Will Canada Become the EU’s First ‘Associate Member’?
Prime Minister Carney is addressing the European Parliament today. Yesterday, Commission president von der Leyen invited Canada to become an ‘associate member’ of the EU during her annual ‘State of the Union’ speech. Speculation abounded: what is an ‘associate member’ and should Canada accept the invitation?
From where I sit, the invitation seems to be more about signaling than about substance. ‘Associate membership’ is not a legal category; it is not something that the EU can simply offer to Canada. That said, by doing so nonetheless, in a high-profile speech at that, the Commission president did extend a significant political favour to Canada’s Prime Minister. Locked in a trade war with the only trade relationship that really matters to Canada, it is helpful for Canada’s Prime Minister to be able to signal to its neighbour to the south that it has options. And lo and behold: as the NY Times reported, the US president did notice; he even threated to punish European countries if they were to engage in ‘hostile acts’ against the US.
Discussions and speculations about Canada joining the EU have been ongoing ever since Donald Trump reclaimed the White House. The US president seems adamant to undermine Canada’s sovereignty, and the trade war that he has unleashed seems designed to asphyxiate Canada’s economy, to break the country’s economic spine, and to force it into a relation of dependency—even vassalage—vis-à-vis the US (hence the ‘51st State’ language).
It is important for European audiences to understand how serious this threat is to Canada.
Canada’s economy is extremely intertwined with that of the US. For many if not most provinces, there is more trade on the north-south axis, between Canadian provinces and neighbouring US states, than there is on a west-east axis, amongst provinces. Oil and gas produced in Alberta has no way of getting to Canada’s Atlantic coast; Eastern Canada imports oil and gas as opposed to buying it from Alberta. Electricity generated in Quebec is sold to New England and New York in much greater quantities than it is sold to neighbouring Ontario or New Brunswick. Automakers active in Canada operate in an integrated supply chain that connects Ontario to Michigan. The list goes on and on.
As Mark Carney mentioned in his Davos speech earlier this year, the integration of the two economies has led to an acute vulnerability to American coercion, to a degree other US trading partners, including the EU, don’t experience. As he put it: ‘[G]reat powers have begun using economic integration as weapons, tariffs as leverage, financial infrastructure as coercion, supply chains as vulnerabilities to be exploited. You cannot live within the lie of mutual benefit through integration, when integration becomes the source of your subordination.’
In an environment as hostile as this, Canada must look for new friends. The European Union and its Member States are an obvious place to look towards. Of course, there is also China, and Canada’s government is actively trying to warm up relations with Beijing. Chinese EVs are now being admitted to Canada, albeit in small numbers, leading Beijing to abandon its tariffs on canola—a key export of Saskatchewan. The Prime Minister is also courting India, the Middle East, and so on. Several trade agreements have been signed, and two days before Commission president von der Leyen’s State of the Union, Prime Minister Carney was hosting a first ‘Canada Investment Summit’ in an attempt to get foreign capital to invest in Canadian infrastructure and natural resource industries.
While Canada is thus embarking on a global campaign to diversify its trade relationships, it makes sense for Canada to be looking to Europe in particular, considering the values Canada shares with Europe. It matters that both Canada and the European Union value the rule of law, which creates trust and predictability, not only for governments but also, and in particular, for investors. To be sure, European populations may be aging, leading to (too) little economic growth, but the EU does remain a huge and by-and-large affluent consumer market, and Canadian companies would do well to leverage the tariff-free access they already enjoy to that market.
None of this is to say that Canada’s relation with the EU will fundamentally change in the near or even medium-term future. Canada already has a free trade agreement with the EU. Canada already participates in SAFE, the EU’s programme created in 2025 to facilitate joint purchases of arms and military equipment. As I’ve argued before, getting closer to the EU would mean surrendering a degree of regulatory autonomy, as countries like Norway and Switzerland have done to get access to the internal market. Yet aligning with EU rules and standards may make it (even) harder for Canadian businesses to trade with the US, which continues to account for over 65% of Canada’s external trade.
I don’t expect Canada would be willing to get that close, considering that the efforts to diversify trade relationships are part of a broader effort to protect and bolster Canada’s sovereignty. What it can do, and what the EU also wants, is greater sectoral cooperation in sectors like defence, critical raw materials, higher education and research. These are undoubtedly the topics that both parties are discussing in the run-up to the EU-Canada summit that is scheduled to take place in Montreal in October.
My hope would be that both parties also engage in discussions on how to reinvigorate the multilateral trading system. The world is larger than the North Atlantic basin, and the vast majority of countries in the world want to trade more, not less. (The US really is an outlier in this regard.) Perhaps by working together and developing common positions on WTO reform, Canada could convince the EU to stay true to its commitments towards rules-based free and fair trade. The EU has in recent months expressed doubts on its commitment to the most-favoured nation principle, which is the bedrock of the multilateral trading system. Perhaps Ottawa could convince Brussels not to throw away the baby with the bathwater as they together, as leading middle powers, reflect on how to address the challenges posed to rules-based trade by both the US and China.
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