The deal was announced after a summit in Brussels between Canadian Prime Minister Mark Carney and EU chiefs Ursula von der Leyen and Antonio Costa.
“While Nato remains the cornerstone of our collective defence, this partnership will allow us to strengthen our preparedness… to invest more and to invest smarter,” Costa, who heads the European Council representing EU member states, told a press conference.
“It opens new opportunities for companies on both sides of the Atlantic.”
The pact seeks to bring Canada’s defence industry more closely into European efforts to revamp the domestic industrial base.
It opens the door for Ottawa to join common procurements under a recently approved €150 billion (US$174 billion) loan programme backed by the EU’s central budget to boost rearmament.
It also paves the way for Canadian defence firms to tap into the scheme, although that requires the signing of a separate deal.
The EU said the pact would deepen cooperation in areas including crisis management, defence industry collaboration, hybrid threats and military mobility.
Britain signed a similar defence partnership in May, and Australia and the EU announced they had started negotiating another one last week.
The signing comes on the eve of a Nato summit where allies, which include Canada and 23 of the EU’s 27 nations, are due to sign off on a ramped-up defence spending target of 5% of GDP.
The pledge is seen as key both to satisfying Trump – who has threatened not to protect allies spending too little – and helping Nato build up the forces it needs to deter Russia.
Carney said the deal with the EU will help Canada “deliver on our new requirements for capabilities more rapidly and more effectively”.
At a time of international instability, Canada was looking to diversify and strengthen its international partnerships, he added.
“We turn first and foremost to our most reliable allies, those who share our values of democracy, freedom and sovereignty,” he said.
Ottawa, which is yet to meet the current 2% Nato target having spent 1.4% of GDP on defence in 2024, buys much of its military equipment from the US.
But relations have soured under Trump, who has repeatedly called for Canada to become the 51st US state and announced tariffs on its exports.
The EU is Canada’s second-biggest commercial partner.
Bilateral trade in goods was worth 75.6 billion euros in 2024, up 64% since 2017, when a free-trade agreement provisionally entered into force.