Canada's International Trade Minister Chrystia Freeland speaks during Question Period in the House of Commons on Parliament Hill in Ottawa, Canada, February 17, 2016.CHRIS WATTIE/Reuters
Far from being dead, the Canada-Europe free trade deal is more alive than ever.
Or so says International Trade Minister Chrystia Freeland. Ms. Freeland said this week her European counterparts are highly motivated to demonstrate that, Brexit be damned, the EU still works. "If anything, the political momentum for [the comprehensive economic and trade agreement] is even stronger than it was before … because the EU is very determined to show it's able to move forward," Ms. Freeland said in an interview this week.
We'll see.
The notion that the trade deal can survive the exit of Britain – the European Union's No. 2 economy and Canada's largest European trading partner – hinges on one important assumption. Namely, that Britain can leave the EU, but somehow stay in the single market.
Call it Bre-entry. It's basically Europe without Eurocrats, pesky rules or noisy relatives who drop by uninvited, but with all the economic benefits.
That's the utopia many in Britain apparently want. It's spawned a #BREENTRY hashtag campaign on Twitter and an e-mail petition targeting British MPs.
It's also a scenario that some Canadian officials think is plausible.
Here's how the glass-half-full scenario would play out. It will take at least two years for Britain to extricate itself from the EU. That gives the European Parliament, European Council and 28 member states plenty of time to ratify the CETA with Canada and implement it by early 2017.
The result is that the CETA could come into force early next year, while Britain is still in the EU and fully covered by the trade deal with Canada.
Even if Britain does eventually split from the EU, the optimists are convinced that it will remain in the common market because it is in both sides' best economic interests for it to do so.
There are precedents. Norway, Liechtenstein and Iceland are members of the European Economic Area single market, which includes both EU countries and others. Norway, for example, pays into the EU, abides by roughly three quarters of its rules – including the controversial free movement of people within the area – but has no say on how the market operates. Switzerland, also not an EU member, has a far more complicated arrangement that gives it access to the common market, but the relationship is governed by numerous separate agreements with the EU.
But what Britain wants and what it gets are not necessarily the same thing. British Prime Minister David Cameron acknowledged this week in the House of Commons that gaining access to the single market without accepting the free movement of people will be difficult.
Other European leaders are in no mood to give Britain special or privileged status. Donald Tusk, President of the European Council, which is made up of the leaders of each EU country, insisted there would be no "single market a la carte."
During a May visit to Ottawa, European Parliament President Martin Schulz said Brexit would be a game-changer for CETA. "It affects everything in Europe," he told the Globe and Mail.
And that's the flaw in the everything-is-okay-with-CETA narrative. No one really knows what Britain's relationship with Europe will look like next week, let alone two years from now.
Yes, it's possible that Britain remains in the European single market. But it's also possible that Britain's exit causes other countries to leave the EU, while undermining the entry of new members, such as Turkey.
The uncertainty that prevails now is an investment and trade killer, particularly for Canadian companies who might want to capitalize on CETA.
What advice would anyone give to companies looking to establish themselves in Britain, or expand existing European operations to take advantage of barrier-free access to the rest of Europe? In the current environment, there isn't a right answer. There is only confusion.
There was a hint of that Thursday when Montreal-based engineering firm WSP Global Inc. decided not to pursue its proposed takeover of British construction advisory company Sweett Group PLC. WSP officials insisted the decision was unrelated to the Brexit vote, but analysts expressed relief that the company wasn't wading into the uncertainty right now.
Given all that, it matters less whether CETA goes ahead than what arrangement Britain eventually works out with the rest of the EU.