Insight
UK + EU = Canada+?
by Beth Oppenheim and Charles Grant 1 December 2017 The European Commission believes that the only plausible future economic relationship between the EU and the UK is one modelled on the EU’s free trade agreement with Canada. That would pose problems for the UK economy. Can the British hope for something better than ‘Canada’? After a meeting at the Department for Exiting the EU in September 2016, a Conservative aide accidentally flashed their notes to the press. “What’s the model?”, they had written. The answer? “Canada Plus”. The note referred to the EU-Canada Comprehensive Economic Trade Agreement (CETA), which is the EU’s deepest free trade agreement yet, covering most goods but offering little on services. Brexiters like Boris Johnson hope for a ‘Canada Plus’ agreement, with more services included. In Theresa May’s Florence speech, she remarked: “We can do so much better than this [CETA]”. Britain is likely to open the second phase of the Brexit talks by asking for a tailored arrangement that is neither Canada nor ‘Norway’ (single market membership via the European Economic Area). Some British officials talk about a bespoke model, based on regulatory alignment, that would allow the UK to diverge from EU rules if it paid a price; in certain sectors this would give the UK something close to single market membership. The British are hoping that, under the pressure from national governments and business lobbies, the EU will in the end agree to much closer economic ties than Canada has. So far there is little evidence that the EU or its member-states are contemplating Canada Plus. A leaked document by Michel Barnier said that Britain should expect a “standard FTA [Free Trade Agreement]”. Barnier has also said that the UK is likely to end up with a model “close” to Canada’s, and not significantly better. CETA has been lauded by the EU and Canada as “the gold standard for future trade deals”. It abolishes almost all tariffs on goods, with most eliminated immediately, and some phased out over three to seven years. The agreement also reduces some non-tariff barriers, promising greater co-operation between Canadian and EU regulatory authorities. The agreement establishes mutual recognition of Conformity CER INSIGHT: UK + EU = Canada+? 1 DECEMBER 2017
info@cer.EU | WWW.CER.EU
1