Brexit: UK and Canada will keep trading under same terms as EU deal

Britain today signed an interim deal with Canada as negotiators rush to cement trading relationships in preparation for life outside the EU.

In a relief for businesses fearing high tariffs, the Government said the agreement paves the way for negotiations to begin next year for a new deal with Canada.

Under the terms of the agreement, the UK and Canada will continue trading under the terms as the current EU system after the Brexit transition period ends.     

Without a series of new bilateral agreements, trade with countries around the world may be hampered by barriers such as tariffs and increased paperwork.

The UK government says the stopgap agreement paves the way for future negotiations on a new tailor-made UK-Canada trade deal.

Boris Johnson today said: ‘This is is a fantastic agreement for Britain which secures trans-Atlantic 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.’

The deal with Canada follows an agreement struck last month with Japan, which largely replicated existing trading arrangements.  

Johnson and Canadian counterpart Justin Trudeau sealed the ‘agreement in principle’ in a video call today, the Department for International Trade (DIT) said.

The agreement rolls over the settlement agreed by the EU with Canada in the Comprehensive Economic and Trade Agreement (Ceta) and does not give any new benefits to UK businesses.

But the DIT said it avoids an estimated £42million of tariffs exporters in the UK would have faced if the Government had failed to get a deal.

Ministers hope future negotiations will go further on ‘digital trade, women’s economic empowerment and the environment’, according to DIT.

Industry groups expressed relief that businesses will not face higher trade tariffs with Canada next month.

Federation of Small Businesses chairman Mike Cherry said: ‘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.

‘The fact that this new agreement upholds the small business chapter that was previously in place is very welcome. We look forward to such chapters being at the centre of all future UK trade deals.’

Confederation of British Industry director-general Josh Hardie said it was ‘great news for businesses’ and that the agreement can ‘lay the foundations for an even deeper trade agreement’.

International Trade Secretary Liz Truss said: ‘Today’s agreement underpins £20billion worth of trade and locks in certainty for thousands of jobs.

‘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.’

Before it is formally signed, the UK-Canada Trade Continuity Agreement will be subject to final legal checks.

It comes after Brussels claimed a post-Brexit trade deal with the UK  is ‘both close and far away’ due to the ‘persistent’ deadlock over crunch issues like fishing rights. 

Top-level talks were suspended this week after a member of Michel Barnier‘s team tested positive for coronavirus. 

Officials continue to work remotely on the detail of the accord but EU diplomats said this morning that sticking points ‘still need their time’ to be resolved as the clock ticks down to the end of the transition period in December. 

As well as fishing, the other main points of contention are the so-called ‘level playing field’ on competition and the future governance of the deal. 

Progress is said to be being made ‘very, very slowly’ on those two issues but ‘fisheries are not really moving anywhere right now’. 

EU diplomats were briefed on the status of the talks this morning by a senior member of the European Commission, with reports suggesting some in Brussels believe a deal is now ’95 per cent done’. 

It was apparently made clear that the two sides are very close to agreement in almost all areas apart from the three which have long prevented major progress being made. 

A senior EU diplomat told Reuters after the meeting: ‘We are both close and far away. It seems that we are very close to agreement on most issues but differences on the three contentious issues persist.’

A second EU diplomat said of the outstanding issues: ‘They still need their time. 

‘Some things on the level playing field have moved, albeit very, very slowly. Fisheries are not really moving anywhere right now.’ 

The talks were plunged into disarray yesterday after a member of Mr Barnier’s team tested positive for Covid-19 and top-level negotiations had to be put on hold. 

Downing Street said this afternoon that the two sides ‘have agreed to negotiate remotely for the time being’ and face-to-face talks will resume ‘when it is judged safe to do so’. 

The Prime Minister’s Official Spokesman would not be drawn on the reports of a deal being ’95 per cent done’ as he said: ‘Our assessment remains that we want to get an FTA, that has been our ambition throughout and our negotiating position remains the same.’ 

Mr Barnier, the EU‘s chief negotiator, said he and his UK counterpart Lord Frost had ‘decided to suspend the negotiations at our level for a short period’ in the wake of the test result. 

Lord Frost said he would remain in ‘close contact’ with Mr Barnier and insisted ‘the health of our teams comes first’. 

A UK Government spokesman had said ministers were now talking to Brussels about the ‘implications for the negotiations’. 

The positive test raises major questions about how and when face-to-face talks could resume because of the potential need for the negotiating teams to self-isolate. 

Mr Barnier tweeted: ‘Update: one of the negotiators in my team has tested positive for COVID-19. With David Frost we have decided to suspend the negotiations at our level for a short period. The teams will continue their work in full respect of guidelines.’ 

Mr Frost responded: ‘I am in close contact with Michel Barnier about the situation. The health of our teams comes first. I would like to thank the [European Commission] for their immediate help and support.’ 

A UK Government spokesman said: ‘The Commission has informed us that an official in their delegation has tested positive for Covid-19. 

‘We are discussing with them the implications for the negotiations. We have been, and will continue to, act in line with public health guidelines and to ensure the health and welfare our teams.’   

The two sides have been engaged in intensified talks in recent weeks, with negotiating rounds alternating between London and Brussels. The latest round of talks was taking place in the Belgian capital.

The middle of November had been viewed as the latest a deal could be agreed between the UK and the EU because of the amount of time needed to ratify and implement the new arrangements.  

A failure to agree a deal before the end of the transition period will see the two sides forced to trade on World Trade Organisation terms from January 1 and that will mean tariffs being imposed on goods. 

Business groups on both sides of the English Channel are calling for the EU and the UK to compromise and strike an accord as they continue to warn companies cannot afford a chaotic split, especially after they have been hammered by the coronavirus crisis.