Australia signed a record Aus$2.5 billion ($1.8 billion) deal Monday to export a sophisticated over-the-horizon radar defence system to Canada.
It was the first international sale of Australia's advanced radar technology, which offers long-range surveillance to improve defences and provide early warning, the government said.
"It is far and away the largest defence export that we have ever done," Defence Minister Richard Marles told a news conference.
"Australia and Canada have always been the very best of friends, but really, with what we have signed today, there is now a very significant strategic dimension to the relationship."
Over-the-horizon radar technology refracts high-frequency electromagnetic waves off the ionosphere to detect far-off objects that would otherwise be invisible because of the curvature of the Earth.
BAE Systems Australia is set to commence delivery of the system on July 1 this year, marking the first stage of a broader Australia-Canada collaboration on development of the long-range radar system.
Australia's radar system is the "backbone" of its long-range northern surveillance, and the most advanced in the world, Marles said.
"Just like Australia, Canada has large areas to surveil, and so Canada will use this to engage in surveillance over the Arctic."
The agreement would support about 300 technical jobs in Australia, the government said.
'Shoulder to shoulder'
The agreement with Canada covers the establishment of one radar site, the first stage of its over-the-horizon radar system, Marles said.
Australia's air force manages the Jindalee Operational Radar Network from three locations, providing surveillance at ranges of 1,000-3,000 kilometres (600-1,900 miles), according to the Department of Defence.
Canada's secretary of state for defence procurement, Stephen Fuhr, said the radar deal would create nearly 2,300 jobs annually in his country over the next five years.
Australia and Canada had stood "shoulder-to-shoulder" for generations as the world adjusted to new strategic realities, he said, after signing the agreement with Australia's Marles.
"This capability will significantly enhance Canada's Arctic domain awareness, detect and track air and maritime threats with much greater range, strengthen NORAD by providing earlier warning and improving continental defense, and reinforce Canada's Arctic sovereignty," Fuhr said.
Canada continued to work with the United States on defence, Fuhr said, while conceding that the "relationship is different".
It would make no sense for Canada to invest all its resources in one place, he added.
"We are reacting to our new realities and rewiring ourselves out to meet the moment, and there's lots of opportunities out there for Canada -- we've got friends in many different time zones."