Protecting your own countries interests is pretty much the mandate of any government. I don't recall Canada ever signing a free trade agreement with the UAE (a la NAFTA) so waving that flag is irrelevant. For your information both Bombardier and Embraer HAVE had multiple disputes go to the WTO for arbitration. Seems more like you just want to rant about North Americans. Try to stick to the specific situation here.
As long as AC could fly into the UAE with as many flights as they want, a restriction for UAE carriers to Canada or any other place is ridiculous
By what logic or legality? Simply, the UAE needs access to Canadian cities more than Canada needs access to the UAE. This has been borne out by the UAE attempting to use a military base for leverage. They wouldn't have gotten very far by threatening to take away Canada's landing rights in the UAE, would they? There is a bilateral agreement in place and negotiations have failed to change that. I'm gonna go out on a limb and suggest that's because changing it would benefit one party far more than the other, and both parties know it. Yes, Air Canada is lobbying furiously, but that doesn't change the fact that it is about protecting Canadian interests at large more than those of Canada's "crappy" airline. And the UAE has definitely been the one to expand the debate beyond landing rights by using Minhad as a pawn.
We'll see how far any "tit-for-tat" goes. Canada denying the UAE overflight privileges would have far greater consequences for Emirates than the UAE diverting one Canadian Forces aircraft. But putting a diplomatic snub on like that - it was the Minister of Defence and Chief of the Defence on board - will not exactly make the Canadians more open to negotiation.
Great "allies" we have in the Middle East...
As an aside, the Canadian Air Force operates Challengers for executive transport, not Gulfstreams. I highly doubt a GIV in the UAE has anything to do with the proceedings. Possible, but unlikely.