Canada & UK Discussing Post-Brexit Trade Agreements

Canada and Britain are quietly laying the groundwork for a new relationship in a post-Brexit era, which could include a trade deal that goes beyond the Canada-European Union agreement.

Canadian Prime Minister, Justin Trudeau, is eager for a UK trade deal  (photo:
Published by Paul WaldieThe Globe & Mail

Canadian High Commissioner Janice Charette said officials from both countries have been meeting for months to discuss trade relations after Brexit.

Canadian trade experts have even offered their British counterparts advice on how to negotiate a deal with the EU and others.

But getting a Canada-U.K. trade deal won’t be easy and will take time, since Britain will have to sort out its relationship with the EU first.

We’ve been having conversations with both the members of the cabinet as well as senior members of the civil service,” Ms. Charette told The Globe and Mail in her first interview since taking up the post last September.

As for Canadian officials offering advice on trade negotiations, she added: Yes, going back to when [former international trade minister Chrystia Freeland was meeting with Britain’s Trade Minister Liam Fox] back in the summertime, there has been ongoing conversations about how Canada might be able to assist the U.K.

The British government plans to begin the process of pulling the country out of the EU before the end of March, kicking off a two-year negotiating period.

It took over 7 years for Canada to sign the CETA free trade agreement with the EU  (photo: Reuters)
Prime Minister Theresa May is expected to announce on Tuesday that Britain will make a complete break with the EU and negotiate a new relationship with Europe. Chancellor of the Exchequer Philip Hammond also hinted at a complete break with the EU, suggesting to a German newspaper that Britain would change our model to regain competitiveness if the country did not get a good deal with Europe.

Ms. May’s pitch will be to create a “global Britain” and she is expected to highlight reaching trade deals with other countries.

That will put her at odds with many business people who have been urging Britain to keep unrestricted access to the European single market. Also, Britain doesn’t have much experience negotiating trade agreements since currently all of that is handled by the EU on behalf of member states.

We have a very deep and comprehensive trading relationship with the U.K.,” Ms. Charette said, “and so we’ll want to be working very hard with them to make sure that they can benefit from [the Canada-EU deal] but also that as they sort out what kind of a trading relationship they are going to have with the EU, that we can preserve and even enhance market access for Canadian companies in Britain, whatever they are going to look like or be like in a post-Brexit world.

Canada and Britain already have political and trade ties that date back centuries. Britain is Canada’s third-largest trading partner, after the United States and China, and the country has been an important base for Canadian companies mainly because of its membership in the EU. Canadian businesses employ more than 50,000 people in the U.K. and the revenue generated in Britain by Canadian firms is more than the value of Canadian exports, which is around $16-billion annually.

One option under consideration is to take the Canada-EU deal, known as the Comprehensive Economic and Trade Agreement, or CETA, and use it as the framework for an arrangement between Canada and Britain.

That wouldn’t be simple. CETA has taken nearly 10 years to complete and it is a sweeping agreement that covers thousands of tariffs and services. It also includes a new dispute-settlement court that has been controversial in parts of Europe because opponents say it could override local regulations. While CETA has yet to be approved by all EU member states, the European Parliament is expected to ratify it soon, meaning most of it will go into effect on a provisional basis.

Britain has been a strong proponent of CETA and Ms. Charette said it is definitely under consideration as a model for any Canada-U.K. deal:

When you look at the U.K., it may be that there are areas where we can even go beyond what is, we think, the gold-standard agreement right now as a modern progressive trade agreement,” she said. “We might even go beyond CETA in a new Canada-U.K. trade relationship and trade agreement. But it’s not too soon to start thinking about it, but it’s probably too soon to be talking about it.