Canada and Saudi Arabia have made progress towards ending a five-year diplomatic spat and mending trade and economic relations.
However experts say that more could be done to deepen exchanges and investment ties – especially as US President Donald Trump kicks off a tariff war that may encourage Ottawa to widen its circle of trading partners.
Canada’s exports to the US last year accounted for about 75 percent of total Canadian international sales. Total trade between the neighbours topped C$1 trillion ($700 billion) for a third consecutive year.
Omar Allam, a former Canada trade-focused Arab diplomat and now a global trade adviser in Qatar, says Canada has not given Saudi Arabia and the wider Gulf Arab region the attention they deserve. The world’s largest oil producing region “should not be overlooked,” he says.
“With this new thinking of de-risking from China and diversifying trade away from the US in light of these tariffs, Ottawa really needs to re-engage with Riyadh, Doha, Abu Dhabi as full trading partners, similar to what it has done with Asia-Pacific,” Allam says.
Saudi Arabia is Canada’s largest trading partner among the Gulf Cooperation Council (GCC) countries, with exchanges dominated by oil, defence and heavy machinery.
In 2023 Canada exported nearly US$1.6 billion of goods and services to Saudi Arabia, and Saudi Arabia in turn sent back a similar amount.
Ottawa and Riyadh curtailed diplomatic relationships in 2018 in a dispute over human rights, and only restored them in May 2023.
Formal government-to-government commercial ties were also halted, resuming in January 2024 as officials laid the groundwork for re-establishing the Saudi-Canadian Business Council in July.
Since then Canada’s ambassador to Saudi Arabia, Oman, Bahrain and Yemen, Jean-Philippe Linteau, has portrayed Canadian officials as eager to build a comprehensive strategic and economic partnership with their Saudi counterparts.
High-level delegations have been deployed to explore bilateral investments in industries such as mining and education.
Canada’s Barrick Gold, for instance, the only foreign company that is mining commercially in Saudi Arabia, works in partnership with the Saudi state-owned giant Ma’aden.
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SPACooperation in defence is also central to the partnership: in September last year, for example, Rheinmetall Canada demonstrated a solution for combating drones at ultra-short range in Saudi Arabia in front of representatives of the country’s armed forces.
In December, Saudi Arabia’s minister of economy and planning, Faisal Al-Ibrahim, met Linteau specifically to discuss enhancing bilateral economic linkages.
Linteau, who has proven himself an active and capable supporter of closer ties between the two nations, visited the Saudi city of Medina in February with a Canadian delegation of more than 30 companies.
“Canadian companies offer world-class expertise in infrastructure, technology and sustainability, and the trade mission reflects Canada’s strong interest in collaboration with Medina-based partners,” he said at the time.
Observers say that Canada’s sales efforts should focus on sectors singled out as pillars in Saudi Arabia’s Vision 2030 economic and social strategic development plan, and in similar programmes in other Gulf Arab countries.
Amnah Mosly, a Jeddah-based policy analyst with the Gulf Research Centre, has written: “Saudi Arabia’s giga-projects and investments in ICT [information, and communications technology], renewable energy, healthcare, education, infrastructure, entertainment and tourism are generating significant demand in various sectors where Canada excels.”
Saudi Arabia is running at least six giga-projects, so called because they each comprise several interconnected mega-projects, each valued at a minimum of SAR40 billion ($10.9 billion).
To tap further into the growing Saudi market, and wider Gulf markets, Canada will need to develop deeper trade financing mechanisms to provide stronger backing for bilateral exchanges, as well as joint investments in third markets with entities such as Saudi Arabia’s state-owned $925 billion Public Investment Fund, Allam says.
Canada also has free trade agreements with Israel and Jordan, and investment promotion deals with Egypt, Jordan, Kuwait and Lebanon. It has concluded investment promotion negotiations with the UAE and Bahrain, though the deals have yet to come into force, and is in talks with Qatar.
“The time is now, and without any significant action, Canadian companies will continue to fall behind competitors and are going to miss out on real opportunities,” Allam says.
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