By Mark Camilleri

August 7, 2026

Since becoming prime minister in 2025, Mark Carney has made a stronger partnership with Europe one of his top priorities.

This diversification toward Europe — reminiscent of Pierre Trudeau’s “Third Option” in the 1970s — comes as Canada looks to broaden its strategic partnerships in the face of an unpredictable United States and a more overtly geopolitical world.

This shift has prompted considerable debate about what Canada wants from Europe. But what does Europe want from Canada?

For most of the past decade, the answer started and ended with the Comprehensive Economic and Trade Agreement (CETA) — a landmark deal, but one that left many Canadians believing the EU mainly wants to sell more goods into a market where it already runs a healthy trade surplus.

That framing is outdated. From potash to LNG to the water bombers needed to fight raging forest fires across Europe, the EU is looking to Canada as a trusted supplier and, more importantly, as a strategic ally in achieving its own economic security, defence resilience, and strategic autonomy.

Europe’s Structural Transformation

Over the past two decades, Europe’s competitiveness has eroded, and its industrial base is weakening. The EU remains highly dependent on external suppliers for energy, critical raw materials and advanced technology. Russia’s war against Ukraine has upended Europe’s security environment, while wavering confidence in America’s NATO commitments has forced hard (and previously considered taboo) conversations about European defence capability.

At the same time, China’s massive trade surplus with Europe, its lock on key critical raw materials, and its competitive pressure on key sectors at the heart of European industry (namely automotive and clean tech) have undermined the faith of the EU in the open, rules-based trading order that it has long cherished, and which the World Trade Organization (WTO) and other multilateral institutions are struggling to uphold.

While none of this happened overnight, it is being acutely felt throughout the EU and has radically changed how Brussels thinks. Former European Central Bank President Mario Draghi’s 2024 report on European competitiveness warned that Europe risks a “slow agony” of relative decline against the U.S and China. Former Italian Prime Minister Enrico Letta’s report on the single market published the same year reached a similar conclusion. The sense of urgency is not confined to policymakers: European industry has long been sounding the alarm and calling for swift action on energy costs, regulation and investment to avoid further erosion of Europe’s industrial base. That industry voice has crystalized around the Antwerp Declaration, a 2024 appeal by European business leaders urging EU policymakers to establish a European Industrial Deal.

Together, these diagnoses are reshaping EU trade, industrial, and economic security policy. The European Green Deal launched in 2019, once framed primarily as environmental policy, is now just as much an industrial strategy, including with the introduction of the Clean Industrial Deal (a direct response to industry demands). Digital sovereignty has followed the same path with AI, cloud infrastructure, and data governance no longer seen as something for the EU to regulate, but as instruments of strategic autonomy.

Moreover, Brussels has overcome years — in some cases decades — of stalled trade talks and is now moving ambitiously to forge new external partnerships — from a trade deal with Mercosur to a trade deal with India (what European Commission President Ursula von der Leyen called “the mother of all deals”), to a modernized EU-Mexico agreement and deeper engagement with ASEAN, all aimed at diversifying its trade and buttressing its supply chains.

While the EU is often criticized for being too slow, it has moved with remarkable alacrity to cut red tape for businesses, secure access to critical raw materials, reindustrialize around clean tech, and build sovereign tech capabilities. In short, the EU has recognized its problems, has the prescription, and is acting to address them. And it knows that it needs partners to help it.

Why Canada?

Few countries are as well placed as Canada to make the most of the EU’s industrial transformation. In addition to offering the natural resources, technological capability, democratic stability, and regulatory predictability the EU needs, Canada is already what the EU wants; a trusted partner. That’s a combination few countries can match.

Moreover, in addition to being party to CETA (a trade deal that the EU widely acknowledges as one of its most successful), Canada holds a privileged place inside some of the EU’s existing strategic architecture: Horizon Europe and the SAFE defence-investment program, in addition to a growing set of bilateral partnerships on raw materials, digital cooperation and energy.

To this end, it is worth considering how the Europeans view their relationship with Canada. EU Ambassador Geneviève Tuts made the point plainly when she appeared before the Senate Standing Committee on Foreign Affairs and International Trade in June, describing an “exceptional partnership” rooted in shared values, and noting of CETA specifically: “Together, we have built something remarkable.”

In addition to pointing to the strengthening of bilateral trade under CETA (now exceeding €100 billion), she cited Canada’s role in SAFE, its association with Horizon Europe, and cooperation on digital issues, alongside shared positions on Ukraine, sanctions and the Special Tribunal for the Crime of Aggression Against Ukraine.

A report passed by the European Parliament in March recommended even stronger and more ambitious EU-Canada cooperation on a wide range of issues, including economic security, defence integration, critical minerals and democratic resilience. The report repeatedly described Canada as one of Europe’s closest and most reliable global allies, and called for, among other things, integrating Canada into the EU’s Defence Technological and Industrial Base and deepening Arctic security cooperation. As the EU’s only directly elected institution, the European Parliament’s report has the added significance of injecting a measure of democratic accountability into a relationship that has, until now, largely been conducted at the executive level.

Europe increasingly seeks trusted relationships, not new dependencies. Canada is one of the few countries positioned to offer that, a refrain regularly heard in Brussels.

What Europe Wants

Viewed through this lens, Europe’s priorities vis-à-vis Canada are clear:

1. Resource security.The EU’s industrial ambitions depend on secure access to critical minerals and rare earths. Canada has both the resources and the standards to be a trusted supplier.  What Europe is looking for is more integrated raw materials value chains, not just imports. Peter Handley, who as head of the Energy-Intensive Industries and Raw Materials unit in the European Commission’s Directorate General for the Internal Market, Industry, Entrepreneurship and SMEs was a key driver of the EU’s 2024 Critical Raw Materials Act, recently addressed this in the Policy piece, On Critical Minerals, Canada and Europe Meet in the Midstream.
2. Security cooperation. The EU’s expanding defence-industrial base extends beyond NATO and creates ample room for joint procurement and supply-chain integration.  Canada’s participation in SAFE and growing Arctic security cooperation reflect an increasingly integrated transatlantic security relationship. Canada’s July 2026 decision to select the German-Norwegian TKMS bid to build its new fleet of up to 12 submarines is a concrete signal of that direction, tethering Canada’s largest-ever defence procurement to European industry.
3. Science, technology and Innovation.As AI, quantum computing and advanced digital infrastructure have become strategic assets, the EU is looking for partners who can contribute research within compatible regulatory and democratic frameworks. Canada’s strengths in AI, computing and life sciences make it a natural fit. Neither Canada nor the EU — even with its proposed €234 billion European Competitiveness Fund, alongside a renewed €175 billion Horizon Europe — can outspend the United States or China alone. The opportunity then is for Canada and the EU to work together to build networks and support the creation of a viable Canada-EU innovation ecosystem: researchers moving across institutions, companies commercializing jointly, research attracting capital. This is why Canada’s participation in Horizon Europe is strategically significant, and where opportunities for deeper and more robust collaboration reside.
4. Regulatory alignment.As Brussels adapts its rulebook on AI, sustainability and digital markets, regulatory compatibility becomes a competitive advantage for Canadian businesses in the EU. Canadian firms currently benefit from unusually close alignment with EU rules, but the pace of change has been dramatic. A rising strain of “Buy European” provisions — from SAFE to the Industrial Accelerator Act and the Cloud and AI Development Act — could limit market access for non-EU providers. Access to the EU market should not, therefore, be taken for granted, and Canadian companies need to engage more directly in Brussels, the centre of EU rulemaking, to protect and take full advantage of their privileged position.
5. Political partnership.Less tangible, but no less real in an increasingly transactional world, is that Europe wants partners willing to help sustain rules-based cooperation, not just benefit from it. Canada is one of the few countries able to do so credibly.

To be clear, the EU is not seeking Canada as a member state, nor does it want a Canada estranged from the United States, a relationship that remains indispensable to both the EU and Canada. What Europe wants and needs is a Canada capable of standing on its own and standing with Europe at the same time.

The Opportunity for Canada

Canadian discussion still tends to treat Europe primarily as a market while Europe increasingly sees its relationship with Canada as something larger — part of a resilient economic and security architecture. That shift, from bilateral relationship to systemic alignment, is arguably the defining feature of Europe’s current thinking about Canada.

Recognizing this should shape Canada’s own approach. While growing exports and improving CETA utilization remain important, the larger opportunity is to embed Canada in Europe’s long-term strategy for competitiveness, economic security and defence resilience.

As already noted, much of the political and legal architecture for this enhanced cooperation already exists (e.g., CETA, the Strategic Partnership Agreement, Horizon Europe, SAFE, and expanding defence and raw materials cooperation), but it has accrued gradually, agreement by agreement, over the past decade — and much of it remains disconnected.

CETA included its own structure for regulatory cooperation, running in parallel to the separate governance set up under the Strategic Partnership Agreement, both designed around the priorities of a decade ago.

Since then, Canada and the EU have layered on a growing list of sector-specific arrangements: a Strategic Partnership on Raw Materials, a Digital Partnership, Horizon Europe, SAFE, each with its own structure and rationale. The points of contact have proliferated and tracking, aligning or even fully accounting for them has become difficult.

The upcoming Canada-EU leaders’ summit is an opportunity to not only build on the impressive foundation of Canada-EU cooperation (including with the expected signing of a digital trade agreement and further signals of areas of industrial cooperation) but, it is hoped, can lead to a new framework of cooperation to allow for better coordination, direction, and transparency.

While the political ambition exists in Canada, a more sustained diplomatic and commercial presence on the ground in Europe, and the tools to turn signed agreements into delivered results, are needed.

There are early signs of Canada addressing this. These include an ambitious expansion of Export Development Corporation (EDC) operations on the continent, the recently announced Strategic Exports Office to coordinate senior-level commercial engagement in sectors like aerospace, defence, infrastructure and energy, and the Europe CanCham Capacity Building Program launched under the 2025 federal budget to strengthen Canadian chambers of commerce across Europe. These initiatives point to a government paying closer attention to CETA implementation.

The gap in follow-through of CETA is not lost on Canadian business. A recent report by the Expert Group on Canada-US Relations — a coalition of prominent Canadian business figures and former officials including former Business Council of Canada CEO Thomas d’Aquino and former Canadian Chamber of Commerce CEO Perrin Beatty — makes a parallel argument: government agreements remain aspirational until business itself moves capital, signs contracts and embeds in supply chains.

For its part, Europe is not turning to Canada out of sentiment, nor simply to extract more value from a decade-old trade deal. It is turning to one of the very few countries that combines resources, technology, democratic governance and institutional alignment, at precisely the moment it is redesigning its own economic and security model.

For Canada, recognizing that shift is an opportunity to become not just a valued partner, but an indispensable one. That trajectory will become clearer still at the upcoming Canada-EU leaders’ summit, where both sides are expected to push this relationship further. The question then is not whether the EU needs Canada; rather, it’s whether Canada is ready to be needed by Europe.

Policy Contributing Writer Mark Camilleri is President and founder of the Canada EU Trade and Investment Association (CEUTIA). He is a Brussels-based Canada and EU regulatory lawyer and founder of Camilleri Law, and Special EU Advisor to the Business Council of Canada.