Probably, yes Number2. If you do some thread searching some other contributors have argued on how it could actually lead to a net reduction on services at other Canadian cities to other destinations outside of Canada. But that is, in a way, besides the point.
In the absence of an Open Skies agreement (so we are talking about bilateral issues), Canada looks upon increased service based on demand between two countries, namely, Canada and the United Arab Emirates (not upon the UAE wanting to increase flow through its hubs to destinations beyond the UAE).
Furthermore, increase rights are normally a result of enhanced mutual benefits. In this case, the benefits are very one-sided.
So. That is why the UAE cannot get additional rights at this time. Pure and simple. Ironically, I suspect the new more restrictive visa requirements will actually drive down demand for traffic between Canada and the UAE, which as I said, is the UAE shooting itself in the foot if it hopes to increase traffic rights in the future.
I certainly hope that Canada won't cave on this issue. The process for permitting the increase in traffic rights follows a logical one. Imagine if Canada were to reverse course in response to the UAE visa restrictions. It would be a lesson to the World on how to negotiate diplomatically with Canada.
Next thing you will know, countries like Panama, El Salvador, Russia, Korea or China could embark on an uncouth game of hardball in order to try to increase flow through their hubs from Canadian airports.
Looking at the humor of it, it is funny how what should be an otherwise low-grade trade dispute has become a major international dispute.