McLeod Group guest blog by Stuart Trew, July 6, 2026
A year into Mark Carney’s prime ministership, much is being made of his apparent foreign policy shift from the Trudeau government. Business groups welcome what they see as an abandonment of values-based for interest-based foreign and trade relations.
“We actively take on the world as it is, not wait around for a world we wish to be”, the Prime Minister told an elite audience at the World Economic Forum in Davos, Switzerland this January. The insinuation is that the previous guys were naive idealists while he is finally getting things done.
The case for this version of reality is wildly overstated. In fact, there is not much of a gap between the old and new Liberal governments on either foreign affairs or trade policy. Both avoid, rather than take on, the world as it is to shore up limited Canadian corporate interests abroad.
For example, Canadian overtures to China and India began months before Carney took over as Prime Minister. It was Mélanie Joly, as foreign affairs minister, who first proposed the need for “pragmatic diplomacy” to navigate today’s complex geopolitics. That was in 2023.
The current government’s main addition to foreign affairs has been a subtraction: budgetary cuts to Global Affairs Canada. We can hardly call this “actively” taking the world as it is, as the cuts deplete Canada’s ability to do as much on the world stage.
With respect to trade, none of Canada’s current trade and investment negotiations, almost all of which were launched by the Trudeau government, are expected to significantly expand Canadian trade. They will, however, buttress thuggish regimes in Ecuador and the United Arab Emirates (UAE), shield polluting extractive projects from democratic oversight, and undermine green industrial strategies, including in Canada.
In Ecuador, the autocratic U.S. puppet regime of President Daniel Noboa has been ruling by military decree for nearly two years. Human rights violations in the country are widespread and systematic. They include brutal state repression and the criminalization of dissent, notably affecting Indigenous Peoples opposed to Canadian mining operations.
Canadian mining firms are responsible for about a third of current international investor-state disputes involving so-called critical minerals. While the Canadian government claims investment arbitration clauses in trade and investment treaties enhance the rule of law, “in practice many, if not most, of the ISDS claims related to critical minerals are challenging measures that governments have taken to protect or advance public interest”, writes Martin Dietrich Brauch.
The Trudeau government was aware of Noboa’s antidemocratic tendencies when Canadian trade negotiators, in February 2024, referred to the Ecuadorian president as a “like-minded” leader committed to “inclusive” trade. Canada was also aware that the extreme investor protections it was pushing into the trade deal were unconstitutional in Ecuador and have been rejected in two popular referenda on investor-state dispute settlement since then.
This lackadaisical view of human rights and democracy has carried into the new Carney government. A June 2025 letter to the Prime Minister from Canadian unions and human rights organizations, urging the government to consult with Ecuadorian Indigenous groups and mining-impacted communities before proceeding with the free trade deal, went unanswered.
Carney received a similar letter this year urging him not to pursue a free trade deal with the UAE while they are funding armed conflict and fuelling human rights violations in Africa, including the devastating conflict in Sudan. A parallel investment treaty with the UAE threatens billions in future investor-state lawsuits against Canada in the fossil fuel sector.
The Canada-Indonesia Comprehensive Economic Partnership Agreement (CEPA) is equally concerning for the contrast between its gold-plated protection of foreign investors and watered-down, largely unenforceable protections for workers and environmental policy. The CEPA was concluded in December 2024 by the Trudeau government and implementing legislation for the deal is currently before the Senate for review.
Canada’s Mercosur negotiations, another “inclusive” Trudeau-era project that Trade Minister Maninder Sidhu wants to fast-track this year, will be an own goal if they succeed. Canadian and Mercosur bloc farmers compete on world markets for cash crops and meat products, with the latter enjoying a clear competitive advantage over Canada and, indeed, over European farmers who are very opposed to the EU-Mercosur free trade deal.
Canada’s promotional materials about the Mercosur negotiations look forward to lowering the trade bloc’s double-digit import tariffs on automobile parts and chemicals, but the dynamic is the same as for agricultural trade. Why would Brazilian vehicle manufacturers import more expensive Canadian parts when it is more profitable to use domestic or, for example, Chinese parts?
Canada’s trade deficit with Japan in 2025 was nearly double what it was in 2019, the year the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) came into force. Our trade deficit with CPTPP member Vietnam tripled over the same period. Canada’s trade deficit with South Korea has more than doubled over the life of the 2014 bilateral free trade deal. We should not expect different results from Canada’s latest slate of agreements.
In all these cases, the trade agreements noticeably increased imports, often of high-value manufactured products such as electronic goods, clothing or finished agricultural products, without noticeably affecting Canadian exports to the target countries. While the overall volumes of trade are small compared to what we trade with the United States, these results hardly suggest signing more free trade deals can deliver meaningful export diversification.
Wipe away the veneer of realpolitik or, in the Trudeau government’s case, “inclusivity”, on recent trade announcements and we are essentially dealing with the same idealistic project: trickle-down corporate globalization. Lock in free-market restraints on governments’ ability to regulate business and wait endlessly for that to translate into positive growth benefiting workers.
The Carney government has tapped into public anxiety about trade uncertainty in North America. People expect their elected leaders to have a plan for weathering difficult periods.
Unfortunately, Canada’s trade diversification strategy does the opposite of taking the world as it is. It papers over the limited potential of these agreements to foster long-lasting economic development while perpetuating trade and investment restrictions that threaten the achievement of human rights and sustainable economic development in Canada and the Global South.
Instead, trade policy should strive to be more flexible with respect to industrial and clean growth strategies and more rigid when it comes to human and labour rights violations. Trade and investment promotion pay far higher dividends than trade deals. Embassy staff should be topped up, not depleted, to enhance political, social and cultural connections.
And we should immediately reinstate and strengthen Canada’s Ombudsman for Responsible Enterprise (CORE) to ensure our trading partners that Canadian business abides by the highest possible standards. We needn’t wait for the world we wish to be when we can be bringing it into being now.
Stuart Trew is a senior researcher with the Canadian Centre for Policy Alternatives, where he directs the centre’s Trade and Investment Research Project. Photo: Chris Wilford from Pexels.