CANADA-UNITED KINGDOM TRADE CONTINUITY AGREEMENT IMPLEMENTATION
Honourable senators, it is my pleasure to speak today as the sponsor of Bill C-18, An Act to implement the Agreement on Trade Continuity between Canada and the United Kingdom of Great Britain and Northern Ireland, a bill that was first tabled in the House of Commons in December of last year and comes to us today.
This bill is good for Canada. It will work for Canadian businesses and workers, and it fully protects Canada’s supply-management industries.
The Trade Continuity Agreement is a replication of the Canada-European Union Comprehensive Economic and Trade Agreement, or CETA, so that trade relations between Canada and the United Kingdom can continue to benefit from the opportunities CETA has created, even as the U.K. has left the European Union. As such, the Trade Continuity Agreement is an agreement that Canadians are already familiar with and what stakeholders have asked for in terms of creating greater certainty.
As Canada seeks to recover from the economic effects of the COVID-19 pandemic, we can ill afford to lose preferential arrangements with our largest and most established trading partner in Europe. I need not remind you that the United Kingdom is one of Canada’s strategic allies, working closely with us in a number of arenas, such as NATO, the G7 and G20, just to name a few.
We are both open, democratic countries with advanced economies that share deep historical ties, values and have similar systems of government. We enjoy a robust trade and investment relationship. The two-way merchandise trade between us amounted to $29 billion in 2019, making the United Kingdom Canada’s fifth largest trading partner. It is also a key source of innovation, science and technology partnerships, and is Canada’s fourth largest source of direct foreign investment, valued at $62.3 billion in 2019.
The Canada-U.K. trade partnership has also grown rapidly under CETA, in just the past few years. In fact, since CETA was provisionally applied in 2017, Canada’s exports to the United Kingdom have increased by over $2 billion.
As I am sure you are aware, for a country like Canada, trade is absolutely critical to our economic success and prosperity, and trade will play a critical role in our economic recovery and future prosperity. As we look to the future, it will be even more important that we continue to provide Canadian businesses, exporters and the work force related to those activities with as many options and opportunities as possible.
That is why it is not only important for Canada to develop trading relationships with other countries, but also to maintain and build upon economic ties we already have.
When Prime Minister Trudeau and the then-U.K. Prime Minister May met to discuss ways to strengthen bilateral relations, following the United Kingdom’s decision to leave the European Union, both leaders agreed to make the transition as seamless as possible and sought to preserve CETA’s preferential trade terms.
Although the United Kingdom was still a party to CETA at that time and continued to be until December 31 of last year, and therefore not able to undertake new international trade negotiations, discussions began regarding converting or replicating the terms of CETA into a bilateral agreement, the outcome of which is Bill C-18.
While CETA will continue to govern Canada-EU trade, the Trade Continuity Agreement will provide continued predictability and remove uncertainty for Canadian companies doing business with, and in, the United Kingdom.
Bill C-18 ensures that Canada and the U.K. can sustain and build upon our important trading relationship by preserving the benefits of CETA on a bilateral basis in the Trade Continuity Agreement. This means the continuation of utterly unprecedented access to the United Kingdom’s 66 million consumers and a $3.68-trillion economy, which Canadian exporters have enjoyed under the CETA.
It also means the continuation of lower prices and more choices for Canadian consumers, and the reduction or elimination of customs duties. And because this agreement is based on CETA, an agreement Canadians already know well, it provides the predictability and stability that stakeholders have told us they need as they grapple with the economic effects of the global pandemic.
Indeed, Bill C-18 includes the same important benefits of CETA that have successfully helped Canadian businesses grow. Once it comes into force and is fully implemented, it will do the following: one, carry forward CETA’s tariff elimination on 99% of Canadian products exported to the United Kingdom; two, maintain priority market access for Canadian service suppliers, including access to the United Kingdom government’s procurement market, which alone is estimated to be worth $118 billion annually; and three, uphold and preserve CETA’s high standard provisions on labour, the protection of the environment and dispute settlement.
At the same time, while it is largely a replication of CETA, the Trade Continuity Agreement provides no new market access for cheese or any other supply-managed products. This outcome fulfills the commitment made by the Prime Minister and the Minister of Agriculture not to concede any additional market access for this sector in the trade agreements this government signs onto.
Critically, this agreement will also continue to give Canadian companies a leg up on competitors from other countries that do not have free-trade access to the United Kingdom. It is worth noting that Canada will continue to be the only G7 member that has free trade agreements with all other G7 countries, all of which are important economic partners for Canada.
Bill C-18 will allow us to continue to serve as an example of how trade in a rules-based system can bring prosperity and protect government’s ability to regulate in the public interest. These are crucial advantages we can look forward to preserving once this agreement is in place.
Indeed, the trade continuity agreement responds to the need to ensure near-term certainty in our trade relationships. For the longer term, Canada and the United Kingdom have also committed to launching subsequent negotiations within a year of its entry into force toward a new bilateral agreement that can reflect specific Canada-United Kingdom interests. Both Canada and the U.K. have committed to this in public statements.
Furthermore, the United Kingdom also recently made a formal application to seek accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the so‑called CPTPP. Progress in our future bilateral negotiations will be important to Canada’s ongoing support for the U.K. joining the CPTPP, which will also require the U.K. to meet the high standards of rules and ambitious market access commitments of that agreement.
I’ve been advised that Canada and the United Kingdom will be negotiating a new trade partnership in the near future and that, as always, it will be informed by extensive consultations with Canadians.
Colleagues, Brexit posed a unique challenge for partners like Canada that already had trade agreements in place with the EU. Canada has shown adaptability and resilience to this unique challenge in achieving an agreement that mitigates potential disruptions for stakeholders due to the United Kingdom’s decision to leave the European Union and, thereby, the protections of the CETA.
And so it was important for the government to remain engaged with Canadians prior to and throughout the negotiations to understand and address specific interests.
Negotiations on the Trade Continuity Agreement have been part of these regular exchanges with provincial and territorial representatives who also wanted to see continuity in the Canada-U.K. trade relationship.
Canadian business stakeholders understand the unique circumstances of the Brexit and the CETA replication exercise, as well as the fact that an entirely new negotiation was not an option while the U.K. was a member of the European Union and a party to CETA, and therefore unable to negotiate.
Stakeholders are overwhelmingly satisfied with the fact that this Trade Continuity Agreement provides them with the continuity they are seeking. At a time of significant economic uncertainty, we need to leave no stone unturned for Canadian businesses to find stability and grow our economy. Trade agreements are a way for governments to support growth at a minimal cost to the public purse.
Colleagues, this bill has strong support amongst Canadian businesses, exporters and industry. The Business Council of Canada, the Canadian Agri-Food Trade Alliance, the Canadian Chamber of Commerce, the Canadian Federation of Independent Business, Canadian Manufacturers & Exporters, and the Canadian Association of Importers and Exporters issued a statement calling for swift passage of this bill. I’d like to quote the shared statement from these businesses directly:
. . . we ask all parties to support the ratification of the Trade Continuity Agreement by quickly passing Bill C-18. Doing so would protect thousands of Canadian jobs and provide stability and certainty for workers, employers and investors. Without an agreement, $2 billion worth of bilateral trade will be at risk.
Mark Agnew, Senior Director of International Policy at the Canadian Chamber of Commerce and a former trade official in the British High Commission in Ottawa said:
Bill C-18 is fundamentally about preserving market access that we already have. Now is not the time to rock the boat on that. From a forward-looking perspective, drawing a line under Bill C-18 will enable us to devote our efforts to focusing on the issues that will allow us to actually expand and improve our market access. This includes such issues as digital trade, regulatory co-operation, trade facilitation, labour mobility and others.
In fact, since the conclusion of this important agreement, the Canadian Chamber of Commerce has said the Trade Continuity Agreement is a “bright spot in the midst of COVID-19 and Brexit-related uncertainty for business.”
Uncertainty remains about the long-term effects of the change in the U.K.-EU trade relationship as a result of Brexit, as well as with regard to changes in the United Kingdom as it works toward its domestic trade frameworks in the coming months.
Subsequent bilateral negotiations, as provided for in this agreement, are an important opportunity to take into account the most recent developments of interest to Canada at the time.
The government has heard over and over from Canadian stakeholders about the importance of maintaining a preferential trading relationship with the United Kingdom. The successful conclusion of the agreement before you goes a long way to minimizing the disruptions that Canadian businesses are worried about and will maintain crucial ties and preferential trade terms with one of Canada’s leading trade partners. It will also ensure that Canadian businesses do not face yet another disruption or challenge at this time.
Indeed, if this agreement were not in place, this would be another setback that Canadians could ill afford.
To close, I would like to quote from the preamble of a question posed by our colleague Senator Doug Black to the Government Representative in the Senate in December:
The government of the U.K. is calling on our government to act. Businesses across the country are calling on us to act.
Colleagues, I couldn’t agree more, which makes it imperative that we move this bill forward as quickly as possible.
Honourable senators, to preserve Canada’s important trade relationship with the United Kingdom and the flourishing of its capacity, I hope you will join me in supporting this bill for second reading so that it might reach Royal Assent as expeditiously as possible. Thank you.