Those of us who are concerned about Brexit, and its ideology, must despair at the superficial attitude displayed by Boris Johnson. His main obsession seems to be asserting that Britain is now an independent country rather than securing what is best for us. A few weeks ago he made the statement: “We want a comprehensive free trade deal, similar to Canada’s”. This begs the question as to whether he actually knows what the Canada deal with the EU (The Comprehensive Economic and Trade Agreement, CETA) actually is.
The first thing to note is that it took eight years to negotiate and hasn’t been properly signed off yet. It does not get rid of all tariffs and quotas, simply reduces them. The example often quoted is cheese (much loved by Liz Truss). The quota has increased from 18,500 tonnes to 31,972 per year. It has not been abolished.
There is alignment of qualifications and standards, but the important point to remember is that Canada’s economy is different to ours. It is a big exporter of agricultural products, but also has a large service industry. Manufacturing is not large. Much of this is tourism – it does not have the large banking and finance sector that we do in the UK. CETA largely benefits agriculture, although it will help the Canadian manufacturing industry which produces trains and aviation products. It does little or nothing for services. Canada exports about 8% of its machinery to the EU, compared with 45% of all exports and 53% of imports for this country.
A CETA deal would not stop border checks of tariffs on some goods. There would still be checks at borders. If you want to see what this is like, travel to the southern border between Montenegro and Croatia south of Dubrovnik. The queue of lorries being checked, not just for what goods they are carrying but also whether they harbour illegal immigrants, is enormous.
The EU is jealous of our financial industry, and centres like Paris, Amsterdam and Frankfurt want to build theirs up. At present 43% of UK financial services exports go to the EU and imports are worth £15 billion, giving the UK a large surplus. Maintaining this would be difficult. The EU might impose conditions on Britain. In any case a Canada Style deal would take a considerable amount of time and effort to work out, even if both sides were keen to have one.
Back in the real world the negotiations continue to struggle. The Economist suggests that neither side wants to be seen as the one who breaks them off. One of the sticking points is fisheries, which is rather odd since they account for about 0.1% of GDP. But they have considerable political and emotional clout, and Boris does not want any accusation of ‘selling them out’. The other main sticking point is about state aid to industry. The CETA treaty agreed an arbitration mechanism, with members nominated by both sides, so there is no reason why something similar could not be agreed with the EU if both parties wanted it.
The complications of negotiating trade agreements seem a far cry away from those of us who have a vision of the benefits of a ‘United Europe’. I think I would be a bit happier if we had a Prime Minister who was prepared to do his homework and appreciate what it was really all about.
