Canada-UK Free Trade: Balancing progressive trade policies and economic benefits
Canada and the United Kingdom (UK) have prospered from a productive commercial relationship. Their two-way merchandise trade totaled more than C$25.3 billion in 2016, making the UK Canada’s fifth-largest merchandise trade partner and making Canada the UK’s eighth biggest export market outside the EU...
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| Published in: | The School of Public Policy publications (Online) 2019-01, Vol.12 |
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| Main Authors: | , , |
| Format: | Article |
| Language: | eng |
| Subjects: | |
| Online Access: | Get full text |
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| Summary: | Canada and the United Kingdom (UK) have prospered from a productive commercial relationship. Their two-way merchandise trade totaled more than C$25.3 billion in 2016, making the UK Canada’s fifth-largest merchandise trade partner and making Canada the UK’s eighth biggest export market outside the EU. The UK is the second largest source of FDI to Canada and Canada’s second most significant destination for FDI abroad. Although the UK is only Canada’s eighth largest trading partner, it is Canada’s largest trading partner in Europe and was an important part of the success of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA). Brexit has made the future of this relationship uncertain. Various trade and financial institutions, such as Export Development Canada (EDC), the Business Development Bank of Canada (BDC), and the Royal Bank of Canada (RBC) note that Brexit may affect Canadian exports and investments. Brexit could make the UK a less attractive destination for Canadian investment due to uncertainty over the UK’s market access to the EU. Further, Brexit could result in Canadian exporters facing the same tariff structure that was in place before the CETA. This would raise the costs of doing business, particularly for exporters of Canadian services. Crucial to the future of Canada-UK relations is the possibility of a new Canada-UK Free Trade Agreement (FTA).1 CETA will not apply to Canada-UK trade after the UK leaves the EU. Canadian Prime Minister Justin Trudeau and UK Prime Minister Theresa May have said that both countries are working on a Canada-UK FTA for after Brexit. Brexit should be a “wake-up” call for Canadian policymakers to address increased social inequality and avoid isolationist movements that threaten the economic and social benefits of an open economy. Understanding these dynamics represents proactive steps that can be taken to prevent a future breakdown of a Canada-UK trade agreement. We examine the provisions and negotiating history of NAFTA-USMCA, CETA, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to identify the demands and limits of both business and civil society. For a Canada-UK FTA to be successful in the long-run and provide a clear model for the future UK trade agenda, policymakers must address the challenges created by FTAs and build an economic environment that are perceived to be more widely beneficial. One option therefore is to maintain the bilateral market acces |
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| ISSN: | 2560-8320 2560-8312 2560-8320 |