Canada and UK sign post-Brexit transition trade deal

Canada and the United Kingdom have reached a provisional post-Brexit trade agreement, Prime Minister Justin Trudeau and British Prime Minister Boris Johnson announced on Saturday.

“Now we can continue to work on a tailor-made deal, a comprehensive deal, in the years to come that will really maximize our business opportunities and drive things for everyone,” said Trudeau.

“Free trade is an important part of how we are going to recover from COVID, but I also think Canada and the UK share a perspective on building a greener environment,” said Johnson, who also congratulated Trudeau for taking steps to get Canada to have net zero carbon emissions by 2050.

The Canada-UK Trade Continuity Agreement extends tariff elimination on 98 percent of goods exported between the two countries and sets the stage for negotiations for a permanent and more ambitious deal in the new year. The deal could include “the potential to go further in areas such as digital commerce, the environment and women’s economic empowerment,” said a statement from the British government.

The announcement was made at a time when world leaders were practically meeting for the G20 summit.

Brexit complicates negotiation of new deal

After the United Kingdom left the European Union last winter, the two countries agreed to allow the Comprehensive Economic and Trade Agreement (CETA) – the bilateral trade agreement in force between Canada and the EU since 2017 – to continue to apply to the Canada-UK trade by the end of 2020.

Negotiating a new comprehensive bilateral trade agreement between the two that could be fully ratified and in force before January 1 was difficult because the British had no jurisdiction over their own trade affairs until their exit from the EU was completed.

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Instead, the two sides agreed to “extend” CETA in a short-term transition agreement, replicating most of the existing language and renegotiating only what was necessary to make it suitable for trade in the UK alone.

Trudeau speaks to Johnson as they participate in a working session with G7 leaders in Biarritz, France, on August 25, 2019. (Sean Kilpatrick / The Canadian Press)

“We knew that having an interim agreement would be crucial to ensure that companies, exporters and our workers on both sides of the Atlantic have the continuity and predictability they need,” said International Trade Minister Mary Ng on Saturday.

After negotiations are concluded, the agreement must be approved by both governments. In the case of Canada, legislation to amend regulations and laws (including its customs tariff) to comply with the new agreement must be approved by Parliament before the agreement takes effect.

The deadline for approving such a project is now very tight, but both countries said they do not want to harm or interrupt the companies that have benefited from CETA and depend on this bilateral trade.

There is no end date or sunset clause for the transition agreement, but both sides intend to start negotiations for a permanent agreement to replace it next year.

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