Britain’s stunning decision to leave the European Union has significant consequences for Canada’s yet-to-be ratified bilateral trade deal with the EU.
Until now, the expectation in Ottawa had been the Comprehensive Economic Trade Agreement (CETA) would be ratified as early as 2017.
Now, that timeline appears to be a pipe dream.
EU leaders are focused now on trying to keep a severely divided Europe in one piece, while having to negotiate the United Kingdom’s sudden exit. Finalizing a North American trade deal has likely fallen to the bottom of the priority agenda.
That’s assuming CETA, as it stands now, can even be ratified.
After all, CETA was negotiated on the assumption all 28 members of the EU, including the U.K., would be part of the deal. With the EU’s second largest economy no longer at the table, questions are swirling about the deal’s economic value.
The U.K. is Canada’s third largest trading partner after the United States and China.
In an interview with CBC’s Power and Politics June 24, former Conservative Trade Minister Ed Fast, who championed the CETA trade deal, said the U.K.’s decision to leave the EU will force negotiators back to the table.
“Because the agreement represents a finely balanced outcome amongst 28 European partners and Canada, as well as the provinces and territories of Canada, with the removal of the U.K. from that agreement, it will require a renegotiation of those finely balanced outcomes,” Fast said.
Not only that, he said, the U.K. was one of the biggest champions of the deal in Europe, an ally Canada can no longer depend upon to help negotiate the complex political channels found in Brussels.
“It is unfortunate that we have this result in the United Kingdom and now we’re all left to pick up the pieces,” Fast said.
That task now falls to International Trade Minister Chrystia Freeland, who must redesign the Canadian government’s approach to trade.
In a statement June 24, Freeland pledged to continue working with the EU on trade. “We remain committed to growing global trade that is good for Canada’s economy, good for the environment, good for labour, and good for people,” she said.
It wasn’t supposed to be this way.
CETA was supposed to be a bright light for the Liberals on the trade file. It was an agreement that could be used to deflect questions about the government’s position on trade and market access as it consulted on the fate of another major trade deal — the Trans Pacific Partnership.
CETA was an example of market access gains that could be achieved for goods such as canola, soybeans, beef, and pork. It was a tool that could be used to sidestep questions from export dependent agriculture about Canada’s competitive position in a globalized market place.
Now, with CETA on life support and the TPP facing more consultations and an unclear political future, the Liberal trade agenda is rife with uncertainty. A new focus is critical.
While Canadian agriculture insists it’s too early to tell what Brexit’s effect will be on Canada’s trade agenda, one thing is certain: demands for new market access will not go away.
Lobbying efforts around other potential markets, such as Japan and China, will most certainly see a heavier push in Ottawa’s backrooms.
Prime Minister Justin Trudeau has repeatedly said trade is beneficial to Canada, a country known internationally as “a trading nation.”
Now, it’s up to his government to find a way to ensure Canada continues to reap its benefits.