Preparing for BREXIT – Canada and the United Kingdom Clinch a Transitional Trade Continuity Deal

On 21 November 2020, the Governments of Canada and the United Kingdom (UK) announced the successful conclusion of talks for an interim post-Brexit trade agreement, the Canada-United Kingdom Trade Continuity Agreement (CUKTCA). The UK is one of Canada’s largest trading partners and the largest export market for Canadian goods in Europe. In 2019, under the Canada-EU Comprehensive Economic and Trade Agreement (CETA), Canada-UK trade totalled about $29 billion.

By agreement, the CETA has continued to apply to Canada-UK trade during the transitional period following the UK’s departure from the EU (see The United Kingdom’s Withdrawal Agreement with the European Union Enters into Force). Beginning 1 January 2021, however, the UK will no longer remain bound by EU treaties with third countries, and this includes the CETA. The newly concluded CUKTCA will therefore serve to ensure continuity of trade between Canada and the UK.

The CUKTCA operates as an interim agreement, setting the stage for further Canada-UK negotiations toward a permanent, comprehensive, and more ambitious free trade agreement that can be better tailored to the bilateral relationship and interests of both countries. In the meantime, the CUKTCA will provide continued access to the benefits of the CETA for Canadian and UK stakeholders. For example, it will maintain preferential access for Canadian businesses to the UK market and vice versa, including the elimination of tariffs on 98% of products traded between Canada and the UK. Further, it will preserve the progress made under the CETA toward mutual recognition of professional qualifications and progressive trade objectives. As the UK Government has explained in a news release published on 21 November, the CUKTCAwill ensure that Canada and the UK can continue to work towards recognising each other’s qualifications in areas including accountancy, architecture and law”, and “paves the way for negotiations to begin in 2021 on a new tailor-made UK-Canada trade deal, with the potential to go further in areas like digital trade, the environment and women’s economic empowerment”.

Minister Ng, the Canadian Minister of Small Business, Export Promotion and International Trade, said that officials were in the process of finalizing the legal text of the agreement, which will then be submitted to the Parliament of Canada for ratification. There will be a relatively short timeframe for Canada’s legislators to ensure that the CUKTCA is implemented before the beginning of 2021.

Tereposky & DeRose regularly provides advice on the interpretation, application, and implementation of international trade agreements. Should you have any questions regarding the CUKTCA, CETA, or any other trade matter, we are at your disposal.

Umair Azam
613.237.1208
uazam@tradeisds.com

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com

Greg Tereposky
613.237.1210
gtereposky@tradeisds.com

 

Fifteen Countries Conclude the Regional Comprehensive Economic Partnership (RECP)

On Sunday 15 November, fifteen Indo-Pacific countries signed the text of the Regional Comprehensive Economic Partnership (RCEP), which is set to become the world’s single largest regional trade agreement to date.

The parties to the RCEP include the members of the Association of Southeast Asian Nations (ASEAN) — Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam — as well as Australia, China, Japan, New Zealand and the Republic of Korea. In addition, a “Ministers’ Declaration on India’s Participation in the RCEP” provides for India’s accession to the agreement in the future, reflecting India’s participation in the RCEP negotiations while expressly “recognizing that India is not in a position to sign the RCEP Agreement in 2020”.

As it stands, the RCEP is estimated to cover a combined GDP of US $26.3 trillion and a total population of 2.3 billion people (see Government of Australia, “About The Regional Comprehensive Economic Partnership (RCEP)”). This coverage encompasses trade in goods and services, investment, government procurement, electronic commerce, intellectual property, and worker mobility. There are chapters addressing SPS measures, technical regulations, trade remedies, and competition, as well as chapters concerning small and medium-sized enterprises (SMEs), customs procedures and trade facilitation, and economic and technical cooperation. However, the RCEP is not as comprehensive in its coverage as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which also addresses a number of other subject matters.

There are five countries who are party to both the RECP and the CPTPP: Australia, Japan, New Zealand, Singapore, and Vietnam (Brunei and Malaysia are also signatories to both agreements, but have not yet ratified or implemented the CPTPP). It will be interesting to see how suppliers in these countries leverage the overlap between these agreements to enhance their market access advantages in each regional trade area.

Tereposky & DeRose regularly provides advice on the interpretation, application, and implementation of international trade agreements. Should you have any questions regarding the RCEP, the CPTPP, or any other trade matter, we are at your disposal.

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com

Greg Tereposky
613.237.1210
gtereposky@tradeisds.com