The Canadian desire to reduce trade reliance on the United States is a long-held objective of policymakers on this side of the Atlantic. This has proven to be an elusive goal with the United States being the destination for three-quarters of Canadian merchandise exports. However, in an era of trade disruption diversification has elevated importance for Canada.
There are a wide number of markets that Canadians are – and should be – looking towards with the United Kingdom (UK) near the top of that list. With a common language and similar ways of doing business, the UK is a critical part of Canadian companies’ trade diversification strategy.
Canadian and British businesses had preferential access to each other’s markets originally through the Canada-European Union Comprehensive Economic and Trade Agreement (CETA). After the UK’s departure from the EU, preferential access is currently through the Canada-UK Trade Continuity Agreement (TCA). Getting the TCA, which is a largely a CETA copy, was a critical stopgap measure to protect C$2 billion in trade flows, according to the Canadian government.
However, the TCA is only a provisional agreement and the two governments aim to negotiate a modernized trade agreement by 2024. Achieving this objective is a priority for the Canadian Chamber of Commerce, which is also the ICC National Committee for Canada.
Like any negotiation, there are bound to be difficult areas. Agriculture is always a sensitive point, whether it is about British cheese coming into Canada, or Canadian meat products going into the UK. Labour mobility was also an area of divergence during the CETA negotiations and is likely to be again this time around.
However, the usual give-and-take of trade negotiations is compatible with finding areas of mutual interest that benefit both countries.
One of these areas is digital trade. Since the CETA’s negotiation, global discussions on digital trade rules have taken on a greater focus in bilateral and plurilateral contexts. Canada has digital chapters in our trade deals with the Trans-Pacific Partnership and United States/Mexico. Canada and the UK should ensure the inclusion of provisions that will enable the movement of data across borders to support companies operating in multiple jurisdictions.
Another area of mutual benefit is cooperation on cybersecurity. Our members desire to see mechanisms implemented to bolster cybersecurity cooperation. This would support national security objectives and reinforce dialogues occurring through the Five-Eyes, in addition to enhancing companies’ ability to undertake joint ventures and access procurement contracts.
We also hope to see the new bilateral trade agreement support the production of critical minerals that enable the manufacturing of products in a wide range of applications, including electric vehicles, consumer products, and in the defence industry. The sourcing of critical minerals remains dangerously concentrated and the future bilateral trade agreement should expand mechanisms that will support the development of supply chains.
Lastly, given growing commitments to net zero by 2050, Canadian businesses are keen to use our trade frameworks to grow cooperation in sustainability policies and increase environmental goods and services exports. As Canadian exporters seek greater recognition of strides made to bolster the ESG credentials of our exports, future discussions with the UK should focus on how mutually recognized standards can achieve this objective.
Trade agreements always take longer to land than hoped, so there is no time to waste. Canadian and British businesses should underscore urgency to our respective governments. ICC Canada looks forward to working with ICC United Kingdom in this journey.