Passing the Puck: How the EU-Canada Partnership is Driving the Transatlantic Alliance

On 23 June, one day before the 2025 annual NATO Summit in The Hague, Canadian Prime Minister Mark Carney was across the border in Brussels for a much understated, yet significant transatlantic convening with his European Union (EU) counterparts. The 20^th EU-Canada Summit between Carney and European Commission President Ursula von der Leyen and Council President Antonio Costa seemed in some ways to be the opposite of the realpolitik from The Hague, unapologetically confirming their “unwavering commitments to the rules-based international order with the United Nations, and its charter, at its core.” Such words have not been heard from Washington for many months.

Indeed, the EU-Canada relationship, underpinned most notably by the EU-Canada Comprehensive Economic and Trade Agreement (CETA) and the EU-Canada Strategic Partnership Agreement (SPA), has long been built upon shared values in support of human rights, international law, educational exchange and free trade. In today’s geopolitics dominated by the contours of realism, great-power competition and transactionalism, these liberal values can seem as though from a bygone era.

However, this year’s EU-Canada Summit was far from “business as usual,” as one EU official put it. The 16-page joint statement issued in Brussels went much further in its pledges to strengthening transatlantic security and economic relations than their last meeting in 2023 in Newfoundland, where the tone and the main conclusions risked the kind of ‘death by high-levelism’ which plagues so many international leaders’ summits today.

More importantly, the Brussels summit showed how the EU-Canada relationship is enjoying a refreshed sense of dynamism fit for the modern era, equipped with new, effective tools to help fill the transatlantic leadership vacuum left by the US.

EU-Canada Security and Defence Partnership

The main outcome of this year’s EU-Canada Summit was the new Security and Defence Partnership (SDP) between Canada and the EU. This agreement is a concrete new policy which, among other commitments, will give Canada access to the EU’s €150-billion joint military procurement instrument ‘SAFE’ as part of the ReArm Europe Plan/Readiness 2030. On top of this, EU and Canadian defence leaders from the European External Action Service (EEAS) and Global Affairs Canada (GAC) will now meet annually in a new Security and Defence Dialogue to monitor the SDP’s implementation and make sure it stays agile and up to date with the latest security developments.

Joining SAFE is a major step forward for Canada and for transatlantic security writ large. In practice, it means that Canadian firms will be able to access loans from the European Commission, backed by the EU budget, to invest in defence systems identified by the European Council as priorities, which include ammunition, munitions and artillery; infantry weapons and gear; air and missile defence systems, including drones, anti-drone and air-to-air refueling capabilities; and maritime and space assets, among many other specified competences.

It is important to note that Canada’s access to SAFE does not mean EU funds will reach the Canadian defence industry with no strings attached. SAFE’s design includes a “Buy European” clause, requiring a minimum of 65 percent of the value of weapons systems purchased with the funds to be manufactured on European soil. Canada’s SDP with the EU is also not one of a kind: The United Kingdom, Norway, Moldova, Albania, North Macedonia, Japan and South Korea have all signed their own such agreements; Iceland appears to be next. However, Canada’s latest entry into this club of EU defence partners is still a significant step forward for the EU as well as for Canada, which is the first country from the Americas to enter such a framework.

Beyond SAFE, the new SDP with Canada is a landmark agreement for two main reasons. First, it integrates Canada more directly into Europe’s evolving security architecture and, as Carney described, will help Canada deliver on its new defence spending commitments to reach 2 percent of GDP this year and 5 percent by 2035, as agreed at the NATO Summit in The Hague. Thus, Canada can now play a more active role in, and benefit from, Europe’s rapid defence industrialization to better defend against military and hybrid threats posed by Russia and other malign actors.

Second, and understated in most analysis of the summit, the SDP implicitly recognizes the EU’s burgeoning role as a security actor in the transatlantic alliance. Of the EU’s 27 member states, 23 are also members of NATO, and the SDP with Canada makes explicit reference to the cross-institutional benefits of closer EU-Canada defence industrial cooperation, stating that “Canada’s association with the EU’s security and defence activities aims to underpin the mutually reinforcing EU-NATO strategic partnership.”

CETA 2.0 and transatlantic geoeconomics

A conversation today about EU-Canada relations cannot escape the inevitable discomfort each partner faces in their difficult economic relations with the US. In the press conference following the summit in Brussels, Carney spoke diplomatically about Canada’s “relative comfort” in its trade partnership and alignment with the EU, including on labour standards, addressing sustainability and other “similar views” in international trade.

In concrete terms, the joint statement from the summit included a commitment to “work towards” full ratification and implementation of CETA, the free trade agreement between the two blocs, as well as launching a new Digital Trade Agreement to complement CETA and the EU-Canada Digital Partnership agreed upon in 2023. Similarly, the EU-Canada Economic Security Dialogue will build on the foundations for supply chain resilience laid down by both CETA and the aforementioned Strategic Partnership Agreement, and a new EU-Canada Industrial Policy Dialogue will be established to “promote projects and investments that reduce supply chain risks,” including investment screening and adherence to the EU’s standards on critical raw materials trade agreed upon by Canada in the 2021 EU-Canada Strategic Partnership on Raw Materials.

On one hand, a pessimist may view this outcome as exactly the kind of ‘business as usual’ that officials hoped to avoid this year. During the 2023 Newfoundland summit, then PM Justin Trudeau and President von der Leyen similarly agreed to “ensure the full implementation of CETA.” For context, negotiations for CETA concluded in 2014 after both sides first opened talks in 2009, and European Parliament approval and provisional implementation of the agreement came about in 2017. Still, in 2025, over ten years since the deal’s final terms were agreed upon, ten EU member states have yet to fully ratify the agreement at the national level: Belgium, Bulgaria, Cyprus, France, Greece, Hungary, Ireland, Italy, Poland and Slovenia. As recently as 2024, the French senate rejected the ratification of CETA in the wake of widespread farmer protests across Europe at the time.

On the other hand, the new frameworks agreed upon by the EU and Canada this year – namely the Digital Trade Agreement, the EU-Canada Economic Security Dialogue, and the EU-Canada Industrial Policy Dialogue – stand out as a concerted effort by both partners to respond to modern geoeconomic challenges in a way notwithstanding the national parliamentary ratification which has held up CETA. Whether or not these commitments together can be considered as a kind of ‘CETA 2.0,’ the context in which they were made symbolizes the need for bold action in the face of unprecedented structural challenges in the transatlantic economic space. The US is far and away the largest trading partner for both Canada, which exported 76 percent of all its goods stateside in 2024, and the EU – whose bilateral trade relationship with the US is the largest in the world, worth 43 percent of global GDP.

Since the start of Trump’s second term in 2025, the US has confronted both Canada and the EU with upwards of 35 percent and 30 percent tariffs on goods from each respective partner. Although these percentages emanating from the White House seem to change on a weekly basis, they imply massive costs on the economies of Europe, Canada and the US. Because of this, Canada and the EU need each other now more than ever as stable trading partners with mutually beneficial comparative advantages and commitments to shared values, which help promote predictability and reliability. It is in this geoeconomic context that CETA stands out in 2025, and its full-throated endorsement at the EU-Canada Summit in Brussels is noteworthy in and of itself.

Next steps after the Brussels summit

As it concerns security, Canada currently spends 1.4 percent of its GDP on defence. Earlier this year, the Carney government set the goal to reach NATO’s 2 percent target by the end of the year – much faster than set by the Liberals under Justin Trudeau, which aimed for 2032 to reach this goal. Carney also agreed with other NATO allies in The Hague to reach 5 percent by 2035, which translates to a total of $150 billion in defence spending every year. These are impressive figures, the likes of which are circulating around Europe as well – for example, Germany has pledged to spend an annual €153 billion on defence, or 3.5 percent of GDP, by 2029, up from roughly 2.4 percent (€86 billion) this year. The question now being asked in Ottawa like in Berlin, Brussels and other allied capitals is where the money will come from.

For its part, by letting Canada into SAFE, the EU will be able to help finance a portion of Ottawa’s defence procurement ambitions and address some of the key shortcomings in the Canadian Armed Forces, which like Europe has for decades benefited from the so-called “peace dividend”. So, the next step for the EU to take is to ensure the full implementation of the new SDP with Canada and thus open up access for Canadian manufacturers to the SAFE financial framework. The rubber will hit the road for this later in the year at the first annual Security and Defence Dialogue, where leaders will assess the degree to which Canadian procurement has been facilitated by the agreement and what changes may be necessary to improve it.

However, those on the inside of Canada’s defence modernization are the first to point out how much progress must still be made, as illustrated by Imran Bayoumi of the Atlantic Council: “Ottawa only has one operational submarine, out of four, and only half of Canada’s maritime and land vehicles are operational.” The new investments in defence by the Canadian government are long overdue and will drastically improve this picture. So, the next step for Canada is for the government to present more details in its federal budget this fall about how it will fund such investments, which could include deep spending cuts across government starting at 7.5 percent for the 2026-2027 fiscal year.

On the economic front, from wine and cheese to digital services, the puck is mainly with the EU to finish the ratification of CETA across all member states. Meanwhile, progress is being made within and outside the original agreement and should be effectively built upon to keep transatlantic trade flows open amidst each partner’s bilateral disputes with the US. Provisional implementation of CETA since 2017 has already eliminated 98 percent of EU-Canada tariff lines, but several key areas remain to be addressed, including Canadian market access for EU exporters of cheese, wine and spirits, which the EU in 2024 decried as “discriminatory.” As part of the new ‘CETA 2.0’ arrangements, the EU-Canada Economic Security Dialogue can help reach consensus on these kinds of grievances on the grounds of national security, which might help give higher political priority to addressing the reasons behind CETA’s non-ratification in Europe.

Similarly, the new Digital Trade Agreement (DTA) will be central in helping the EU and Canada navigate the cross-border digital marketplace, which CETA was not properly equipped to address. EU-Canada trade in services has grown by around 90 percent since 2016, primarily in the telecommunications and IT sectors. Given CETA’s age, Canada and the EU have already begun to close the gaps in digital policy coordination with the 2023 EU-Canada Digital Partnership. The new DTA aims to build on this and improve the experiences of consumers and businesses operating online transactions across borders, addressing pain points such as data protection concerns and the security risks associated with developing and using artificial intelligence, which at the time of CETA’s drafting in 2014 was not on the radar at all.

In a sign of its commitment to getting the DTA right, the Canadian government is currently running an open consultation from 25 June to 23 August of this year for Canadians to submit their questions or concerns about the DTA to GAC’s Intellectual Property, Digital Economy and Innovation Division. After years of protests against CETA, which many across Europe and Canada complained to be undemocratic in its terms and neoliberal in its ambitions, perhaps the Canadian government’s public consultations for the DTA are also a lesson learned and an effort at greater democratic accountability to build popular consensus for economic cooperation with Europe. The EU could benefit from such an approach, as well.

In conclusion, the EU-Canada Summit in Brussels, while in many respects outshined by the defence spending commitments made by Carney and his NATO allies in The Hague days later, is nonetheless part of an important moment of transatlantic solidarity between Europe and Canada amidst the shifts in Washington’s foreign policy. On defence, as well as economic matters, the two sides are adding to their existing piecemeal agreements to better address gaps, identify priorities and modernize and integrate their approaches across the spectrum of foreign and security policy.

Some have floated the idea that Canada should join the EU as its next member state – although as Robert Cutler noted recently in Open Canada, this is not a realistic scenario. Others have argued it should become the 51^st state of the US – even more unlikely. Instead, the transatlantic community has been watching Canada rise to the moment, buoyed by its common ground with the EU and increased commitments with its NATO allies. Now is the time to continue building on this foundation and show Washington that values-based transatlantic cooperation can be effective in facing up to today’s world of hard-power geopolitics.