The UK-Canada Trade Continuity Agreement is a rollover trade deal which was struck between the British Prime Minister, Boris Johnson, and the Canadian Prime Minister, Justin Trudeau. The deal was announced on a four-way zoom call between Boris Johnson, Justin Trudeau, Liz Truss (The UK’s International Trade Secretary) and her Canadian counterpart, Mary Ng, on the 21st November 2020, and is due to come into effect on the 1st January 2021. The deal has promised to protect the flow of $27 billion-worth (£20.32 billion) of goods and services between the UK and Canada after Brexit. Both countries vowed to start talks on a bespoke agreement next year. This agreement to protect jobs and provide economic uncertainty is a positive signal in such times of economic uncertainty following the COVID-19 pandemic. However, the deal has also promised to pave the way for a tailor-made agreement covering more areas such as “digital trade, small businesses, the environment and women’s economic empowerment”. This possible new future deal, and the immediate economic short-term benefits the Trade Continuity Agreement, is indicative of possible positive consequences. However, whilst how the countries will address these areas is unclear, economic certainty in the year after the UK left the EU would be beneficial to the UK.
What does the deal mean for the UK and Brexit?
The agreement could provide a significant boost to UK Prime Minister Johnson in his efforts to set a new course for Britain as a “global trading nation outside the EU”, and “prevent Britain losing wider international market access that it enjoyed as part of the EU”. This view can be seen by the Federation of Small Business’ (FSB) National Chairman Mike Cherry, that “there was always a danger that the end of the transition period would mean losing wider international market access that we enjoyed as part of EU membership. So it’s encouraging to see new trade deals secured with trading partners like Canada, long since seen as a crucial market by small firms. The fact that this new agreement upholds the small business chapter that was previously in place is very welcome”.
The benefits locked in under the agreement reached on 21st November include:
“Future zero tariffs on UK car exports to Canada, which were worth £757 million last year, supporting factories and jobs in the community. 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, confectionery, fruit and vegetables, bread, pastries and fish. Last year the UK exported £344m worth of agri-food goods to Canada.”
Whilst this transitional agreement “largely replicates” the EU deal on tariff reductions and provisions for labour and environment, all of this means that the flow of £20billion of goods and services between the two countries has been protected, a deal which puts Britain, economically, in a better situation after having left the EU. It is important to note, however, that this Trade Continuity Agreement between the UK and Canada only makes up around 12% of Britain’s secured trade deals; “in less than two years, the UK has agreed trade deals with 53 countries, accounting for 164 billion pounds ($217.82 billion) of British bilateral trade”. Thus, although this deal is remarkably note-worthy, its current short-term economic impact is perhaps less of a significant form of aid for the UK as first thought. Rather, it could be the promise of a future agreement, which promises to cover more areas such as digital trade, small businesses, the environment and women’s economic empowerment, which holds more significance between the two countries.
How does the UK-Canada Trade Continuity Agreement plan on addressing “digital trade, small businesses, the environment, and women’s economic empowerment”?
The UK-Canada Continuity Agreement maintains trade, with “multiple rollover bilateral deals simply replacing the terms the bloc had already agreed”. However, the deal also paves the way for a tailor-made agreement covering more areas such as “digital trade, small businesses, the environment and women’s economic empowerment”. However, quite how these promises are going to be fulfilled is unclear; whilst International Trade Secretary Liz Truss said “We look forward to striking a new more ambitious deal next year with the aim of creating more opportunities for businesses and improving the lives of people across the country”, all of these claims are vague, and somewhat ambiguous.
Thus, it could be argued that more clarification over a possible future agreement that addresses “digital trade, small businesses, the environment, and women’s economic empowerment” is needed. However, it is clear that “the UK-Canada Trade Continuity Agreement will form the basis for future negotiations on a new bespoke UK-Canada trade deal”.
In conclusion, the UK-Canada Trade Continuity Agreement is an agreement, in principle, for the two countries to “continue trading on the same terms as the current EU-Canada trading arrangements after the end of the Brexit transition period”. This economic aid, whilst perhaps will not have a substantial impact on the two countries (especially on Britain’s economic position following Brexit), it does signal possible plans for an agreement addressing “digital trade, small businesses, the environment, and women’s economic empowerment”, arguably areas which need increasing global cooperation.