Yahoo Finance What is ‘Canada plus plus plus’, the Brexit trade deal David Davis wants?
David Davis, the Brexit secretary, wants the UK to move to a trade deal he calls “Canada plus plus plus” after the UK leaves the EU. But what does that mean?
Mr Davis said the deal will emulate the free trade deal struck by Canada with the EU, with some added benefits. He said the UK is aiming for: “Canada plus the best of Japan, the best of South Korea and that bit that is missing, which is services”.
He said that the deal reached on Friday makes it less likely the UK will crash out of the EU with no deal and have to fall back on World Trade Organisation rules.
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Mr Davis is optimistic that the UK could sign a trade deal with the EU as soon as “a minute” after the UK leaves the EU in March 2019. But EU officials have said it could take years for a final agreement. It took Canada and the EU seven years to agree the Continental Economic and Trade Agreement, or CETA, that was signed off by the Canadian Prime Minister Justin Trudeau in October 2016.
On Monday, Jeremy Corbyn asked if the government is still committed to maintaining the “exact same benefits” as the UK gets from single market membership.
He saved his last question until the end of the session, pressing Theresa May to explain exactly what David Davis meant when he said Britain wanted a deal amounting to “Canada plus, plus, plus.”
What deal does Canada have?
Canada signed a trade deal with the EU last year that removes the vast majority of customs duties on EU exports to Canada and Canadian exports to the EU, without Canada having to pay to access the single market.
MORE: David Davis promises bespoke EU trade deal within eight months
Mr Davies wants the UK’s deal to go further than this and include the service industries, as financial services are a key part of the British economy.
UK financial services companies will lose their passporting rights after Brexit, which means they will no longer be able to access 500 million clients in the European Union or the European Economic Area.
Davis may seek to maintain these rights, despite assurances from Michel Barnier, the EU’s chief negotiator, that “Brexit means Brexit”.
What other options are there?
Labour wants the UK to “stay aligned” to the EU after Brexit. It could pay to have access to the single market, like Norway, Labour says.
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But the Conservatives are against this model. They say it would tie the UK to “billions of pounds going to the EU in perpetuity” and that the UK would still have to abide by EU rules, without having a say in those rules.
How does the UK get a deal with the EU without making regular payments?
The UK could instead pay a one-off sum. An agreement reached between Theresa May and the EU on Friday December 8 brings the UK divorce bill to between £35 billion and £39 billion.
Mrs May has said this deal was not legally binding. However the Irish Government has said that as far as it was concerned, the agreement was binding.
David Davis has also stressed that Friday’s agreement is conditional on a trade deal, agreements on security and foreign affairs and a two-year transition period.
If no deal is reached on these points, the UK would fall back on regulatory “alignment” between the UK and EU, according to the Friday agreement. There is still confusion about what this would mean in practice.
