ABE MAGAZINE | NEWS O’CLOCK — INTERNATIONAL TRADE & GLOBAL ECONOMY
Wednesday, October 28, 2026
Canada has signed a comprehensive trade agreement with the United Arab Emirates, strengthening economic ties with one of the Middle East’s leading commercial centres as Ottawa seeks to diversify its international trade relationships. The deal promises expanded market access for Canadian exporters and deeper investment cooperation, although its longer-term economic impact will depend on how effectively businesses take advantage of the opportunities.
Canada and the United Arab Emirates signed a Comprehensive Economic Partnership Agreement (CEPA) on October 27 in Ottawa, marking a significant development in Prime Minister Mark Carney’s efforts to strengthen commercial relationships beyond North America.
The agreement was concluded during an official visit by Abu Dhabi Crown Prince Sheikh Khaled bin Mohamed bin Zayed Al Nahyan. Negotiated in just 47 days, it is expected to reduce or eliminate tariffs on more than 99% of current Canadian exports to the UAE once implemented.
The deal is expected to enter into force in 2027, subject to the necessary approval procedures. Its signing comes at a time when Canada is reassessing its international trade strategy amid continuing tariff disputes and economic uncertainty involving the United States.
A BROADER STRATEGY TO DIVERSIFY CANADIAN TRADE
For decades, the United States has been Canada’s most important trading partner, supporting major industries including automotive manufacturing, energy, agriculture and industrial production. That relationship remains essential, but recent tariff disputes have highlighted the economic risks associated with relying heavily on a single export market.
Carney has committed to doubling Canada’s trade with countries outside the United States over the next decade, a strategy intended to create new opportunities for Canadian companies while reducing their exposure to changes in American trade policy.
The UAE represents a potentially valuable partner in that effort. Its financial institutions, international airports and logistics networks connect businesses to markets across the Middle East, Africa and Asia, offering Canadian exporters opportunities that extend beyond the country’s domestic economy.
However, expanding trade with the UAE will not fundamentally change Canada’s dependence on the American market in the near term. The agreement is better understood as one component of a gradual diversification strategy rather than an alternative to the deeply integrated North American economy.
NEW OPPORTUNITIES FOR EXPORTERS AND MANUFACTURERS
The agreement is expected to improve conditions for Canadian businesses operating in agriculture, aerospace, industrial manufacturing and professional services. Products including pulses, canola, machinery and power-generation equipment could become more competitive as tariffs are reduced or eliminated.
Beyond tariff provisions, the CEPA is intended to address regulatory barriers and establish more predictable trading conditions. These measures could help Canadian companies navigate foreign markets and develop longer-term relationships with Emirati customers and commercial partners.
For smaller exporters, the agreement could create opportunities to enter a market where international competition is already well established. Nevertheless, tariff reductions alone will not guarantee commercial success. Businesses must still secure financing, establish distribution networks and meet local regulatory requirements.
The UAE’s position as a regional commercial hub could also support Canadian companies seeking to expand their presence across neighbouring markets, particularly in sectors where Canadian expertise is internationally competitive.
BILATERAL TRADE AND INVESTMENT AMBITIONS
The UAE is already Canada’s largest merchandise export market in the Middle East. Bilateral merchandise trade reached approximately C$3.5 billion in 2025, including about C$2.8 billion in Canadian exports and C$679.1 million in imports, according to Canadian government figures.
More than 150 Canadian companies maintain operations in the UAE, while approximately 60,000 Canadians live and work in the country. These existing business and professional connections provide a foundation for further commercial expansion.
International Trade Minister Maninder Sidhu has outlined an ambition to increase bilateral trade to approximately C$7 billion over the next decade. Reaching that target would represent substantial growth, although the outcome will depend on market demand, business competitiveness and the agreement’s implementation.
Investment is another important element of the partnership. In November 2025, the UAE announced a C$70 billion investment commitment to Canada, with potential opportunities in energy, infrastructure and technology. The figure represents an announced commitment rather than capital already fully deployed.
INFRASTRUCTURE AND ENERGY COOPERATION
The agreement forms part of a wider economic relationship involving infrastructure development, energy cooperation and strategic investment. During the October visit, the two governments announced additional initiatives intended to strengthen connections between Canadian and Emirati businesses.
Among them was a memorandum of understanding involving DP World, Arctic Gateway Group and CentrePort Canada to explore transportation opportunities connected to the Port of Churchill and the Hudson Bay Railway.
The initiative could support efforts to improve Canada’s international logistics connections, although the memorandum does not establish that the proposed projects have been completed or fully financed.
Cooperation involving UAE renewable energy company Masdar and Natural Resources Canada was also announced, reflecting growing interest in energy investment and technological collaboration.
These initiatives suggest that the relationship is developing beyond conventional trade in goods. Their significance, however, will ultimately depend on whether commercial discussions result in operational projects and measurable investment.
THE ECONOMIC TEST AHEAD
While the agreement represents progress in Canada’s efforts to diversify its trading relationships, the practical benefits will take time to emerge. Companies must identify customers, develop reliable supply chains and compete with established international suppliers.
Canada must also ensure that domestic businesses possess the infrastructure, productivity and financial capacity needed to expand internationally. Improved access to foreign markets offers limited value if companies cannot produce competitively or deliver reliably.
The agreement’s success will therefore be measured not simply by the removal of tariffs, but by growth in exports, completed investments and the establishment of sustainable commercial relationships.
THE ABE TAKE | MARKET ACCESS IS ONLY THE BEGINNING
Canada’s agreement with the UAE reflects a necessary adjustment to an increasingly uncertain global trading environment. Strong economic relationships with the United States remain essential, but excessive dependence on one market can leave businesses vulnerable when political priorities change.
The UAE partnership offers an opportunity to strengthen Canada’s international commercial presence, particularly in industries where Canadian businesses already possess expertise. Yet diversification requires more than diplomatic agreements and ambitious investment announcements.
For Ottawa, the challenge is to ensure that new trade partnerships translate into stronger domestic industries, competitive exports and productive investment. The government can negotiate access to foreign markets, but Canadian businesses must ultimately demonstrate that they can succeed within them.
The agreement opens another door for Canada’s economy. Its lasting value will depend on what Canadian businesses build on the other side.
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