Canada Plus

Super Canda: Super Idea

As the Government’s Chequers proposal looks more and more likely to fail, our attention must now be drawn to the alternatives; a potential deal with the EU that will give us the bright future and positive relations not only with the EU, but with the wider world.

The option that is consistently mentioned is that of Canada +, or Canada ++, or Canada +++, or simply Super Canada.

Canada’s Comprehensive and Trade Agreement (CETA) came into application a year ago and is widely held as the gold standard of trade deals. Canada is the world’s tenth largest economy, with the eleventh (Toronto) and eighteenth (Vancouver) largest global financial centres, ahead of Paris (23rd).

The principles surrounding CETA are a strong starting point for a possible future relationship with the EU. But the UK must go further. Hence, all of the plus signs.

But really, what do all of these pluses mean?

CETA by itself delivers 99% tariff-free access to the EU Single Market with no free movement and no EU fees. 99% of EU tariff lines – meaning duties levied on incoming products entering the Single Market through the Customs Union’s walls numbering 19,753 Most Favoured Nation tariffs – are abolished.

Quotas refer to an agreed volume of goods that may be exported at a certain lowered tariff rate, e.g. 100,000 tonnes of beef at 0% tariff, say.

All industrial tariffs are abolished in CETA anyway, though some are tapered reductions. But agriculture is an issue, primarily due to French protectionism. Canada only achieves 92% access to the Single Market in agriculture, not 100%. Similarly, the CETA-style deals being negotiated currently with Australia and New Zealand (my trade brief) will only achieve a similar reduction.

This means that we need an additional element to our trade deal; one that achieves the 100% tariff reduction and 100% quota-free reductions the EU offered us on 7th March this year.

Additionally if the UK/EU have a 100% tariff and quota-free deal on goods, then there is little need for a customs border on the island of Ireland. There won’t be any tariffs to levy or quotas to be managed, only electronic customs forms and some regulatory checks well away from the border.

The other pluses take into account the murky waters of services. At the moment, the EU Single Market for services hardly exists now and nor do services generally suffer tariffs but but they do incur ‘non-tariff barriers’ (NTBs), which can be just as serious. This is more along the lines of regulatory burdens; the need to obtain licenses, financial passports etc.

The current Chequers proposal divides goods and services. Yet CETA actually opens up services. The agreement requires both parties to list discriminatory measures and quantitative restrictions across all sectors. It includes provisions to grant the EU greater access to Canada’s postal, telecommunications and maritime transport services markets, and greater access to Canada’s public procurement market at federal and provincial level.

CETA suggests that borders can be as frictionless as possible and that we can use technology to ensure supply chains continue to operate smoothly and efficiently.

CETA’s Customs and Trade Facilitation measures seek commitments to design an improved procedure governing the movement of goods across national borders to reduce cost burdens and maximise efficiency and speed – while ensuring national safety and security are also maintained. Technology is key, with parties providing advance electronic submission and information processing services before the physical arrival of the imported goods, such as electronic forms for cargo reporting, release, entry and accounting.

CETA is our starting point. The EU has shown it is willing to be flexible with this model if it can show that there are benefits for the EU. Of course there would be the need for amendments to the agreement but with political will from both sides, there is no reason such a deal couldn’t be reached.

The SuperCanada deal has plenty of ‘Super’ – additional value, greater access and border friction-reducing measures – to recommend it. It really is the only genuine and workable form of deal the UK and EU can now mutually agree and will provide us with a potential deal with the EU that will give us the bright future and positive relations not only with the EU, but with the wider world.