Canada possesses a crucial opportunity to forge a significant trade partnership with Saudi Arabia, capitalizing on a renewed diplomatic relationship and the kingdom’s ambitious economic transformation. Following a hiatus of over a decade, prompted by diplomatic tensions, Ottawa can leverage Saudi Arabia’s burgeoning economy, innovative Vision 2030 reforms, and strategic geographic location to unlock substantial investment and trade opportunities. This potential is particularly strategic as Canada seeks to diversify its trade relationships and address global challenges.
The appointment of a new Canadian ambassador to Riyadh represents a key first step in resuming bilateral trade and investment relations. Saudi Arabia, fueled by necessity and strategic planning, has undergone a remarkable period of diversification, moving away from its historical reliance on oil revenues. This transformation is underpinned by substantial reforms directly aligned with Vision 2030, an ambitious plan encompassing sectors ranging from scientific innovation and space exploration to the development of a sprawling, world-class mega-city, NEOM, and significant investments in tourism, mining, and renewable energy technologies. The kingdom’s US$730-billion sovereign wealth fund, the Public Investment Fund, provides further impetus for strategic investments abroad, presenting Canada with attractive avenues for engaging with burgeoning markets, including Qatar, the United Arab Emirates, and the broader Gulf Cooperation Council (GCC).
Saudi Arabia’s economic growth rate in 2022 stood at the highest among G20 nations, according to the Organization for Economic Co-operation and Development (OECD). This impressive growth, coupled with the kingdom’s strategic location and access to Europe, the Middle East, Africa, and Asia, positions Saudi Arabia as an ideal market for Canadian businesses and investments. Notably, the country played a leading role in evacuating over 5,000 people, including Canadians, during the recent Sudan crisis, illustrating its strategic importance on the global stage. The ambitious NEOM project, a $500-billion mega-city bordering the Red Sea, further cements Saudi Arabia’s forward-looking vision, attracting investments in areas such as aerospace and defense, education, tourism, healthcare, transportation, mobility, mining, public-private partnerships, and the renewables sector encompassing solar and wind energy, advanced batteries, electric vehicles, and tech-driven manufacturing—entire value chains where Canada is recognized as a world leader.
To fully realize this opportunity, Canada must adopt a proactive and strategic approach. The immediate focus should be on crafting an international export and investment strategy that prioritizes Saudi Arabia. Canada should aim to actively engage in sectors with a clear competitive edge, including those aligned with Vision 2030, incorporating knowledge sharing and best practices. Furthermore, Canada needs to leverage trade financing solutions and government-to-government contracting vehicles with the Public Investment Fund to make strategic investments in Canada, Saudi Arabia, and third markets. A fundamental element of success lies in fostering a “deal-oriented” mindset, recognizing the complexities of international business and seeking opportunities for collaboration.
Over the next few years, Canada should prioritize maintaining open channels for political and trade dialogue, supported by the ongoing operation of the Joint Economic Council (JEC), while recognizing that it has been underutilized. The JEC should be revitalized as a key strategic vehicle to further advance cooperation in high-growth sectors. The Prime Minister should seize the opportunity to lead a high-level diplomatic visit to Saudi Arabia in October 2023 on the margins of the Future Investment Initiative, signaling Canada’s commitment to the partnership and fostering positive engagement. Ultimately, capitalizing on this opportunity requires a long-term perspective, a clear strategy, and a willingness to navigate the inherent complexities of engaging with a major global player. The time to act is now; inaction risks Canada losing a significant chance to diversify its economy and secure valuable trading partnerships, bolstering its position on the global stage.
Omar Allam is a global trade adviser and a former Canadian trade diplomat.
