Research on the effects of Brexit on future Canada-UK trade relations

Flags of Canada and UK

With the support of Canada's Social Sciences and Humanities Research Council (SSHRC) and the UK’s Economic and Social Research Council (ESRC), Professor Armand de Mestral and Dr Lorand Bartels, a Reader in International Law at Trinity Hall, Cambridge, have been conducting a study of the legal structure of the trading relationship between the UK and Canada after Brexit.

The departure date of the UK from the EU is set to take place on March 29, 2019, unless this date is postponed by mutual agreement. It is therefore incumbent on both Governments to find a mutually satisfactory accommodation by that date. Canada’s Prime Minister Justin Trudeau has stated the intention of his government to ensure that mutual trading relations are maintained on the basis of “CETA +”, this guaranteeing existing MFN (Most Favoured Nation) and preferential rights enjoyed by UK and Canadian citizens in our respective countries. Achieving this goal in the very short space of time available may be challenging.

Project synopsis: The UK and Canada share a close legal and institutional history. Like the UK, most of Canada uses the common law legal tradition. The countries also share many basic constitutional principles. To ensure continuity in trade between the countries post-Brexit, policy-makers, industry and the wider community will need more clarity on the legalities governing trade in goods and services.

This project will study how much existing international legal arrangements and relevant domestic laws already provide for a satisfactory trading relationship between the UK and Canada. The researchers will also explore various bilateral options, such as transitional adoption of the Comprehensive Economic and Trade Agreement as an agreement between the two parties; or adoption of a new, bilateral agreement. The project will also explore the UK’s position in the World Trade Organisation after the country leaves the European Union.

The general objective of the review is to give policy-makers, the business community, journalists and the general public an understanding of the relevant issues posed, and of the state of current information on the subject.

Recent academic articles and other publications about Brexit

Final Report: Trade Relations between Canada and the UK in the event of Brexit

Armand de Mestral & Lorand Bartels, December 2, 2018 - Strategic Knowledge Report SSHRC-ESRC

The trade statistics on UK–Canada relations are eloquent. Britain is the fifth largest single national economy in the world. Canada’s economy is the tenth largest. The UK is the second most important European country exporting goods and services to Canada and the most important source of European foreign direct investment. In Europe, the UK is the most important export destination for Canadian goods and services and the most important destination of Canadian foreign direct investments.

Representatives of both the UK and Canadian governments have stated their intentions to maintain and even enhance trade relations after Brexit. How can this objective be best achieved?

Download the PDF: File Trade Relations between Canada and the UK in the event of Brexit

Abstract of Final Strategic Knowledge Report for SSHRC-ESRC

Armand de Mestral & Lorand Bartels, November 20, 2018

There is every reason to believe that both governments desire to maintain close commercial relations after Brexit, whether this takes place completely on March 29, 2019 or gradually under a phase-in period. They have also stated that they will continue to do what is possible to expand trade relations between them. This is in the interests of Canadians currently having business relations in the United Kingdom and the converse is equally true. Historic ties certainly exist, the Constitution of Canada was shaped by the United Kingdom and is “similar in principle to that of the United Kingdom,” but it would be a mistake to seek the source of this cooperative spirit in nostalgia for Empire or even Commonwealth solidarity. Both countries share a long history of mutually beneficial trade and investment relations and both countries wish to maintain and enhance these relations in their mutual self-interest.

Download the PDF: File Abstract of Final Strategic Knowledge Report for SSHRC-ESRC

Memorandum on extending CETA tariff benefits to the United Kingdom after Brexit

Jan Nato, October 24, 2018 - Research memorandum prepared under the direction of Prof. de Mestral

"Canada has signalled its desire to ensure that the United Kingdom continues to benefit from preferential trade arrangements with Canada after Brexit. This may be achieved in one of three scenarios. First, in the case that the UK and the European Union reach a withdrawal agreement which includes a transition period when the UK can continue to benefit from EU trade agreements, Canada has expressed its consent that the UK continue to be treated as a party to CETA. Second, in the case of a hard Brexit, Canada has expressed that it will seek to ensure “a seamless transition of CETA” via a transitional agreement with the UK that could take effect from exit day. Finally, Canada and the United Kingdom have signalled their intent to forge a new bilateral trade agreement."

Download the PDF: PDF icon Memorandum on extending CETA tariff benefits to the United Kingdom after Brexit - October 24, 2018


Where Canada stands as Britain leaves the EU

Armand de Mestral, September 24, 2018, Canadian Lawyer

The United Kingdom government is committed to leaving the European Union on March 29, 2019 — a date that is fast approaching. The preferred scenario is for March 29 to be the formal date of departure, but to facilitate departure with a 19-month phase-in period, so the U.K. can clarify its relationships with third countries such as Canada. So, what does that mean for us?
Keep reading...


SSHRC ERCS Strategic Knowledge Project on future Canada-UK Trade Relations

Armand de Mestral, September 20, 2018 - Some notes for a report

Notes on the current legal situation governing trade between Canada and the UK; possible developments as a result of Brexit; necessary actions by Canada; and outcomes desired by both parties.

Download the PDF: PDF icon SSHRC ERCS Strategic Knowledge Project on future Canada – UK Trade Relations – Some Notes for a Report - September 20, 2018


Brexit Literature Review

Shannon Gallant, August 31, 2018 - Literature review prepared under the direction of Prof. de Mestral

Covers Government-Issued Documents (UK White Papers and Canadian notices regarding CETA and Brexit); Canadian Customs Law (architecture of Canadian Customs Law and how tariffs are encapsulated in federal legislation) and Customs Tariff Analysis (scope of CETA provisions within the Customs Tariff Act and associated regulations. Possible remedies for a ‘hard Brexit’ where the EU has not accepted a transitional application of CETA to the UK).

Download the PDF: PDF icon Brexit Literature Review - 31 August, 2018


Trade between Canada and the UK after Brexit: Where are We?

Armand de Mestral, August 28, 2018 - Draft post, Centre for International Governance Innovation (CIGI) blog

"The Government of the United Kingdom (UK) is committed to leaving the European Union (EU) on March 29, 2018 - a date which is fast approaching. The preferred scenario is for March 29 to be the formal date of departure but to facilitate departure with a 19 month phase-in period, within which the UK can clarify its relationships with third countries like Canada. During the phase-in period, it is planned that the EU and other countries will continue to treat the UK as part of its territory, so that many major legislative and regulatory changes will only have to be made after a further 19 months.

But what happens if the UK does not succeed in reaching a withdrawal agreement with the EU and is completely out on March 29, 2019? This raises a host of difficult issues for the UK and for its trading partners like Canada."

Download the PDF: PDF icon Trade between Canada and the UK after Brexit: Where are We? - August 28, 2018


Brexit’s Impact Will Reach Overseas

Armand de Mestral, March 13, 2018, CIGI Blog

"If Brexit is reflective of something greater than a purely British malaise, the movement will certainly have implications for Canada. We live in a time of considerable uncertainty about the fate of trade and investment agreements." Keep reading on the blog...


Squaring the Circle: The Search for an Accommodation between the European Union and the United Kingdom

Armand de Mestral, November 30, 2017, CIGI Papers

This paper examines the various options for a new economic relationship that appears to be available at the time of opening negotiations between the European Union and the United Kingdom. Canada’s concerns with respect to an eventual Brexit are considered, as well as the political and economic considerations motivating the European Union and the United Kingdom. This paper argues that the United Kingdom has so far proposed largely constitutional options, but neglected the economic dimensions of the issues posed by Brexit. Various existing models are reviewed. In conclusion, the author argues that if the United Kingdom has no options beyond the free trade model, it would do the rest of Europe and North America a great service by negotiating an Atlantic free trade area.
Download the PDF: cigionline.org/publications/squaring-circle-search-accommodation-between-european-union-and-united-kingdom


Why London Will Run Out of Runway on Trade

Armand de Mestral, May 3, 2017, CIGI Blog

"The Rubicon appears to have been crossed, and the United Kingdom’s exit and re-entry negotiations with the European Union must soon begin. What form should they take? The current assumption is that London must agree on the terms of its withdrawal from the European Union and then immediately begin the even more complex process of defining its future trading relationship with the bloc. It is also assumed that this relationship will take the form of some kind of bilateral free trade agreement (FTA). Implicitly, the suggestion has been that it must be an FTA rather than a customs union, as the United Kingdom wishes to retain the freedom to make trade agreements with other partners — in particular the United States and Canada."
Keep reading on the blog...


What Does Brexit Mean for Canada? A Lot, Unfortunately

Armand de Mestral, March 29, 2017, CIGI Blog

"The Ides of March have come and gone. With a hand-delivered letter to Brussels, Prime Minister Theresa May has served notice under article 50 of the Treaty on European Union (TEU) of Britain’s intention to withdraw. “Thank you and goodbye” was the simple reply of Donald Tusk, the president of the European Council who received the historic missive and will now convene a summit of EU leaders on April 29 to adopt guidelines for Brexit negotiations that are expected to last up to two years."
Keep reading on the blog...


If NAFTA fails, Canada should reach across the Atlantic to the UK

Armand de Mestral, February 13, 2017, LSE Business Review or the London School of Economics blog

An Atlantic Free Trade Agreement would help the countries deal with their NAFTA and Brexit crises, writes Armand de Mestral. The future of the North American Free Trade Agreement is looking increasingly uncertain under Donald Trump as president of the United States. In case NAFTA implodes, Armand de Mestral proposes the creation of the Atlantic Free Trade Area between Canada and the United Kingdom, in a framework involving Europe and the US.
Keep reading on the blog...


Additional Links

The Guardian (for regular reporting on Brexit) theguardian.com/international and theguardian.com/politics/eu-referendum

Peter Ungphakorn's Trade β Blog: tradebetablog.wordpress.com