Two of the country's largest labour unions announced Tuesday they are engaging in talks that could potentially end in a merger as early as the middle of next year.

The Canadian Auto Workers and the Communications, Energy and Paperworkers unions said in a statement the talks are in response to "the challenges facing organized labour," citing the lockout at the Caterpillar-owned Electro-Motive plant in London, Ont. as one example of a strained labour relations climate.

The two unions, which together have more than 320,000 members, said they have been engaging in preliminary discussions "for several weeks," and the executive boards have unanimously voted to formally explore a merger.

CAW National President Ken Lewenza said the boards of both unions believe workers "need a stronger, more active, and more innovative labour movement to defend them.

"Our movement cannot afford a 'business-as-usual' approach in light of the attacks we face from both business and government," Lewenza said in a statement.

"We need to combine our resources, and use them more effectively, if we are to protect Canadian jobs and push for greater equality in this incredibly hostile economic environment."

The talks are also a response to moves by the federal government to curb strikes by Air Canada workers represented by the CAW.

Last summer, Labour Minister Lisa Raitt threatened to enact back-to-work legislation for thousands of Air Canada employees, which led to a negotiated settlement between the CAW and the airline.

The unions have approved what they're calling a "Process Protocol" document that sets out the terms of reference for future talks and a timeline for union representatives to consider issues related to a potential merger.

According to the protocol, those issues include dues and finances, executive structures and regional concerns. The two unions are also open to allowing representatives of other unions to join the talks "as appropriate."

The committee will issue a report on whether a merger is "feasible and desirable" ahead of each union's convention. The CAW meets in August, while the CEP meets in October.

"Our goal is to create a new, Canadian union," Dave Coles, president of the CEP, said in a statement.

"We are examining every aspect of our work as trade unions, from organizing to bargaining to political activism. We are working to create a stronger union movement and a better future for workers."

With files from The Canadian Press