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The United Kingdom has a fresh new Labour government led by Keir Starmer, which should reignite hopes for a new free trade agreement between Canada and the U.K. A possible new deal is fantastic news for Canada’s critical mineral sector, with the potential to significantly diversify our trade relations with the world.
Furthermore, with the U.K. and many other democracies seeking stronger relationships with each other, a renewed Canada-U.K. trade agreement promises great mutual benefit and strategic advantages for both countries.
That is not to say Canada’s trade with the U.K. is not already strong, as we are the U.K.’s fourth-largest trading partner. With $45 billion already in annual trade, this is an excellent foundation to build upon.
Brexit’s messy aftermath is still being sorted out, but as the U.K. adjusts its foreign trade relationships, the timing could not be better for Canada, as there is always room to diversify or expand our collection of trading partners.
The United States is currently the destination for about 75 percent of our exports, but our heavy reliance on the world’s largest economy has been a great boon for Canada. Having the world’s largest undefended border and free trade with the world’s largest economy is a unique and unparalleled advantage.
Without taking anything away from our excellent commercial relations with the United States, it is still always a boost for Canada to open new avenues for our exports, especially in Asian and European markets.
Within Canada’s land is an extraordinary endowment of abundant critical minerals that are essential for the ever-expanding green and digital economy. These include lithium, graphite, cobalt and other rare earth elements needed to produce batteries, electric vehicles, solar panels and wind turbines.
Global demand for the minerals we possess is skyrocketing due to the energy transition and technological advancements. By renewing free trade with the U.K., we will open a prime market for Canada’s critical minerals while mitigating the risks of dealing with the world’s more authoritarian states.
The U.K. will find that Canada can be a reliable and democratic partner who will help ensure their supply chains are not beholden to an unpredictable and non-market economy like China.
For British Columbia in particular, a free trade deal with the UK would level up the province’s critical mineral sector. In a recent interview, Mining Association of BC president Michael Goehring revealed that 16 proposed critical mineral mines in B.C. might result in a whopping $36 billion in investment just in the near-term.
Goehring also noted that the mining industry already accounts for 30 per cent of B.C.’s good exports. As B.C. is on-track to becoming an LNG hub, pairing that with the possibility of becoming a critical mineral factory would transform the province, with one study suggesting that $800 billion in value could be generated by expanding the critical mineral sector.
Our great disadvantage is that Canada has not found a way to marshal these resources quickly and efficiently. Our critical mineral sector still faces significant challenges.
New Canadian mines take up to 17 years to be developed and opened due to the long regulatory requirements and laborious red tape. Ottawa has committed nearly $4 billion over eight years to create a modern critical minerals strategy.
Our friends in Australia have done an excellent job expediting approval processes, helping to ensure that the country remains a more competitive player in the market for critical minerals. Canada should view Australia as a role model, and capitalize on our mineral wealth with a thorough effort to loosen up mining regulations to foster an environment that is friendly to investors both at home and abroad.
The U.K.’s ambitious climate goals and plans to transition to a net-zero economy by 2050 requires a steady supply of minerals. Stronger trade ties with Canada means the U.K. can secure the ethically procured materials it needs to expand green technologies.
Renewed negotiations for free trade with the U.K. should bring optimism, but challenges remain. The last round of talks for free trade crumbled over hang-ups like British cheese exports and Canadian dairy quotes, in addition to concerns over hormone-treated beef and auto sector regulations.
These issues are likely to emerge again and will need to be solved if a new agreement is to be reached.
Canada will need assurances that its critical mineral sector will not face restrictive tariffs or quotas that limit the potential benefits of wider access to the U.K. market.
Moreover, Canada’s critical mineral sector will need assurances that the U.K. will not impose restrictive tariffs or quotas that could stifle the potential benefits of increased market access. A transparent and fair-trade agreement will be essential to fostering trust and ensuring long-term cooperation.
Nevertheless, these are resolvable issues, and fresh free-trade negotiations are a great opportunity for both Canada and the U.K. Canada has a chance to diversify its trade and strengthen our critical minerals sector to make sure it is competitive in global markets. The U.K. has an opportunity to lock down a reliable supply of minerals to power to its energy transition.
The potential rewards are immense, and the time to seize this opportunity is now.
Geoff Russ is a policy analyst with Resource Works, and a columnist in Vancouver. He is a former journalist with The Hub.
