50 LEXPERT MAGAZINE
|
JUNE 2018
| BREXIT |
done as a member of the EU.
Hard exit or so? "At the moment, I
think it's too close to call," says Peter Kir-
by of Fasken Martineau DuMoulin LLP.
Whether March 30, 2019, or Dec. 31, 2021,
what happens to Canada the day the trade
deal expires is the £64,0000 question.
The EU is Canada's second largest trade
and investment partner so the question is a
serious one. A significant number of Cana-
dian companies use the UK as their gate-
way to the EU, some have UK divisions,
operations or even hard assets there, or use
a UK company in their supply chain for
goods being sold in the EU. ey all stand
to be affected by the what happen across
the Atlantic.
While Canada exports large amounts
of minerals and metals to the UK, Brook-
field Asset Management, for example, has
an investment in London's Canary Wharf.
CAE Inc., which makes simulators, has a
UK division, Bombardier Inc. has Bombar-
dier Aerospace, Belfast — with a European
supply chain of 900 approved suppliers.
Most of Canada's financial services com-
panies have offices in London, some have
separate UK units. e Canada Pension
Plan Investment Board has infrastructure
investments across the UK.
Kirby sees some Canadian sectors be-
ing much more affected than others. Fi-
EU without tariffs, giving Canadian
businesses access to the market of half
a billion customers with a GDP of $22
trillion. While the EU will be smaller
without the UK, Boscariol acknowl-
edges, it will still consist of 27 countries
and regardless of what happens with
Brexit, Canadian businesses can still
access them. But those that have been
using the UK as their portal may need
to change their strategy.
"ey should be looking carefully
at how they would access the EU mar-
kets directly from Canada," he says.
"e timing of CETA was wonderful
in this instance because we've got the
free trade agreement with the EU, but
they still have to have a contingency
plan in place. I think we can all hope
that reasonable minds prevail here and
it's not going to be the hard break every-
one talks about. But I think companies
have to be prepared in case it is."
Boscariol and others have heard that
Canadian and British trade officials
have already been talking informally,
laying the groundwork for an eventual
bilateral deal. It has been reported that
UK officials are also talking trade with
the US.
Britain's top export markets are Swit-
zerland, Japan, Canada, Singapore and
South Korea and, post-Brexit, the UK
will want to ink deals that are easiest to
seal "to show their other trading part-
ners outside the EU that it's possible."
ey have probably the closest relation-
ship with Canada, he says, pointing to the
shared history, culture and common law.
"ey may want to do the same with the
United States, which is a much bigger trad-
ing partner for them, but with President
Trump in power that could still be tricky.
So I think Canada will be an attractive tar-
get for the UK. We're a tenth of the size of
the US and smaller than Japan and other
EU countries. It's more of a symbolic thing,
I think. e groundwork is there, there is
the historical and cultural relationship and
because we've had CETA negotiated, the
connections are already very tight."
But that doesn't mean a potential Can-
ada-UK trade deal could be inked within
a month or two of Britain exiting the EU.
Boscariol sees it taking between one and
three years of formal negotiations, best case
nancial services, in particular, he says is a
significant sector to worry about "because
we don't know how important London is
going to remain as a financial-services cen-
tre. Should we be looking at Europe rather
than the UK for access? at's one that will
be very dependent on what the final rela-
tionship with the EU looks like."
Most if not all major Canadian financial
institutions have a UK office. ose with-
out a European office as well have already
started looking at opening one, he says. "It
would be negligent for any bank to be sit-
ting in London and not making arrange-
ments for the various possibilities. … We
don't have armoured trucks going off to
Europe yet but the banks are all definitely
all talking about relocating staff." What's
not clear, he says, is how large the displace-
ment will be.
As for manufacturers, he expects pos-
sible "hiccups" for Canadian companies
with UK suppliers who sell into the UK
but predicts there will be workarounds,
with the real issues being tariff negotiations
slowing things down.
Many trade lawyers agree workarounds
all be agreed on. But the feeling is Cana-
dian companies should be preparing now,
and with the developments on the North
American Free Trade Agreement sucking
the air out of the room not everyone is giv-
ing Brexit the attention they should.
John Boscariol, head of the Internation-
al Trade & Investment group at McCarthy
Tétrault LLP, says his firm is pointing cli-
ents who use the UK as a gateway into the
EU to the Canada-European Union Com-
prehensive Economic and Trade Agree-
ment, or CETA, which was provisionally
applied in September 2017.
e Canada-EU trade deal allows over
98 per cent of Canadian goods to enter the
JOHN BOSCARIOL
>
MCCARTHY TÉTRAULT LLP
"They should be looking carefully at how they would access
the EU markets directly from Canada. The timing of CETA was won-
derful in this instance because we've got the free trade agreement
with the EU, but they still have to have a contingency plan in place.
I think we can all hope that reasonable minds prevail here and it's
not going to be the hard break everyone talks about. But I think
companies have to be prepared in case it is."
