U.K., Canada on Brink of Trade Deal in Brexit Boost for Johnson
The U.K. is poised to sign a new trade agreement with Canada to replace the existing deal it has through European Union membership, a step ministers say they hope will pave the way to even closer links with Britain’s 12th-biggest trading partner.
The agreement would be a major boost to U.K. Prime Minister Boris Johnson in his efforts to plot a new course for Britain as a global trading nation outside the EU. An announcement is expected within days, according to people familiar with the matter who spoke on condition they not be identified.
Without the new accord, the U.K. and Canada would face tariffs on trade from Jan. 1, when the Brexit transition period ends. After this date the U.K. will no longer be part of CETA, the EU-Canada trade agreement that came into force in 2017. Total trade between the two countries was worth about 17 billion pounds ($23 billion) in 2019.
The talks are “at an advanced stage and progressing well,” the U.K.’s Department for International Trade said in a statement.
Liz Truss, the U.K. trade secretary, said that she hoped Britain could forge a deeper relationship with Canada in future, once this continuity deal has been signed.
“We’re determined to reach a deal with Canada before the end of the year -- it will help our trade from cars to beef to fish to whiskey,” Truss said in Parliament on Thursday. “I do hope that in the future, as Canada is a member of the Trans-Pacific Partnership which has advanced chapters in areas like data and digital, that we will be able to go much further and build a much deeper relationship with Canada.”
The Canada breakthrough would be a relief for the U.K. as it continues contentious talks with the EU, its largest trading partner, over their own future economic relationship. Those discussions could bear fruit as early as next week, but the negotiations could still collapse.
The U.K. is Canada’s third-largest export market after the U.S. and China. In the first nine months of this year, Canada has exported C$14 billion ($10.7 billion) in merchandise exports to the U.K., while it imported C$6.9 billion. Last year, Canada was the U.K.’s 15th-largest export market.
Canadian Prime Minister Justin Trudeau last week said the two countries could wrap up negotiations on a new trade deal by Jan. 1.
“I know that rolling over and demonstrating free trade deals is important for the U.K. government. Canada is a really easy one. We’re there for it. We’d like to do it, so I am very hopeful that it’s going to get done but that’s up to the U.K. government,” Trudeau said last week during an online event hosted by the Financial Times.
The Canada deal would be the second major trade accord announced by Britain in less than a month, after it agreed to terms with Japan in late October. Meanwhile, trade negotiations are ongoing with countries including Australia, New Zealand and the U.S.
The U.K. still needs to roll over 14 other EU agreements by Jan. 1 to avoid defaulting to World Trade Organization terms, including with nations such as Mexico, Turkey and Singapore -- agreements which cover about 60 billion pounds of trade with Britain.
©2020 Bloomberg L.P.