Brexit A New Trade Agreement – Part Three
For Print Only Logo
Insights and Market Perspectives

Brexit A New Trade Agreement – Part Three

Author: Blake C. Goldring

June 28, 2018

Preparing for Brexit Not Just a British Challenge

I recently participated in a “Preparing for Brexit Not Just a British Challenge” Panel with the Right Honourable Lord Mayor of the City of London and the Honourable Michael H. Wilson, Chairman of Barclays Canada.

We had the opportunity to share our insights on the UK financial services industryopportunities for Canadaand a new trade agreement between our two countries.

Canada has a significant financial services presence in the UK. In fact, Toronto and London are at the heart of the Canada-UK commercial relationship with both cities listed among the top 10 global financial centres.

Canadian pension funds are some of the biggest institutional investors in the UK, while our banks have created long and successful business relationships and jobs on both sides of the Atlantic.

The UK is Canada’s second most important destination for investment abroad. There are more than 1100 UK firms owned or controlled by Canadian interests.

Canada and the UK have significant ties in trade and investment that account for about 40% of Canada’s relationship with the EU. This is well above the UK’s 15% weight in the EU economy.

The UK is by far Canada’s most important commercial partner in Europe and, from a global perspective, is our third largest export market after the United States and China.

Given these numbers, there is no doubt, that our relationship will be impacted on several levels with the UK’s exit from the EU. Many Canadian firms had viewed the UK as a springboard for accessing the larger EU market.

While the UK remains in the EU, it is subject to the provisions of the provisionally implemented Canada-European Union Comprehensive Economic and Trade Agreement (CETA). CETA was initiated to create jobs, strengthen economic relations and boost Canada’s trade with the world second-largest market.

This progressive free trade agreement covers virtually all sectors and aspects of Canada-EU trade in order to eliminate or reduce barriers.

CETA provides substantial access in goods and services markets, while easing labour mobility and opening up public procurement. Some of that access could be reduced when the UK exits the EU.

Given the time needed to ratify CETA in all EU Member States, there is a possibility that the UK will have left the EU by the time CETA comes fully into force. The UK will need to renegotiate its trade agreements with non-EU countries after Brexit.

And most businesses – regardless of their geographic location – will need to reassess their position to take advantage of the opportunities and mitigate risks.

Depending on the Brexit outcome, there are a number of continental European cities that might replace London as the financial center for the EU. Favorites include Frankfurt, and Dublin, with Amsterdam, Warsaw, Luxembourg, and Paris as other possibilities.

Given the uncertainty that exists regarding the level of access the UK will retain to the EU market, Canadian financial services have not made final decisions on the future of their operations in the UK.

Until negotiations to leave the Eurozone are well underway, I believe it will be difficult for Canadian financial services firms to determine what their post-Brexit presence will look like, at the same time, I am optimistic that Canada can negotiate a CETA-like trade deal with UK providing the access that was originally negotiated with all 28 EU member states.

The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.

About AGF Management Limited

Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.

For further information, please visit AGF.com.

© 2018 AGF Management Limited. All rights reserved.

More articles like this.

2018 Investor Survey Results: A Revelation for Regulators

2018 Investor Survey Results: A Revelation for Regulators

Canadian investors continue to use their voice during a time of debate and consultation within our industry, expressing a clear appreciation for the value of advice and the current compensation models available to them. The Gandalf Group recently released the results of its 2018 Investor Survey, commissioned by AGF.

Read More
Post-USMCA Business Conditions in North America

Post-USMCA Business Conditions in North America

Reaching the elusive USMCA agreement allows our respective governments, regulatory authorities and business communities to turn their collective attention to the critical task of improving conditions to promote economic growth, job creation and business investment. And while reduced uncertainty is a great positive, important non-tariff barriers – namely, regulation and taxation – must be addressed, while also keeping a close eye on the implications of interest rate hikes.

Read More
IFIC Survey Gives Voice to Canadian Investors

IFIC Survey Gives Voice to Canadian Investors

AGF has always been a strong advocate for the value of financial advice, and these findings from Pollara Strategic Insights support previous research that demonstrates: Canadians who work with an advisor build more savings over time and are better positioned to meet their long-term investing goals. In fact, more than three-quarters (78%) of the surveyed investors specifically reported having better saving and investment habits because of their advisors.

Read More