The UK has signed a trade agreement with Canada that will extend the terms of an existing agreement between the EU and Canada at the end of the Brexit transition period on January 1st.
British Prime Minister Boris Johnson and his Canadian counterpart Justin Trudeau basically agreed the agreement in a video call on Saturday. Mr Johnson hailed it as “a fantastic deal for Britain that will secure transatlantic trade with one of our closest allies”.
UK exports of goods and services to Canada amount to around £ 20 billion a year.
The UK government hopes the continuity agreement will lay the groundwork for talks next year on a “bespoke” trade deal between the UK and Canada.
International Trade Secretary Liz Truss said the deal would provide “security” to thousands of companies.
She hoped the UK-Canada rollover deal recently signed with Japan would be a stepping stone to broader trade alliances: “Today is another step towards membership in a group of like-minded nations – the Trans Pacific Partnership. ”
In addition to Japan and Canada, the UK has a number of agreements with other countries, including Norway, South Korea and Israel.
Negotiations are also open with more than a dozen other economies, including Mexico, Vietnam and Egypt – three countries whose combined trade relations with the UK were worth nearly £ 12 billion in goods alone in 2019.
If no business is done with them by January 1, trading terms would revert to the basic World Trade Organization terms, with higher tariffs on UK imports and exports.
The deal with Canada comes just days before the final crisis of talks on a trade deal between the UK and the EU.
Speaking at an FT Global Boardroom event earlier this month, Mr Trudeau said he feared the rollover deal would not be completed before January 1st due to a “lack of bandwidth” in the UK trading department.
Ms. Truss’s allies said the Canada deal demonstrates the UK’s ability to thrive outside the EU on its own terms.
An adviser said the deal was “part of a larger post-Brexit strategic game that relies on deeper trade with countries outside of Europe – particularly dynamic economies in the Americas and the Pacific”.
The UK Department of International Trade said the rollover deal would be of particular benefit to the automotive, manufacturing and food and beverage industries.
For example, UK manufacturers of agricultural exports will continue to have zero tariffs, while UK auto exports to Canada, valued at around £ 757 million, will not have tariffs.
Acting Director General of the CBI Josh Hardie said, “The conclusion of an agreement with Canada that will ensure continuity of trade is good news for companies on both sides of the Atlantic.”