Post-Brexit “Continuity Trade Deal” between Canada and the UK
In short, the Continuity Trade Deal will allow Canada and the UK to trade, post-Brexit, under the same terms provided by the CETA on a bilateral basis. This interim agreement was announced back on November 21st 2020 and came into effect on the 1st of January 2021.
Benefits of the Continuity Trade Deal
The benefits of this deal are that the UK was Canada’s 5th largest trading partner in 2019. Two-way merchandise trade reaching CAD29 billion that year (GBP 17 Billion or EUR 18.7 Billion).
Vice versa, UK businesses export substantial amounts of merchandise to Canada. These are exports are said to be worth around GBP 11 billion per year as Canada is a particularly large market for UK-made cars. Without this continuity trade deal in place. UK car exporters would face Canada’s standard tariff on cars of 6.1%.
New Deal
The continuity trade deal is a temporary transitional arrangement between both governments. They have agreed to begin negotiations on a bespoke trade pact in 2021. This as a result does provide a level of uncertainty for those business trading between Canada and the Uk. As it’s still unclear how long these talks and negotiations might last and ultimately what the outcome from them will be. On a more positive note, this development does suggest that both governments are committed to potentially improving existing beneficial trading rules provided by the CETA.
The UK government has also said that this transitional agreement with Canada takes the UK one step closer to joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This is a regional agreement between 11 Pacific Rim countries. These are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
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