Prior to the shock Brexit referendum vote in June which saw a small majority of UK voters opting to leave the European Union, things were moving steadily forward for the ratification process to start in earnest this fall of a historic Canada-EU free trade agreement. Amidst the subsequent uncertainty and complications, Canadian ports engaged in maritime exchanges with the 28 EU member bloc which is Canada’s largest trading partner after the United States are monitoring the situation closely while the Ottawa government continues to press – possibly too optimistically – for implementation by 2017. So are Canadian business circles, largely supportive of the Comprehensive Economic and Trade Agreement (CETA) concluded by negotiators in August 2014.
“The Brexit file is one we are keeping a close eye on for our members, not just in terms of trade with Britain, but also for its implications for CETA,” said Wendy Zatylny, president of the Association of Canadian Port Authorities (ACPA), which represents 18 ports handling the great bulk of Canada’s maritime trade.
“ACPA and its members are like many stakeholders,” she told the American Journal of Transportation. “We have to monitor how Brexit unfolds, but there is not much we can do to influence it.
“What we can do is ensure that the Canadian government is aware of our interests as it becomes more engaged with the UK directly on trade.”
This an important component, considering that the UK alone represents one third of Canada’s total trade exceeding C$100 billion with the EU.
“There are a lot of unknowns with Brexit.” Zatylny continued. “Our role with our members, particularly those on the East Coast and inland waters, is to answer any questions they may have and also connect them with appropriate Global Affairs Canada (foreign affairs department) officials if they have specific concerns.”
On Canada’s East Coast, the key ports focused on transatlantic trade with Europe are Montreal and Halifax as well as, recently, Saint John, New Brunswick. The largest Canadian port on the Great Lakes, Hamilton, is also eyeing opportunities with Europe in such areas as general cargo, breakbulk and agricultural products.
According to an industry source, implementation of CETA could translate into another 250,000 TEUs in annual container business for Canadian ports on the eastern seaboard. Currently, container volume in these ports is just over 2 million TEUs.
Tony Boemi, vice-president growth and development for the Montreal Port Authority, points out that northern Europe continues to be the port’s “core market” - accounting for two-fifths of total container throughput of 1.5 million TEUs. One in every five containers transiting Montreal come from or goes to the Port of Antwerp.
An estimated 43% of total marine cargo of 8 million metric tons through the Port of Halifax is with European countries. Observers see strong growth prospects as tariff barriers would all but disappear under CETA and global shipping lines call at the Nova Scotia port with ever larger container ships.
For its part, the Port of Saint John has been gearing up for CETA by adding capacity and services and, this past summer, concluding a long-term lease deal with DP World to significantly expand its container terminal (see separate report on page 12).
Scenarios Difficult to Pinpoint
What do the coming weeks and months have in store? Definitive scenarios seem elusive.
Among the few certainties worth mentioning is the fact that both Canada and the European Union are reluctant to reopen a landmark deal which could be put at risk if any of the toughly-negotiated terms are changed. Various concessions were made by Canada as worthwhile trade-offs for unfettered access to a market of 500 million consumers.
Earlier this summer, International Trade Minister Chrystia Freeland suggested during an interview with the Canadian Broadcasting Corporation that Canada and the EU could sign CETA even before the UK has time to trigger Article 50 – which would kick-start its withdrawal from the European bloc. This would launch a two-year negotiation period that could be extended.
Such negotiations, affirmed Freeland, should not impact CETA which she described as a “gold standard agreement” that will be a model for the rest of the world.
Freeland maintained an optimistic stance, too, after the European Commission recently reversed a previous approach to hold a vote (this fall or early 2017) to approve CETA in the European Parliament only. Ratification will now need to proceed in the legislatures of each EU state – a daunting task in light of the anti-establishment and anti-trade agitation prevailing in some European countries.
According to the EU Ambassador to Canada, Marie-Anne Coninsx, such a “mixed” agreement will not derail a timeline that would see 90% of CETA taking effect next year while Britain will remain bound by the treaty as long as it has not formally withdrawn from the EU. She stresses it is politically important to deal with the anti-globalization forces in Europe by allowing individual parliaments to have their say.
Freeland has welcomed a European Commission warning to European legislatures that “the credibility of Europe’s trade policy is at stake.”
Meanwhile, Britain’s top representative in Ottawa, Howard Drake, has underscored the willingness of the UK to conclude a separate free trade deal with Canada. “We’ll be looking to make trade deals with other countries around the world, including Canada,” he stated in the aftermath of the Brexit vote.
But cold water has already been poured on such a scenario – at least in the short term - by Secretary of State John Kerry who in July clearly nixed the prospect of a trade deal between the U.S. and Britain until Britain actually exits from the European Union. One speculates there is similar thinking in the Canadian federal government.