Canada has joined the European Union's Security Action for Europe (SAFE) defence initiative, becoming the first country outside Europe to take part. Prime Minister Mark Carney said on Monday that participation would give Canadian defence companies "tremendous opportunities" from increased access to the European market in a "dangerous and divided world".

SAFE is the EU's 150-billion-euro ($170bn) loan programme for joint defence purchases, launched as part of the bloc's Readiness 2030 plan to speed up defence readiness. Joint arms projects under the scheme must have a minimum of 65 percent of their components produced within the EU's 27 member nations, although partner countries such as Canada could be granted exemptions, according to reports.

What it means for Canadian firms

Carney said Canada's participation would fill key capability gaps, expand markets for Canadian suppliers and attract European defence investment into Canada. Negotiations on the arrangement have concluded, and Canada and the EU will now work to ratify the bilateral agreement, with the goal of officially launching Canada's participation in the coming weeks. A new Defence Investment Agency will help Canadian firms take part.

The move follows a year in which US President Donald Trump launched a trade war against Canada and suggested the country become the 51st American state. Carney had previously said that more than 70 cents of every dollar of Canadian military capital spending would no longer go to the United States. Talks between the EU and London on Britain joining the SAFE fund ended without agreement last week, after the two sides could not agree on money.