The UK has secured a trade deal with Canada that will roll over the terms of an existing agreement between the EU and Canada when the Brexit transition period ends on January 1.
Boris Johnson, UK prime minister, and his Canadian counterpart Justin Trudeau, settled the agreement in principle on Saturday in a video call. Mr Johnson hailed it as a “fantastic agreement for Britain, which secures transatlantic trade with one of our closest allies”.
UK goods and services exports to Canada are worth around £20bn a year.
The UK government hopes the continuity agreement will lay the foundations for talks next year on a “tailor-made” UK-Canada trade agreement.
International trade secretary Liz Truss said the deal would provide “certainty” for thousands of businesses.
She added that she hoped the UK-Canada rollover deal, like one concluded recently with Japan, would be a springboard to wider trade alliances: “Today marks another step towards membership of a group of like-minded nations — the Trans-Pacific Partnership.”
Beyond Japan and Canada, the UK has struck a number of accords with other countries, including Norway, South Korea and Israel.
But negotiations are also still open with more than a dozen other economies including Mexico, Vietnam and Egypt — three countries whose combined trading relationship with the UK was worth close to £12bn in 2019 for goods alone.
If deals with them are not in place by January 1, trading conditions would revert to basic World Trade Organization terms, with higher tariffs on UK imports and exports.
The agreement with Canada comes just days before the final crunch point in talks over a UK-EU trade deal.
Mr Trudeau told a FT Global Boardroom event this month he was worried the rollover deal would not be ready before January 1 because of a “lack of bandwidth” in the UK trade department.
Ms Truss’s allies said the Canada deal demonstrated the UK’s ability to succeed outside the EU on its own terms.
One aide said the deal was “part of a bigger strategic play post-Brexit, based around deeper trading tied with countries beyond Europe — particularly dynamic economies in the Americas and Pacific”.
The UK’s department for international trade said that the rollover deal would be of particular benefit to the automotive, manufacturing and food and drink industries.
For example, zero tariffs will continue to apply for UK producers of agricultural exports, while UK car exports to Canada, which are worth around £757m, will not be subject to tariffs,
The acting director-general of the CBI, Josh Hardie said: “Agreeing a deal with Canada that secures continuity of trade is great news for businesses on both sides of the Atlantic.”