As the United Kingdom prepares to begin its formal negotiations to leave the European Union, the British government is looking to the Commonwealth for new business opportunities. And Canada could find itself at the front of the queue.
Trade and business leaders from 30 Commonwealth countries are meeting in London, England, on March 9-10 for the first ever Commonwealth Trade Ministers Meeting. Canada is represented by its Minister of International Trade François-Philippe Champagne.
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A recent poll asked 500 British companies which of the 52 Commonwealth countries should take priority in trade talks. Overall, Australia came first, followed by Canada and Singapore. But Canada was the top choice for London-based businesses.
“This is an opportunity and it has to be seized,” said Tim Hewish of The Royal Commonwealth Society, which commissioned the poll. “Canada is a modern market, a Western market with a strong democracy, and one could argue that it’s a good entry point into the Americas more broadly.”
Hewish points to a study from 2015 that found trade between Commonwealth countries was 19 per cent cheaper for businesses, thanks to their shared language, institutions, legal and accountancy frameworks.
“We view (Brexit) as an opportunity for Canadian companies to enter UK supply chains,” said Stephen Wilhelm of Export Development Canada, which opened an office in London last year. “If we can get Canadian companies into UK supply chains, they may in fact benefit from UK companies looking to grow internationally, including those who have before been primarily reliant on the EU.”
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Wilhelm noted that Canadian and British officials already have a blueprint for future trade talks; Canada recently signed CETA — a landmark free trade deal with the EU removing 98% of tariffs — which will no longer include the UK, Canada’s largest European trading partner.
“There is a desire to get a similar deal to CETA, or one that’s better if that’s possible,” said Hewish.
Any official discussion of a CETA-inspired Canada-UK trade agreement will likely have to wait until after the Brexit negotiations are complete. The formal talks are expected to begin by the end of March and last up to two years.
In the meantime, Canadian businesses already in the UK are bracing for a bumpy ride.
“It feels a little bit like the calm before the storm,” said Robert Brant, a Canadian corporate lawyer based in London.
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For decades, London was the favoured place for businesses to set-up shop and gain access to the European Union. But Brexit will almost certainly mean higher tariffs and more red tape.
“Most of those companies are looking at increased costs going forward, if they want continued access to Europe and to the UK,” Brant, who has spent 20 years advising Canadian companies in Britain, said.
There are approximately 1100 Canadian companies currently operating in the UK, most of whom also do business elsewhere in Europe.
One of the newest arrivals is DIRTT Environmental Solutions, a Calgary-based construction firm that produces interior designs using 3-D printing technology. The company expanded to the UK just months before the Brexit referendum.
“I did not think that the vote would actually pass,” said DIRTT representative Katie Jeffery.
“Do we expect a slow-down? I don’t know. There’s a lot of uncertainty in the market right now. In terms of going forward, the great British saying — ‘Keep Calm and Carry On’ — is definitely pertinent here. I’m using it as a mantra.”