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Could Canada’s relationship with the US be a model for Brexit?

May 18, 2016

The introduction to this short series of blogs explained that, at a team meeting in early March, we discussed a range of scenarios should the UK choose Brexit in June. We took as our models the way different North American countries interact with their powerful neighbour, the USA. In other postings we looked at Cuba as it was in 2000 and Mexico. Here we consider Canada, the most closely inter-connected of the three.

Canada

Interestingly, a couple of days after our meeting, we saw people in the news having similar thoughts – of particular note were points that the Mayor of London, Boris Johnson, made during a speech in Kent. And there have been more since, including references in the UK Government’s widely distributed leaflet.

We noted, as the Mayor did, that on the face of it a Canadian style agreement or relationship looks appealing. As a model it would seem that we could end up with a broad, wide-ranging trade agreement with the majority of tariffs removed across both goods and services (including financial services). Compared with the other scenarios there would be less need to develop new, perhaps challenging, relationships with countries elsewhere in the world.

We spent time discussing various areas where agreements and deals would need to be made and tried to consider what they might look like in such a scenario. For example, a key area for the UK would likely be agriculture. As in such a situation the UK would lose the EU agriculture subsidies, would the government choose to compensate for this by using the contribution that would no longer need to be paid to the EU to reimburse farmers for the loss of these? In this scenario, we would expect EU agreements on health and safety controls for animals, plants and food would remain in place.

Clearly there are many areas where the UK would need to continue to meet EU standards and requirements, such as in manufacturing, public procurement and environment policies whilst having no real input into what requirements would be set in the future except as part of a negotiated deal. This may or may not be significant problem for businesses and producers but does require consideration. Canada faces the same challenge in its relations with the USA.

We thought that there were likely to be some areas where the UK might experience more negative effects. These included science and research where access to EU grants would be lost and the benefits of co-operation harder to secure and also education where EU student numbers would likely decrease leading to a loss of fee income and other grants.

On migration, the UK would regain some control but is likely to have to admit to the UK non-UK employees of EU companies who require such employees to staff their operations in the UK. UK may not necessarily enjoy equal reciprocal rights – this is the case with Canada and the US.

Compared with the other two scenarios, security co-operation is far less affected.

We had an interesting debate but of course, as is usual when exploring scenarios and possible futures, we ended up with more questions than answers!

The future is uncertain whether we Brexit or Remain. The nature of the relationship we have with the rest of the EU will underpin the whole range of economic and other issues. In this short series, we sought to explore a range of models for the Brexit option. Tell us what you think – and what models you think we might use to explore “Remain”.

Written by Cathy Dunn, SAMI Principal

The views expressed are those of the author and not necessarily of SAMI Consulting.

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