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Brexit tension leads U.K. to seek deeper ties with Canada

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Marie-Claude Bibeau, Minister of International Development of Canada

As the United Kingdom works to finalize its split from the European Union, it’s about to ramp up efforts to expand its footprint in Canada.

When French bank Crédit Mutuel Alliance Fédérale embarked on a North American expansion more than a decade ago, its executives selected Canada as its continental beachhead.

At the time, French entrepreneurs were itching for financing to pursue business opportunities in North America, but the bank’s private equity arm, CM-CIC Investissement, had no operations on this side of the Atlantic.

Brexit has hit another roadblock as the European Union (EU) and U.K. attempt to work out exactly what their future relationship will look like. Both sides are trying to come up with an outline of a post-Brexit relationship in time for a leaders’ summit set for Oct. 17-18 in order to stay on track for the March 29, 2019 leave date — exactly two years after Prime Minister Theresa May triggered the departure process.

Its Canadian subsidiary, known as CIC Capital, first set up shop in Montreal and then in Toronto, using the latter as a gateway to the United States. CIC Capital has so far invested in 15 companies in Canada and the U.S., and has earmarked roughly $300-million for more investments.

Canadians, though, have a real knack for getting in their own way. Not only do we have a long-standing aversion to foreign money, we take a parochial view of globalization despite being a Group of Seven country.

For instance, although the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) went into force more than two years ago, Canadian companies have been slow to take advantage of its benefits, including increased labor mobility.

The Canadian Free Trade Agreement, which took effect in July, 2017, has been an abject failure. Not only does the deal protect government monopolies, it excludes key industries including alcohol. If left unchecked, these barriers will continue to drive away foreign investment.

Statistics show that the EU has been quicker than Canada to take advantage of the year-old Comprehensive Economic and Trade Agreement (CETA) it signed with Ottawa.

Though that pact has not yet been fully ratified, imports from the EU increased more than 12 per cent between Oct. 2017 and July 2018. Canadian exports to the EU, meanwhile, were actually lower in some recent months than they were prior to CETA, and the overall growth in Canadian exports to Europe during the Oct. 2017-July 2018 period amounted to less than one per cent.

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