Amid US president Donald Trump’s tariffs and annexation threats, Sigmar Gabriel, former German vice chancellor and foreign minister, made a curious suggestion in an interview with German media outlet The Pioneer: invite Canada into the European Union. Soon after, Guy Verhofstadt, former prime minister of Belgium, addressed Canada on X to say that “[t]here is no reason why EU membership should be off the table.” The thought of this North Atlantic alliance excited some Canadians and Europeans—one YouTube video even theorized how “CANEU” (read: canoe) would be a “global superpower.”
To learn more about what the possibilities are for Canada and the EU, I spoke with Mark Camilleri, president and CEO of the Canada EU Trade and Investment Association—CEUTIA—based in Brussels.
In terms of trade, what similarities do Canada and the EU share?
There’s a lot of complementarities when you go across sectors. Take mining, for example. Canada has an abundance of natural resources that the EU doesn’t have, but Europe creates and makes a lot of industrial equipment that helps extract those resources. Europe has a certain need for these resources as part of their own economic security.
If you take a look at the fertilizer that Canada produces, Europe needs it to support their agricultural sector. Another example is nuclear energy. Nuclear is going through a renaissance at the moment, and Canada can basically cover the full supply chain from mining uranium to building nuclear reactors.
What have trade relations between Canada and the EU looked like over the past decade?
Since the signing of the Comprehensive Economic and Trade Agreement—CETA—between Canada and the EU, and its provisional implementation in 2017, trade has increased. Bilateral merchandise trade has increased more than 65 percent, equalling $126.5 billion in 2023. And that’s across a variety of different sectors. Services trade has also enjoyed impressive growth, and that’s increased by almost 73 percent—equal to $64.9 billion in 2023. In addition to this significant growth, the EU represents Canada’s second largest trading partner after the US.
There’s a greater increase in trade by small and medium-sized enterprises, and it’s also proven to be resilient. There have been a lot of problems and issues with the global trading regime, including due to COVID-19 and other political disruptions. And yet the Canada–EU trade relationship has proven to be resilient.
You mentioned that Canada provisionally implemented CETA in 2017. What does that mean?
Provisional implementation means that all the parties in the agreement need to go through their own ratification process. Canada did that in 2017, and the process has been ongoing for the EU. There are ten EU member states that have yet to ratify CETA. We’ve got France, Italy, and Poland—just to name three significant EU member states that have not yet ratified—which I certainly hope will come to a conclusion soon.
Amidst the economic tensions with President Trump, in what ways can Canada and the EU strengthen their existing relationship?
More than 70 percent of Canadian companies’ exports go to the US. The US used to be an easy market for Canadian companies to do business in. And now it’s proving to be a bit more of a challenge.
The use of tariffs against Canada by our long-standing partner and friend, quite frankly, is a real challenge that will require businesses to start looking abroad. And the EU is a natural place to look. It doesn’t mean that every company is going to find an alternative market in the EU. At the end of the day, trade with the US will remain important—if not the most important—market for Canadian businesses. The point is that it doesn’t have to be either/or. This is about complementarity and diversification, and the EU offers a lot of opportunities for Canadian businesses.
What’s really interesting is that the EU is going through twin transitions right now: a green transition and a digital transition.
What opportunities could these transitions open up?
Most immediately, it’s critical raw materials and energy. Those are the two standouts, but there are other things as well. There are skill gaps within both the Canadian and the EU economies. Canada has expertise in a lot of clean technologies, for example, and the EU is looking to adapt. Canada has become a partnership country for Horizon, which is the EU’s big research-funding program.
Looking beyond the immediate need for raw materials and energy, we would be looking at a more long-term, durable partner for assisting in building up new resilient supply chains that are, at least from the EU’s perspective, sustainable. The EU is passing—and has passed—legislation requiring EU manufacturers to make sure that their supply chains are indeed sustainable. Given Canada’s robust labour laws and environmental standards, it’s not surprising that the EU would look to Canada as a natural source for many of these products and services that they need.
The Economist published an article in January that proposes the idea of Canada joining the EU amidst trade tensions with the US. What do you think of this?
Well, I don’t think it’s really in the realm of possibility for Canada to join the EU. But the reality is Canada doesn’t need to join the EU in order to promote trade between the two. Again, there’s already a very robust trade agreement in place: CETA.
The EU is more than just an economic union. Joining the EU would be a political move as well, and I don’t think there’s much of an appetite—probably on both sides—to go that far. At the end of the day, there’s lots that can be done between the two to enhance and grow. I think that Canada has looked to the EU for a long time as an alternative market—a balance against the US market. And I think there’s been a lot of progress since CETA, but still so much more to be done. I really think there’s so much potential here that hasn’t been fully tapped yet.
What else can enhance the trade relationship between Canada and the EU?
The more immediate one is to ratify CETA. Another is to look at ways that this relationship can improve. There was a joint economic study between Canada and the EU back in 2008 that talked about what this potential Canada–EU relationship could look like. That report certainly gave a lot of impetus to the CETA negotiations, but it’s somewhat outdated now when you think of how much the world has changed. So I would argue that a new study that would look at further trade liberalization between Canada and the EU would be very much welcome.
With the EU’s twin transitions, there’s a lot of discussion about creating new markets. And I think Canadian businesses can certainly be more engaged in those conversations. You look at something like the Net-Zero Industry Act that the EU has passed as part of their Green Deal Industrial Plan last year. There are all kinds of opportunities in the clean tech sector, for example.
Canada and the EU have got a great government-to-government relationship, but I think there could be more business engagement in some of these conversations as well. This would certainly enhance the trade relationship.
What potential obstacles could come up?
When people think of the EU, they will often think of regulatory burden. But regulation is like cholesterol. There’s good cholesterol and there’s bad cholesterol. There’s good regulation and there’s bad regulation. Regulation isn’t inherently bad. It’s just a question of understanding it.
I think there are always challenges to regulation that not everybody always agrees with, but I think this is something that Canadian companies should be watching very carefully. For example, EU regulations are increasingly focusing on supply chains and the transparency of companies’ obligation to report on those supply chains.
Because, again, the EU is embarking on this with a view to become more competitive. And while the EU market may not be as attractive as the US market right now in terms of growth, it is a big market. There’s nearly 450 million people. It’s a wealthy market. And they’re very aware of their challenges and taking some active steps to try to address them.
Canadian businesses should take advantage of these opportunities—the time is now.
This interview has been edited for length and clarity.
