In Depth

What is a ‘Canada-style’ trade deal?

Deal would mean new border checks but not most tariffs

Boris Johnson will tell the UK to prepare for a “new act” in its history as the country leaves the European Union at 11pm today.

In a speech scheduled for Monday, the prime minister will indicate he is prepared to accept the “off-the-shelf” trading model with the EU, first proposed by the Union’s chief negotiator, Michel Barnier.

Before that, however, in a speech scheduled to be broadcast tonight, one hour before the UK’s formal departure from the EU, the prime minister will say Brexit is “not an end but a beginning”.

But EU leaders have warned in The Times that Britain will lose global influence and power when it leaves the bloc.

What is a Canada-style trade deal?

Canada’s free trade deal with the EU is known as the Comprehensive Economic and Trade Agreement (CETA) and took seven years to negotiate. It came into effect in 2017, and will be fully implemented within seven years.

According to the BBC, the deal eliminates 98% of all tariffs on goods traded between Canada and the EU. The agreement does not fully remove regulatory barriers, however, as Canada is not a member of the single market - so Canadian products are still subject to border checks.

The broadcaster adds that the deal “encourages the use of advanced electronic checking to speed customs clearance”.

Under the deal, the EU could decide to place greater barriers on Canadian trade with European countries. But unlike the EU27, Canada is free to strike trade deals with other countries around the world.

On the other hand, Canadian financial services do not have full access to the European market. In 2018, financial services contributed £132bn to the UK economy - 6.9% of total economic output.

CETA allows professional qualifications to be recognised in both Canada and the EU, making it easier for people to travel and work in both places. However, fact-checking site Full Fact notes that the movement of services is “much more limited than within the single market”.

Who backs this type of Brexit?

The prime minister met the European Commission president, Ursula von der Leyen, in Downing Street earlier this month to express his openness to a Canada-style deal, says The Times.

And Johnson has supported the proposals for some time. In an article for The Daily Telegraph in September 2018, the now prime minister wrote that a “Super Canada” deal was preferable to then PM May’s withdrawal agreement.

A Canada-style Brexit was also supported by the majority of May’s cabinet, including Sajid Javid, Andrea Leadsom, Michael Gove and Esther Mcvey.

As the Daily Express notes, Brexiteers “have argued the model is attractive to the UK due to the lack of obligations in return for EU market access”.

Adopting this model would also “respect campaign promises on the Leave side, including ending large sums of money being sent to Brussels and greater control of immigration”, the newspaper adds.

Who is against it?

The Canada deal would mean border checks between the UK and EU, and only covers trade, not the service sector - a huge part of the UK’s economy.

The Treasury’s own analysis has estimated that Britain’s economy would be 4.9% smaller under a Canada-style deal after 15 years than it would be if it had remained in the EU.

And a CETA-style deal with the UK could be controversial in Europe, as Canada’s agreement was when it was signed. The BBC reports that Canada’s deal was opposed across the EU27 amid fears that it would “erode labour laws, not enforce environmental standards and allow multinational companies to dictate public policy”.

On the day that the agreement was signed, protestors took to the street in Brussels, while Italy threatened not to ratify the agreement because it did not sufficiently protect “geographical indications".

In the UK, Shadow Brexit secretary Keir Starmer said in 2018 that Labour would vote down a Canada-style Brexit deal, as The Guardian reported at the time.

Starmer argued that the deal would not pass Labour’s “six tests”, including guarantees on maintaining the benefits of EU membership and delivering for the whole UK.

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