The United Kingdom is finally free from the European Union.
Will it be free to make a free trade deal with Canada?
That’s something we won’t know for a year or longer, but there’s much hope for many Canadian farmers and their industries as the United Kingdom attempts to get outside the EU’s trade walls and embrace a more global perspective.
Imagine:
- Better access for Canadian bacon and ham, which shouldn’t have to face preferential access for continental European rivals.
- Fewer non-tariff trade barriers to Canadian canola and flax due to bogus fears of genetically modified organisms.
- At least equal access to anybody else to a wealthy population of 60 million people already fond of Canadian grains.
- A wonderful reunion with our wayward mother country, with whom we had much more agricultural trade before that regrettable European Union experiment.
Even Canadian wines and processed foods could end up displacing EU goods if this country’s producers get fair access to the United Kingdom market. Quebec cheese too.
However, those hopes could be dashed by either the EU or the United States if they successfully play the same sorts of games they’ve played in recent years.
Canada looks big on a map, but it is tiny in trade power compared to the big bullies in the global playground, so this country will be making a deal with Westminster following whatever deals the U.K. can make with the remainder of the EU and whoever is running the White House in Washington, D.C., next year.
What can we expect from the Europeans? I doubt they’ll get too pugilistic with the Brits. After all, the U.K. is a huge market for German cars, French wines and cheeses, as well as Danish and Dutch pork and produce. British holiday-goers supply a significant share of the gross domestic products of some less-rainy parts of the EU.
They won’t want to lose access for all of that.
The French no doubt will try to stick it to their old rivals at least a little bit during the negotiations, getting a little payback for 1805 and 1815, and for the humiliation of the 1940 collapse and the 1944 liberation. This is the way of Europe.
What would be worst for Canada is if the U.K. falls into a deal that keeps it within a customs union with the EU, which would continue to provide preferential access to Canada’s European competitors. That seems unlikely, and would defeat the purpose of Brexit, but it would be of great value to the EU to keep the U.K. within its economic hegemony, stripped of any political influence.
Fortunately, British Prime Minister Boris Johnson doesn’t seem the type to fall for a deal that would create a U.K. subordinate to the EU. He has crazy hair, but he isn’t stupid.
That’s where Canada’s other problem comes up. U.S. President Donald Trump would dearly love to have a deal with the U.K. in hand to go into this November’s elections. It would allow him to claim another trade win, and to counter the idea that he’s anti-trade after his nasty fights with his nation’s North American Free Trade Agreement partners, China and now the EU.
Unfortunately, Trump doesn’t like free trade deals. He likes managed trade deals. He’s essentially a mercantilist.
His China trade deal is a breach of World Trade Organization rules, but that doesn’t matter because he’s emasculated the WTO. It commits China to buying certain amounts of U.S. agricultural goods in order to keep receiving access to the U.S. market.
That isn’t exactly free market economics.
It disadvantages Canadian exporters, but there’s not much Canada can do about that.
What’s he going to do with the EU, now he’s turning his attention that? Heck if I know, but I’m guessing he’ll try the same sort of quid pro quo approach that worked with China: you want access for Audis, BMWs and Mercedes? Commit to buying a certain amount of our stuff and stop harassing our tech giants.
That would hurt Canada’s ability to get anything out of the existing Canada-EU trade deal, which so far has been a profound disappointment.
But with the U.K., Trump might try the same thing. He is said to be an anglophile, but don’t think for a minute he won’t be squeezing the Brits to get everything he can from them in a trade deal.
That could mean squeezing us out of various markets in agriculture, like pork, beef, corn and soybeans. It could hurt our chances for boosting sales of wheat, canola and cheese.
There’s no way to see how these balls will end up being juggled. The future is unwritten.
But there’s both reason to hope and fear what’s coming in the next few months as the reality of Brexit sets in.
The British have set off in a bold new direction, and if we’re lucky we’ll be riding along together.
All else being equal, Canada is probably the U.K.’s best and most natural agricultural trading partner.
But in this tortured world of today, all else is far from equal.
