With Brexit appearing to be slipping further from their hands, British Members of Parliament are preparing to take control of the situation. According to the latest update, the EU approved an extension, saying that the UK would be able to leave on May 22nd, 2019 if a deal was passed by the UK government by end of the week. However, the uncertainty continues to be present now more than ever since Prime Minister Theresa May’s proposed outcome has already been rejected twice.
While the British MP’s are figuring out the next step forward, it is also important to consider the implications of Brexit on other countries, such as Canada. At present, with the UK part of the EU, it is clear that is an opportune place for Canadian companies to invest. It helps that the countries share common laws, a common language and a direct access to a market of 500 million people.
That all changes when Brexit comes into play. Since the UK might no longer be a part of the Customs Union, it changes the thought process around potential investment.
Mike Palota is a Commercial Sales Manager at a Canadian manufacturing company with over 25 years of experience in transacting global trade. He said that in the first 6 to 10 months, there’s going to be a lot of muddling through in order to alter the existing infrastructure in the UK. Since nobody can know the exact nature of the events about to unfold, there’s going to be a lot of time and effort put into the future steps.
“One of the huge – perhaps the biggest challenge with Brexit – is the extent to which this whole thing is a great, flying leap into the absolute unknown,” Palota said. “At first glance, one would think that a Canadian with a Brit passport would have no trouble in the UK but some trouble with the EU. Same goes with a Canadian with an EU passport: Good in Paris, who knows in Liverpool.”
He pointed out that things are potentially going to get really messed up for Canadians with an EU passport by way of Irish citizenship, especially if the citizenship was acquired by way of a connection to Northern Ireland.
“Ireland is in the EU but the UK – Including Northern Ireland – will not be post-Brexit. So post-Brexit, there can’t be the free movement of goods & people across the border between Ireland & Northern Ireland, but the Good Friday Accord says there has to be,” Palota said.
He added that according to the EU, the Good Friday Accord cannot and will not be broken and nobody in Ireland or the North wants to take any sort of chance with whatever peace there is now.
“This is one the central impasses of Brexit,” he said. “Two entirely incompatible ideas trying to exist at the same time.”
Prime Minister May has tried to solve the Northern Ireland issue with the “backstop”, where Northern Ireland is in the Customs Union until the UK and the EU can figure out a way to interact post-Brexit. However, that too appears to have an uncertain outcome.
“And businesses hate uncertainty. Uncertainty paralyses business,” Palota said. “Risk is fine; risk can be calculated but uncertainty can’t be. I can’t imagine that a Canadian with an Irish/EU passport would be asked to leave Belfast or shut down their business there, but I can imagine that person having a hell of a time crossing borders, reporting income, etc.”
Anna Nadibaidze, a Research and Communications Associate at Open Europe said that for Canadians, a lot will depend on the details of the future post-Brexit immigration system. It will also depend on whether the Comprehensive Economic and Trade Agreement (CETA) will be rolled over in a UK-Canada free trade agreement.
“CETA has a clause which allows for some mobility arrangements, so if there is continuation of that agreement, we can expect the possibility for Canadians coming to work in the UK on a contract or to provide a service,” she said.
The EU and UK have agreed on a transition period until the end of 2020. Nadibaidze further added that after the transition period post-Brexit, the new immigration system will apply the same rules to EU and non-EU citizens. This means that in the new system, Canadians and EU citizens will essentially be on an equal basis.
In the case of a lack of a withdrawal deal between the UK and EU, they’re expected to go back to following the World Trade Organization’s rules. If that turns out to be a reality, any Canadian company in need of importing goods from the EU into the UK would be forced to pay tariffs.
However, the UK and Canadian governments have stated their intentions to apply similar arrangements to CETA after the UK leaves the EU’s trade policy, but it could be more comprehensive. Canadian Prime Minister Justin Trudeau announced last year that it is possible to go beyond the agreement itself for a better and more impactful deal.