Canada-U.K. trade deal signed, implementing bill expected today

“At a time of great uncertainty amid COVID-19, this continuity and predictability is crucial for all Canadians,” Ng said in a statement. “Canada and the United Kingdom will now move forward with their respective domestic procedures toward the ratification and implementation of the new trade agreement.”

Global Affairs Canada is preparing to release the legal text of the Canada–U.K. Trade Continuity Agreement (TCA) to coincide with the bill’s introduction, followed by briefing sessions for business groups and other stakeholders. The briefings are support to offer a more complete picture of what’s in store than what was presented when the two countries announced they’d reached a deal on Nov. 21.

On Jan. 1, the current rules governing trade between Canada and the U.K. will expire as Brexit takes hold and the British government assumes full responsibility for its trade policy independent from the European Union.

The trade minister has promised to work with her U.K. counterpart to mitigate the short-term effects of not having the new measures in place.

Until now, trade with the U.K. has been liberalized by the terms of the Comprehensive Economic and Trade Agreement (CETA). While not yet fully ratified by all of the EU’s member states, the bulk of CETA’s measures took effect in 2017.

Had no deal been reached to cover future two-way trade with Canada, new tariffs and other restrictions could have hit Canadian and British businesses this winter.

Instead, the new deal temporarily “rolls over,” or replicates, most of CETA’s terms for the immediate future, allowing both countries more time to consider the arrangements they want to have in place permanently.

The new implementation bill is unlikely to pass before the end of the year, however. The House of Commons is scheduled to rise for its holiday break on Friday.

‘Working to ensure no disruptions’

Ng has downplayed the risk of not having the transitional agreement fully ratified and ready to implement in the new year.

But the Canadian government has not released any details of interim measures it’s working on with the British government to avoid new trade barriers disrupting the two-way trade in goods, services and investment with its fifth-largest trading partner. For example, the two sides could reach an understanding not to collect tariffs otherwise payable on each other’s products until the implementation legislation is passed.

“I want businesses to know that is my absolute top priority, making sure they get that predictability heading to the end of the year,” Ng said after the cabinet met on Monday, adding that the transitional deal “maintains the high standards we have in CETA.”

“We’re absolutely working to ensure there is no impact or disruptions for our businesses,” she said.

WATCH | What we know about the interim Canada-U.K. trade deal:

The two countries have agreed to ‘roll over’ the Comprehensive Economic and Trade Agreement (CETA). 5:35

Both countries have committed to negotiating a more permanent, comprehensive trade deal in the new year.

There is no sunset date for the terms of the transitional deal, but parliamentarians on the Commons trade committee have been told that the text of the deal says the two parties intend to conclude their bilateral negotiation by 2024.

According to federal government policy, trade treaties are supposed to be tabled in Parliament 21 sitting days before the implementation legislation — a bill changing laws and regulations to comply with the new agreement — is introduced for debate.

It doesn’t look like that policy will be applied to this Canada–U.K. transitional deal.

Process ‘a train wreck’

Ratifying trade agreements is the responsibility of the federal cabinet, but before an agreement is finalized, Parliament needs to pass implementation legislation so that Canada is ready to comply on the date it takes effect.

Implementation bills can include changes to tariff schedules, intellectual property rules or health and safety regulations. Prior to the release of the legal text of this TCA, it’s not clear how much needs to be changed among the tariff rates and other rules that were already in place for trade when the British were part of the European Union.

When implementation legislation for the revised North American trade agreement was rushed through Parliament last spring, the Trudeau government agreed to opposition demands that it engage in a more comprehensive consultation process for future trade deals.

“This process has been a train wreck,” said NDP trade critic Daniel Blaikie, who led the fight for assurances things would work differently the next time. 

“By omitting a sunset clause, this minority government appears to have concluded a permanent trade agreement with almost no meaningful stakeholder consultation or parliamentary involvement.

“Negotiations toward a successor agreement are an opportunity to get the process right. They should involve Parliament and the public early and often. The TCA process cannot be allowed to stand as a precedent for how these deals are done.”