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posted on 25 April 2016

What Is The Canada Trade Model And Could It Work For A Post-Brexit UK?

from The Conversation

-- this post authored by Andrew Smith, University of Liverpool

It has been suggested that, in the event of a Brexit, the UK could negotiate a partnership with the European Union similar to that enjoyed by Canada.

Boris Johnson has suggested that it would be relatively easy for the UK to set up a comprehensive free trade agreement with the EU after Brexit that would be similar to the proposed Canada-EU Comprehensive Economic and Trade Agreement (CETA). That's the "Canada model", at least according to Johnson.

Johnson's argument overlooks the fact the CETA talks have dragged on for years - and still have not resulted in a functioning agreement. Some of the academics and diplomats who spoke at a conference I organised on the CETA talks in 2011 were cautiously optimistic that the agreement would be in place within a year or two. Now, five years later, CETA is still not in place.

What's more, CETA provides for far less than total free trade between the Canada and the EU. It will remove most duties between the EU and Canada by 2023, but some tariff barriers will be left in place.

A very long engagement

In the event of Brexit, it may take years for Johnson's idea to be implemented. Proposals for free trade between Canada and Europe have, after all, been around for decades.

In a sense, this idea is simply a new version of the very old dream of free trade within the British Commonwealth. This was once favoured by Canadians fearful of US domination. But in the 1960s and 1970s, the demise of the Commonwealth as a meaningful political actor and the relative economic decline of Britain nudged the idea of Canada-UK free trade to the backburner.

Former Canadian PM Stephen Harper and former European Commission president Jose Manuel Barroso agree the deal way back in 2013. EPA

Following the imposition of some trade barriers by the US in the early 1970s, Canadian interest in European partners increased. By this time, the discussion was about a trade deal linking Canada with the EEC as a whole - an option that was equally appealing to Canada's two main linguistic groups.

Free trade with Europe has been a perennial idea in Canada. It is one that is particularly popular with those who are concerned about the country's economic dependence on the US. Canadians across the political spectrum - even those on the left who are normally sceptical of trade agreements - support the concept.

Even with this widespread enthusiasm, it has taken years to agree to an actual deal. The planning for the talks that eventually led to CETA being drawn up began at a Canada-EU summit in Ottawa in March 2004. The negotiations concluded in August 2014, when the text of the 1,600-page agreement was finalised. It now sits in front of the European Parliament, awaiting approval by MEPs.

Alas, the ratification of the agreement has taken almost two years. The treaty needed to be translated into no less than 24 languages and must now be approved by all 28 EU member nations, as well as by the EU parliament.

Some of the poorer nations in Eastern Europe have threatened to veto CETA because Canada continues to insist their citizens have to have a visa to travel there. Some of the leaders of the Socialists and Democrats bloc in the European parliament have threatened to vote against ratification if Canada does not lift the visa requirement on Bulgarian and Romanian visitors.

Everyone loves Canada

Johnson and other advocates of the so-called Canada model should reflect carefully on the time it has taken to translate the idea of Canada-EU trade into an actual agreement in principle. In negotiating an equivalent trade deal with the EU, the UK might expect similar delays.

To be fair, the UK's political system makes it somewhat easier to negotiate international trade deals than is the case in the Canadian federation, which gives the governments of the ten provinces a say in such matters. At one point in 2015, it was not entirely clear whether Newfoundland and Labrador was going to give the deal the green light. Since trade policy within the UK is entirely under the control of Westminster, the British trade negotiators might be able to negotiate a deal somewhat faster.

However, British diplomats operating in Brussels might have a chilly reception if there is widespread resentment towards the UK after Brexit. Canada's diplomats, in contrast, were able to take advantage of their country's largely positive national brand image in their own negotiations.

For Canada, free trade with the EU is something of a luxury, since the country already has largely free access to the US market and can find customers for its natural resources in Asia. For Britain, which is far more dependent on trade with Europe, lengthy negotiations for a trade agreement with the EU could cause economic paralysis. Brexit campaigners who speak of the Canada model should reflect carefully about the fundamental differences between the Canadian and British economies.

The ConversationAndrew Smith, Senior Lecturer in International Business, University of Liverpool

This article was originally published on The Conversation. Read the original article.

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