On June 8, 2017, the election in the United Kingdom saw the May Conservative Government go from a majority Conservative Government to a minority Conservative Government (possibly to be supported by the Democratic Unionist Party). On June 23, 2016 (almost a year ago), the United Kingdom voted for Brexit (that is, to exit the European Union). On October 30, 2016 (approximately half a year ago), Canada and the European Union (including the United Kingdom) executed the Canada-European Union Comprehensive Economic and Trade Agreement (the “Canada-EU CETA”). These are three key and developments in the United Kingdom, an important trading partner with Canada.
So, this latest development leaves Canadian businesses asking- how does the June 8, 2017 United Kingdom election results affect Canada-UK trade?
For starters, it makes ratification of the Canada-EU CETA by the UK Government more problematic. The majority May Government did not ratify the Canada-EU CETA prior to the election. As a result, now a coalition Conservative-DUP Government must ratify the Canada-EU CETA. Ratification of the Canada-EU CETA may be politicized in the UK and may not pass as easily as it could have.
According to www.parliament.uk, the ratification process for the Canada-EU CETA is as follows:
“In the UK, the agreement must be laid before Parliament for a period of 21 sitting days. The agreement can only be ratified if the 21 day period has passed without either House having resolved that it should not be ratified. In the event of such a resolution by the Commons, a further period of 21 days is triggered during which the Commons can again raise objections.”
This ratification process has not been completed in the UK. There is little information on whether the process was started prior to the June 8, 2017 UK election or if the steps were formally completed. It is likely that the UK was waiting for the EU-Singapore FTA ECJ legal opinion (issued May 16, 2017) before commencing the ratification process.
There is an interesting Paper written by Dominic Webb entitled “CETA: the EU-Canada Free Trade Agreement” that discusses a variety of issues involving the UK and the Canada-EU CETA.
In the United Kingdom, the term for a parliament is five years. An election may be called before the five year term ends by the leader (like what happened before the June 8th election) or if the government is defeated by way of a non-confidence vote. This is important because if Brexit proceeds and the UK negotiates a free trade agreement with Canada, that negotiation process may be affected by the coalition politics.
Prior to the June 8, 2017 Election, the UK Conservative Party issued a Manifesto in which it states a policy to “seek to replicate all existing EU free trade agreements and support the ratification of trade agreements entered into during our EU membership.” Without a majority government, the Conservatives may not be able to follow the Manifesto or may need to re-write a coalition-approved manifesto.
Current Trade Between Canada and UK
The June 8, 2017 should have little effect on current trade. Businesses will continue as they have been. Canada-UK trade was not an election issue. That being said, it is possible, if not likely, to expect that the recent terrorist incidents in the United Kingdom (March 22, 2017 Westminster terrorist attack, May 22, 2017 Manchester terrorist incident at the Arianna Grande concert and June 3, 2017 London Bridge/Borough Market terrorist attack) will result in a thickening of the UK border. What this means is that Canadian goods exported to the United Kingdom may be subject to new national security measures and may not enter the UK as seamlessly and quickly as before. It would be prudent for the Canadian Government to discuss a Fast and Secure Trade Program with the UK similar to what is in place between Canada and the United States. Canadian businesses should consider what steps can be taken to ensure that their goods flow most efficiently.
NEXUS/Registered Traveler Program
Since 2016, Canadians who travel to the United Kingdom frequently (3 or more times per year) are eligible for a Canada-UK NEXUS card/registered traveler card. The Canada-UK NEXUS Program allows pre-screened and approved travelers to get through the UK border faster. In light of recent developments, this program may be more beneficial for Canadian travelers.
There is uncertainty for Canada-UK trade. It is not that trade will stop. It is more than likely that progress on trade will be slow and some trade will be negatively affected by new security measures in the UK.
For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or firstname.lastname@example.org or Heather Innes at 416-350-1234 or email@example.com. There are many useful articles posted on the LexSage website.