Mark Camilleri / May 2025
Image: Shutterstock
On 28 April 2025, Canadians elected the Liberal Party of Canada as its federal government. The Liberal Party is led by Mark Carney, the former governor of the Bank of Canada and the Bank of England, who, having just taken over as Liberal party leader and Prime Minister a month before, has won his own mandate as Prime Minister.
As Mr. Carney said in his acceptance speech, the election took place at a “hinge moment” for Canada —not just in terms of its domestic renewal, but also for its place in a changing global order. Mr. Carney leads a country facing serious economic challenges: lethargic economic growth, low productivity, and a serious housing and cost-of-living crisis. At the same time, the return of Donald Trump to the White House means that Canada is again bracing for unpredictability and outright hostility in its most important bilateral relationship.
Stabilizing relations with the U.S. must be a top priority for Ottawa, but it will not be the only one. Diversifying Canada’s economic partnerships is no longer just a strategic ambition for Canada – it is an economic necessity. And in this way, Europe matters more than ever for Canada.
The Canada EU Comprehensive Economic and Trade Agreement (CETA) provides a strong and robust platform for a deeper, more strategic transatlantic partnership. Since its provisional application began in 2017, CETA has driven a more than 65% increase in bilateral goods trade and a nearly 73% rise in services trade. Small and medium-sized enterprises, in particular, have benefited from expanded market access and reduced red tape.
But CETA is about more than numbers; it is an ambitious agreement, designed from the start to be a modern, forward-looking document aimed at deepening cooperation on a variety of key bilateral issues – the “gold standard” of modern trade agreements. Moreover, in an era defined by geopolitical volatility and economic fragmentation, CETA offers both Canada and the EU a hedge against global risk – a resilient link between two like-minded, rules-based economies.
Yet despite its success and strategic importance, CETA remains only provisionally in force. Ten EU member states – France, Italy, Belgium, Ireland, Poland, Hungary, Greece, Bulgaria, Cyprus and Slovenia – have yet to ratify the agreement. This legal purgatory constrains the agreement’s potential, creates uncertainty among businesses, and impedes the updating of its governance structures to meet today’s economic needs and realities.
Some of the reasons for this delay are political, even symbolic. CETA has been caught in the broader European debate over globalization, regulatory sovereignty, and the balance of power between corporations and the state. Concerns over the Investment Court System (ICS), for instance, have persisted despite a 2019 European Court of Justice ruling confirming its compatibility with EU law. In some cases, CETA has simply fallen off the political radar – overshadowed by more urgent domestic priorities or by shifting parliamentary coalitions.
Although these hesitations may be rooted in internal politics, their consequences are international. A failure to fully ratify CETA sends the wrong signal about Europe’s trade credibility. If the EU cannot finalize an agreement with Canada – a like-minded democratic partner with high regulatory standards and deep social protections – what message does that send to other prospective partners?
For Canada, non-ratification undermines its broader diversification strategy. A fully ratified CETA would not only enhance trade but also strengthen Canada’s leverage in its negotiations with the United States. Moreover, full implementation would allow Canada and the EU to integrate newer sectoral agreements—on raw materials, energy, and digital policy—into a more coherent governance framework.
What needs to happen now is clear. First, the remaining EU member states must move to complete the ratification process. Canada has already done its part—now it is Europe’s turn to ratify CETA.
Second, Canada and the EU should continue aligning CETA with shared policy priorities, such as the Canada-EU Strategic Partnership on Raw Materials and the Canada-EU Digital Partnership. This will help underscore the relevance of CETA not just as a trade pact, but as a policy tool for achieving broader economic and strategic goals.
Mark Carney’s government will be looking for reliable global partners as it navigates uncertain waters ahead. It is clear that Europe will be top on his list. CETA has proven its value. Now it’s time for Europe to finish the job and seal the deal.
