The decision was reported by Saudi Arabia's official Saudi Press Agency. It is understood to be in response to Canada's statement of concern over the arrests of human rights activists in Saudi Arabia.
In a statement issued by the Saudi Arabian Foreign Ministry, Riyadh dismissed as "totally false" allegations by the Canadian authorities that recent arrests of several civil society activists were unwarranted.
Comment: Here is the 'tweet heard round the world':
It said the arrests were made by "the competent authorities" and detainees were provided with all rights guaranteed during investigative and trial stages. The ministry denounced Canada's stance as "explicit interference in the internal affairs" of the kingdom, which runs "contrary to the most basic international norms and charters that govern relations between countries."
Besides putting on hold "all new trade and investment transactions with Canada," the ministry said that the ultra-conservative kingdom, which has drawn stark criticism from human rights groups for its crackdown on dissent, "retains the right to take further action."
On Friday, Canada called on Riyadh to "immediately release" civil and human rights activists recently arrested by the Saudi Arabian authorities, including Samar Badawi, an internationally recognized human rights defender. Badawi and another high-profile Saudi women's rights activist, Nassima al-Sadah, were arrested in the kingdom last week, sparking international outcry.
In 2012, Badawi received an international Women of Courage award in a ceremony in Washington from former US Secretary of State Hillary Clinton and then-First Lady Michelle Obama.
The UN has also voiced concern over the widening clampdown on opposition in Saudi Arabia, with its human rights office (OHCHR) calling the spate of arrests since spring "apparently arbitrary detentions." Since May 15, at least 15 critics of the Saudi government have been detained, the office noted on Tuesday.
Comment: The high volume of trade between the two countries - estimated at $3 billion - is in tanks and other fighting vehicles - the stuff used by the Saudis to kill Yemenis and arm terrorists. But the 'Progressives' don't usually get too worked up over that.
Saudi Arabia has since stated: Also see:
As the diplomatic row escalates, Saudi Arabia has suspended its scholarship and fellowship programs in Canada and plans to move the recipients of the scholarships to other countries, primarily Britain and the US. Over 15,000 Saudi students are currently studying in Canada and with their accompanying family members the overall number is over 20,000.
Saudi Arabia's national airline Saudia announced the suspension of all direct flights to and from Toronto beginning August 13. Toronto was the only Canadian destination Saudia served and the company has promised to find alternate solutions for customers affected by the suspension.
Riyadh has received some backing from allies in the Middle East: The UAE's Minister of State for Foreign Affairs, Bahrain's foreign ministry and the Palestinian leader, Mahmoud Abbas have all expressed support to the Kingdom and condemned what they called interference into the internal affairs of Saudi Arabia.