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A Canada-style trade deal won't save us from post-Brexit fallout, however desperately Boris Johnson wants it to work

Even under a similar agreement, we’d have no chance of enjoying the full freedoms we had when we were members of the largest economic bloc on the planet

Sean O'Grady
Friday 31 January 2020 13:36 GMT
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Brexit: What happens after January 31st?

On this dawn of a new Elizabethan age of enterprise, discovery and international trade, it seems a bit miserablist to snipe at the prospects of post-Brexit global Britain. But snipe, I’m afraid, I must.

The important point to remember, always, is that whatever new trade deal the UK negotiates with the European Union, it will be inferior, to a greater or lesser extent, with the completely frictionless movement of goods, provision of services, workers and capital that now exists as a full member of the EU.

Nor, on any rational calculation, will any fresh trade deals with other major powers – America, China, Japan, Australia and so on – compensate for the additional costs of Brexit and the impact of it on investment, jobs and living standards in Britain.

So, Canada then. It is being much talked up at the moment, as it has been on and off since the referendum in June 2016 as a model for the UK's new relationship with the EU. You may remember some chirpy talk form the former Brexit secretary, aka Brexit Bulldog, David Davis about a “Canada plus plus plus” trade deal, and variants thereof.

Put back into the jargon, a “Canada-style deal” with the EU means that global Britain will achieve a similar economic and trading relationship with the European Union as the one Canada recently concluded. It’s called CETA – the Comprehensive Economic and Trade Agreement – and it looks quite impressive. Some 98 per cent of all duties that used to be levied on EU exports to Canada, and vice versa, are being abolished. European protected products (eg Italian Chianti and Hungarian salami) will continue to enjoy a sort of copyright protection.

Certain Canadian services will be opened up to EU forms – financial services, transport and telecoms, for example. Most impressively, the EU and Canada can recognise each other’s professional qualifications in certain jobs. Thus, in principle, a Canadian accountant could get a job as an accountant without further ado in Denmark; a French lawyer could practise in Quebec; or a German engineer could take up a position in Montreal and so on – but none would have any automatic “right” to do so, as exists today across the EU. And of course, this leaves out non-professional workers (such as journalists, as it happens).

Sound good? Canada doesn’t have to send any money to the EU budget; there’s no sense in which the Court of Justice of the European Union has supremacy over Canadian courts; there’s no unrestricted freedom of movement for workers across the Atlantic; and the EU and Canadians being advanced civilised societies, have mutually agreed standards of environmental protection and workers’ rights.

Now, if you added in some clauses about sharing intelligence on terrorists, say, cooperating on data exchanges and some additional co-operation on areas such as overseas development, student exchanges, tourism, air travel and the rest, it would make a fine basis for a new relationship with what the government calls “our friends and partners” in Europe.

Except for a few things, though. First, Canada is not Britain. Britain is next door to the EU, and the movement of people, goods and services across the English Channel and the North Sea is obviously far larger than they are across the North Atlantic. We have a lot of fish, far nearer than Canadian stocks.

The economic relationships and social relationships, after a half-century of integration between Britain and the EU’s remaining 26 members are obviously far more intimate than the relatively remote ones between the EU and Canada (even with the British interest, via historical and Commonwealth ties). The post-Brexit rights of British citizens on the Costa del Sol, and Polish families in Lincolnshire, for example, remain unclear – a big issue that simply doesn’t apply to the relatively small numbers of EU and Canadians living abroad.

Most trade deals are to do with dismantling barriers and making trade easier; the UK and EU are in the unusual position of erecting obstacles and making trade more difficult. In a way that should be easier – we start from complete harmonisation as if we were one economic country – but it can also be trickier, because of ingrained expectations. If we assume we can, say, use a UK driving licence to drive a lorry to Turkey in a year’s time, or to export our cars as we do now, we may be disappointed, even under a CETA style agreement.

Moreover, Britain might wish to diverge further than Canada does from EU rules on, say, the working time directive. The EU has made clear that the UK would not be allowed to do so without some corresponding reduction in access to EU markets – the level playing field idea.

“Free trade” is not as free as it sounds. It merely means free (or free-er) access to goods markets, mostly without duties and quotas. It does not mean that everything can flow freely across borders as if they didn’t exist – there will still be checks, on, for example, whether “rules of origin” are being observed.

To take a topical example, it would be wrong for a Canadian entity to import a consignment of the famous chlorinated chicken from the US, and then re-export it to the EU, where it is banned. The chickens would be, by value, still overwhelmingly American rather than Canadian; but even if they were Canadian, they would not be allowed into the EU, tariffs or no tariffs. There is no suggestion that Canadian and EU product standards will be aligned – but that means checks and bureaucracy and costs.

There are many more such examples, and rules of origin can be complex and demanding. It is not the same, at all, as the current single market and customs union.

Last, the CETA took years to negotiate and was held up in its ratification, semi-comically, by the Walloon regional parliament in Francophone Belgium, where the feeling was that the interests of dairy farmers and their (presumably French-speaking) cattle were not being sufficiently looked after. Eventually, the CETA crossed its final hurdles and was passed into law – but it took far longer than the11 months Boris Johnson has allowed for a deal.

From the tangle of tariffs and restrictions that previously existed between Canada and Europe, it was a great step forward. But from the full membership and full freedoms currently enjoyed by the UK in the largest economic bloc on the planet, it would be a correspondingly retrograde step. No cause for celebration there.

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