Creating a Progressive Canada-UK Free Trade Agreement: Gaining Civil Support in a Post-Brexit World
Lead Research Organisation:
University of Sussex
Department Name: Sch of Law, Politics and Sociology
Abstract
This research comprehensively assesses strategies to strengthen support for an inclusive and progressive Canada-UK FTA in a post-Brexit context. Canada and the United Kingdom (UK) have prospered from a productive commercial relationship. Their two-way merchandise trade totaled more than C$25.3 billion in 2016, making the UK Canada's fifth-largest merchandise trade partner and making Canada the UK's eighth biggest export market outside the EU. The UK is the second largest source of FDI to Canada and Canada's second most significant destination for FDI abroad. Brexit has made the future of this relationship uncertain. Various trade and financial institutions, such as Export Development Canada (EDC), the Business Development Bank of Canada (BDC), and the Royal Bank of Canada (RBC) note that Brexit may affect Canadian exports and investments. Brexit could make the UK a less attractive destination for Canadian investment due to uncertainty over the UK's market access to the EU. Further, Brexit could result in Canadian exporters facing the same tariff structure that was in place before the Canada-European Union Comprehensive Economic and Trade Agreement (CETA). This would raise the costs of doing business, particularly for exporters of Canadian services. For these reasons, Canadian businesses may direct more of their business to the EU.
Crucial to the future of Canada-UK relations is the possibility of a new Canada-UK Free Trade Agreement (FTA). One issue for analysis, is why there is a growing reaction against deeper economic integration. It is also useful to understand why free trade agreements fail to live up to societal expectations. Who are the losers from free trade and who opposes free trade and globalisation?
This research identifies different inclusion efforts that could be made to strengthen the support for a Canada-UK FTA. Our proposal identifies key areas that represent civil society's critique of FTAs that need to be addressed in a Canada-UK trade agreement to gain societal support: 1) Fair and free trade: Providing safeguards to protect environment and social standards, including labour adjustment supports. What are the most effective rules, education and re-training programs that can be embedded in an FTA? 2) Effective consumer protection: including cooperation between consumer agencies to ensure the benefits of free trade agreements are felt and understood by consumers, particularly the vulnerable or marginalised. 3) Smart government procurement policy: Buy National clauses have become an important form of protectionism within government procurement policy, as well as a policy tool to support and nurture local industry and communities. How can a Canada-UK FTA be designed to allow sovereignty in the government procurement space, allowing value for money and local SME development? 4) Sustainble FDI rules: investment chapters and dispute settlement provisions have become a lightning rod for opposition to modern FTAs. Investor chapters offer recourse to businesses affected by foreign governments and often provide closed and secret rulings on important regulatory issues. The investment chapters along with dispute settlement provisions also raise important state sovereignty concerns. How can these provisions be designed to address the main concerns of critics, while preserving investor confidence? 5) How will these negotiations incorporate the positions of the sub-national or devolved regions in both countries? Could we expect a similar subnational government representation in a Canada-UK FTA? Would the devolved regions of Ireland, Scotland, Wales and England have independent representation alongside the Canadian provinces? What impact would this have on the integration level (deep or shallow) of the final agreement?
Crucial to the future of Canada-UK relations is the possibility of a new Canada-UK Free Trade Agreement (FTA). One issue for analysis, is why there is a growing reaction against deeper economic integration. It is also useful to understand why free trade agreements fail to live up to societal expectations. Who are the losers from free trade and who opposes free trade and globalisation?
This research identifies different inclusion efforts that could be made to strengthen the support for a Canada-UK FTA. Our proposal identifies key areas that represent civil society's critique of FTAs that need to be addressed in a Canada-UK trade agreement to gain societal support: 1) Fair and free trade: Providing safeguards to protect environment and social standards, including labour adjustment supports. What are the most effective rules, education and re-training programs that can be embedded in an FTA? 2) Effective consumer protection: including cooperation between consumer agencies to ensure the benefits of free trade agreements are felt and understood by consumers, particularly the vulnerable or marginalised. 3) Smart government procurement policy: Buy National clauses have become an important form of protectionism within government procurement policy, as well as a policy tool to support and nurture local industry and communities. How can a Canada-UK FTA be designed to allow sovereignty in the government procurement space, allowing value for money and local SME development? 4) Sustainble FDI rules: investment chapters and dispute settlement provisions have become a lightning rod for opposition to modern FTAs. Investor chapters offer recourse to businesses affected by foreign governments and often provide closed and secret rulings on important regulatory issues. The investment chapters along with dispute settlement provisions also raise important state sovereignty concerns. How can these provisions be designed to address the main concerns of critics, while preserving investor confidence? 5) How will these negotiations incorporate the positions of the sub-national or devolved regions in both countries? Could we expect a similar subnational government representation in a Canada-UK FTA? Would the devolved regions of Ireland, Scotland, Wales and England have independent representation alongside the Canadian provinces? What impact would this have on the integration level (deep or shallow) of the final agreement?
Planned Impact
Our team plans to create a number of opportunities to share our findings broadly. We will focus on three groups - policymakers, populations left behind, and academics. Our engagement and information dissemination goals are tailored to each group in hopes of creating the greatest impact. Our team intends to collaborate with policymakers from both Canada and the UK during the information gathering period of this project. By creating an open and ongoing dialogue between academics and policymakers we intend to host roundtable sessions in May and follow-up presentations of the synthesised report in November, one in each country. Having a more nuanced understanding of Canada's and the UK's political environment around the free-trade in an economic climate of instability will provide policymakers the data they need to make informed policy decisions the creation and implementation of a Canada-UK FTA. Consultation interviews will be necessary to elicit the opinions of the main societal groups with vocal interest in the outcome of trade negotiations. This will include trade unions, environmental groups, consumer organisations, business representatives.
Both CETA and CPTPP are examples of progressive FTAs which include sections related to labour and technology changes, it is important to discuss the effects of these types of deep integration policies on inclusion. Groups who have been left out of the economic benefits of globalization historically have been individuals described as low skilled workers, low levels of education, women and those holding anti-immigration and other protectionist views. Our team intends on reaching out to groups who have been disenfranchised by globalization in two ways. First, we will invite youths to the roundtables to ensure that the voices of tomorrow are present today. Secondly, Dr. Beaulieu has written several pieces for national newspapers which offer a publicly accessible version of our literature review. These two pieces of our knowledge mobilization plan aim to shed light on gaps in academic and political research and to identify future research questions.
In addition to the papers produced for the project, we will produce some briefing notes that complement the larger papers. The target audience for the briefing notes will be the general public and individuals interested in these policy issues. Although these briefing notes will be scholarly publications, the reader need not need be a specialist in the subject area to comprehend the material. We will release these briefing notes through both Sussex Law School and the School of Public Policy at the University of Calgary (the Schools) and will work closely with the professional communications team to ensure maximum impact and outreach. The School communications team is very successful due to its aggressive marketing and dissemination of its research.
With every paper released, the Schools will apply a protocol of action that ensures the broadest possible reach of its work.The media approach includes further work after release of the paper by managing echo media requests - usually talk shows; reaching out to local daily newspapers, ask if they would have interest in an op-ed on the topic of the research report and if so, quickly prepare and submit about 650 words in the most accessible language possible; actively engage in social media to enhance coverage of the paper and send the paper via email to major stakeholders - donors, politicians, etc.
Both CETA and CPTPP are examples of progressive FTAs which include sections related to labour and technology changes, it is important to discuss the effects of these types of deep integration policies on inclusion. Groups who have been left out of the economic benefits of globalization historically have been individuals described as low skilled workers, low levels of education, women and those holding anti-immigration and other protectionist views. Our team intends on reaching out to groups who have been disenfranchised by globalization in two ways. First, we will invite youths to the roundtables to ensure that the voices of tomorrow are present today. Secondly, Dr. Beaulieu has written several pieces for national newspapers which offer a publicly accessible version of our literature review. These two pieces of our knowledge mobilization plan aim to shed light on gaps in academic and political research and to identify future research questions.
In addition to the papers produced for the project, we will produce some briefing notes that complement the larger papers. The target audience for the briefing notes will be the general public and individuals interested in these policy issues. Although these briefing notes will be scholarly publications, the reader need not need be a specialist in the subject area to comprehend the material. We will release these briefing notes through both Sussex Law School and the School of Public Policy at the University of Calgary (the Schools) and will work closely with the professional communications team to ensure maximum impact and outreach. The School communications team is very successful due to its aggressive marketing and dissemination of its research.
With every paper released, the Schools will apply a protocol of action that ensures the broadest possible reach of its work.The media approach includes further work after release of the paper by managing echo media requests - usually talk shows; reaching out to local daily newspapers, ask if they would have interest in an op-ed on the topic of the research report and if so, quickly prepare and submit about 650 words in the most accessible language possible; actively engage in social media to enhance coverage of the paper and send the paper via email to major stakeholders - donors, politicians, etc.
Organisations
| Description | What were the most significant achievements from the award? This award produced research that has plotted the progress of labour, environment and human rights provisions in EU and Canada's regional trade agreements to provide an historical overview of the development, character and enforcement properties of these provisions. This gives a state of play and an assessment of the present potential of these agreements as relates to the environment, labour standards, gender and human rights. It has pointed to where the added value from this research will be in terms of focusing on individual policy objectives. For example, how far can these labour provisions support gender rights or the environmental provisions support the Paris Agreement's commitments to control and reduce carbon emissions. Conversely, how far do these agreements hurt the attainment of objectives such as the Paris Agreement's commitments on carbon emissions reductions. The research on the economic aspects of free trade agreements has largely involved a literature survey. This has indicated that Brexit will have a negative impact on the UK economy. The UK will need to forge new trade agreements with countries, but there has not been much appetite in Canada for a UK FTA. It indicates that there are civil society reactions to global trade surges and this can be seen to translate into voting behaviour in affected regions. It indicates that under the UK Canada trade relations - there is not much trade affected, which minimises the risk of the impact. The research on paradiplomacy and the relationship between devolved regions and the centre has been particularly revealing. Both labour and environment are also devolved competences in both Canada and the UK. The research indicates the relative sophistication of the Canadian provisional states' communications and stakeholder consultations with Ottawa, as compared with the UK governments institutional framework for consulting with Wales, Scotland and Northern Ireland. The research concluded: The UK and Canada are well positioned, with shared values and customs, to commit to a fair and progressive free trade agreement. Under normal circumstances, free trade agreements can be controversial and politicised issues. In the current political economy, the UK and Canada will need to be mindful of various levels of society - civil society including dichotomised fractions supporting protectionism and others globalisation; international precedents such as the global architecture and trends in RTAs; and internal multilevel governance structures like the provinces and devolved regions. We described how each of these three spheres relate to the current political economy and a potential Canada-UK free trade agreement. The fractures in our societies makes clear that the impact of Brexit on the UK economy will be negative and profound - but that the magnitude of impact will depend greatly on what the new relationship looks like and what the UK relationships with other countries look like. Overall, Brexit will reduce income per capita in the UK and the best way to mitigate the economic costs of leaving will be for the UK to remain closely integrated into the European single market and to maintain similar access to other partner countries that the UK currently enjoys through EU membership. As Brexit and the backstop have yet to be concluded, it is difficult to know the limitations and opportunities the UK will have before it until a resolution has been decided. To what degree can the UK seek assurances from other potential RTA or bilateral trade partners as March 29, 2019 approaches? Some countries, like Canada have committed to transferring EU RTA provisions to the UK after Brexit. How long will it take for those agreements to be renegotiated and to what ends? As above, this instability creates business uncertainty which will also have an adverse effect on the UK economy. With the aim of forging more progressive trade agreements, it is significant that governments, including Canada, now commonly include comprehensive labour and environmental chapters in RTAs in a manner the WTO is unlikely to be able to do in the foreseeable future. These RTAs explicitly try to develop textual coherence and legal integration with the wider body of international law, as well as referencing both the language and some agreements of the GATT/WTO. Nevertheless, even in the RTAs with the strongest obligations, the commitments are restricted to effective domestic law enforcement, the need to show the impact of a violation on trade between the parties to the agreement, or the threat of retaliatory action was removed by the exchange of side letters between the parties. That is, whether or not these legal provisions can meet their policy objectives still remains dependent on domestic factors such as the political will and resources to enforce these laws. For example, the difficulty appointing panels through consensus under the old NAFTA chapter 20 has not been effectively addressed in the new NAFTA USMCA, nor has the lack of transparency on the panel appointment system. It could be argued that if the challenge is in the implementation rather than the creation of such regulation, these RTA provisions could be doing little more than duplicating existing law and institutional arrangements. This is unless they offer a stronger incentive to implement than currently exists at the multilateral or national level. Given that labour and environment are devolved/subnational competencies, there are a number of issues that must be identified when proceeding with a Canada-UK free trade agreement. Canada's Constitution and the UK's devolution legislations assign jurisdictional authorities to the sub-state regions. There are significant differences between the Canadian and British systems that need to be understood. Both countries must ensure the legitimacy of this trade agreement. The legitimacy of a federal state is its ability to produce results, and with respect to a free trade agreement, it is a state's ability to successfully negotiate, ratify, and implement the agreement. Our consideration of the evidence leads us to conclude that the impact of Brexit on the UK economy will be negative and profound. The magnitude of the impact will depend on what the new relationship looks like and the relationships the UK forges with other countries. We also find that displaced labour and populations have not benefited from free trade support the current protectionist movements. Other public interest groups criticize globalisation for failing to safeguard adequate environmental and human rights standards. Yet whether or not labour and environmental provisions can meet their national policy objectives still remains dependent on domestic factors such as the political will and resources to enforce these laws. We examine Canada's Constitution and the UK's devolution legislations and point out that jurisdictional authorities included in FTAs are increasingly assigned to the sub-state regions including powers over labour, environment, and many social programs. As FTAs become more progressive, they will have a greater impact on subnational jurisdictions which can alter the role of subnational governments in international affairs. To mitigate the economic costs of leaving, the UK should remain closely integrated into the Single Market and maintain similar access to other partner countries that the UK currently enjoys through EU membership, including Canada. The UK and Canada should negotiate an FTA with strong environmental and labour provisions. It would be progressive, but unprecedented to include an independent enforcement body or explicit targets for the parties to achieve within the commitments of the trade agreement. More likely, the Canada-UK FTA will be modelled closely after the CETA. Further research is necessary to identify how a more progressive FTA could be designed to more effectively address issues such as independent monitoring and enforcing labour environmental and social rights, or achieving government's nationally determined emission reductions under the Paris Agreement. Ensuring a successful Canada-UK PTA requires efforts to garner buy-in from jurisdictions responsible for implantation. Strategies to achieve this could include consultations, collaborations, and new institutional mechanisms for negotiations with subnational governments. - How might the findings be taken forward and by whom? We are submitting a briefing paper on this research to the Calgary School of Public Policy We are collaborating with the other project partners to produce an academic book with chapters on UK Canada Trade Agreements We are drafting 2 academic journal articles on labour and trade agreements and environment, devolution and trade agreements |
| Exploitation Route | - we are submitting a briefing paper of our findings to the Calgary University Public Policy Journal. - We are proposing a special edition publication of edited chapters on different topics relating to fair and progressive free trade agreements. - we are drafting 2 academic journal articles on trade agreements and labour provisions and trade agreements, environmental provisions and devolution |
| Sectors | Communities and Social Services/Policy Environment Government Democracy and Justice Security and Diplomacy |
| Description | Training UK Regulatory Scrutiny Committee |
| Geographic Reach | National |
| Policy Influence Type | Influenced training of practitioners or researchers |
| Impact | I presented a training session to the UK Regulatory Scrutiny Committee and trade civil servants on assessing impacts of regulation and the use of impact assessment reports. This involved looking at the legal impacts of trade agreements, EU regulation and choices for the UK's regulatory models after Brexit. It assessed the various qualitative and quantiative approaches to assessing the impact of a regulation, in terms of its objectives, indicators and monitoring mechanisms. |
| Title | Atlas TI database EU Canada FTAs |
| Description | I have used Atlas TI software and collected all of the regional trade agreements signed by Canada and the EU. I then coded all of these agreements' provisions on labour, environment, human rights and dispute settlement. I have then been able to analyse the different provisions and add comments on the legal characteristics of interesting provisions. I can now use this for all other FTAs that I am analysing. |
| Type Of Material | Database/Collection of data |
| Year Produced | 2018 |
| Provided To Others? | No |
| Impact | We have shared the database within the research team and can now build and draw upon the qualitative and quantitative data that it contains for future use. |
| Description | Canada House London Event |
| Form Of Engagement Activity | A formal working group, expert panel or dialogue |
| Part Of Official Scheme? | No |
| Geographic Reach | International |
| Primary Audience | Policymakers/politicians |
| Results and Impact | On December 6th 2018, the project held a roundtable event at Canada House in London. Approximately 20 academics, policy makers and diplomats attended this discussion of the project research. This produced a lively debate with useful feedback to improve the research and focus on developing further outputs and initiatives. |
| Year(s) Of Engagement Activity | 2018 |
| Description | Panel discussion |
| Form Of Engagement Activity | Participation in an activity, workshop or similar |
| Part Of Official Scheme? | No |
| Geographic Reach | Local |
| Primary Audience | Policymakers/politicians |
| Results and Impact | Project partner Eugene Beaulieu participated in a panel discussion in London on December 5 that was a direct spinoff from our work. The panel was at the Institute for Public Policy Research (IPPR), a leading UK-based think tank and was supported by the UK-Canada Foundation. It was entitled 'Trade policy for post-Brexit Britain - the lessons from Canada's progressive trade agenda' on Wednesday 5th December at IPPR, 14 Buckingham Street, WC2N 6DF from 13:00-14:30. |
| Year(s) Of Engagement Activity | 2018 |
| Description | Public Policy Event Goodenough College |
| Form Of Engagement Activity | Participation in an activity, workshop or similar |
| Part Of Official Scheme? | No |
| Geographic Reach | International |
| Primary Audience | Policymakers/politicians |
| Results and Impact | Funded by Calgary University School of Public Policy. Approx 50 Canadian and UK public policy makers, politicians, diplomats and academics attended the Canada-UK Shoulder to Shoulder event at Goodenough House in London on November 29th 2018. I was on the main panel event discussing what a fair and progressive free trade agreement between Canada and UK could include and what would be different about previous FTAs between these two trading partners. |
| Year(s) Of Engagement Activity | 2018 |
| URL | http://www.policyschool.ca/events/shoulder-to-shoulder-forging-a-new-canada-uk-relations |
| Description | Public Policy Event Goodenough College 2019 |
| Form Of Engagement Activity | Participation in an activity, workshop or similar |
| Part Of Official Scheme? | No |
| Geographic Reach | International |
| Primary Audience | Policymakers/politicians |
| Results and Impact | A 2-day event involving UK and Canadian policy makers, academics, business and practitioners. The discussions ranged from trade agreements - scope and implementation. Market access, devolution, climate change and industrial policy. |
| Year(s) Of Engagement Activity | 2019 |
| URL | https://www.canada-uk.org/2019/univeristy-of-calgary-shoulder-to-shoulder-canada-and-the-uk-partners... |
| Description | TV Interview |
| Form Of Engagement Activity | A broadcast e.g. TV/radio/film/podcast (other than news/press) |
| Part Of Official Scheme? | No |
| Geographic Reach | National |
| Primary Audience | Public/other audiences |
| Results and Impact | On January 21st 2019, project partner Eugene Beaulieu was interviewed on Canadian CBC Television on Canada-UK relations, based on the project work. |
| Year(s) Of Engagement Activity | 2019 |