Canada and the UK have reached a post-Brexit interim trade deal, Prime Minister Justin Trudeau and British Prime Minister Boris Johnson announced on Saturday.
“We can now continue to work on a tailor-made deal, a comprehensive deal, over the next few years that will really maximize our business opportunities and spur things up for everyone,” Trudeau said.
“Free trade is an important part of how we will bounce back from COVID, but I also think Canada and the UK share a perspective on rebuilding greener,” said Johnson, who also took a moment to congratulate Trudeau. for taking action to bring Canada to net zero carbon emissions by 2050.
The Canada-U.K. Trade Continuity Agreement extends the elimination of tariffs on 98 percent of goods exported between the two countries and sets the stage for negotiations towards a permanent agreement and more ambitious in the new year. The deal could include “the potential to go further in areas such as digital trade, the environment and women’s economic empowerment,” said a British government statement.
The announcement came as world leaders virtually gathered for the G20 summit.
WATCH | What we know about the Canada-UK Interim Trade Agreement:
Brexit complicates the negotiation of a new agreement
Following the UK’s exit from the European Union last winter, the two countries agreed to leave the Comprehensive Economic and Trade Agreement (CETA) – the bilateral trade agreement in force between Canada and the ‘EU since 2017 – continue to apply to Canada-UK trade until end of 2020.
Negotiating a new comprehensive bilateral trade deal between the two that could be fully ratified and put in place before January 1 was difficult as the British did not have jurisdiction over their own trade affairs until their exit from the EU is complete.
Instead, the two sides agreed to ‘roll over’ CETA into a short-term transitional deal, reproducing most of the existing terms and renegotiating only what was necessary to make it fit for exclusively UK trade.
“We knew that an interim agreement would be crucial to ensure that businesses, exporters, our workers on both sides of the Atlantic have the continuity and predictability they need,” the Minister for International Trade said on Saturday. , Mary Ng.
Now that the negotiations are over, the deal must be approved by both governments. In the case of Canada, legislation to amend regulations and laws (including its tariff) to comply with the new agreement must be approved by Parliament before the agreement can enter into force.
The timeline for passing such a bill is now very tight, but the two countries have said they do not want to disadvantage or disrupt companies that have benefited from CETA and that depend on this bilateral trade.
Canada’s business community is responding
The Canadian business community offered a mixed reaction shortly after the deal was announced, welcoming the economic certainty offered by the interim deal while asking for more details on the deal.
“We are calling on the Canadian and UK governments to release the details of the agreement so that companies can understand all the practical details,” said Mark Agnew, director of international policy at the Canadian Chamber of Commerce.
“We also call on the government and parliamentarians to work together to ensure the swift passage of the necessary implementing legislation to provide certainty for Canadian businesses as soon as possible.”
Goldy Hyder, Chairman of the Business Council of Canada, said he looked forward to reviewing the details of the deal and believed in a future “opportunity to further strengthen our bilateral trade and investment relationship.” as part of a more comprehensive pact.
Dan Darling, president of the Canadian Agri-Food Trade Alliance, called the deal a “welcome interim measure” but said it was not enough, calling on the government to address market access issues facing consumers. Canadian producers were confronted under the existing agreement with the EU.
“For other agri-food exporters, a transitional arrangement only reinforces a situation that remains unacceptable under CETA due to the persistence of trade barriers that continue to hamper Canadian exports,” he said. .
That is why we urge both sides to return to the negotiating table as soon as possible in order to achieve a comprehensive and more ambitious pact that removes tariff and non-tariff barriers, provides liberal rules of origin and creates conditions of fair competition. will enable increased trade and provide commercially viable two-way growth for agribusiness. “
There is no end date or sunset clause for the transition agreement, but the two sides intend to begin negotiations for a permanent agreement to replace it next year. .