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Summary
- Canada and the UK will continue to conduct business under the Comprehensive and Economic Trade Agreement (CETA) that Justin Trudeau had signed with the EU in 2016.
- The two countries are expected to initiate negotiations for a broader “tailor-made” UK-Canada trade agreement next year.
- Had the new accord not been established by the end of this year, both the UK and Canada would have been subjected to trade tariffs January 2021 onwards.
After months of deliberating, Canada and the United Kingdom have finally reached a post-Brexit trade agreement. Under the new agreement terms, both the countries will continue to trade under the preexisting European Union (EU). In other words, the countries will continue business under the Comprehensive and Economic Trade Agreement (CETA) that Justin Trudeau had signed with the EU in 2016.
Prime Minister Justin Trudeau and his British counterpart Boris Johnson came to the agreement in principle during a video conference on Saturday, November 28.
The two countries are expected to initiate negotiations for a broader “tailor-made” UK-Canada trade agreement next year.
Earlier in November, Prime Minister Justin Trudeau had expressed concerns about the UK government’s ‘bandwidth’ regarding trade talks as the country, a former member of the EU, had not negotiated trade deals since 1973. Britain, however, had junked Trudeau’s claims saying it has a dedicated staff working on the policies of the trade deal.
The two nations will formally sign the UK-Canada Trade Continuity Agreement following final legal checks. They cannot engage in any new trade deals until the Brexit transition period ends on 31 December.
How Did Canada & The UK Come To This Agreement?
After the United Kingdom left the EU in January 2020, the country was given a 11-month buffer period during which it was expected to hammer out details of new deals with its trade partners. In the meantime, Britain was allowed to carry on its international business under the existing EU regulations for the 11 months.
Canada continued its trade deals with the UK, its third largest export market, under the CETA.
The 11-month transition period granted to the UK is set to end on December 31.
How Does Canada & The UK Benefit?
Had the new accord not been established by the end of this year, both the UK and Canada would have been subjected to trade tariffs January 2021 onwards.
Canadian food exports to the UK, such as maple syrup, biscuits, salmon, etc. would have been subjected to taxes of up to eight per cent without the new trade agreement, as per media reports.
The UK is also benefitting from this new agreement in terms of establishing itself as a standalone international trading entity with the EU.
The new accord between the UK and Canada reportedly encompasses about 20 billion pounds worth of trade last year, the trade office said.
The new trade agreement with Canada is the UK’s second major deal in less than a month after Japan, which it announced in late October. The country is currently negotiating terms with trading partners such as Australia, New Zealand and the United States.
