Prime Minister Stephen Harper announced Canada's intention to seek an air transport agreement with Kuwait, after a meeting Monday with the country's prime minister, Sheikh Nasser Al-Mohammed Al-Ahmed Al-Jaber Al-Sabah, on Parliament Hill.
Officials in Harper's office did not have additional details of the proposed plan, but Sheikh Nasser said Canadian airlines are welcome in his country.
"We have, as I have mentioned to you Mr. Prime Minister, an open-sky policy. … Let me welcome all your airlines at any time," Sheikh Nasser said, standing next to Harper.
Canada signed a memorandum of understanding with Kuwait in July to use one of its military bases to support operations in Afghanistan.
The move was necessary after the U.A.E. booted the Canadian Forces out of Dubai after Ottawa refused to grant more landing rights to two of its airlines.
The diplomatic damage caused by the U.A.E. dispute led to the imposition of expensive travel visas for Canadian business travellers to the Persian Gulf country.
Harper raised the possibility of the new airline agreement as he and Sheikh Nasser announced a new investment-protection agreement on what was the first visit of a Kuwaiti prime minister to Canada.
Harper said the new agreement would offer significant investment potential for Canadian manufacturing and infrastructure companies in the oil-rich Gulf state.
"Kuwait already recognizes the advantages of investing in Canada, including our stability and relative strength in a time of global economic uncertainty," Harper said.
"This bilateral agreement will provide greater predictability and certainty for Canadians investing in Kuwait, and comprehensive protection for investors in both countries through a framework of legally binding rights and obligations."
The Canadian Manufacturers and Exporters group welcomed Monday's investment agreement.
"By providing businesses with greater certainty and predictability, this agreement will improve Canadian manufacturers' and exporters' confidence in this growing market," Jayson Myers, president of the organization, said in a statement.
"Kuwait being an important member of the Gulf Co-operation Council, this agreement is also a positive step forward in improving our trade relations with a region that is increasingly important for Canadian business."
Canada's trade with Kuwait is dwarfed by the amount of business it does with the U.A.E. Critics accused the Harper government of compromising Canada's business interests in the U.A.E. in the airline dispute.
Two-way trade between Canada and Kuwait totalled only $129 million last year, with Canadian exports at $97 million.
In comparison, Canada had a $1.1-billion trade surplus with the U.A.E. last year, with manufactured products accounting for 60 per cent.
Emirates Airlines and Etihad Airways wanted to expand flights to western Canadian cities beyond their three per week to Toronto. Canada said no, and ultimately had to vacate Camp Mirage in Dubai, its main staging ground for the Afghanistan war since 2002.
That forced the government to scramble for new arrangements as the Forces prepared to ship equipment out of Afghanistan in the run-up to the end of combat operations this past summer.
"I'm personally grateful to his highness for his direct involvement in this important matter," Harper said of the new military base agreement with Kuwait.
Foreign Affairs Minister John Baird was the transport minister at the time of the dispute.
Weeks after taking over his current portfolio, a briefing note to Baird outlined "the downturn" in bilateral relations between the two countries since the 2010 air services dispute.
"The U.A.E. is an important regional commercial partner that hosts 125 Canadian companies and 27,000 resident Canadians ...
"The U.A.E. is Canada's largest export market in the Middle East and North Africa and 20th largest trading partner. U.A.E. entities have invested billions of dollars in Canada," says the May 18 memo, obtained by The Canadian Press under the Access to Information Act.
The memo also reminded Baird that Canada and the U.A.E. remain partners in Afghanistan and Libya, where the Gulf state had dispatched 12 of its own jet fighters to enforce the United Nations no-fly zone along with Canada's seven CF-18 war planes.