Canada and the United Kingdom have reached an interim post-Brexit trade agreement, Prime Minister Justin Trudeau and British Prime Minister Boris Johnson announced Saturday.
“Now we get to continue to work on a bespoke agreement, a comprehensive agreement, over the coming years that will really maximize our trade opportunities and boost things for everyone,” Trudeau said.
“Free trade is an important part of the way that we’re going to bounce back from COVID, but I also think that Canada and the U.K. share a perspective about building back greener,” said Johnson, who also took a moment to congratulate Trudeau for taking steps to get Canada to net-zero carbon emissions by 2050.
The Canada-United Kingdom Trade Continuity Agreement extends the elimination of tariffs on 98 per cent of goods exported between the two countries and sets the stage for negotiations toward a permanent and more ambitious deal in the new year. The deal could include “the potential to go further in areas like digital trade, the environment and women’s economic empowerment,” a release from the British government said.
The announcement came as world leaders virtually convened for the G20 summit.
WATCH | What we know about the Canada-U.K. interim trade deal:
Brexit complicated negotiating new agreement
Following the U.K.’s exit from the European Union last winter, the two countries agreed to let the Comprehensive Economic and Trade Agreement (CETA) — the bilateral trade deal in effect between Canada and the EU since 2017 — continue to apply to Canada–U.K. trade until the end of 2020.
Negotiating a new comprehensive bilateral trade agreement between the two that could be fully ratified and in place before Jan. 1 was difficult because the British did not have jurisdiction over their own trade affairs until their exit from the EU was complete.
Instead, the two sides agreed to “roll over” the CETA in a short-term transitional agreement, replicating most of the existing language and renegotiating only what was required to make it fit U.K.-only trade.
“We knew that having an interim agreement would be crucial to ensure that businesses, exporters, our workers on both sides of the Atlantic have the continuity and the predictability that they need,” International Trade Minister Mary Ng said Saturday.
Now that negotiations have concluded, the deal must be approved by both governments. In Canada’s case, legislation to change regulations and laws (including its custom tariff) to comply with the new agreement must be approved by Parliament before the deal can take effect.
The timeline for passing such a bill is now very tight, but both countries have said they don’t want to disadvantage or disrupt businesses who’ve benefited from CETA and depend on this two-way trade.
Canada’s business community reacts
Canada’s business community offered a mixed reaction shortly after the deal was announced, welcoming the economic certainty the interim deal offered while asking for more specifics on the arrangement.
“We call on the Canadian and British government to publish details of the agreement so that businesses can understand all the practical details,” said Mark Agnew, international policy director for the Canadian Chamber of Commerce.
“We also call on the government and parliamentarians to work together in ensuring a prompt passage of the necessary implementing legislation to provide certainty for Canadian businesses at the earliest possible opportunity.”
Goldy Hyder, president of the Business Council of Canada, said he looked forward to reviewing the details of the agreement and that he believed in a future “opportunity to enhance our bilateral trade and investment ties even further” under a more comprehensive pact.
Dan Darling, president of the Canadian Agri-Food Trade Alliance, described the agreement as “a welcome stop-gap measure” but said it is not enough, calling on the government to fix the market-access issues that Canadian producers have faced under the existing agreement with the EU.
“For other agri-food exporters, a transitional arrangement simply reinforces a situation that remains unacceptable under CETA due to the persistence of trade obstacles that continue to hinder Canadian exports,” he said.
“That is why we are urging both parties to return to the negotiating table as soon as possible in order to reach a comprehensive and more ambitious pact that removes tariffs and non-tariff barriers, provides liberal rules of origin and creates a level playing field that will enable increased trade and deliver commercially viable two-way growth for agri-food.”
There’s no end date or sunset clause for the transitional agreement, but both sides intend to begin negotiations toward a permanent agreement to replace it sometime next year.