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UK secures vital rollover trade deal with Canada and agrees to start negotiating more advanced deal next year

Monday November 23rd, 2020

International Trade Secretary Liz Truss has today secured an agreement for a continuity trade deal with “friend and ally” Canada.

The agreement paves the way for negotiations to begin in 2021 on a new tailor-made UK-Canada trade deal, with the potential to go further in areas like digital trade, the environment and women’s economic empowerment

Today’s agreement also locks in certainty for UK businesses trading goods and services with Canada worth £20 billion

The UK and Canada have locked in their existing trading relationship, worth £20 billion, and agreed to begin negotiating a new more ambitious trade deal as early as next year.

On a video call (21st November), Prime Minister Boris Johnson and Canadian Prime Minister Justin Trudeau, joined by International Trade Secretary Liz Truss and her Canadian counterpart, Minister of Small Business, Export Promotion and International Trade Mary Ng agreed an ‘agreement in principle’ to roll over current EU-Canada trading arrangements and begin negotiations on a new, bespoke UK-Canada trade deal in 2021.

Today’s agreement to rollover provisions of the Comprehensive Economic and Trade Agreement (CETA) gives certainty for UK businesses exporting goods and services to Canada worth £11.4 billion. It will support the British automotive manufacturing and food and drink industries which between them provide jobs for more than half a million people across the UK.

Overall, an estimated £42 million tariff burden on UK exports has been saved. The benefits locked in under the agreement reached today include:

Future zero tariffs on UK car exports to Canada, which were worth £757 million last year, supporting factories and jobs in our communities. Without this agreement, Canada’s standard tariffs on cars of 6.1% would apply.
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 under the UK Global Tariff.

The deal secured today provides the foundation for both countries to negotiate a new trade deal, that will improve on the existing EU-Canada agreement. It will be tailored for the British economy with the potential to go further in new areas like digital trade, women’s economic empowerment and the environment. 

Today’s announcement means that it in under two years, the UK government has agreed trade deals with 53 countries accounting for £164bn of UK bilateral trade. It also takes us one step closer to accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), of which Canada is a member. CPTPP is a key part of our trade negotiations programme, helping businesses secure more opportunities in 11 key Pacific markets.

Today’s agreement also guarantees tariff-free access to the Canadian market for British wine and spirits and ensures that the UK and Canada can continue to work towards recognising each other’s qualifications in areas including accountancy, architecture and law.

All nations and regions will benefit from preferential access to Canadian markets. For example, together the West Midlands and North West regions exported over £1.2 billion worth of goods to Canada last year, while Scotland and Northern Ireland collectively exported £1 billion.

British supercar maker McLaren Automotive, the largest part of luxury automotive, motorsport and technology company McLaren Group, sold its first car in Canada in 2012.

Now with retailers in major Canadian cities such as Toronto, Montreal and Vancouver the brand, represented by Pfaff Automotive, has seen a four-fold growth in sales over the past eight years.

Combining leading-edge technology that enhances owner experience and hand-built personalised luxury, McLaren is poised to sell its 1,000th supercar in Canada before the end of the year.

Prime Minister Boris Johnson said:

This is a fantastic agreement for Britain which secures transatlantic trade with one of our closest allies. British businesses export everything from electric cars to sparkling wine to Canada, and today’s deal will ensure that trade goes from strength to strength.

Our negotiators have been working flat out to secure trade deals for the UK, and from as early next year we have agreed to start work on a new, bespoke trade deal with Canada that will go even further in meeting the needs of our economy.

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