What Is The Canada-Style Trade Deal: Brexit Option Explained

24 September 2018, 11:07 | Updated: 28 October 2019, 15:53

Theresa May and Justin Trudeau
Theresa May and Justin Trudeau. Picture: Getty

Brexiteers are proposing a Canada-style trade deal as a way to break the deadlock over Brexit. This is everything you need to know so you can tell your Canada+ from your Chequers.

What is a Canada+ style trade deal?

Officially known as the EU-Canada Comprehensive Economic and Trade Agreement (CETA), the agreement was signed in October 2016 and took seven years to agree.

It means the removal of 99% of customs duties on exports between Canada and the EU, with a seven-year plan to remove all tariffs.

The agreement is far from comprehensive, however, with hundreds of exceptions listed. For example, it does not guarantee Canadian firms an EU financial services "passport", meaning there are still challenges to trading freely with Europe.

Senior Brexiteers such as David Davis and Jacob Rees-Mogg are very keen on securing a Canada-plus-plus-plus trade deal with the EU.

Why do Brexiteers back a Canada-style trade deal?

Crucially for Brexiteers, Canada don't have to pay into the EU budget, sign up for freedom of movement or European Court of Justice rulings.

This is in contrast to other countries' agreements with the EU, such as Norway or Switzerland, who have accepted some of these obligations in exchange for near full access to the single market.

This meets two of the key campaign points for the Leave campaign - controlling immigration and reducing the payments to the EU.

Jacob Rees-Mogg is a fan of a Canada-style trade deal
Jacob Rees-Mogg is a fan of a Canada-style trade deal. Picture: PA

What are the negatives of the Canada trade deal?

A Canada-style trade deal would not offer the same level of access to EU markets for UK companies as currently enjoyed under Britain's membership of the single market and customs union.

Indeed, Theresa May all-but ruled it out in her famous Florence speech.

The seven-year period to get it up-and-running is also a concern, with the UK leaving the EU on 29th March 2019.

- Brexit: A timeline of key events.

What would a Canada-style trade deal mean for Northern Ireland?

Brexit Secretary Dominic Raab has said the Northern Ireland border is a major reason for rejecting a Canada-style trade agreement.

The issue is that the Good Friday stipulates that Northern Ireland and the Republic have the same customs rules to avoid a hard border. This wouldn't happen if the UK leaves the EU Customs Union.

The EU has suggested a "backstop" - a fallback option - meaning that with no other solution, Northern Ireland remains in "full alignment" with the EU's rules. That would mean it had different trading arrangements than the rest of the UK.

Chequers. Picture: PA

What is the Chequers Agreement?

The Chequers deal, the Brexit proposal which led to the resignation of David Davis and Boris Johnson, is Theresa May's preferred plan.

This would mean that the UK would keep close ties with the EU, creating an EU-UK free-trade area and a common rulebook. There would be no freedom of movement and no paying the EU, but the UK could still strike other trade deals.

However, the EU has already ruled out this proposal as "cherry-picking".