The UK and Canada signed a post-Brexit trade agreement, through which an estimated “£42m ($56m) tariff burden on UK exports has been saved,” the UK government said.
The new agreement “secures transatlantic trade with a trading partnership that was worth £20bn last year,” the UK Department for International Trade said in a statement, adding that it also gives certainty for businesses exporting goods and services to Canada worth £11.bn.
The news comes two months after the UK sealed its first post-Brexit trade deal, which was with Japan and a month after Canadian prime minister Justin Trudeau said a trade deal could be finalised by the end of 2020, but feared the UK may not have the “bandwidth” to see it through.
Under the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada, 95% of the imports covered are tariff and quota-free.
When the UK leaves the EU, it will lose the benefits that comes with being part of the bloc — unified tariffs and trading conditions with 27 other nations, and it now has to work out separate deals.
The UK and Canada last month announced an ‘agreement in principle’ to roll over current trading arrangements and will begin negotiations on a new, bespoke UK-Canada trade deal next year.
The government said the deal it has just announced supports British industries including automotive manufacturing and food and drink.
The benefits locked in under the agreement signed Wednesday include zero tariffs on UK car exports to Canada, which were worth £757m last year.
Without this agreement, Canada’s standard tariffs on cars of 6.1% would apply.
It also includes tariff-free trade on 98% of goods that can be exported to Canada including beef, fish and seafood and soft drinks.
UK producers will continue to benefit from zero tariffs on many agricultural and seafood exports including chocolate, confectionary, fruit and vegetables, bread, pastries and fish. Last year the UK exported £344m worth of agri-food goods to Canada.
Without the continuity agreement, Canadian food products such as maple syrup, biscuits and salmon could have been more expensive for British consumers as they would face taxes of up to 8% when entering the UK.
International Trade Secretary Liz Truss said the agreement “takes us a step closer to joining the Trans-Pacific Partnership, a high standards agreement of 11 dynamic Pacific nations. Membership would deepen market access for our businesses, help turn us into a global hub for tech and services trade, and strengthen the global consensus for rules-based free trade.”
In under two years, the UK government said it has agreed trade deals with 55 countries accounting for £170bn of UK bilateral trade.
Meanwhile, a trade deal with the US continues to be a top priority for the UK. However, Johnson’s politics are more aligned with Donald Trump’s and with Biden now in charge, there will be a real test of the well-recognised “special relationship” between the UK and US, especially when it comes to Brexit.
And the EU and UK have yet to agree a trade deal, increasing the possibility of a disruptive and abrupt end to the transition, which is set to end on 1 January 2021.
Investor attention remains focused on Brexit trade talks as Boris Johnson heads to Brussels to try and reinvigorate negotiations and finally reach a deal.
Downing Street confirmed on Tuesday evening that Johnson will travel to Brussels on Wednesday to have dinner with European Commission president Ursula von der Leyen.
“The conversation between the prime minister and the president tonight, I hope, will create further political momentum, which will make sure that we do reach an agreement,” Cabinet minister Michael Gove told BBC Breakfast.
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