Permanent deal with U.K. next priority for exporters

Canada has a chance to ink a better-than-expected deal with the United Kingdom as that country leaves the European Union and sallies forth onto the global stage.

But even though Canada is in a better position than almost any other country in getting a permanent trade deal on good terms, many factors make the future of negotiations uncertain.

“Trade is like water: it goes wherever it is easiest for it to go. If Canada can secure a comprehensive free trade deal with the U.K. significantly before the U.K. and the (United States) reach a deal… Canada can enjoy a significant advantage on the U.S. and become a bigger portion of British trade in terms of imports and exports,” said Jacob Shapiro, a geopolitics expert with Perch Perspectives, in an interview.

“It’s a no-brainer for both sides and not the sort of opportunity that comes along very long.”

However, Shapiro, like many observers of the EU, thinks a last-minute trade deal between the EU and the U.K. is likely, since that is the bloc’s tendency with negotiations. And he thinks Canada’s present interim trade deal with the U.K., which continues the main provisions of the Canada-EU deal, doesn’t change much other than prevent a loss of existing market access.

While a permanent trade deal with the U.K. is high on the agenda of many of Canada’s industries, none are keener to get a good one done than Canada’s agriculture and food exporters.

Not only do they see the U.K. as a high-paying, quality-conscious market already familiar with Canada’s agrifood products, but they are also incensed by the failures of the Canada-EU trade pact, which has been a grave disappointment.

A Canada-U.K. deal has the chance to substantially improve the flaws of the EU deal, and the U.K. is seen as being more friendly to free trade than the EU.

The present “unacceptable” situation with the EU deal can be fixed with the U.K. by a “return to the negotiating table as soon as possible in order to reach a comprehensive and more ambitious pact that removes tariffs and non-tariff barriers, provides liberal rules of origin and creates a level playing field that will enable increased trade and deliver commercially viable two-way growth for agri-food,” the Canadian Agri-Food Trade Alliance said in a statement.

“The best way to show the world that open trade can protect the economy now and support recovery is by negotiating and concluding an actual meaningful free trade agreement that enables viable growth for agrifood and generates significant benefits for both sides.”

Canada might be in an enviable position to negotiate a trade deal on Canadian terms, due to the U.K.’s extremely uncertain and vulnerable trade situation post-Brexit. Outside the EU’s wall of tariffs and regulatory blocks, the U.K. could face the same sort of vexations that Canada has faced.

The U.K. might also find the incoming Joe Biden U.S. presidential administration less than keen about a quick trade deal with the U.K. considering the Democrats’ generally less-friendly feelings toward international trade, and Biden’s suspected preference for improving relations with the EU before bothering with the newly independent U.K.

Shapiro thinks the U.K. will be extremely keen to forge a U.K.-U.S. deal, but that doesn’t mean Canada doesn’t still have an advantage.

“Of course, the U.K. needs the U.S. a lot more than it needs Canada, but beggars can’t be choosers, and the Brits are beggars right now,” said Shapiro.

“My biggest take-away is (that) because of the way the U.K. has gone about Brexit, it has poor leverage in all its trade negotiations.”

Trade experts say making a permanent deal won’t be easy. Because it was bound by EU trade policies and treaties for the past four-and-a-half decades, Britain has little independent trade negotiation expertise left.

And it will be keen to protect its own interests and domestic industries now that it isn’t ensconced inside the giant walled garden of the EU economy.

And while the U.K. is generally seen as being friendlier to free trade, to be less likely to indulge in regulatory games, and to have warm feelings toward Canada, some “European” attitudes that outrage Canadian agricultural exporters are held in significant parts of the British population as well.

In a story in the Nov. 28 edition of The Economist, the writer discusses how deeply some of the views hostile to modern farming and free trade run in the British population.

“British farmers are expected to produce not only skylarks and hawthorn, but increasingly to help with flood management and soaking up carbon dioxide too,” writes the traditionally pro-trade publication.

“Britain must also deal with the vexed issue of food imports. Farmers’ organizations argue that the country should not import foods that are harder on the environment or on animals than would be allowed under domestic rules. An impressive coalition, ranging from celebrity chefs to shepherds, backs the campaign, which raises the spectres of American chlorine-washed chicken and hormone-treated beef.

“Most Britons agree.”

However, The Economist cautions British people against being too obstructionist.

“The government is refusing to be so bound, a deeply unpopular decision that is nonetheless correct,” it writes.

“To insist that imports meet domestic standards ignores the fact that other countries have different climates and pests, so need different tools.”

Canadian agricultural exporters may wonder how the U.K. will want to treat the import of GMO crops and other issues that have stopped Canadian farmers selling many of their products into EU markets.

For now, Canada has an interim agreement with the U.K. and high expectations from its agrifood exporters to forge a bigger and better permanent deal.

How things progress after the U.K. is finally outside the EU’s complications is something few trade experts will offer firm guesses upon.

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