowed to jointly strengthen critical raw materials supply chains (the two already have a Strategic Partnership on Raw Materials since 2021) and explore cooperation in clean technologies.
Against the backdrop of Washington’s tariffs and assault on free trade, which have wreaked havoc on markets globally, particularly on key US trading partners such as Canada and the EU, the two sides highlighted the success of their Comprehensive Economic and Trade Agreement (CETA). According to estimates, the CETA, which abolished 98 percent of EU-Canada tariff lines, has increased the EU’s annual GDP by €3.2 billion and Canada's by €1.3 billion, while yielding a 71 percent boost in bilateral trade since it provisionally came into effect in 2017. In 2023, EU-Canada bilateral trade amounted to €123 billion, making the EU Canada’s second-largest trading partner.
Canada has also been in the line of fire after Trump threatened to call off trade talks over Ottawa’s proposed digital tax on American tech companies.
Building on the EU-Canada 2023 Digital Partnership, the two are also negotiating a Digital Trade Agreement, similar to the EU’s agreements with Singapore and South Korea, aimed at cooperation in emerging technologies, facilitation of data flows and alignment of digital regulatory standard一san, EU-US point of contention based on EU regulatory action against US tech firms. Canada has also been in the line of fire after Trump threatened to call off trade talks over Ottawa’s proposed digital tax on American tech companies. In June, the EU presented its Digital Strategy, aimed at strengthening digital and technological cooperation with key partners. In addition, Canada and the EU are exploring deeper cooperation on Artificial Intelligence (AI) systems and innovation through AI factories and governance mechanisms.
Despite Canada’s decision to rescind the digital tax to placate Trump, on 11 July, the American president announced tariffs of 35 percent on Canadian imports, in addition to sectoral tariffs on metals and cars, that would go into effect in the absence of a deal by 1 August. Meanwhile, Trump has pledged 30 percent tariffs on European imports, threatening a bilateral trading relationship that valued €1.6 trillion in 2023.
“As the most European of the non-European countries, Canada looks first to the European Union,” reiterated Prime Minister Mark Carney at the EU-Canada summit press conference, while European Commission President Ursula von der Leyen emphasised, “Hard times reveal true friends”. As both rethink their traditional dependencies on a mercurial US, the political symbolism of these statements is inescapable as the transatlantic partnership between the EU and Canada is galvanised into action even while the transatlantic alliance with the US weakens.
The EU is now so popular in Canada that, according to a poll, nearly 50 percent of Canadians favour Canada joining the EU.
Moreover, Trump’s attacks on Canada’s sovereignty and threats to annex the country as the 51st US state provoked Canadians so much so that they elected Carney, who lacked political experience but rode on an anti-Trump wave, to power in the country’s federal election in April 2025. On the other hand, the EU is now so popular in Canada that, according to a poll, nearly 50 percent of Canadians favour Canada joining the EU. Meanwhile, there have been talks of a CETA Plus model, which involves even deeper strategic engagement between the two partners.
As Brussels and Ottawa scramble to negotiate trade deals with the White House, they are simultaneously reshaping and deepening their own trade and security linkages to insulate against American uncertainties and global disruptions.
Shairee Malhotra is the Deputy Director of the Strategic Studies Programme at the Observer Research Foundation.
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Shairee Malhotra is Deputy Director - Strategic Studies Programme at the Observer Research Foundation. Her areas of work include Indian foreign policy with a focus on ...
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