Canada could benefit from a renegotiated free trade deal following the UK’s vote to exit the European Union.
Experts say any potential renegotiation of the Comprehensive Economic and Trade Agreement (CETA) could work in Canada’s favour with the UK excluded from the terms of the deal.
This would then leave Canada open to negotiate a separate deal with the UK, also likely to be mutually beneficial given the already strong ties between the two nations.
CETA – a Canada-EU free trade deal that has been seven years in the making – was expected to be ratified in 2016 until the UK referendum threw it into jeopardy.
It could still be voted through in its current form, although this is likely to be a drawn-out process following the EU’s decision to empower member states to each pass it through their individual parliaments.
Before the ‘Brexit’ curve ball, the deal was set to be ratified at European Council level, despite opposition from several corners, including in Germany, France and Belgium.
Bulgaria and Romania have also threatened to vote against the bill in protest over a separate visa-free travel wrangle.
Experts say that, taken individually, the turmoil playing out in both the UK and the USA – where Donald Trump seems to get closer to the White House by the day – will be beneficial to Canada.
With such key major economies beset by uncertainty, Canada is there as a stable alternative and is already picking up investment dollars because of that, according to certain analysts.
But if the protectionist retreat being witnessed in the UK and USA is the start of a global trend, Canada risks being left on the outside as it moves in the opposite direction, having just elected a progressive prime minister on a pro-free trade and pro-immigration manifesto.
The Liberal government has already taken steps to improve ties with Latin America, with the US’s influence in the region likely to wane if Trump made it to the White House.
Meanwhile, the short term impact of global economic uncertainty may already be being felt in Canada.
Experts predict economic growth to slow here, moving the Bank of Canada to keep interest rates low, in turn helping out the out-of-control housing markets in Vancouver and Toronto.
Canadian firms with UK investments are likely to see a drop in returns. One example is the Canada Pension Plan, which has $20 billion invested in the UK.
Businesses with European headquarters in the UK will also be rethinking their strategies because of uncertainty over how much access to the single market they will get following Brexit negotiations.
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