CETA Deal In Jeopardy After Brexit Referendum, Experts Say

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OTTAWA — With Britain voting to leave the European Union, where does that leave Canada's landmark free trade deal with the 28-country bloc?

In serious jeopardy, with a real risk that it will never be ratified, say experts in Canada and the United States, which has just embarked on its own free trade talks with the EU.

The decision by British voters to leave the EU immediately pummelled the markets, including in Canada, sinking the British pound to its lowest level in more than 30 years and dragging the Canadian dollar down about a cent.

stephen harper jose manuel barroso
European Commission President Jose Manuel Barroso shakes hands with Prime Minister Stephen Harper to conclude a signing ceremony at the European Commission headquarters in Brussels, Friday, Oct. 18, 2013. AP Photo/Yves Logghe)

Canada and the EU hoped to ratify and fully implement their hard-fought free trade deal — talks began in 2009 — by early 2017. Full ratification needs the approval of the European Parliament, but with Europe seized with what boils down to a two-year divorce negotiation, many have raised questions about whether the Comprehensive Economic and Trade Agreement will ever see the light of day.

Canada's envoy to Britain, High Commissioner Gordon Campbell, told The Canadian Press prior to the referendum that a leave victory could scuttle CETA because the EU would become overwhelmed with negotiating Britain's departure.

The very future of the bloc in question

Even if the EU is able to follow through and finish its work on the agreement, the Brexit vote raises questions about the future viability of the bloc itself and therefore the trade deal, said Fen Hampson, a foreign policy expert at the Centre for International Governance Innovation in Waterloo, Ont.

Hampson questioned whether the narrow decision by British voters might trigger a similar "Frexit" movement in France, where there is more opposition to the EU, or in the Netherlands, as well as hastening the departure of financially battered Greece.

"The real question is: does CETA have any kind of a future?" he said. "I would say CETA is probably dead."

'CETA is probably dead'

The Brexit vote could represent the beginning of "a cascade of bad news for Canadian trade," Christopher Sands, director of the Centre for Canadian Studies at Johns Hopkins School of Advanced International Studies, wrote in a Friday analysis.

"Will the remaining European Union countries see Canadian trade as sufficiently valuable to them now to complete this agreement? How long might it take for Canada to patch together a bilateral agreement with Britain modeled on CETA?"

Sands and Hampson noted that British Prime Minister David Cameron was an important ally to Canada during the CETA negotiations.

The British were helpful in resolving the final roadblock in the negotiations, assuaging concerns in Germany and France over the investor settlement dispute mechanism that threatened to scuttle the deal after Canada and the EU signed an agreement in principle in 2014, said Hampson.

Richard Haas, president of the U.S. Council on Foreign Relations, said the decision by British voters might mean the end of the American ambitions for its own free trade deal with Europe, which is in an early stage of negotiations.

Freeland's working on it

"It's hard to see how the political environment in the United States becomes more conducive to trade, or to passing free trade agreements any time soon," said Haas.

International Trade Minister Chrystia Freeland affirmed Canada's commitment to the free trade deal with the EU.

"I was in touch early this morning with the EU trade commissioner, Cecilia Malmstrom, about our commitment to CETA and to deepening our trading relationship," Freeland said in a statement.

"We remain committed to growing global trade that is good for Canada's economy, good for the environment, good for labour, and good for people."

Lack of optimism in Europe

There was a noticeable lack of optimism on the EU side.

The EU embassy in Ottawa declined comment.

A joint statement by the EU's main political leadership, including European Council President Donald Tusk, European Commission President Jean-Claude Juncker and European Parliament President Martin Schulz, told Britain to move "as soon as possible, however painful that process may be" to formalize exit plans in order to minimize uncertainty.

Until then, it said, Britain is bound by all EU treaties and laws.