Canada Forges New Trade Alliance with UAE, Diversifying Beyond US Markets

Canada and the United Arab Emirates have finalized a comprehensive trade agreement designed to dismantle economic barriers and stimulate investment between the two nations. This strategic pact emerges as Canadian Prime Minister Mark Carney actively pursues expanded trade and investment relationships, particularly amidst ongoing trade tensions with the United States.

Prime Minister Carney and Abu Dhabi Crown Prince Sheikh Khaled bin Mohamed bin Zayed Al Nahyan officially oversaw the signing of the Comprehensive Economic Partnership Agreement (CEPA) on Tuesday. The agreement is set to reduce tariffs, streamline regulatory processes, and enhance market accessibility for businesses operating in both Canada and the UAE.

This initiative aligns with Prime Minister Carney's commitment to double Canada's non-US trade within the next decade, a goal spurred by the economic impact of US President Donald Trump's tariffs on Canada. Following unsuccessful negotiations with Washington, Prime Minister Carney has intensified efforts to secure trade agreements with nations across the Asia Pacific, Europe, and the Middle East.

According to a statement from the Prime Minister’s Office, “Once fully implemented, the CEPA will reduce or eliminate tariffs on over 99 percent of current Canadian exports to the UAE.” This will open up new avenues for Canadian agricultural producers of pulses and canola, manufacturers of industrial machinery and power generation equipment, the nation's aerospace sector, and other innovative Canadian industries.

The statement further elaborated that the agreement will also address non-tariff barriers, foster a more predictable trade and investment climate, and broaden market access for Canadian goods and services. These sectors include industrial, agricultural, forest, fish and seafood, environmental, and engineering services. The CEPA is anticipated to take effect in 2027.

In addition to the CEPA, both countries executed preliminary agreements covering energy, diplomatic relations, and defense cooperation.

UAE's Minister of Foreign Trade, Thani bin Ahmed Al Zeyoudi, stated, “We see considerable potential for our private sector, whether through improved market access for our exporters or access to investment opportunities in high-growth sectors such as logistics, communications, advanced technology and manufacturing – all of which will support our pursuit of a resilient, diversified and globally connected economy.” He signed the CEPA with his Canadian counterpart, Maninder Sidhu.

The UAE currently represents the largest Middle Eastern market for Canadian exports and is a significant purchaser of Canadian motor vehicles, parts, and machinery. Bilateral trade between the two nations reached 3.5 billion Canadian dollars ($2.48 billion) last year, exhibiting a consistent annual growth of 10 percent over recent years, according to government figures. Furthermore, the UAE committed to investing up to $50 billion in Canada last year.