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

November 21, 2020

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 CUKTCA “will 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.


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