What Would a ‘Canadian-style’ Brexit Deal Mean for International Business?
Michel Barnier, the EU’s chief Brexit negotiator, has suggested that a post-Brexit deal similar to Canada’s is the most likely future trade deal for the UK . It would allow the UK to retain control over immigration and regulatory standards. But how would such an arrangement be enacted, and what would it mean for UK companies doing business abroad? Here, we examine a Canadian-style Brexit deal and its potential impact on international expansion.
The Implications for International Business
The Comprehensive Economic and Trade Agreement (CETA) is Canada’s trade agreement with the EU. This deal removed 98% of tariffs on imports between both parties, but it did not remove non-duty barriers to trade. As a result, customs checks would still be required between the UK and EU. We know that, if a deal similar to CETA is enacted, access to EU trade will not be nearly as comprehensive as it is currently – particularly for businesses in the key UK financial sector. These companies would not be guaranteed the right to offer their services in the EU.
Currently, 43% of the UK’s exports in goods and services go to the EU, and 54% of UK imports come from these countries . Therefore, any inhibitory changes to trade terms will impact UK businesses looking to expand into the EU. It is also possible that sensitive goods and services could be excluded from any trade deal, as was the case with CETA.
Applying the Canadian Blueprint
If history helps us to make predictions of the effects of a Canadian-style deal for the UK, it is likely to be a drawn-out process. The negotiation of CETA was a contentious process that lasted seven years, including two years alone to obtain all the ratifications from parties such as Wallonia.
Theresa May has made it clear that she does not want to negotiate terms of transition with the EU until a final trade deal is reached . If this goal is not achieved, it is highly possible the UK could face a significant gap between the end of any transition period and the start of a new trade deal. An extended transition deal would alleviate this issue but is unpopular with Brexiters in the UK. To find out more about how a transitional deal (or lack thereof) could affect international business, read our article on the topic here.
For business owners, the uncertainty of Brexit puts a strain on moving forward with plans for international expansion. Fortunately, Galvin International’s international business expansion concierge service can provide you with the resources, guidance and implementation you need to expand your company in these times of instability. With our vast network of partners, we help your business work through the complexities of expansion and compliance, taking into account the effects of potential trade deals and what they mean for your industry and your target market. Get in touch with our team of expansion experts today to learn more about how Galvin International can help you navigate your company’s global growth.
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