Prime Minister Mark Carney is turning an unfinished European trade deal into part of Canada’s answer to an increasingly unpredictable United States. Ahead of meetings in Strasbourg, Carney urged the European Union’s remaining holdouts to fully ratify the Comprehensive Economic and Trade Agreement, or CETA, nearly nine years after it began operating provisionally.
The timing is deliberate. Canada is still deeply tied to the American economy, but tariff battles and the breakdown of recent Washington negotiations have made that dependence look increasingly risky. Europe cannot simply replace the United States as Canada’s dominant customer. What it can offer is something Ottawa now prizes almost as highly as market size: another major economic relationship governed by negotiated rules rather than continually shifting political demands.
CETA Is Becoming a Strategic Tool, Not Just a Trade Deal
Carney’s new push comes as Canada attempts to transform its relationship with Europe from a conventional free-trade partnership into something considerably broader. In an interview published ahead of his European trip, the prime minister called for the 10 EU countries that have yet to ratify CETA to complete the process. Seventeen of the bloc’s 27 members have already done so. That leaves an agreement signed in 2016 and provisionally applied since September 2017 still waiting for full legal implementation.
For Ottawa, that unfinished business has acquired new significance. CETA was originally promoted largely around tariffs, procurement and easier access for exporters. In 2026, the argument is increasingly about economic security. Carney has described stronger ties with Europe as a way of making Canada and its partners more resilient and independent. With Washington willing to use tariffs aggressively against allies, dependable access to another wealthy market has become an insurance policy as much as an export opportunity.
Most of CETA Already Works — but It Still Is Not Fully Finished
Canadian and European businesses have enjoyed most of CETA’s commercial benefits for years. When provisional application began on September 21, 2017, roughly 98% of tariff lines were eliminated immediately. The European Commission says the agreement ultimately removes duties on about 99% of tariff lines. That means products ranging from machinery and seafood to industrial inputs can generally cross the Atlantic under dramatically better tariff conditions than before the agreement.
Full ratification still matters, however, because provisional application does not activate every part of the treaty. Some investment-protection and dispute-resolution provisions remain outside provisional application until all necessary national procedures are completed. That legal distinction rarely attracts the same attention as tariffs, but it matters to companies making long-term investments. Carney’s argument is therefore partly symbolic and partly practical: a fully ratified CETA would demonstrate that Europe can finish agreements with trusted partners while giving investors greater certainty about the rules governing future projects.
Canada-Europe Trade Has Already Grown Sharply
CETA has not remained a theoretical trade framework. The European Council says trade in goods between the EU and Canada increased by more than 76% between 2016 and 2025, while trade in services grew by roughly 90%. Combined trade in goods and services exceeded €130 billion in 2025. Ottawa places the value at approximately C$178 billion and identifies the EU as Canada’s second-largest trading partner for goods and services after the United States.
Those numbers help explain why Europe has become central to Carney’s diversification plans. The relationship already has enough scale to support expansion rather than having to be constructed from scratch. Canadian miners, aerospace companies, professional-services firms, technology businesses and agricultural exporters have an existing platform across the EU market. European capital is also deeply embedded in Canada: Ottawa estimated EU direct investment stock in Canada at about C$217 billion in 2025, while Canadian direct investment in the EU stood near C$315 billion.
The United States Still Towers Over Canada’s Trade Map
Diversification may be Ottawa’s goal, but the starting point explains why the transition cannot happen quickly. Statistics Canada data show that 71.7% of Canadian merchandise exports went to the United States in 2025. That was down from 75.9% in 2024 and represented the lowest U.S. share since the early 1980s, yet it still means roughly seven out of every 10 dollars of Canadian goods exports depended on the American market.
There are encouraging signs elsewhere. Canadian goods exports to non-U.S. destinations rose 17.2% in 2025, reaching an all-time high even as exports to the United States declined 5.8%. That shift gives Carney evidence that diversification is possible. Still, geography and decades of industrial integration cannot be legislated away. Cars, energy, machinery, food and intermediate goods often move across the Canada-U.S. border through supply chains built around proximity. Europe therefore represents an additional pillar for Canadian trade, not a realistic near-term replacement for America.
Washington’s Trade War Has Made Diversification More Urgent
Canada has talked about finding new markets for decades, but the political incentive is different now. In August, Carney suspended negotiations with Washington after saying U.S. demands had become economically unacceptable and unreliable. His government subsequently moved ahead with retaliatory measures while arguing that Canada could no longer base its long-term strategy on the assumption that preferential American access would always remain stable.
That experience has changed the language around international trade. Diversification is increasingly described as protection against concentration risk rather than simply an opportunity to increase sales. A Canadian manufacturer that depends overwhelmingly on a single foreign market becomes vulnerable when tariffs change suddenly or political negotiations collapse. Europe offers a market of hundreds of millions of relatively affluent consumers governed by institutions Canada already knows well. CETA does not remove every regulatory obstacle or transportation cost, but Ottawa increasingly sees its rules as a counterweight to the uncertainty surrounding American trade policy.
Carney Wants a Relationship With Europe That Goes Beyond CETA
The prime minister is not limiting his European ambitions to conventional trade. Carney has said Canada is seeking a “unique alliance” with the EU while making clear that Ottawa is not asking for full European Union membership. Current discussions encompass strategic sectors including energy, artificial intelligence, critical minerals, defence, investment and infrastructure. The government has presented those areas as complementary strengths that could bind the two economies more closely.
Defence already offers an example of how quickly the relationship has expanded. Canada joined the EU’s Security Action for Europe initiative in February 2026, becoming the first non-European participant. Ottawa says participation gives Canadian defence companies access to new procurement opportunities. Canada and the EU had previously established a broader security and defence partnership, while cooperation has also expanded in digital policy and critical resources. In that context, CETA increasingly looks like the economic foundation for a much larger transatlantic partnership rather than the final destination.
European Politics Remains the Biggest Obstacle to Full Ratification
Convincing the remaining EU states to ratify CETA will not be automatic. Trade agreements in Europe frequently become domestic political battles, particularly when agriculture, food standards or investor protections are involved. France provides one of the clearest examples. Its Senate voted overwhelmingly against CETA ratification in March 2024 after farmers and agricultural groups argued that the agreement exposed European producers to unfair competition from Canadian imports.
Those concerns help explain why an agreement delivering commercial benefits since 2017 can remain legally unfinished nearly a decade later. CETA is a “mixed” agreement, meaning elements require approval not only at the European level but through national processes in member states. Carney therefore cannot secure full ratification simply by persuading Brussels. Governments facing pressure from farmers, environmental groups or trade sceptics must also be willing to spend domestic political capital. That makes the Canadian prime minister’s campaign as much diplomatic as economic.
Europe Cannot Simply Replace the American Market
The temptation during a major Canada-U.S. dispute is to imagine that Ottawa can simply redirect trade elsewhere. The economics are more difficult. Canada and the United States share road networks, pipelines, electrical connections, rail systems and deeply integrated manufacturing operations. Reuters reported earlier this year that more than 85% of bilateral trade was still moving tariff-free under CUSMA rules, even as disputes intensified elsewhere.
That integration is also part of Canada’s appeal to international investors. Automakers and other multinational companies frequently view Canadian facilities partly through their access to the broader North American market. Losing favourable U.S. access would therefore weaken one of the very advantages Ottawa uses to attract European and Asian investment. The more realistic objective is to reduce Canada’s vulnerability at the margin: sell more energy, minerals, services, technology and manufactured goods elsewhere so that a disruption in Washington hurts less than it would today.
Ottawa Is Pairing the European Push With a Massive Investment Pitch
Carney’s trade strategy is unfolding alongside an equally ambitious campaign for international capital. Canada’s first major Investment Summit in Toronto on September 14 and 15 brought together global investors, Canadian executives and public-sector institutions. Ottawa says its wider economic plan aims to catalyse C$1 trillion in investment during the next five years, with major projects spanning energy, mining, infrastructure, technology and transportation.
Reuters reported that more than 160 potential projects were being showcased around the summit, while many participating investors manage enormous pools of global capital. The connection with Europe is straightforward. Trade access becomes more valuable when companies are also willing to build production, infrastructure and supply chains inside Canada. Ottawa is effectively trying to sell the country as both a production base and a gateway to multiple markets. A fully ratified CETA would strengthen that pitch by signalling that one of Canada’s largest non-American relationships rests on durable, long-term rules.
The Bigger Test Is Whether Canadian Trade Actually Changes Direction
Full CETA ratification would be politically significant, but the real measure of Carney’s strategy will be visible in export patterns years from now. His government has set an objective of doubling non-U.S. exports over the decade, an increase Ottawa has previously described as representing more than C$300 billion in additional orders for Canadian resources, goods and expertise. Reaching that target will require ports, railways, energy corridors and companies willing to invest in unfamiliar overseas markets.
Carney’s September trip to Strasbourg is part of that longer effort. He is scheduled to address the European Parliament while Canada and the EU prepare for another summit later this year. Even successful CETA ratification would not erase Canada’s economic connection to the United States, nor does Ottawa appear to want that outcome. The emerging strategy is instead about balance. After decades in which proximity to America shaped almost every major Canadian trade calculation, Ottawa is trying to ensure that Washington is no longer the only relationship powerful enough to determine Canada’s economic fortunes.
