OTTAWA - Dock workers in Western Canada have rejected a proposed labor contract that would have ended a dispute that has already impacted trade and could have more economic repercussions by disrupting operations at the country's busiest ports.

The International Longshore and Warehouse Union, representing about 7,500 dock workers, had been negotiating a new contract with the British Columbia Maritime Employers Association (BCMEA) for months.

"The membership of the ILWU Canada Longshore Division has said no to the terms of the settlement," the workers' union said in a statement early on Saturday and called on its direct employers to come to the table for negotiations.

The BCMEA said it was disappointed that the ILWU rejected a tentative agreement that would have provided a compounded wage increase of 19.2% and increased retirement payouts in 2026 to C$96,250 ($72,625) for eligible retiring employees, over and above employees’ pension entitlements.

The proposed deal also provided a signing bonus of C$1.48 per hour worked to be paid to each employee (equivalent to approximately C$3,000 per full-time worker), and an 18.5% increase to a Modernization and Mechanization retirement lump sum payment, the BCMEA said.

The BCMEA also said it would await further direction from the federal government on the next steps and that the ILWU had not communicated its next steps and would retain the ability to provide 72-hour strike notices.

The leaders of the dock workers union in Canada's Pacific region had last week backed the tentative contract deal with employers.

Some 7,500 workers walked off their jobs for 13 days earlier this month over disagreements about issues including wage increases and expanding the union's jurisdiction to regular maintenance work on terminals.

The strike has upended operations at two of Canada's three busiest ports, the Port of Vancouver and the Port of Prince Rupert, which are key gateways for exporting natural resources and commodities and bringing in raw materials.

Economists warned that the strike could trigger more supply-chain disruptions and fuel inflation while the Bank of Canada tries to cool the economy.

The world's biggest fertilizer producer, Nutrien, has already reported an impact on business, while more than half of small Canadian business owners said in a survey their operations were expected to be affected.

($1 = 1.3253 Canadian dollars)

(Reporting by Ismail Shakil in Ottawa and Gokul Pisharody in Bengaluru; Editing by Muralikumar Anantharaman and Mark Potter)