- The deal paves the way for negotiations to begin in 2021 on a new bespoke trade deal between the UK and Canada, with the potential to go further in areas like digital trade, the environment and economic empowerment of women.
- Today’s deal also ensures certainty for UK companies trading goods and services with Canada worth £ 20 billion
The UK and Canada have locked down their existing trade ties, worth £ 20 billion, and have agreed to start negotiating a more ambitious new trade deal as early as next year.
In a video call today (November 21), Prime Minister Boris Johnson and Canadian Prime Minister Justin Trudeau, accompanied by International Trade Secretary Liz Truss and her Canadian counterpart, the Minister of Small Business, Export Promotion and International Trade, Mary Ng, agreed to an “ agreement in principle ” to renew current trade agreements between the EU and Canada and to start negotiations on a new tailor-made trade agreement between the UK and Canada in 2021.
Today’s agreement to extend the provisions of the Comprehensive Economic and Trade Agreement (CETA) gives certainty to UK companies exporting goods and services to Canada worth £ 11.4 billion. It will support the UK’s car manufacturing and food and drink industries which together provide jobs for over half a million people across the UK.
Overall, an estimated tariff charge of £ 42 million on UK exports has been avoided. The benefits locked in in today’s deal include:
- Future zero tariffs on UK car exports to Canada, which were worth £ 757million last year, are supporting factories and jobs in our communities. Without this agreement, Canada’s standard car tariffs of 6.1% would apply.
- Duty-free trade on 98% of goods that can be exported to Canada, including beef, fish and seafood, and soft drinks.
- UK producers will continue to benefit from zero tariffs on many agricultural and seafood exports, including chocolate, confectionery, fruit and vegetables, bread, pastries and fish. Last year the UK exported 344 million pounds of agri-food products to Canada.
- Without the Continuity Agreement, Canadian food products such as maple syrup, cookies and salmon could have been more expensive for UK consumers, as they would be subject to taxes of up to 8% when would enter the UK under the UK world tariff.
Today’s deal provides the two countries with the foundation for negotiating a new trade deal, which will improve on the existing EU-Canada deal. It will be tailored to the UK economy with the potential to go further into new areas such as digital commerce, women’s economic empowerment and the environment.
Today’s announcement means that in less than two years the UK government has concluded trade deals with 53 countries accounting for £ 164 billion in UK bilateral trade. It also brings us closer to joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), of which Canada is a member. The CPTPP is a key part of our trade negotiating agenda, helping companies gain more opportunity in 11 key Pacific markets.
Prime Minister Boris Johnson said:
This is a fantastic deal for Britain which guarantees transatlantic trade with one of our closest allies. British companies are exporting everything from electric cars to sparkling wine to Canada, and today’s deal will ensure that trade grows more and more.
Our negotiators have been working hard to secure trade deals with the UK and, early next year, we have agreed to start working on a new bespoke trade deal with Canada that will go further. further to meet the needs of our economy.
International Trade Secretary Liz Truss said:
Today’s deal supports £ 20 billion in trade and secures thousands of jobs. We look forward to reaching a new, more ambitious agreement next year with the goal of creating more opportunities for businesses and improving the lives of people across the country.
The UK is linked by history, culture and transatlantic commerce with our friends and allies in Canada, and we want to continue to build partnerships around the world that support our shared values of freedom and democracy, and brand today another step towards belonging to a group. like-minded nations – the Trans-Pacific Partnership.
Today’s agreement also guarantees duty-free access to the Canadian market for British wines and spirits and ensures that the United Kingdom and Canada can continue to work towards mutual recognition of qualifications in areas such as accounting, architecture and law.
All countries and regions will benefit from preferential access to Canadian markets. For example, together the West Midlands and North West regions exported over £ 1.2 billion worth of merchandise to Canada last year, while Scotland and Northern Ireland collectively exported 1 billion pounds.
Josh Hardie, Acting CEO of the CBI, said:
Reaching an agreement with Canada that ensures continuity of trade is great news for businesses on both sides of the Atlantic.
Whether it’s manufacturers who still ship their products between the two counties duty-free or whether UK companies can sell their services in the Canadian market, this is a real step forward.
The signing of this agreement can now lay the foundations for an even deeper trade agreement, suitable for both economies. Businesses are ready to work with government to achieve this goal and to promote opportunities with Canada. Miles Beale, Managing Director of the Wine and Spirit Trade Association, said:
This is a good result for the UK wine and spirits industry. Canada is an important and growing market for UK exporters, especially our small and medium-sized English gin and wine exporters.
This agreement not only confirms the continued elimination of tariffs, but gives us additional foundations and mechanisms to engage with Canadians on their complex alcohol market, which is controlled at the provincial level. This should allow UK companies to be more competitive in the Liquor Control Board system and is a positive step to help us grow in the market.
British supercar maker McLaren Automotive, the biggest part of luxury car, motorsport and tech company McLaren Group, sold its first car in Canada in 2012.
Now, with retailers in major Canadian cities like Toronto, Montreal and Vancouver, the brand, represented by Pfaff Automotive, has seen sales quadruple in the past eight years.
Combining cutting-edge technology that enhances the owner’s experience and personalized, hand-crafted luxury, McLaren is set to sell its 1,000th supercar in Canada before the end of the year.
Tony Joseph, Regional Director for the Americas, McLaren Automotive said:
As an innovative UK-based bespoke manufacturing company exporting to meet growing demand for McLaren supercars among Canadian buyers, today’s announcement that the UK and Canada have concluded a business continuity agreement is welcome. It provides increased certainty and continuity for us and our Canadian retail partners, customers and employees as we continue to strengthen our presence in this key global market.
FSB National President Mike Cherry said:
There was always a risk that the end of the transition period would mean the loss of the wider access to international markets that we enjoy as part of EU membership. So it’s really encouraging to see new trade agreements with trading partners like Canada, which has long been seen as a crucial market by small businesses. The fact that this new agreement confirms the chapter on small businesses that was previously in place is very welcome. We hope that these chapters will be at the center of all future UK trade agreements.
The UK-Canada Continuity of Trade Agreement will undergo final legal checks before it is officially signed.
Notes to Editors:
- The agreement will be officially signed once it has been formally verified.
- Total UK-Canada trade was £ 19.9 billion in the four quarters ending in the first quarter of 2020
- The UK will continue to be covered by the EU-Canada FTA during the transition period. This agreement will enter into force on January 1, 2021.
- Source of trade statistics with Canada: ONS UK Economic Accounts, Q2 2020 release.
- Source of regional trade statistics: HMRC Regional Trade in Goods, Q2 2020 release.