Israeli Prime Minister Benjamin Netanyahu said Canada and Israel differ when it comes to the building of new homes in existing settlements in the West Bank and East Jerusalem.

Despite the close friendship between the two countries, something that has been celebrated throughout Prime Minister Stephen Harper's first official visit to the region, Netanyahu said Harper has voiced Canada’s opposition to new settlement homes in private meetings.

"I guarantee you that's the case," Netanyahu told a news conference on Tuesday.

Harper, meanwhile, refused to publically criticize Israel on the controversial issue and chided the media for expecting him to do so.

The prime minister pointed out that he was never asked to criticize the Palestinian Authority when he was in the West Bank.

"The one lesson I think we have learned is that when somebody is a minority, particularly a small minority in the world, one goes out of one's way to embrace them, not to single them out for criticism. That's a fundamental Canadian ethic," Harper said Tuesday.

Canada, Israel to expand free trade deal

Earlier in the day, Harper and Netanyahu announced a new agreement that will boost economic, cultural and social ties between Canada and Israel, along with the expansion of the free trade pact between the two countries.

The two leaders signed a new partnership agreement that looks to enhance defence and security relations and develop more business links and closer academic ties in the Canada-Israel Strategic Partnership Memorandum of Understanding.

"Canada and Israel enjoy a special friendship based on freedom, justice, democracy and the rule of law, underpinned by strong and growing people-to-people ties," Harper said in a.

He said the partnership agreement will also allow for stronger relations in security, energy and the promotion of human rights, as well as being a sign of "goodwill" between both countries.

Harper said an expanded Canada-Israel Free Trade Agreement (CIFTA) will help Canadian businesses by reducing trade barriers and transportation costs and increase Canada's visibility in the Israeli market.

The free trade negotiations will be held in Israel from Feb.3-9.

"An expanded and modernized trade agreement with Israel will generate more jobs and economic growth at home and in Israel, while strengthening the close friendship that both countries enjoy," Harper said.

Israel is Canada's 9th largest merchandise export market in the Middle East and North Africa.

Canada's exports to Israel were valued at nearly $266 million in 2012 and primarily consisted of machinery, pharmaceutical products, precious metals and stones, sulphur and electrical and electronic machinery and equipment. 

Six federal cabinet ministers joined Harper during Tuesday’s meetings: Foreign Affairs Minister John Baird, Employment Minister Jason Kenney, Industry Minister James Moore, Natural Resources Minister Joe Oliver, Development Minister Christian Paradis and Trade Minister Ed Fast.

Following his meeting with Netanyahu, Harper was scheduled to visit the Wailing Wall, the Dome of the Rock and the Yad Vashem Holocaust Museum on the third day of his visit to the region.

Harper made history on Monday, becoming the first Canadian prime minister to speak to the Israeli parliament.

In an impassioned speech, Harper said Canada's support of Israel is a "moral imperative," and he warned of a "new anti-Semitism" emerging among those who blame Israel for the problems in the Middle East.