For us to understand the impact on local businesses, we first need to see what sort of trade role Britain plays with Canada. An article that appeared on the Globe and Mail’s website recently pointed out that Britain is Canada’s second-largest export destination and its sixth-largest source of imports. Adding to this trade, there are more than 700 Canadian businesses in operation today on British soil. Operating in Britain not only provides these companies the prospect to develop their businesses in Britain, but also a step to Europe as well, with companies using the same staff and other resources in Britain to cover the EU. This decision to opt out of the Eurozone will make it more expensive for companies to cover the U.K. and Europe.
Canada’s Finance Minister William Morneau recently highlighted this negative impact on Canadian businesses, when he said that any decision by Canadian businesses “to invest in the United Kingdom in order to have the opportunity for the European market is now at risk.”
It is this risk that will severely affect Canadian business where more investment would have to be made to operate in Europe. Added to that is the requirement to meet two sets of legislation and laws which will govern the operation of their business in the island nation and within the EU.
Speaking of legislation, we know that this does not come about quickly. In fact, it has taken Canada almost eight years to negotiate the EU-Canada Comprehensive Economic and Trade Agreement (CETA) with Europe, which is expected to take effect next year. With this new direction in the U.K., Canada would have to negotiate another trade agreement with Britain, which will definitely take time to come into place.
Another impact will be in patent and intellectual property laws, although this differs throughout Europe, the EU has an overriding framework for its 28 members. With the vote to leave the EU, this overriding framework will no longer be in effect and will open up a new set of laws to govern patent and IP. This adds more work for Canadian companies and more unplanned dollars in expenditure.
As we can see, this move by Britons to leave the European Union is one that will ultimately have a negative impact on Canadian businesses, costing these companies more to cover a larger territory, an area that is now divided with different rules and regulations to comply with.
Even with this negative outlook, there are some who are still managing to draw out positives. By trading with two different blocs, there is hope of gaining a greater market share with Europe and continuing with a separate market in the U.K. This stance was confirmed by a statement issued today by Minister Morneau, where he claimed, “[Canada] will remain a strong partner of the UK and the EU. Our shared histories make us natural trading partners, and I look forward to maintaining those close economic ties.”
Source: The Globe and Mail
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