The recent Canadian budget, as with all government budgets, laid out a financial plan for the next several years. It contained a myriad of measures on new spending initiatives, particularly on national defence and security, tax cuts, reduction or elimination of certain programs, public service cutbacks. The government billed it as generational set of announcements to “transform our economy from one that is reliant on a single trade partner, to one that is stronger, more self-sufficient, and more resilient to global shocks.” (See the budget documents at Finance Canada)
Finance Minister François‑Philippe Champagne said: “The global uncertainty we are facing demands bold action to secure Canada’s future … we are making generational investments … ensure our country doesn’t just weather this moment but thrives in it.”
A number of the announcements relate quite specifically to Canada’s international activities and are therefore relevant to bilateral international relationships such as the Canada-Caribbean relationship.
Here is a summary of the key announcements that those interested in Canada-Caribbean relations should track.
International assistance/development
The budget signals a reduction in the Canadian “international assistance envelope”. The government plans to cut about “$2.7 billion over four years” in international development and global-health programming.
According to the budget document, “There will be reductions in development funding to global health programming, where Canada’s contribution has grown disproportionately relative to other similar economies, and to some international financial institutions, which receive significant support through other sources, and where Canada’s contributions can be leveraged further. Some bilateral development programs will also be refined and adjusted. These changes are expected to rebaseline the International Assistance Envelope to pre-COVID levels.”
Tuesday’s budget also announced cuts to the International Development Research Centre, starting with $11.4 million in the fiscal year that starts in April, rising to $23.5 million annually at the end of five years.
The budget provided very little in the way of detailed information on these cuts. Reaction to the news has been negative. A statement from Médecins Sans Frontières (MSF)/Canada: “deeply concerned by the government’s plan to reduce funding for international assistance and global health programmes — especially at a time when more people than ever need urgent medical and humanitarian support.” Doctors Without Borders
A coalition led by Cooperation Canada and CanWaCH stated: “The government’s intention to return Canada’s international assistance envelope to a pre-pandemic level will have far-reaching consequences … cuts erode Canada’s credibility with our global partners.” Cooperation Canada
Results Canada, an advocacy group seeking to end poverty said: “Investing in international development assistance isn’t just about compassion — it’s smart policy … Now is the time to build on that legacy, not step back from it.” Results Canada
For the Caribbean it will be important to track how these reductions to development assistance are implemented in the region.
Trade diversification and new export tools
The budget document states the world’s trading system and long-standing supply-chains are being reshaped and identifies this as a “generational shift”.
Budget 2025 proposes a significant overhaul of Canada’s trade promotion efforts, with new funding, institutional changes, and regional priorities aimed at diversifying exports beyond the U.S. market.
Here are the key changes identified in the budget document:
Major Initiatives
- Strategic Exports Office at Global Affairs Canada
- A new office will be established to coordinate trade promotion and help Canadian firms access international opportunities.
- Focus on Asia-Pacific as a “critical market,” especially for agriculture and agri-food exports.
- Enhanced CanExport Program
- An additional $68.5 million over four years to expand support for small and medium-sized enterprises (SMEs).
- Funding will cover costs of international business development, including legal expenses, market research, and trade missions.
- European Market Expansion
- $8 million over four years to deepen trade relationships with European partners.
- $20 million to strengthen Global Affairs Canada’s capacity to negotiate and implement trade and investment agreements.
- Trade Diversification Corridors Fund
- $5 billion over seven years through Transport Canada to improve infrastructure (ports, rail, logistics) that supports diversified trade flows.
- For trade-finance: the budget includes a new “$2 billion concessional trade finance envelope” (cash basis) to encourage international partners to buy Canadian goods/services (not strictly aid, but a trade-tool) and is to be funded from existing GAC resources and the Export Development Canada (EDC) capital.
Strategic Goals
- Double non‑U.S. exports within 10 years, generating an estimated $300 billion in new trade.
- Reduce reliance on the U.S. market by building stronger ties with Asia and Europe.
- Position Canadian agriculture, manufacturing, and clean technology sectors to compete globally.
It is quickly seen that the Caribbean has not been identified as a priority focus for trade and investment promotion. While that is perhaps disappointing for those with an interest in a strong Canada-Caribbean relationship, the bilateral trade relationship has never been a first order priority for either side. But that does not have to be the end of the story. There are, and will continue to be, levers that do exist to expand trade. The key will be to ensure that it can be clearly shown where/how the Caribbean fits with Canada’s goals, and in turn, how Canada supports CARICOM’s goals.
The existing Strategic Partnership between Canada and CARICOM needs to be re-affirmed as the policy anchor guiding the overall relationship.
Canada’s continued active engagement in the region, including recent disaster assistance, should be highlighted. Canadian support for Caribbean resilience and growth should be seen as directly linked to expanded trade and investment.
The Caribbean should be positioned as providing reliable supply chains as part of Canada’s diversification and resilience logic (e.g., agri-food, green logistics, professional services).
See the recent SRC/CCI Policy Brief on CARICOM/Canada Trade for additional thoughts on how the bilateral trade relationship can be advanced.
Global Affairs international footprint
The budget has signalled cuts to most government departments and agencies. Global Affairs Canada was no exception. Tuesday’s budget forecasts Global Affairs is to have $561 million in cuts in the next fiscal year, scaling up to $1.1 billion in annual savings two years later, and for each ongoing year. This against a budget of $8.1 billion this year.
The budget notes that Global Affairs will implement a range of measures to find efficiencies across Canada’s mission network, including revamping emergency preparedness and modernising consular services. It will reduce its mission expenditures through a number of strategies, including consolidating embassies with multiple properties into fewer buildings, acquiring Crown-owned properties in certain cases, and co-locating some offices with allies where appropriate.
It is not yet clear whether or how these changes might impact the Canadian footprint in the Caribbean.