Canada sets sights on trade as Brexit looms

Officials working on back-up plan with British counterparts

Canada is laying the groundwork for a contingency trade deal with Great Britain in case that country fails to agree on terms for its looming exit from the European Union. In the words of one official, trade between Canada and Great Britain is facing a “cliff” that can’t be resolved until British politicians decide their future relationship with the European Union.

The U.K. parliament this week rejected the withdrawal deal proposed by Prime Minister Theresa May, setting the stage for a chaotic exit from the European Union in March, one that would catch Canada in its ripple effects.

Publicly, Canada is urging the U.K. and the EU to “find a way forward” on their continued relationship.

But behind the scenes, Canadian officials are talking to their British counterparts about a back-up plan to avoid major upset to trade with the U.K., Canada’s largest partner in Europe with two-way merchandise trade valued at $26 billion in 2017.

“We’ve been in conversations with the U.K. authorities and a trade dialogue of what it will take in order to be able to continue the preferential access that Canadian businesses enjoy right now,” said Janice Charette, Canada’s high commissioner to the United Kingdom. “I’m hopeful that those talks will continue,” said Charette, who attended a cabinet retreat here to brief federal ministers.

“This is a very challenging, this is a very complex decision to move forward to implement the results of the referendum,” she said, referring to the 2016 British referendum that set in motion the exit from the EU.

Canada’s trade with Britain is now covered by the recently concluded trade pact with the EU, known as the Canada-European Union Comprehensive Economic and Trade Agreement (CETA).

If the U.K. exits the EU with some agreement, the CETA deal would remain in place to govern trade with Canada.

If not, a new deal between Canada and the U.K. would be required.

While it’s expected that any new deal would conform largely to the terms of the EU pact, it would still take time to negotiate.

“We have to wait to see but in the meantime we have continuing discussions with officials in the U.K. about possible scenarios,” International Trade Minister Jim Carr told the Star.

“If there is no arrangement, then over time Canada will negotiate an arrangement with the U.K. Meanwhile we have discussions to see where the alignment is and those discussions are positive,” Carr said Thursday.

Carr, who said he’s in “frequent” contact with Liam Fox, his U.K. counterpart, underscored the unpredictability caused by the political turmoil in London, saying it’s hard to speculate on outcomes.

“No one can give you the definitive road ahead,” he said.

Things could become clearer on Monday when May is expected to present her back-up plan for parliamentary debate.

“I think we’ll have to take this one step at a time and see then what this means in terms of the U.K.’s plan and how the Europeans react,” Charette said.

May’s stand: British Prime Minister Theresa May not budging on main issues in Brexit withdrawal, A10