It's nice to be here today. Hello to everyone.
I'll keep my remarks brief, to five minutes, and focus primarily on the United States and the United Kingdom.
First, broadly, the primary impact of COVID-19 on international trade is the continued rise of the sentiment “my country first”. We've obviously heard it being voiced south of the border as “America first”, but it's the concept that we're putting our country and its interests, at least as the politicians see them, ahead of the multilateral agreements that are in place. I feel that has the potential to be quite problematic.
The principal reason I feel it could be problematic is that there are arguments for some self-sufficiency given what's transpired. However, this can quite easily morph into a wider and more unjustified form of protectionism, notably in the form of technical barriers to trade—that is, putting up barriers based on the fact that it's not safe enough, their approvals are not robust enough, etc.
There are also some other issues. The nationalization of industries could run afoul of international trade commitments. Massive government expenditures could undercut things like state aid rules, which we may see play out in the negotiations between the U.K. and the EU, given the massive spending that Germany is making now in their stimulus program and the money that's going to specific industries.
When we look at our relations with the United States, I think our trade relations are generally under control. It's been a bumpy ride since Mr. Trump was elected as president. I think the government has generally done a pretty good job there, but we have to constantly be keeping an eye on things because protectionism pops up, as it has with aluminum, with the border at times, with bans on exporting protective equipment into Canada, etc.
The approval of the CUSMA is good news. Closing the border as a result of COVID was a more impactful development than the approval of the CUSMA, which has largely been factored into business decision-making since it's an agreement from some time ago. However, it's obviously important that we maintain a strong trading relationship with the U.S., the obvious reason for this being national prosperity and maybe the less obvious reason being that we will need U.S. support in dealing with difficult third party issues, such as the diplomatic dispute with China, including in Ms. Meng's extradition hearings.
Turning to the U.K., I think the real question for Canada is this: What will be the outcome of negotiations on a future relationship between the U.K. and the EU? In my view, the highest probability outcome at present is a hard Brexit, which would take place at the end of the year. That is, the U.K. would leave the customs union and the single market and would revert to WTO rules. There is a bit of good news there in the sense that the British have unilaterally decided that they are going to remove import tariffs for countries with which they have MFN status, so that would take some of the sting of a hard Brexit off Canadian exporters.
The problems with a hard Brexit, as I see them, are twofold. First, we would be unable to conclude a Canada-U.K. agreement to replace the CETA. The U.K. is currently a party to the CETA, the Canada-EU trade deal. Obviously, if they leave the single market and the customs union, they will no longer be a party to it. Frankly, once they leave the EU, they are no longer a party to it after the transition period. We won't be able to conclude a Canada-U.K. trade agreement until we know the outcome of U.K.-EU talks. The second problem is that if the U.K. leaves the single union, they'll no longer be covered by the CETA.
We're going to have to do some work to get an alternate arrangement in place. It would not make sense, in my view, to move forward with a trade agreement with the U.K. right now, because we do not know where there will be import tariffs in the EU, how we would deal with rules of origin and how we would deal with financial services and a whole host of other issues.
I'll end my remarks there. Thank you.