A post-Brexit trade deal is not top of Canada's priorities

Canada is more concerned about what President-elect Donald Trump could do to the North American Free Trade Agreement (NAFTA) than with working out a post-Brexit trade deal.

Finance Minister Bill Morneau said in an interview with the Financial Times on Tuesday that, while Canada is keen to reach a deal with Britain after it leaves the European Union, it is not the number one priority — or even the number two.

Here is the key passage from the interview:

“From our perspective, clearly the Nafta [North American Free Trade Agreement] relationship [with the US] is of huge importance. That’s our biggest relationship by a very big margin, so that’s important to us. And then the Ceta relationship [with the EU] opens up a very significant market. Our opening of exploratory talks with China … we do see as important and as the UK figures its next steps, that will be important too.”

It is another blow for Britain’s hopes of securing quick and favourable trade deals once the country leaves the European Union. India, for example, another country Britain hoped to reach a swift post-Brexit trade deal with, has asked for Britain to accept more immigrants in return for trade, something Theresa May is unlikely to accept. Australia has also said it will not negotiate with Britain until it has fully left the EU, delaying what is already likely to be a lengthy process.

Sir Thomas Harris, once the British ambassador to Korea and former vice chairman of emerging markets-focused bank Standard Chartered, told a conference in London recently that there are no “sunny uplands” when it comes to trade deals, saying: “Of course bilateral deals will eventually be struck, but we should be under no illusions about how long that will take, or the extent to which those agreements will be able to substitute for access to the EU.”

CETA, Canada’s trade deal with the EU, took seven years to negotiate and was almost completely derailed by Wallonia, a small region of Belgium that opposed the agreement. It underlines how difficult bilateral agreements can be.

The fact that Canada prioritises maintaining CETA over striking a deal with post-Brexit Britain also highlights just how much more weight the European trading bloc carries than an independent Britain. Italy’s economic development minister Carlo Calenda underlined this point in an interview last week, after Boris Johnson told him that Italy needs a trade deal with Britain to continue selling its prosecco here.

“He said, ‘you’ll sell less prosecco.’ I said, ‘OK, you’ll sell less fish and chips, but I’ll sell less prosecco to one country and you’ll sell less to 27 countries.'” Calenda said.

Donald Trump has repeatedly vowed to scrap, or at least renegotiate, NAFTA, which he claims has hurt US manufacturing by increasing trade with Mexico. However, the agreement also dictates trading terms between the US and Canada, with Morneau telling the FT that there is over “$2 billion a day of back and forth trade.”

NOW WATCH: JAMES ALTUCHER: This is why owning a home is financial suicide

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.