Carney heads to Strasbourg for EU Parliament address

EU mulls ‘special association agreement’ with Canada

The renewed Canada-EU engagement has its lighter moments. Finnish President Alexander Stubb asked this summer, “Wouldn’t it be lovely if Canada was the 28th state of the European Union rather than the 51st state of the United States?” The question was rather tongue-in-cheek. Trump, currently locked in an escalating tariff tussle with Ottawa, has on a number of occasions declared his ambition to make Canada the 51st American state — causing deep offence amongst many Canadians. Finland is one of the EU’s 27 member states and a close ally of Canada as a fellow Arctic nation. “Canada is more Europe-minded than most Europeans!” is a retort often heard in Brussels at the moment.

EU insiders attribute the engagement to what they call the “Trump effect.” Trump recently posted a map of North America on his Truth Social site, including Canada and Greenland — a territory that is part of EU member state Denmark — all overlaid with the US flag. Trade negotiations between the US and Canada broke down late last month. European countries, hit by their own Trump tariffs, have privately watched the spat play out with what the BBC described as “a mixture of interest and, for many, admiration.”

The EU, led by the European Commission, accepted new blanket Trump tariffs without fighting back; Carney imposed counter-tariffs on the United States in the name of “sovereignty” and said Canada was “at war” with the US over trade. Carney’s posture drew comment from Paolo Gentiloni, a former EU economy commissioner and former Italian premier, who wrote on social media: “Here is a speech I would like to hear in Europe.” The US president is by now infamous amongst US allies for what they view as his unpredictability and his penchant to use trade or security ties as leverage, the BBC reported.

European officials, speaking on condition of anonymity, told the BBC the unofficial aim on both sides is to reduce reliance on Washington across several strategic sectors: digital and technology developments, in which the US and China dominate; energy, where Canada has liquefied natural gas that the EU has sought since cutting its energy dependency on Russia; raw materials and critical minerals, which Canada has in abundance; and trade and defence procurement. One EU diplomat described the goal as a relationship “as close as you can get without (Canada) actually becoming an EU member.” In Brussels corridors, there is whispered talk of constructing a “special association agreement” with Canada. Officials on both sides insist this is more than just “blah blah politics,” as one EU diplomat put it.

Carney and von der Leyen are both expected to mention plans to forge closer ties this week. An even tighter Canadian-EU alliance, covering far more sectors than trade alone, would continue a recent trend of both parties forming new association agreements around the world. In Canada’s case, that includes a sectoral deal with China, which raised international eyebrows earlier this year.

On the defence side, Canada has been on a “buy European” spree of late, purchasing German attack submarines and airborne early-warning planes from Sweden’s Saab. The shift has been framed in Ottawa by the question of why reward the US by buying American equipment after being slapped with trade tariffs amounting to 50% in some sectors.

Officials on both sides acknowledge that replacing US customers and supply chains built around America’s massive market would be a tall order. The US is the EU’s largest overall trading partner, if goods and services are taken together. The bilateral US-Canada trade relationship was valued at nearly US$900bn (£668bn) last year, the BBC reported, dwarfing the roughly US$130bn in total EU-Canada bilateral trade during the same period. About 70% of Canadian exports head to the US. Mark Camilleri, president of the Canada EU Trade and Investment Association (CEUTIA), told the BBC that the Canadian government is “committed to trade diversification, doubling non-US trades in the next 10 years, and doing more with the European Union will be very key to achieving that target.”

Ties between Canada and the EU are far from new. The Comprehensive Economic and Trade Agreement (CETA), agreed just under a decade ago, has been provisionally implemented and eliminated 99% of tariffs on Canadian goods exports. The EU is already Canada’s second-largest trading partner. European officials told the BBC that the renewed high-level engagement has everything to do with the actions of Trump’s second term.

Canada joined the EU’s Security Action for Europe (SAFE) defence fund earlier this year; the UK remained on the sidelines following a row over costs and political tensions, and a summit designed to reset EU-UK relations has just been delayed again. “Canada right now seems more interested than the UK to get as close to Brussels as possible, as a non member state,” Mark Lowen, director of the European Council on Foreign Relations, told the BBC. “It’s remarkable.” It’s a conundrum the UK faces too.

A turning point in European attitudes came early this year when Trump refused to rule out taking Greenland — a territory of fellow NATO power and EU member Denmark — by force. Around that time, Carney, the former governor of the Bank of England, gave a speech at the World Economic Forum in Davos calling on middle-sized countries to stick together against economic coercion by global superpowers. Europe, the BBC reported, “sat up and took notice.”

European leaders are involved in behind-the-scenes discussions with Carney about deepening relations, including Finland’s Stubb, French President Emmanuel Macron, and Italian Prime Minister Giorgia Meloni. But no leading European politician wants to publicly champion the Canadian prime minister while risking voter backlash at home over possible US tariff retaliation, the BBC reported. Under EU rules, the European Commission — not member states directly — handles trade, giving EU institutions cover to engage Canada more openly. Germany held elections just over a week ago; France chooses a new president in April and early May; and Italy, Spain and Poland have yet to set dates for their parliamentary elections.

Some officials warn that Carney should also wake up and smell the European coffee. Brussels may feel warmly towards Canada and believe Ottawa shares many of the same values and priorities, but there are still loud EU voices, like France, that prefer to prevent non-member countries from getting too favourable a deal, despite pressure on the EU to show more flexibility when it comes to accommodating allies.

A Nanos opinion poll from April suggests more than four in five Canadians favour strengthening ties with the EU. Close to three in five support Canada actually joining the bloc, though Article 49 of the EU Constitution would appear to make that impossible.

Carney is scheduled to travel to Liverpool later this week for his first face-to-face meeting with new UK Prime Minister Andy Burnham. An EU-Canada summit is scheduled for the end of next month, after which working groups are expected to begin tackling the legal and technical details in the sectors where the two sides hope to establish closer ties. Diplomats told the BBC that Carney and von der Leyen will defend a rules-based global trading order this week. “This is not about trying to keep the past alive. We need to forge a new rules-based future in trade and beyond. With or without Washington,” the diplomats said.