Canadian territory that welcomes island nation (5)
I believe the answer is:
yukon
'canadian territory that welcomes island nation' is the definition.
'Yukon' can be an answer for 'canadian territory' (one of the territories of Canada). I am not certain of the remainder of the definition.
'canadian territory that welcomes' is the wordplay.
'canadian territory' becomes 'uk' (UK is an example. I am not sure about the 'canadian' bit.).
'that' becomes 'yon' (archaic term meaning 'that').
'welcomes' means one lot of letters goes inside another.
'uk' put within 'yon' is 'YUKON'.
Can you help me to learn more?
(Other definitions for yukon that I've seen before include "Territory of northwest Canada" , "Canadian territory, famed for the 1897 gold rush" , "remote territory" , "Canadian region" , "Klondike region of Canada" .)