Canada and the European Union have begun moving toward what can only be described as a strategic alliance. But what does this mean for the future of the West? And what role will technology play in this new relationship? The truth is that Canada has entered a period of strategic uncertainty that would have been difficult to imagine only a few years ago. Its economic and security relationship with the United States remains foundational, but the assumptions underlying this relationship have become profoundly unsettled.
In the context of the Canada-EU Summit, and as the global order continues to fragment, Canada and Europe have a rare opportunity to build a long-term partnership. Indeed, both are confronted with similar structural problems: demographic aging and growing pressure on their working-age populations, persistently weak productivity growth, and difficulties translating innovation into commercial success. These problems have been documented by the Organisation for Economic Co-operation and Development (OECD) in its 2025 economic surveys of Canadain the OECD’s Economic Surveys of and the European Union and euro area, as well as by Mario Draghi in his 2024 report on the future of European competitiveness.
Beyond shared values, Canada has what Europe needs most: energy, critical minerals, food, uranium, natural resources, advanced research, aerospace technology and enormous potential for clean-energy development. And Europe has what Canada needs most: a vast market, industrial capacity, sophisticated financial institutions, regulatory authority, advanced manufacturing, defence industries, research networks and a large community of democratic states with which Canada shares a fundamental world view.
While it remains true that Canada and the European Union already have a comprehensive trade agreement in place — the Comprehensive Economic and Trade Agreement, or CETA (which some EU countries have not ratified) — this proposed partnership could go considerably further. Beyond markets alone, a Canada-EU alliance could bind the two economies together at a deeper cultural and institutional level: coordinating industrial policy, regulatory planning and nurturing innovation, in order to build the digital ecosystems needed to thrive within the twenty-first century.
Building a Transatlantic Ecosystem
Artificial intelligence (AI) provides perhaps the clearest example of why a deeper Canada-EU partnership should extend far beyond trade and defence. AI is quickly becoming foundational infrastructure for economies, public institutions and national security. The countries that control the full AI stack — compute, data, frontier models, chips and technical standards — will have considerable influence over the development and benefits of this technology.
Canada has considerable strengths in AI, but its commercial research and development (R&D) and productivity performance lag other advanced economies. In 2023, Canada’s total R&D expenditure amounted to just 1.81 percent of GDP, compared with the OECD average of 2.70 percent, according to the OECD Economy Economic Surveys: Canada 2025 report. Europe faces a parallel challenge. Its scientific base remains formidable, but the OECD finds that Europe is losing ground in frontier innovation to the United States and, increasingly, China. Relatively low R&D investment, fragmented capital and product markets, and persistent weaknesses in translating scientific research into breakthrough innovations all contribute to this gap.
Instead of simply expanding trade, a Canada-EU alliance offers the opportunity to transform into a larger transatlantic innovation ecosystem that bridges Canadian research, talent, energy and critical minerals with European markets, investment and industrial capacity.
Both Canada and Europe face sluggish markets, in which established firms and concentrated sectors exercise excessive market power. Canada’s relatively concentrated banking, telecommunications, grocery and airline sectors illustrate the problem. Similarly, Europe’s fragmented but often heavily regulated markets insulate incumbents and limit the market access that small and medium-sized enterprises need to scale. Indeed, the challenge here is addressing the need to go beyond regulation and focus on more dynamic markets: stronger competition policy, easier entry and exit, greater access to growth capital, lower barriers to scaling across jurisdictions, and public procurement that gives new and innovative firms a pathway to grow.
A Global Bridge for AI and Digital Infrastructure
Given these challenges, a deeper Canada-EU partnership could experiment with new models to promote innovation. Both economies need to start thinking seriously about how to properly catalyze and scale innovation clusters. This might mean jointly developing transatlantic projects that support a common digital infrastructure. Only by creating the global platforms of the future will Canada and Europe find their competitive footing in the industries that matter most: AI compute, sovereign cloud capacity, cybersecurity, quantum technologies and intelligent energy systems.
Rather than allowing digital markets to become dominated by a small number of tech giants in the United States and China, Canada and Europe could integrate their digital infrastructure. That involves more than simply creating a new “values-based” bloc designed to compete with the United States. The objective needs to be to create enough shared capacity in key sectors to enable both economies to have meaningful choices about how their digital ecosystems develop. Sovereignty in the technological age does not mean producing everything domestically; it means having alternatives, and the ability to choose among them. A network of Canadian and European technology clusters and large-scale infrastructure projects could therefore become the physical foundation for a wider strategic partnership.
A practical starting point is to connect existing Canadian and European innovation clusters through programs that already enable talent and research to move more easily between them. Canada can build on these programs by expanding joint research agencies and researcher exchanges under Horizon Europe and Erasmus+, strengthening links between European university networks and Canadian technology clusters in Montreal, Toronto, Edmonton and elsewhere. Apart from academic collaboration, reciprocal or pooled compute access could mean giving Canadian researchers and start-ups access to projects such as the European High Performance Computing Joint Undertaking, Canada thereby gaining capacity from EU participating countries (and vice versa), potentially under Horizon Europe or a dedicated bilateral framework. Over time, these connections could form an integrated transatlantic network of specialized innovation hubs, each building on its own strengths but operating within a much larger ecosystem. Done right, Canada and Europe can ensure that new technologies are something democracies shape, rather than simply consume.
