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Omar Allam is a former diplomat and CEO and founder of Allam Advisory Group, a global trade consulting firm that advises companies with international market entry/expansion.

Relations between Saudi Arabia and Canada could go from bad to worse, depending on Ottawa's moves in the coming days and weeks ahead.

Foreign Affairs Minister Chrystia Freeland has ordered an investigation after The Globe and Mail reported last week that Canadian-manufactured armoured vehicles from Ontario had been used by Saudi Arabian police forces in security operations in the eastern part of the country.

Ms. Freeland's recent challenges to the kingdom on trade and human rights are rattling Canadian companies across industries who now fear retaliation by Riyadh if Canada were to act hastily without a carefully planned and executed Saudi Arabia engagement strategy.

Globe editorial: On Saudi arms sale, Ottawa must be prepared to say no

Ottawa needs to open a fresh new dialogue to reset and normalize relations with Saudi Arabia in order to prevent current tensions from growing.

A good first step would be the convening of a special meeting chaired by the ministers of international trade and foreign affairs with senior executives from Canada's leading companies doing business in the kingdom – most of which operate within the niche areas of defence, health care, education, engineering, informational and communications technology, natural resources, construction and services' exports.

Ottawa needs to seriously engage with the Canadian private sector and civil society in order to put Canada's best foot forward to promote our strengths in pursuit of business opportunities in Saudi Arabia, the region and around the world.

Ms. Freeland's response to calls for the federal government to cancel the $15-billion deal to supply light armoured vehicles (LAVs) produced by General Dynamics Land Systems could leave Canada in a position of political and economic weakness with the most influential and powerful Group of 20 member in the Middle East and the Islamic world.

The Saudi government is almost certainly insulted and offended at Canada's reaction to the allegations surrounding the sale of Canadian armoured vehicles to the kingdom.

It would not be surprising to see Riyadh push Canada further out of its "circle of trust." Currently, Canada isn't even ranked in the top 10 countries that Saudi Arabia considers a priority partner – in a $653-billion (U.S.) economy.

If Canada-Saudi bilateral tensions were to reach a boiling point, the pain would be widespread and deep for Canadian businesses.

In an extreme event, there could be a visa standoff and trade war. Saudi Arabia is both a critical source of revenue and profit, and a vital link in global supply chains.

A rise in tensions puts TMX Group Ltd.'s bid to win a piece of the planned initial public offering (IPO) of Saudi Arabian Oil Co. for the Toronto Stock exchange on an increasingly shaky footing.

The Saudi state-owned oil company is expected to be valued at at more than $2-trillion (U.S.) when it sells 5 per cent of its shares on the open market. Saudi retaliation against Canada would put players such as London, Singapore, New York and Tokyo ahead of TMX Group in the race for the biggest share flotation in history.

Canadians (and businesses) have legitimate concerns about human rights and corporate social responsibility when doing business in high-risk global economies. In the case of Saudi Arabia, we need to keep all channels for trade and political dialogue open, especially when we are critical of them.

Engagement and dialogue are roots of good diplomacy. You can't advance major issues such as trade, security, human rights and women's empowerment by just walking away when the going gets tough.

This is the foundation that enables countries such as Canada to make a difference in the world.

We face an important choice. We can lead and ensure that the global trading system reflects our shared values and our interests, or we can concede that role to others who don't play by the rules, which will inevitably create a less advantageous position for Canada.

Some may think we need to pull back from Saudi Arabia, but there is too much at stake for Canada's global leadership and competitiveness. Now is the time to engage more, not less.

The question, then, may not be "should we take this approach," but "can we afford not to?"

The prime minister says a he’s happy the U.S. is not proceeding with a planned border adjustment tax. On a visit to Kenora, Ontario on Friday, Justin Trudeau said the tax would have been a 'serious impediment to trade.'

The Canadian Press

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