U.K., Canada Reach Stopgap Deal to Avoid Tariffs Post-Brexit

The U.K. and Canada reached a temporary agreement to prevent tariffs on goods and services between the two countries starting on Jan. 1, when the U.K. will no longer be covered by Canada’s trade deal with the European Union.

In a statement Tuesday issued by the Canadian foreign affairs ministry, the governments said they agreed to continue giving each other’s products preferential tariffs. The measure will stay in place until the British and Canadian parliaments can ratify the Trade Continuity Agreement put forward in November.

“This action is important for many businesses and jobs in Canada, which benefit from the strong economic ties between our two countries,” Chrystia Freeland, Canada’s finance minister, said in the emailed statement.

U.K. officials had privately expressed concern that businesses on both sides of the Atlantic would face tariffs on Jan. 1 without a stopgap deal in place after both parliaments failed to pass the legislation before breaking for the end-of-year holidays.

Two-way trade between the countries was worth C$29 billion ($22.5 billion) in 2019, and the U.K. is Canada’s fifth-largest trading partner; Canada is the U.K.’s 15th-largest export market.

©2020 Bloomberg L.P.

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