UK can clinch an even better trade deal with Canada if it acts quickly

Justin Trudeau’s offer to resurrect stalled trade talks gives the UK a small window in time in which to clinch major concessions, economists said last night.

The beleaguered Canadian PM extended the olive branch in an effort to reduce Canada’s dependence on the US in light of Donald Trump’s trade policies.

Trade between the UK and Canada is now worth a handsome £27 billion, up 6.7% from last year.

Though both countries successfully secured a continuity deal to roll over EU terms in 2021, hopes of signing off an upgraded Free Trade Agreement stalled last year after a gruelling ten rounds.

At the heart of the impasse was Ottawa’s failure to persuade London to relax its ban on hormone-treated beef, which Canadian producers claim effectively shuts them out of the British market.

Meanwhile, Britain objected to the 245% import taxes levied by Canada on British cheese.

But Trudeau’s desire to resume talks has led political analysts in Canada and economists here to suggest that Ottawa has less leverage now than it did even 12 months ago.

“There is real scope for the UK to gain movement on some of the stumbling blocks that derailed things last year,” said a senior advisor to former Conservative Party leader Erin O’Toole.

“Trudeau is desperate to show Trump that Canada can withstand his aggressive trade tactics – he needs this economically but, crucially, he also needs this politically to bolster the position of the next leader of the Liberal party, who is likely to be Mark Carney.”

Once the poster boy for liberal values, Trudeau was forced to resign as PM last month after almost ten years in power last month following a collision of unsustainable factors.

These ranged from plummeting polls to a split from deputy PM Chrystia Freeland, one of his few remaining allies, in a dispute over how best to handle Trump’s threatened trade tariffs.

He agreed to remain in power until a new leader of the Liberal Party was chosen, and suspended parliament until 24 March.

Former Bank of England Governor Mark Carney is expected to take his place, despite never having served as a Canadian MP.

But despite narrowing of poll divisions in the face of the Trump threat, the Conservative Party continues to command a 13 point lead and its leader, Pierre Poilievre, is expected to win the next General Election.

While this would normally take place in October, a lack of confidence in the Government could push the GE to as soon as March, though the Liberals are hoping Carney will be given more time to turn things round.

Canada’s constitution would allow the General Election to be held as late as September next year.

This might spell good news for Keir Starmer – if he chooses to bite.

Continues below…

“There is an opportunity for the UK, here. Ottawa has less leverage now and it is perfectly possible that they decide, for instance, to drop the whole hormone beef clause,“ said economist and policy advisor Matthew Kilcoyn, formerly of the Adam Smith Institute.

“If Canada shows real movement on one key issue I think they’ll get a deal, and we should be pressing for one.”

The UK’s membership of the £12 trillion trans-pacific CPTPP trade bloc, to which Canada is a founding member, will already give the UK better trading terms – when Ottawa gets round to ratifying the UK’s accession, as it has said it will.

“Clearly Canada is an important trading partner for the UK and, as its third largest trading partner, we are very significant for Canada,“ said William Bain, head of trade policy at the British Chamber of Commerce,

“Overall, we are in a similar place. We are like0minded nations, we both want simpler arrangements for borders, we want more digital trade, and service trade is burgeoning. There’s a win-win in the offing”

For his part, Keir Starmer told Justin Trudeau that he welcomed an international conversation on the importance of trade and collaboration during a phone call on Wednesday.

But Mr Bain questioned Starmer’s political commitment to push the deal through.

“This Government wants to prioritise an EU reset to remove some trade barriers, and it has six priority FTAs (India, South Korea, the GCC,Turkey, Switzerland and Israel), with India talks resuming soon.

“So the real question is whether there is any capacity to tackle these Canadian negotiations as well?”