Canada’s transitional trade deal with the United Kingdom will offer agri-food exporters some stability, but concern over non-tariff barriers persist.
On Nov. 21, Canada and the U.K. announced an interim deal, allowing the parties more runway to finalize a comprehensive trade agreement.
“This trade continuity agreement between Canada and the United Kingdom assures we maintain our strong and mutually beneficial trade relationship. I am looking forward to working with Secretary of State Truss to ensure a smooth transition in Canada-United Kingdom trade relations — ensuring Canadian workers, exporters, and businesses of all sizes continue to benefit,” said Mary Ng, federal Minister of Small Business, Export Promotion and International Trade in a statement.
The U.K. was included as part of Comprehensive Economic and Trade Agreement between Canada and the European Union, but will no longer be included in that agreement when it formally leaves the EU at the start of 2021.
While text of the agreement is not available, the federal government said in a release, “This new agreement will provide continued access to the benefits of CETA on a bilateral basis, including the elimination of tariffs on 98 percent of Canadian products exported to the United Kingdom.”
Claire Citeau, executive director of the Canadian Agri-Food Trade Alliance, told a parliamentary committee focused on international trade that a permanent, meaningful trade deal with the U.K. is still needed, calling it a “high value market.”
She said the transitional agreement is “an important first step to ensuring that exporters preserve the existing access and benefits that are already in place.”
But as CAFTA has previously done, Citeau spoke about the need for an agreement to arrive in a timely matter to ensure Canada does not lose market share to other nations.
Citeau urged “both parties to return to the negotiating table as soon as possible in order to reach a comprehensive pact that remove non-tariff barriers, provides liberal rules of origin and provide a level playing field.”
Ng told reporters on Nov. 21 that negotiations on a permanent trade agreement will begin in 2021.
The EU has been criticized by Canadian exporters for failing to remove certain non-tariff trade barriers, hampering CETA’s ability to live up to its full potential.
Citeau said she was equally concerned those barriers are being carried over into the transitional U.K. deal, and may end up in a permanent one.
LIVE: Minister Ng announces conclusion of trade talks for the Canada-UK Trade Continuity Agreement https://t.co/RN5HVWzrAK
— Canada Trade (@CanadaTrade) November 21, 2020
“It’s very important to understand that the problems with CETA are not with the text itself, but with the EU’s reluctance to abide by the commitments and remove barriers,” she told the committee. “Whether it’s the timely approval of biotech trade and the need for predictability in science-based processes, or recognition of our farmers’ sustainability practices, the approval of beef processing systems, the illegal trade-distorting subsidies, and even the illegal country-of-origin labelling in Italy, the problem is the EU’s reluctance to remove the barriers, not the text itself.”
Citeau told members of Parliament on Nov. 23 that the transitional agreement should not be the basis for a permanent deal.
Preferential tariffs remain in place for grain and cereal exporters under the transitional deal, which is a positive for those commodities; but beef producers continue to be concerned over the existence of non-tariff barriers that could continue to impact their ability to succeed in the U.K. market.
“The important point to really understand is the priority for our members should be to negotiate a real, meaningful trade deal… that will remove non-tariff barriers and deliver on viable commercial access.”
Last year, Canada exported about $20-billion worth of goods to the U.K.