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What is the new UK and Canada trade agreement?

What is the new UK and Canada trade agreement?

The UK and Canada have reached a trade agreement this week - here's a look at what it means...

 

What is the trade agreement?

The deal that has been agreed between the UK and the EU is essentially a continuity deal. The "agreement in principle" was made in a video call this week.

The agreement means that trading between the two countries is set to continue under current EU terms after the Brexit transition period ends at the end of 2020.

The agreement is not a new bespoke deal and there will be no new benefits to businesses from it - rather, it means that businesses will not lose out from the trading terms ending after the transition period.

The current trading terms are set out in the Comprehensive Economic and Trade Agreement - a deal reached between the EU and Canada after negotiations which took seven years.

 

What is the Brexit transition period?

The UK left the European Union on January 31, 2020. Since then, the transition period has been in place - during this time, the UK continues to remain part of the single market and the customs union, however, it is no longer part of the EU's political institutions and has no say in what rules are set. 

The transition period is set to end on December 31, 2020. The UK has been negotiating a post-Brexit trade agreement with the European Union, however, no deal has been reached as yet. If no deal is reached by the end of the transition period, the UK will have to trade with EU countries on World Trade Organization (WTO) terms from January.

The exact consequences of a no-deal scenario are unknown, however, it is expected by many that there would be delays at ports and potential disruption to food and other supply chains.

 

What about trade deals with non-EU countries?

Canada is not a member of the EU but does have a trade agreement with it. The deal between the UK and Canada, if passed through final legal processes, should see trading continue on those terms. A full, bespoke trade agreement between the UK and EU is likely to take several years to negotiate.

In October, the UK signed a trade agreement with Japan which means that after the transition period, around 99% of UK exports to Japan will be free of tariff charges. 

The UK Government is understood to be in conversation with a number of other countries, including Australia and the United States.

 

What has been said about the UK-Canada deal?

Talking about the extension of the current arrangements through the deal, UK Prime Minister Boris Johnson said it was "a fantastic agreement for Britain".

The deal has also been welcomed by Labour's Shadow International Secretary Emily Thornberry, though she warned that urgency was needed to reach similar continuity agreements with countries such as Singapore and Mexico.