Why even the so-called Canada deal won’t mean business as usual

PUBLISHED: 12:10 14 October 2020 | UPDATED: 12:10 14 October 2020

Deal or no deal, businesses need to start preparing for the end of transition period now   Picture: Getty Images/iStockphoto

Deal or no deal, businesses need to start preparing for the end of transition period now Picture: Getty Images/iStockphoto

Edgars Sermulis

In the second of Lovewell Blake’s series of weekly Brexit Blogs, Paul Briddon says that the much-trumpeted ‘Canada Deal’ would still leave businesses which trade with Europe with many changes to make.

Paul Briddon of Lovewell BlakePaul Briddon of Lovewell Blake

The Brexit trade negotiations may be nearing the end-game with no sign of what will emerge, but Boris Johnson has stated his ambition: “We want a comprehensive free trade agreement, similar to Canada’s.”

This outcome has been trumpeted as the solution to uncertainty about what will happen after the transition period ends on December 31. Many have taken this to mean that little will change, that seamless, borderless, frictionless trade will result, and that businesses which import from and export to the EU won’t really have to change much.

When you actually look at the deal which Canada has with the EU, you realise that we need to inject a huge dose of reality into this thinking.

The Comprehensive Economic and Trade Agreement with Canada (which took eight years to negotiate, by the way) came into effect in 2017 – and it is still not fully signed off by the EU states.

The deal gets rid of most tariffs, but not all, with foodstuffs such as poultry, meat and eggs still subject to tariffs. It also increases – but does not abolish – quotas. It does not remove the need for border checks, so goods still have to be examined at ports to ensure they meet regulatory requirements.

The agreement does, however, cover matters such as geographical indications, opening up government contracts to each party, equivalence of qualifications, and co-operation on standards, all of which certainly grease the wheels of trade. But – and it’s a huge but – the deal doesn’t cover the all-important (for the UK) service sector, and that includes financial services.

Mr Johnson has said he wants to tack financial services onto a ‘Canada-style deal’, but he will have to convince EU governments first, which is a big ask.

So put simply, a ‘Canada deal’ – regarded by most as the very best we can expect – is still likely to include tariffs on some foodstuffs, quotas, border checks and customs declarations, and will not include the service sector, which represents something like 80pc of the UK’s economy. This will then fall short of the seamless, frictionless trade with the EU we have come to take for granted.

Many UK businesses are holding off preparing for the end of transition period, mistakenly believing that a last-minute deal will be done that will allow them to carry on trading as they were.

Deal or no deal, that is not going to happen; those which want to carry on trading must make preparations or face the real prospect of not being able to do business on January 1.

If you value what this story gives you, please consider supporting the Eastern Daily Press. Click the link in the orange box above for details.

Become a supporter

This newspaper has been a central part of community life for many years. Our industry faces testing times, which is why we're asking for your support. Every contribution will help us continue to produce local journalism that makes a measurable difference to our community.

Latest from the Eastern Daily Press