Why is the UK so interested in half-finished trade deal?

CETA is being touted by UK politicians as an ideal template for future trade deals – even though it’s not even in effect yet

There’s often a sharp contrast between outside perceptions and internal reality, and this is clear to see in a report on the Comprehensive Economic and Trade Agreement, or CETA, recently published on the Guardian website.

Following its decision to secede from the EU, the UK has the unenviable task of formulating new trade agreements with its partner countries. As leaders and analysts discuss possible models to follow, one deal stands out for many: the Comprehensive Economic and Trade Agreement, or CETA, which Canada hashed out with the EU.

The new minister for Brexit, David Davis, describes it as the “perfect starting point for our discussions with the [European] commission,” while Boris Johnson cites it as an example for the UK to follow. However, insiders and others who are familiar with the massively complex process behind CETA’s development just don’t see it.

“How they think CETA is the panacea, I’m confused,” said one senior Canadian government official deeply involved with the negotiations. “We still don’t get complete access to the EU market the way the Brits currently have as a member state.”

The yet-to-be-ratified agreement has several provisions, including one indicating that some 98.6% of goods traded between Canada and the EU will be free of duty. The deal also has implications on trade in agriculture and services, with hundreds of exceptions and qualifying criteria included.

The sheer complexity of the issues addressed confounded negotiations between Canada and the EU for years, during which time they produced a document described by Canada’s trade minister as a “gold standard” deal with the EU. “I’m surprised we pulled it off,” said the government source.

In the wake of Brexit, however, there may be some major retooling necessary. Some of CETA’s thornier clauses, such as one allowing corporations to launch legal challenges against governments perceived to block them, will likely have to be reevaluated by UK negotiators. “That’s a real threat,” said Andreas Schotter, a professor at Western University’s Ivey School of Business in Ontario. “That’s what the person in the street doesn’t understand, that with the legislation that is behind these trade deals, corporations become powerful enough to sue governments.”

The European Commission, which the UK is still currently part of, is also showing tepidness towards the deal, recently saying that it would send the text to the EU’s 28 national parliaments, as well as some regional parliaments, to be ratified.

The Canadian government hopes that the agreement will be implemented by early 2017, reported Greg Tereposky of Borden Ladner Gervais, a law firm that represented various private companies in the negotiations. “I don’t think that’s possible … We don’t know how the UK will fit into this puzzle, ultimately.”

Related stories:
Canada-EU trade deal may be in danger
BoC rate hold points to calming markets: Expert