On January 23, 2013 British Prime
Minister David Cameron delivered a long anticipated speech on his country’s
relationship within the European Union. Cameron’s speech outlined the intention
of his government to enter into a negotiation with EU member states in order to
ensure that the balance of powers and authority rests with member governments,
and not with the EU Commission or the European Parliament. In the past day, Cameron has announced that
an agreement in principal has been reached, thereby triggering a long promised
referendum – one that presents the choice to stay in the EU under the newly negotiated
terms, or to leave the Union and, presumably, seek a successor trade agreement.
Based on polling data, as well as
the outreach of already mobilized campaigns, it is not entirely clear what
scenario will unfold on June 23. The most recent surveys place both sides in a
statistical ‘dead heat.’ As with most votes of this nature, it will be driven
as much by emotion as by economic arguments, and with a little over 100 days to
make their respective cases, much can happen.
Britain’s status as a major
economic power, its global trade and investment connections, as well as its
significance in transatlantic geopolitical affairs, makes it an important –
almost indispensable – player on the world stage. A ‘Brexit’ would most
certainly challenge existing foreign policy totems, and would require countries
such as Canada to engage in a serious re-think of our own affairs with both
Britain and the EU.
Decision-makers in Ottawa will be
pressed to develop a policy framework that maintains a healthy and positive
relationship with both Brussels and London no matter the outcome of this issue.
Should the status quo remain, so, too, would Canada’s existing European policy,
that of fostering significant trade and strategic ties with the EU. If Britain were to exit the structures of the
European Union, Canada would need to work to put in place complimentary
arrangements with the UK, while still maintaining good relations with Brussels.
Some thought to what that relationship would entail would be advised.
The purpose of this paper is
neither to speculate nor advocate on the efficacy of any of the scenarios. The
question of EU membership for Britain properly belongs with that nation’s
people and their representatives. The focus of the paper is in asking what the
impact of a ‘Brexit’ may mean for Canada’s relationships with Britain and the
European Union. More specifically, what should Canada’s response be if such a
situation was to develop?
The Potential for a
‘Brexit’
For a long period there has been
a growing movement in the United Kingdom to redefine their relationship with
Europe. The idea of Britain choosing to
leave the political structures of the European Union has been referred to as a
British exit, or ‘Brexit.’
While an overwhelming majority of
Britons do wish to preserve trade links and economic cooperation with the
European Union, they are increasingly opposed to the political project - one
that would inevitably see their country become a province of a larger European
Federation.
In May of 2012, British polling
firm YouGov conducted a survey for the Sunday Times which found that
only 28% of respondents would vote in a referendum for Britain to stay in the
EU, and that 51% would
vote to leave. Their polling results - after having tracked the question over a
one-year period - reveal a rather stable distribution pattern.[i]
|
% who would vote for Britain to...
|
|||
|
Stay in the EU (a)
|
Leave the EU (b)
|
(b) minus (a): majority for leaving
|
|
|
June 2011
|
35
|
48
|
13
|
|
August
|
30
|
52
|
22
|
|
September
|
33
|
47
|
14
|
|
October
|
31
|
52
|
21
|
|
December
|
41
|
41
|
0
|
|
January 2012
|
34
|
44
|
10
|
|
April
|
31
|
49
|
18
|
|
May
|
28
|
51
|
23
|
On the eve of EU negotiations,
polls indicate that the difference in support for remaining in the EU as
opposed to leaving is within the statistical margin of error – with 52 per cent
in the "remain" camp and 48 per cent wanting to leave.[ii]
In juxtaposition to this, those member
states firmly committed to the future of the EU have been clear and consistent
in their aspirations. From the pioneering work of Monnet, Schumann, and Spaak
shortly after World War II up to the present, the economic integration of Western
Europe has always been a prelude to something more comprehensive and
encompassing. Comments by EU Commission President Juan Manuel Barroso were very
explicit in this regard:
"Let's not be afraid of the words: We will need to move towards a federation
of nation states. This is our political horizon. This is what must guide our
work in the years to come"[iii]
It would not be wrong to say that
many in the European Union have always seen economics more as a means to an
end, one that would see the formation of a single European federal state.
Whether or not these intentions
have been fully appreciated by British decision-makers over the decades is
difficult to ascertain. There are those in the UK who support greater economic
and political integration with their EU partners. Their appraisal of Britain’s
EU future is based on a view that Europe provides economies of scale in an
increasingly competitive and regionalized global economy. They assert that British
interests are better served within that relationship. There are others who see
the relationship in a much different light, and advocate leaving the EU full
stop. The majority opinion, however, distinguishes between the political
project and the economic partnership. Its preference would be for Britain to
transition from being a EU member state to one that enjoys a free trade
relationship with Europe, either by rejoining the European Free Trade Agreement
(EFTA) or negotiating a separate bilateral deal. Key to this view is the desire
to preserve trade links with the EU while being free to pursue bilateral and
multilateral agreements elsewhere.
This debate is now fully underway,
and is experiencing what can only be referred to as a ‘preference cascade.’
Opinions that would have been considered marginal and highly speculative prior
to 2008 are now being discussed in the British mainstream – in the media, and
in the halls of Westminster. The UK
Independence Party has now supplanted the Liberal Democrats as Britain’s
third-largest party. That party has already fought a British general election
on a policy platform that included both a withdrawal from the European Union,
as well as support for the creation of a Commonwealth Free Trade Area. Many
leading figures in the British Conservative Party, as well as a number of
Labour MPs, publicly support replacing Britain’s EU membership with a successor
UK-EU free trade treaty.
The response to this emerging
trend has been sporadic and lacking focus.
EU President Herman van Rompuy has suggested that a 'Brexit'
would have catastrophic consequences for the Union as a whole, adding that
member states cannot simply ‘cherry pick’ those policies they wish to retain
for themselves.[iv]
At the same time, the Group of European
Federalists, an umbrella organization representing 19 pro-EU federation
constituent groups and including several Members of the European Parliament
(MEP’s), openly floated the idea of Britain assuming an ‘associate member’ status within the EU, with a looser association.[v]
In addition, former EU Commission President Jacques Delors has stated publicly that
nothing is to be feared by the possibility of a ‘Brexit’, and that a EU-UK free
trade deal is entirely workable.[vi]
The conclusion of an agreement against this backdrop would suggest that the EU
does not speak with one voice, and that the possible negotiating position taken
by Brussels in the event of a ‘Brexit’ will depend greatly on what pressure is
exerted, and by who.
Potentialities
for 2016
With a majority mandate, Cameron
has had more latitude in dealing with Europe. Having said that, his task
remains incomplete. While he may have tentative success in dealing with the
demands and expectations of EU partner states, the same must also be
accomplished among those who will determine the agreement’s final fate – the British
people. Those who have determined to either stay in the Union or to depart it
have declared their intentions. What remains are the majority of Britons, many
of whom are genuinely conflicted on this question. While what was hammered out
among EU leaders may have satisfied the government’s main points, will it have
done the same for those casting a ballot on June 23rd?
Canada’s position on
Europe and Britain
In this environment, Canada must
consider its position should a ‘Brexit’ occur.
Given the political and economic realities of our relationship with
Europe as a whole, a great deal of forethought and caution should be exercised.
This means considering the possibility of having to forge a policy that keeps
the lines of communication open in both London and Brussels.
For Canada, the status quo presents no policy
challenges. Britain is currently part of the European Union. By virtue of its
commitments made through the Lisbon Treaty, it is unable to enter into any
trade agreement outside the rubric of a EU-negotiated treaty. Our foreign and
international trade policy has, over the past decades, adjusted to this
reality. If the current state of affairs continues, then the existing policy
requires no great rethink. The
successful ratification and implementation of CETA provides a free trade
environment between Canada and the United Kingdom by default.
If, however, political
developments in Britain do lead to an ‘in/out’ referendum, and a formal exit
from the European Union, Canada’s trade relationship with both Europe and
Britain would need to undergo a significant change.
In 2015, Canada’s exports to the
EU totaled C$39.47 billion.[vii]
Any opportunity to grow this trade is vital to our national interests. It would
not be an exaggeration to say that involvement in the ‘Brexit’ debate would be
ill-advised and counter-productive.
This trade number, however, also
belies the importance of maintaining a strong trading relationship with
Britain. Nearly 43 percent of Canada’s exports to the European Union are
specifically destined for the United Kingdom, some C$16.60 billion in 2015.[viii]
By any practical measure, a ‘Brexit’ would immediately cut Canada’s exports to
the EU by half. While the proposed Canada-EU Trade Agreement (CETA) will
enhance trade volumes overall, it is doubtful that the loss of British markets to
Canada would be compensated for by increases in exports to the remaining EU
member states.
The reality is that Canada-EU
trade, as it is currently constituted, is actually Canada-UK trade. If the EU
includes Britain, then the CETA can deliver what its proponents expect. If
Britain is removed from the equation, then none of the assumptions that
underpin CETA's benefits can hold. In fact, given that Canada’s EU imports
during this same period were C$52.94 billion, and that Britain accounted for
C$8.60 billion, a ‘Brexit’ would have the effect of increasing the trade
imbalance that already exists with the EU even further.
The UK is a significant economic
player in the world, with London serving as the pre-eminent centre for
international capital markets. A
reluctance to join the Eurozone has not diminished this status, and it is
highly unlikely that a redefined relationship with the EU would cause a
collapse of London's status as a global financial capital. It is highly
unlikely that Canada would not contemplate the possibility of partnering with such
a close ally and fellow Commonwealth power should a ‘Brexit’ occur.
This issue may also be
unavoidable for Canada to address. For
the UK, a ‘Brexit’ will definitely involve an immediate negotiation for some
form of new free trade agreement with the EU. Beyond that, Britain will almost certainly
involve an active promotion soon after of free trade relationships with select Commonwealth
states and possibly with NAFTA. On both counts, Canada figures pre-eminently.
Indeed, it is very likely that a post-EU Britain would promote an initial
agreement with Canada as a template for future extra-European trade treaties.
Even if Canada does not actively
court London after a ‘Brexit’, it is clear that British overtures to Ottawa would
occur very soon after. Whether the initial phone call is placed from 10 Downing
Street or 24 Sussex Drive, a call would most certainly take place. The Federal Government has a small window of
opportunity to consider what will be said when the phone does ring, something
that will ease thoughts and attitudes in both Brussels and London.
The Quebec Precedent
In October of 2012, the then newly
elected Premier of Québec, Pauline Marois, travelled to Paris to meet with French
President François Hollande. For frequent observers of politics in that
province, this trip has become somewhat of a time-honored tradition –
regardless of party stripe.
The meeting at the Elysée
Palace was typically warm and cordial, and it gave an opportunity for Hollande
to reiterate a policy as enduring a tradition as these get-togethers. When it
comes to the question of Québec sovereignty, the French answer is “ni, ni.”[ix]
“Ni, ni” is an acronym that stands for ‘non-interference,
non-indifference.’ In its simplest terms, it means that France will not offer
any support, material or otherwise, in the cause of Québec’s separation from Canada. On
the other hand, it also promises not to turn a blind eye to Québec
should it ever achieve its own independence. In short, it means no help to
leave Canada, but also includes implicit promises of assistance if it ever did
make that choice.
The policy was born of a
difficult set of circumstances in the 1960’s, when Québec’s ‘Quiet Revolution’ was beginning to transform the province’s
francophone society, and its political discourse. The lapse of the decades-long Duplessis era
and the rise of Jean Lesage’s Liberals not only changed government policies,
but also expectations and attitudes among Québecois. This transformation
still largely informs politics in Québec to this day.
The natural linguistic and
cultural affinities between France and Québec make any attempt at
neutrality on the sovereignty question nearly impossible. On the other hand, as
witnessed by the fallout from President Charles de Gaulle’s ‘Vive le Québec
Libre’ speech from Montréal City Hall in July of 1967, any
outright support for Québec separation – whether real or implied – has its own
dangers.
Politically, France cannot afford
to be seen to ‘abandon’ Québec, and yet it cannot risk alienating
Canada as a whole. The four-decade old policy may not perfectly suit either the
tastes of the most adamant federalists or separatists, but it does succeed in
creating a normalized state of relations. It keeps doors open in both Ottawa
and Québec
City, regardless of what party is in power, Péquiste or not.
A policy of ‘non-interference, non-indifference’ has succeeded reasonably well
under often difficult circumstances, and for a lengthy period. It is not a
perfect approach, but it is one that offers all parties concerned the
opportunity to move beyond an issue that is both difficult and, at its heart,
irreconcilable. Quebec is satisfied that should it embark on the path to
independent statehood, that it will have a sure ally. Canada is also satisfied
that such goodwill will not extend to tacit and proactive promotion of
sovereignty.
Like France’s policy regarding Québec,
Canada would do well to consider a similar position toward the UK on the
possibility of their exit from the European Union proper. Ottawa should continue to make clear that the
question of Britain’s membership in the EU is one properly considered, debated
and settled by the British people through whatever mechanism they choose – Act
of Parliament, or popular referendum. To date, political leaders in Canada have
not involved themselves in this debate, nor should they. On the other hand,
Britain forms the most significant share of Canada’s European trade. Cultural,
linguistic, historical and political affinities bind English-speaking Canada
with Britain just as France and Québec share indelible and enduring bonds.
If a post-EU Britain made overtures to Canada regarding a free trade agreement,
it would be counterintuitive not to respond positively in kind.
There are, of course, striking
differences between the British and Québec cases. While Québec
is an integrated part of a constitutionally mandated federal state, Britain is
still a sovereign national entity in its own right. Dealing with the
consequences of a nation leaving a customs union is not on the same scale as a
constituent part of a federal state seeking nationhood in its own right.
Nevertheless, we do live in a world where the political realities of a
situation often trump all other considerations, and that reality is based
largely on perceptions and aspirations.
The Way Forward
Canada’s long-term economic and
strategic interests lie in fostering strong and mutually beneficial
relationships with Europe. This includes both the European Union and the United
Kingdom. Current trade policy presumes a continuation of British membership in
the EU, and is equal to the challenge should that situation continue. If,
however, Britain decides to leave the European Union, then that policy will
need to undergo a careful and necessary re-think.
Canada can, and will, benefit
from enhanced trade with the European Union, with or without British
membership. Beyond the financial gains, CETA will help further cement the
broader transatlantic relationship, one that encompasses partnerships on a
myriad of global policy imperatives.
We must also recognize, however, that
should Britain leave the European Union, the anticipated gains from CETA will
be significantly diminished. Given the magnitude of Britain’s portion of
Canada’s EU trade, it is highly unlikely that other member states would be able
to increase their Canadian trade to such an extent as to compensate for the
loss.
The challenge for the Trudeau
government is, simply put, to develop a contingency that preserves the market
access assurances obtained under CETA regardless of the outcome of the June 23rd
referendum. The status quo depends on a majority of Britons voting to accept the
agreement and remain in the EU. Should the result differ, then the federal
government will need to act quickly to preserve Canadian interests.
For Canada to realize the
economic benefits promised by CETA in its current form, it will have to ensure
that its European market access remains ceteris
paribus. In the event of a ‘Brexit’ this can only be obtained by concluding
a successor Canada – UK treaty that mirrors the arrangements included in CETA.
In the end, Canada’s policy on
Europe needs to be flexible enough to ensure a good and productive relationship
with both London and Brussels without alienating either one, even if Britain
chooses a future outside the formalized governance structures of the European
Union. In this regard, the long-established example of France’s Québec
policy provides a useful, effective and proven path.
[i] “Will
Britain vote to leave the EU?”,YouGov – 21 May, 2012 http://yougov.co.uk/news/2012/05/21/will-britain-vote-leave-eu/
[ii] EU referendum: polls remain tight as Cameron heads to Brussels, The Week, February 18, 2016 http://www.theweek.co.uk/eu-referendum/65461/eu-referendum-polls-remain-tight-as-cameron-heads-to-brussels
[iii]“Europe must
become 'federation of states', Barroso says”, Daily Telegraph, 12 September, 2012, http://www.telegraph.co.uk/finance/financialcrisis/9538077/Europe-must-become-federation-of-states-Barroso-says.html
[iv] " 'UK can't 'cherry pick and choose powers to claw back from Brussels', EU president warns," Jason Groves, Daily Mail, 27 December 2012. http://www.dailymail.co.uk/news/article-2253956/UK-cherry-pick-choose-powers-claw-Brussels-EU-president-warns.html?ito=feeds-newsxml
[vi] "It’s OK for Britain to quit EU, says Delors," David Charter, The Times, 29 December 2012. http://www.thetimes.co.uk/tto/news/politics/article3642769.ece
[vii] Statistics Canada, Imports, exports and
trade balance of goods on a balance-of-payments basis, by country or country
grouping (last modified 19 February 2016)
[ix] “France’s president embraces traditional ‘ni, ni” stance on Quebec’s future,”
Kevin Dougherty, Montreal Gazette, 15 October, 2012, http://www.montrealgazette.com/news/Quebec+sovereignty+France+President+Hollande+returns+position+meeting+with+Premier+Pauline+Marois/7390753/story.html
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