Business experts advise a wait-and-see approach for new Canada-U.K. trade deal
TORONTO -- As the Conservatives swept to power in the U.K. with a pledge to “Get Brexit Done,” business leaders in Canada are watching with interest to see what a new free trade deal with Britain could look like.
Uncertainty hangs over the future of Britain’s trade relations with countries including Canada since the U.K. voted to leave the European Union in 2016. The ensuing uncertainty has damaged business confidence and curbed investment in the U.K.
Business experts who spoke to CTV News advocated a “wait-and-see” approach for the Canadian government, urging officials to see what kind of deal is struck between the U.K. and E.U. when the divorce deal goes through.
The U.K. is Canada’s fifth largest trading partner, a relationship worth around $25.5 billion in 2018. One report suggests that the two countries are linked by 94 treaties and international agreements.
British Prime Minister Boris Johnson has promised the U.K. will leave the E.U. by Jan. 31 2020.
“Once Brexit happens, Canada will have better access to the European Union than the United Kingdom will,” University of Toronto professor Mel Cappe told CTV News.
Canada has an existing trade agreement with the E.U. under CETA, the Comprehensive Economic and Trade Agreement.
“We’re in a very favoured position because we have access to 400 million people and we’ll have a question about how we have access to 60 million people. That’s easily managed,” Cappe said.
“The problem is for some manufacturers and some service companies, like financial institutions, the rules of trade between Canada and the United Kingdom will be up in the air. And we’d better figure out how that’s going to work, quickly.”
Cappe, a former High Commissioner for Canada to the U.K, said for the next 11 months, CETA rules will apply.
“Following Dec. 31, 2020 we need to figure out how Bombardier is going to import its fuselages, all of which are made in Belfast (Northern Ireland) into Canada to be assembled into airplanes,” he said.
“What we need to do is wait and see what kind of deal Britain negotiates with the European Union. We don’t want to be the first ones to have a deal that then the U.K. uses as a template with the European Union.
“We want to see what they do with the European Union and try to get a better deal for Canada.”
But don’t expect a quick turnaround, Cappe warned.
“It took us three years to negotiate a new NAFTA (North American Free Trade Agreement) based on the NAFTA we already had,” he said.
“Do you think the United Kingdom’s going to get a deal in 11 months with the European Union starting from scratch? I don’t think so. We had better take our time and figure out what our interests are.
“It’s going to be much more challenging for Britain because their new deal, even when they negotiate it between Jan. 31 and Dec. 31 2020, will have to be ratified in 27 parliaments. That should be quite a challenge.
“We will have an arrangement with the U.K. through either Commonwealth preferences or the WTO (World Trade Organization) and the WTO rules will undoubtedly still apply so it won’t be chaos but it will be a change and we need to adapt to the change.”
Jason Langrish, executive director of the Canada Europe Roundtable for Business, added that concerns over the border between Ireland and the U.K. and Scottish independence create further uncertainty and that these are issues businesses have to look at in terms of their forward planning.
Adam Taylor, president of Canadian business consultancy Export Action Global, was an advisor to the Harper government that negotiated CETA. He told CTV News there were large pieces of CETA that could be “cut and pasted” into a new Canada-U.K. agreement.
“The question is, are there going to be new concessions that both sides have to potentially consider?” he said.
“The U.K. is our biggest trading partner in Europe and we absolutely need to preserve that type of trading relationship. I think we should actually be negotiating a comprehensive and ambitious deal.
“The good news about these types of trade negotiations if there’s political will on both sides creative solutions are available.”