Beyond Eurovision: Why joining the EU would defy Canada’s economic reality
As published in Policy Magazine
In January 2025, The Economist posed a question that, until recently, would have seemed fanciful: should Canada join the European Union?
At a moment of geopolitical upheaval, U.S. unpredictability, and soul-searching about Canada’s place in the world, the idea sparked debate across law, politics, and the social sciences, and, according to an Abacus poll, among the public at large.
In a recent Policy article, Global Governance Forum Executive Director Augusto Lopez-Claros argues that, in a world where geography matters less than values, institutions and governance, it is possible to reimagine EU membership itself, with Canada as an ideal candidate.
Since becoming prime minister in 2025, Mark Carney has consistently demonstrated an inclination toward Europe. In substantive terms, the Carney government has been formalizing strategic partnerships across Europe, including a EU-Canada Strategic Partnership signed last June, covering enhanced cooperation on trade, digital transition and climate change. On February 15th at the 2026 Munich Security Conference, Canada formally joined the European Union’s Security Action for Europe (SAFE) program of loans to member states to invest in defence capabilities.
In soft power terms, he has described Canada as the most European non-European country, evoked European federalist Václav Havel in his famous Davos speech last month, and, in his government’s 2025 federal budget, even floated the idea of Canada participating in the Eurovision Song Contest, all strong gestures of cultural if not political alignment with Europe.
Yet, while Canada may soon be singing again on a European stage, this time in its own colours (a young Céline Dion famously won the contest in 1988 for Switzerland), there should be no doubt that it will not be seeking a seat at the EU table itself, nor is this an ambition the prime minister has set out to pursue, as he made clear last year. Asked about Canada joining the EU, Prime Minister Carney responded, “That’s not the intent. That’s not the pathway we’re on.”
However intriguing — and, for some, enticing — the idea of EU membership may be, it defies Canada’s economic reality. In today’s world, geography does still matter, and Canada is deeply embedded in the North American economy.
Roughly three-quarters of Canadian merchandise exports continue to flow to the United States, and integrated supply chains remain overwhelmingly continental. While this situation has exposed vulnerabilities to Canada’s economic sovereignty that the Canadian government is correctly trying to address, EU membership is not the answer.
The implications of full EU membership would be colossal for Canada. Beyond the need to adopt EU tariffs and set up a customs border with the US, it would require wholesale adoption of the EU’s body of law (its acquis) — from product standards and data governance to competition and state-aid rules. Such regulatory realignment would be costly and complex and would invariably destabilize the Canadian economy in the North American market and beyond.
Yet, rejecting EU membership does not mean rejecting Europe. The European Union is still one of the world’s largest and wealthiest markets. It is re-industrializing around green and digital priorities, investing heavily in defence and resilience, and actively seeking reliable partners for energy and critical minerals.
What is more, the European Union is already Canada’s second-largest trading partner and one of its most important investment partners. Since the provisional application of the Comprehensive Economic and Trade Agreement (CETA) in 2017, nearly all tariffs have been eliminated and bilateral trade in goods and services has grown markedly.
For all of these reasons, the Canadian government is right to prioritize Europe within its trade diversification strategy. Yet, despite clear opportunities and sustained political attention, a great deal of commercial potential in the Canada-EU relationship remains unrealized.
Although CETA has been in place for nearly a decade and has delivered tangible benefits, it is being under-utilized, particularly by Canadian exporters. According to the European Commission’s 2025 ex-post evaluation, only about six in 10 Canadian goods exports to the EU claim CETA preferences. Utilization has improved over time, but remains uneven, leaving meaningful tariff savings unrealized for many Canadian businesses.
However intriguing — and, for some, enticing — the idea of EU membership may be, it defies Canada’s economic reality. In today’s world, geography does still matter, and Canada is deeply embedded in the North American economy.
In addition, the ex-post evaluation points to other factors leading to CETA under-utilization, including challenges related to regulatory complexity, rules-of-origin compliance, limited awareness (especially among SMEs) and the slow pace of regulatory cooperation.
In short, CETA is delivering, but well below its potential.
Recognizing the untapped potential of this relationship, Canada and the EU are working to increase areas of cooperation and deepen the collaboration. At the June 2025 leaders’ summit, Canada and the EU signalled their clear intention to move towards a more integrated partnership.
The agreed work plan, set out in the leaders’ communiqué, points to a deeper form of economic integration that builds on CETA while extending well beyond traditional trade policy, a trajectory that can be described as a “CETA Plus” model.
Canada’s participation in EU defence initiatives, its deeper cooperation with the EU on digital governance and artificial intelligence, and closer alignment on critical minerals supply chains all reinforce the same message: closer economic integration without a political union.
This is a prudent and pragmatic path that Canada can and should follow, and one that signals a level of ambition in Canada-EU economic relations that has been largely absent since CETA was signed.
But political ambition on its own will not deliver results. Trade agreements can open doors, but it is businesses that ultimately walk through them. The question, then, is how best to support businesses in making fuller use of CETA and translating policy ambition into commercial outcomes?
The 2025 CETA evaluation highlights areas where further progress is needed, particularly in respect of regulatory cooperation, conformity assessment, sanitary and phytosanitary measures, and outreach to exporters.
And while the architects’ mutual recognition framework under CETA (which provides the legal framework through which Canadian architects can work in Europe and vice-versa) is now finally operational, it has taken years to complete and has yet to trigger broader replication across other professions.
Greater focus on improving these areas is essential to ensure that CETA’s institutional framework functions and delivers as intended.
Moreover, if Canada is serious about trade diversification with Europe and about investing itself more deeply in the EU’s economic future, businesses must be more actively engaged in shaping priorities — particularly in identifying areas where deeper regulatory cooperation would make the greatest commercial difference — and better supported in making effective use of what CETA already offers. This requires clearer and more accessible information about CETA and its opportunities.
It is clear that the federal government recognizes these challenges and has committed resources toward outreach and support. While these efforts are welcome, businesses also need more concrete, forward-looking guidance to help inform commercial decisions and investment. One tangible and cost-effective way to provide this is through a new Canada-EU economic study.
CETA itself was born from a joint economic study published in 2008 — one that identified untapped opportunities and helped galvanize political momentum. Eighteen years on, the global economy and the world have changed. Digital trade, industrial policy, supply-chain resilience, and economic security now shape commercial strategy in ways barely contemplated at the time.
Advancing trade diversification in Europe, however, requires a new, forward-looking study that identifies where future liberalization, regulatory alignment, and strategic cooperation would generate the greatest commercial returns. This will help to translate political ambition into real opportunities that firms can better understand and act on, and help direct investment into new strategic areas.
Canada is not going to be the 28th EU member state, nor does it need to join the European Union to deepen its relationship with Europe. What it does need is to continue to work on improving CETA and delivering on CETA Plus. It also needs to communicate to businesses a credible, compelling business narrative that translates political priorities into commercial opportunities and enables Canadian companies to make fuller use of the tools already available to them.
Without that, political vision risks outpacing commercial reality. And if ambition is not matched by execution, Canada may find that while it is welcome on the Eurovision stage, it will be singing the blues when it comes to trade diversification with Europe.
