The election of a new Labour government in Thursday’s British elections may come with the promise of change in the United Kingdom, but the immediate impact on relations with Canada is less clear.
The Canada-U.K. relationship, while typically strong, has faced some bumps in the road this year. The newly defeated Conservative government unilaterally paused trade negotiations with Ottawa in January, and more recently put new pressure on NATO allies — including Canada — to further increase their defence spending.
In the short term, those tensions may continue, analysts say, although common priorities between Labour and the Liberals could lead to a softening down the road.
“It’s probably safe to assume that we are not going to see much onward movement in resolving those issues until issues surrounding the election are behind us,” said Ann Fitz-Gerald, director of the Balsillie School of International Affairs and a political science professor at Wilfrid Laurier University.
Canada regularly touts its strong ties with the U.K., particularly as a Commonwealth member and strong trading partner. Last year, bilateral trade was valued at $45 billion, according to the Canadian government, making Britain Canada’s fourth-largest single-country trading partner.
The two countries have been negotiating a new trade deal over the past two years since Britain fully left the European Union. That deal would replace the current, pre-Brexit Canada-United Kingdom Trade Continuity Agreement that has largely allowed goods to keep flowing.
One recent exception is British cheese. Tariff-free cheese exports from Britain stopped at the end of 2023 after a time-limited side agreement expired, leaving British producers facing higher duties of 245 per cent.
Hopes of resolving that issue and others were dashed in January, when the British government announced it was hitting the brakes on trade talks, claiming “progress is not being made.”
Access to Canada’s cheese market was a sticking point in the talks, which were about to enter a ninth round before London pulled the plug. Another was Britain’s policy of banning imports of meats treated with certain hormones that are widely used by Canadian ranchers, which has impacted Canadian exports of beef and pork.
While the British government insisted at the time that it “remains open” to restarting talks in the future, negotiations have remained deadlocked. In the meantime, another temporary deal on country-of-origin rules expired at the end of March.
The change means that EU components in British products are now counted as U.K. goods within certain quotas. For example, British cars imported to Canada now face an additional 6.1 per cent tariff if more than 50 per cent of their parts come from the EU. That proportion is set to drop to 45 per cent in September.
A spokesperson for Global Affairs Canada said negotiators “are prepared to engage with our U.K. counterparts once they are ready” following Thursday’s election.
“Canada will only negotiate an agreement that delivers results for Canadian businesses, farmers and workers,” Charlotte MacLeod said in a statement.
The Labour Party’s more progressive, pro-worker economic policies may align the new government with the Liberals and create a path toward an agreement, Fitz-Gerald says. But she notes both the U.K. and Canada are facing cost-of-living crises and other economic headwinds, making it crucial for each side to secure a deal that benefits consumers.
“Whatever the outcome, one would like to think with the regulatory and tax systems in both countries that the outcome will not burden the individual consumer enormously more than the burdens that they are already facing,” she said.
Pressure and compatibility on defence
Britain’s election comes less than a week before NATO leaders gather in Washington for their annual summit, which will mark the 75th anniversary of the defence alliance.
During the summit, allies not currently meeting the alliance’s threshold of spending at least two per cent of GDP on defence — including Canada — are expected to deliver detailed plans on how and when they will get there.
Canada’s updated defence policy only includes explicit spending plans that will get to 1.76 per cent by 2030, but the government has promised additional spending beyond that.
In May, then-British foreign secretary David Cameron said NATO’s threshold should be raised to 2.5 per cent. That pressure may not subside under Labour, which has pledged to set out a path to meet that number.
Labour has also said it will remain committed to AUKUS, the new security partnership between Britain, Australia and the United States signed last year. Canada was left out of the pact despite its Five Eyes intelligence alliance ties with all three countries.
There is a potential, however, for additional defence partnerships between Canada and the U.K. in areas like Arctic security, cybersecurity, defence production and higher education that will be mutually beneficial to both countries, Fitz-Gerald says.
“We’re very like-minded and facing very similar challenges,” she said.
“There is an opportunity here to niche in some areas (and) cluster with like-minded partners … and seek more complementarity on what we bring to the world, and not duplication and competition.”
—with files from The Canadian Press and The Associated Press
Comments