The U.K. and Canada are on the brink of signing a new trade agreement to replace the existing deal Britain has through European Union membership.
The agreement would be a major boost to U.K. Prime Minister Boris Johnson in his efforts to plot a new course for Britain as a global trading nation outside the EU. An announcement is expected within days, according to people familiar with the matter who spoke on condition they not be identified.
Without it, the U.K. and Canada would face tariffs on trade from Jan. 1, when the Brexit transition period ends and the U.K. will no longer be part of CETA, the EU-Canada trade agreement that came into force in 2017. Trade between Canada and the U.K. was worth about 17 billion pounds ($23 billion) in 2019.
“Trade talks are at an advanced stage and progressing well,” the U.K.’s Department for International Trade said in a statement. “The U.K. is committed to seeking to secure a continuity trade deal with Canada before the end of the transition period.”
The Canada breakthrough would be a relief for the U.K. as it continues contentious talks with the EU, its largest trading partner, over their own future economic relationship. Those discussions could bear fruit as early as next week, but the negotiations could still collapse.
The U.K. is Canada’s third-largest export market after the U.S. and China. In the first nine months of this year, Canada has exported C$14 billion ($10.7 billion) in merchandise exports to the U.K., while it imported C$6.9 billion.
Canadian Prime Minister Justin Trudeau last week said the two countries could wrap up negotiations on a new trade deal by Jan. 1.
“I know that rolling over and demonstrating free trade deals is important for the U.K. government. Canada is a really easy one. We’re there for it. We’d like to do it, so I am very hopeful that it’s going to get done but that’s up to the U.K. government,” Trudeau said last week during an online event hosted by the Financial Times.
Source: Bloomberg/Joe Mayes