The recent suspension of Free Trade Agreement negotiations between the UK and Canada has caused some surprise and consternation.
The “pause”, initiated by the UK, comes after years of negotiations on an enhanced trade deal that was intended to go far beyond the holdover agreement inherited from UK’s membership of the EU. International relations are not always as they seem, and whilst the UK and Canada have broken off negotiations over a new trade deal with time running out for the temporary deal in place, there had already been considerable issues over UK cheese exports to Canada – and the Canadians attitude was hard cheese to the British.
But now things have taken a further downward turn when the UK walked away from the table because of a beef over beef!
The Canadians, under considerable pressure from their own farming lobby, had sought to add in hormone injected beef to the trade deal; something that crosses the UK’s red lines – that’s an absolute no no. If the UK were to even consider the idea, it would cause serious issues over here with our European neighbours, and others and the trade deals that we have with them.
The Americans call this “Pork Barrel Politics” when special interest groups add their favoured cause to an unrelated agreement. And this is not the first time this has happened with the Canadians; when the CETA agreement between EU and Canada was in its final stages, minority causes in Belgium – the Walloons – held the agreement to ransom for a while.
The Canadian farmers have felt for some time that it is unfair that they are blocked out of participation in the UK market (amongst others…), whilst at the same time UK beef can be accepted in Canada. The strength of the Canadian agricultural lobby is what is really on show here; not so much the tail wagging the dog as the cow ringing the bell.
The Canadians are not alone. The USA and Canada have been in a series of disputes with the EU at the WTO emanating from the 1981 EU resolution (when UK was still in the EU) banning hormone injected beef.
That the issue is still going on after 40 years shows how intractable the differences are.
Nor are beef and cheese the only contentious issues; the percentage of a car that originates in the other party is also a major bugbear for the Canadians as it was in their negotiations with Japan over the CPTPP. This was eventually settled with a side agreement.
So does this really mean that it’s all over in our negotiations with one of our closest allies?
Nothing would ever be that simple! Let me take you back to the CPTTP – a comprehensive partnership agreement that includes both Canada and the UK. How will this dispute affect that agreement, if it does at all?
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a trade agreement between original members Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. The UK formally signed the agreement in July 2023 and along with the other member states are currently in the process of ratification.
Does this mean that Canada could hold up, or prevent the UK’s accession? Well it can hold it up but cannot, by itself, prevent accession.
Having already agreed to the UK’s joining, Canada can delay ratification, however there is a clause that allows for full accession once the UK and a majority of member countries have ratified the agreement. But to think that the CPTPP trade agreement is the same as the agreement that the UK and Canada have been negotiating would be a mistake.
Indeed it is not comparable to the Canadian/EU CETA deal, it is far more advanced.
The UK has been negotiating, and in some cases, for instance Japan, agreeing, what are known as FTA 2.0, a more advanced trade agreement, which are better suited to the UK’s substantial services sector (The UK is the 2nd largest exporter of services in the world after the USA). So the next steps in this saga will be keenly followed; my own view is that this is a hiatus not a break.
The countries are too closely aligned for it to be otherwise. The big question you may now be asking: is this really how international relations work?
Well the simple answer to that is yes, sometimes it is.
Tony Goodman MBE is a successful exporter and has been doing so through a variety of different businesses. He is currently Marketing Advisor at Forest and Co who specialise in offering guidance on branding, exporting and sales: www.forestandco.com