Finance
Canada, EU sign deal to modernize economic and trade agreement
Published by Global Banking & Finance Review®
Posted on March 5, 2026
3 min readLast updated: March 5, 2026
Quick Summary
Canada and the EU signed a deal in Toronto on March 5, 2026, to update their existing trade pact by introducing a framework for investment dispute resolution and initiating talks toward a digital trade agreement addressing data, cybersecurity and emerging technologies.
EU trade head says US has given assurance it will honor trade deal
Assurances and Developments in EU-US and Canada Trade Relations
By Nivedita Balu and Promit Mukherjee
US Commitment to EU Trade Deal
TORONTO, March 5 (Reuters) - European Union Commissioner for Trade and Economic Security Maros Sefcovic said on Thursday he believed the U.S. would respect the terms of the trade deal signed with the EU last year after receiving assurances from his American counterparts.
"I believe that the United States will honor the deal because this was the reassurance I got from my American partners," he said.
Tariff Changes and Implications
President Donald Trump's executive order from last month, after the Supreme Court struck down most of his global tariffs, imposed a 10% tariff on imports. But U.S. Treasury Secretary Scott Bessent said Wednesday that those rates would likely rise to 15% later this week.
Trump and European Commission President Ursula von der Leyen concluded a deal at Trump's Turnberry golf course in Scotland last July which set a broad 15% U.S. tariff for most EU exports.
Additional Surcharges and Trade Terms
However, unlike the tariff terms of the EU-U.S. trade deal, the new surcharge applies in addition to the most-favored-nation rate, meaning some EU exports could face higher tariffs than before.
EU-Canada Trade Expansion
Sefcovic's remarks came in Toronto, Canada where he signed an agreement with Canada's Trade Minister Maninder Sidhu to expand trade ties and ease trade rules under their existing pact as countries across the world strive to increase non-U.S. trade.
Modernization of CETA and New Digital Trade Talks
The agreement set new rules for settling investment disputes and also launched talks on a digital trade deal that would support data sharing, digital services, cybersecurity cooperation and emerging technologies.
Strategic Diversification from US Markets
Canada and Europe are both seeking to diversify away from the United States. The U.S. is Canada's biggest trading partner and consumes almost 70% of its exports, making it particularly vulnerable to changes in U.S. trade policy.
The agreements aim to modernize and strengthen the Comprehensive Economic and Trade Agreement (CETA), a free trade deal signed in 2017, that gives companies easier access in both regions for doing business and exporting goods and services.
Canada's Ambitious Trade Goals
Prime Minister Mark Carney has set a goal to double Canada's non-U.S. trade within a decade.
"This is not just an economic target, it is a strategy to reduce vulnerability, protect Canadian workers from shocks beyond our control, and build long term resilience. And Europe is an important partner to build on this ambitious goal," Sidhu said.
Future of Digital Trade Negotiations
The negotiations on digital trade, which will be Canada's first such agreement, will be concluded within this year, he said.
(Reporting by Nivedita Balu and Promit Mukherjee; Editing by Lincoln Feast)
Key Takeaways
- •The agreement enhances the Comprehensive Economic and Trade Agreement (CETA) by adding clearer investment dispute mechanisms to benefit SMEs and investors.
- •The launch of digital trade talks marks a strategic step toward modernizing trade, covering data sharing, regulatory alignment in AI, cybersecurity, and digital services.
- •This move reflects both parties’ aims to strengthen economic resilience, diversify trade beyond the U.S., and deepen the EU‑Canada partnership in the digital era.
Frequently Asked Questions about Canada, EU sign deal to modernize economic and trade agreement
1What agreement did Canada and the EU recently sign?
Canada and the EU signed a deal to modernize and expand their existing economic and trade agreement.
2What new areas does the Canada-EU agreement cover?
The agreement covers investment dispute settlement and initiates discussions on a digital trade deal, including data sharing and cybersecurity.
3Who signed the Canada-EU trade agreement?
Canadian Trade Minister Maninder Sidhu and EU Commissioner Maroš Šefčovič signed the agreement in Toronto.
4What is the goal of the updated Canada-EU trade agreement?
The goal is to expand trade ties, ease existing trade rules, and support cooperation in emerging technologies.
5Why are Canada and the EU modernizing their trade agreement?
They aim to increase trade and diversify away from reliance on the United States.
