Jason Langrish is executive director of the Canada Europe Roundtable for Business
Prime Minister Boris Johnson won a resounding victory in the recent British election with his promise to “get Brexit done.”
The gridlock in the British House of Commons appears to now be cleared. Not only is Mr. Johnson no longer reliant on the Northern Irish Democratic Unionist Party to maintain power, he is free of the hold exerted by the European Research Group – Tory traditionalists who are hostile to Europe and advocate for a hard exit from the European Union.
Mr. Johnson will pass his withdrawal agreement by the end of January and then commence negotiations on the future relationship with the EU. The latter carries a deadline of the end of 2020, meaning that Britain and the EU have 11 months to secure a trade and investment deal that replaces more than 40 years of economic integration. By contrast, Canada and the EU took seven years to negotiate their Comprehensive Economic and Trade Agreement (CETA), which is still awaiting ratification in several European parliaments.
The possibility that the United Kingdom may fragment – as pressure mounts for a second referendum on Scottish independence and a customs border between Northern Ireland and the rest of the U.K. pushes the two Ireland’s closer together – further complicates matters.
Satisfaction that Brexit is going to “get done” may turn to frustration as voters realize that there are no easy solutions to leaving the EU. In an added twist, Mr. Johnson’s withdrawal bill will contain a provision that the post-Brexit transition period cannot be extended beyond the end of 2020, dramatically increasing the probability of a hard Brexit.
During this period, Canada, and other countries such as the United States and Australia, will engage in talks about their own future relationship with Britain. However, until the terms agreed to by Britain and the EU become clear, it will be virtually impossible for any of them to conclude a deal.
The British government needs to convince Canada why investing time and energy in trade talks is warranted after its decision earlier this year to remove import tariffs as a way of minimizing economic shock in the event of a hard Brexit.
With bilateral trade amounting to more than $26-billion a year, and investment numbers that are significantly larger, the importance of the relationship is clear. An agreement would ensure continuity with Canada’s most important transatlantic commercial partner.
A high-quality trade and investment agreement secured in a timely manner would instill confidence in other trading partners that Britain has the capacity to achieve such an outcome.
To do this, Canada and Britain must not get hung up on perennial offensive interests such as financial-services market access for the Brits and agricultural-market access for the Canadians, as wins will be hard to come by.
Instead, the focus should be on provisions that have already been agreed to in CETA, including broad tariff elimination, open public procurement and intellectual-property protection.
Canada and Britain should strengthen areas where CETA has not lived up to its promise, such as increasing the mobility of skilled workers and preventing red tape and technical barriers at the border.
Negotiators can go even further and establish frameworks for industries that will dominate in the future, including electric vehicles, sustainable finance and new energy technologies.
They should take a flexible approach to rules of origin and the delivery of professional services, in order to accommodate either a negotiated future relationship between Britain and the EU or a hard Brexit.
Finally, a comprehensive Canada-Britain agreement can serve as the basis for a broader partnership that supports the rules-based trading system at the WTO, works to mitigate the impacts of climate change and reinforces shared defence and security commitments.
This level of ambition can be achieved if both sides are realistic about what is possible, given the timelines and complexity of the process in front of them, and are willing to approach talks with creativity and imagination.