LEXPERT MAGAZINE
|
JUNE 2018 53
| BREXIT |
open the deals to renegotiation.
Wendy Wagner, a partner in the Ottawa
office of Gowling WLG (Canada) says the
partners in her firm's London office are
convinced Brexit is "irreversible."
ey're advising clients who do business
in the UK to examine their supply chains
and identify where they have the routing of
goods through the UK to Europe. "ere
is a thought that it won't be as seamless or
as easy as people think for the UK to work
out something with Europe in terms of ac-
cess to markets and customs duties. You
can't assume when Brexit occurs there will
be the same access to the rest of Europe
from the UK.
Asked what she's advising clients, she
says Canadian companies, like companies
everywhere working on new contracts,
"should be looking to see who has duty li-
ability. A lot of times if companies are sell-
ing in a free-trade market then there's no
issue in your mind in assuming liability
for any applicable customs duties because
you know there are none, or you're confi-
dent there are none, or that your product
qualifies for preferential access under the
free trade agreement." But if they're now in
a situation where that's not the case, busi-
nesses should be look at the liability issues
for customs duties in a different way "and
perhaps assign that liability to the cus-
tomer rather than to the supplier. So you
should be looking at the way the contract
is structured."
For contracts that are already in force,
she says, Canadian companies that manu-
facture or source parts in the UK to sell
into the EU should be aware of the po-
tential for increased cost and evaluate its
impact their competitiveness. "If it's very
significant, you might look at sourcing
that component or part from within con-
tinental Europe." She says the bottom line
is even if there is a hard exit, and Britain
leaves the EU reverting to WTO terms, it's
not necessarily a disaster for Canada.
"Duties are not particularly high for a
lot of different categories of product. If you
look at the Canadian tariff code there are
thousands of products that have zero duty
regardless of whether we have a free-trade
agreement. e Most Favoured Nation
rate of duty can be very low. While some
sectors like textiles have a fairly high rate of
duty, others such as computers and the tech
sector have a zero rate of duty."
She says right now Canada is in a good
position in negotiating with the UK. "If
Canadian companies see that there's a po-
tential opportunity, and start speaking to
government in terms of what overtures we
can make to the UK for some of those mar-
kets, there may be a really good opportuni-
ty here. ey are going to be looking to do
some deals. ere are some risks, but there
a lot of opportunities as well."
Peter Kirby of Fasken Martineau Du-
Moulin LLP thinks Canada is in a great
position because at the end of the day it is
holding an extraordinarily strong hand.
"e message is it's not as simple as
cutting and pasting CETA into an agree-
ment with the UK. We've already made
concessions to the larger group but those
concessions are not necessarily transfer-
rable to the UK. So if they ask for con-
cessions, in, say, dairy, we can say, 'We al-
ready gave you your cake through
CETA
and now you're asking for more?' We now
have a whole different ballgame when we
negotiate with them. We can demand
some tough concessions."
"e UK is desperate for trade agree-
ments. ey absolutely have to have trade
agreements in place as quickly as possible.
So I'm thinking they're negotiating from
the worst possible position, from despera-
tion." In other words, Deal or No Deal, no
matter which way Brexit works out, it may
result in a better deal with the UK for some
Canadian businesses. It may not be fast, it
is bound to cause some bumps, but in the
long run it may turn out to be worth it.
Ironically, at least one commentator has
suggested for the United Kingdom, that it
may take note of the Canadian direction:
Martin Wolf wrote in the Financial Times:
"So where, when the dust has settled, will
the UK end up? It will become Canada. It
will have a trade relationship with the EU
similar to Canada's. It will relate to the EU
in a way not dissimilar to Canada's relation-
ship with the US. It will remain a middle-
of-the-road democracy, like Canada, and
not become, as David Davis, secretary of
state for Brexit puts it, a "Mad Max" dysto-
pia leading a regulatory race to the bottom.
Finally, like Canada, it can seek a modestly
positive global influence."
Michel Barnier, the EU's chief nego-
tiator, has explained why the UK's future
trading relationship with the EU will be
similar to that in CETA. is agreement al-
lows both sides to enter into separate deals
with other partners. It also puts Canada
outside the EU's customs union and single
market. us CETA provides limited ben-
efits to providers of services. A word of cau-
tion from Scotland though: In discussing
the grandiose and imaginative notion that
Scotland might join the Canadian federa-
tion aer Brexit, Scottish-Canadian jour-
nalist Julie Rampen wrote: ere is one
time Canada is anathema to the Scottish
government, however, and that is when it is
followed by the word "plus." is is a refer-
ence to the Canada-EU trade deal, seen as a
poor alternative to access to the EU's single
market, which Britain is expected to leave
aer Brexit.
Sandy Rubin is a
writer and strategic consultant.
MATTHEW KRONBY
>
BENNETT JONES LLP
"Since the UK has not needed to have internal trade
expertise for well over 40 years they need to recruit
from elsewhere. That's proving a challenge because
the salaries they can offer are not particularly attractive,
especially given the cost of living in London."
