OTTAWA - It's smooth sailing between Canada and the United Arab Emirates after a period of turbulence in 2010 over a landing rights request.

Foreign Affairs Minister John Baird and his counterpart from the UAE, Sheikh Abdullah bin Zayed Al Nahyan, were chummy Monday as they announced a nuclear co-operation deal between the two countries.

"Canada and the UAE have had some challenging times in the past, many people said the relationship was going in the wrong direction," Baird conceded, adding relations are now "better than they've been and they're going in the right direction."

But Al Nahyan, in Ottawa for a bilateral meeting with Baird, hinted the UAE was still interested in acquiring more landing rights in Canada for the state-owned Emirates Airlines and Etihad Airways.

"(The) UAE is a main hub for trade in our region when it comes to the Gulf, the subcontinent, central Asia, east Africa," the sheikh said.

"So I think having more trade between the UAE and Canada, and using the UAE as a hub, is beneficial for both countries."

The spat started when the federal government turned down a request for additional landing rights in Canada for the UAE airlines in 2010.

In retaliation, the Emirates announced it would shut a military staging base used by Canada for its Afghanistan operations, leading Prime Minister Stephen Harper to remark: "That's just not how you treat allies, and I think tells us you better pick your friends pretty carefully in the future."

Defence Minister Peter MacKay predicted at the time it would take 10 years to restore the relationship between the two countries.

But relations began to thaw after Canada struck a deal last year to set up a new staging base in nearby Kuwait, and Baird visited the UAE last November.