The UK and Canada have locked in their existing trading relationship, worth £20 billion, and agreed to begin negotiating a new more ambitious trade deal as early as next year.
On a video call over the weekend, Prime Minister Boris Johnson and Canadian Prime Minister Justin Trudeau, joined by International Trade Secretary Liz Truss and her Canadian counterpart, Minister of Small Business, Export Promotion and International Trade Mary Ng agreed an ‘agreement in principle’ to roll over current EU-Canada trading arrangements and begin negotiations on a new, bespoke UK-Canada trade deal in 2021.
Today’s agreement to rollover provisions of the Comprehensive Economic and Trade Agreement (CETA) gives certainty for UK businesses exporting goods and services to Canada worth £11.4 billion. It will support the British automotive manufacturing and food and drink industries which between them provide jobs for more than half a million people across the UK.
Overall, an estimated £42 million tariff burden on UK exports has been saved. The benefits locked in under the agreement reached today include:
- Future zero tariffs on UK car exports to Canada, which were worth £757 million last year, supporting factories and jobs in our communities. Without this agreement, Canada’s standard tariffs on cars of 6.1% would apply.
- Tariff-free trade on 98% of goods that can be exported to Canada including beef, fish and seafood and soft drinks.
- UK producers will continue to benefit from zero tariffs on many agricultural and seafood exports including chocolate, confectionary, fruit and vegetables, bread, pastries and fish. Last year the UK exported £344m worth of agri-food goods to Canada.
- Without the continuity agreement, Canadian food products such as maple syrup, biscuits and salmon could have been more expensive for British consumers as they would face taxes of up to 8% when entering the UK under the UK Global Tariff.
The deal secured today provides the foundation for both countries to negotiate a new trade deal, that will improve on the existing EU-Canada agreement. It will be tailored for the British economy with the potential to go further in new areas like digital trade, women’s economic empowerment and the environment.
Today’s announcement means that it in under two years, the UK government has agreed trade deals with 53 countries accounting for £164bn of UK bilateral trade. It also takes us one step closer to accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), of which Canada is a member. CPTPP is a key part of our trade negotiations programme, helping businesses secure more opportunities in 11 key Pacific markets.
All nations and regions of the UK will benefit from preferential access to Canadian markets. In 2019, 373 businesses in Wales exported goods to Canada worth £234m.
In the same year almost 15% of the UK’s iron and steel exports to Canada came from Wales, worth £10m.
Secretary of State for Wales, Simon Hart, said:
“This agreement marks another huge step forward and demonstrates the opportunities that lie ahead of us as we take our place on the global stage as an independent trading nation.
“It could potentially bear fruit for Welsh companies operating in a wide range of industries from financial services and manufacturing to food and drink. Wales has strong historical links to Canada and this development will see that relationship go from strength to strength, improving access to vital markets for our fantastic Welsh businesses.”
Today’s agreement also guarantees tariff-free access to the Canadian market for British wine and spirits and ensures that the UK and Canada can continue to work towards recognising each other’s qualifications in areas including accountancy, architecture and law.
The UK-Canada Trade Continuity Agreement will be subject to final legal checks before it is formally signed.
Case Study
Headquartered in Snowdonia, North Wales, bubble toy business Dr Zigs Extraordinary Bubbles was founded in 2011 by former professional sailor and marine conservationist Paola Dyboski-Bryant, in a bid occupy her young son Ziggy.
After researching the Canadian market Dr Zigs discovered there is a big demand for the types of products it manufactures, especially giant bubble kits. Thanks to Tradeshow Access Programme (TAP) funding provided by the Department for International Trade to attend Nuremberg’s Spielwarenmesse toy fair in January, Dr Zigs met potential customers.
The business is talking to distributors across the country ahead of launching a new bamboo foamer bubble painting kit in the New Year.
Dr Zigs founder and Bubbler in Chief Paola Dyboski-Bryant said:
“It all started at my little cottage in Snowdonia and after experimenting with different bubble mixes, I spent about £20 on bottles and stickers then sold them out of my car boot at a beach.
“I am proud that our products, from the bubbles to the packaging, are eco-friendly as Canada is a nation that values the environment, and the news of this continuity agreement couldn’t have come at a better for us, as we plan to expand across the country.”
Securing its place in the 2018 Guinness World Records after having over 400 local people make bubbles at Caernarfon Castle during the World Bubble Festival, the business manufactures its toys and works with other UK producers.
In time for the festive season, Dr Zigs has launched its Christmas Bubble Bauble collection with orange, cinnamon, mulled wine and Christmas tree scents.
With five employees and selling to over 10 countries with distributors in Australia and South Korea, exports account for 25% of annual turnover.
Sales doubled during the first UK lockdown and Dr Zigs’ bubble products are also used in care homes for the elderly and children’s special needs centres.
Additional stats on trade between Wales and Canada:
- Over 10% of Wales goods exports to Canada in 2019 were in petroleum products, worth £26m
- Over 5% of Wales goods exports to Canada in 2019 were in medicinal and pharmaceutical products, worth £12m.
- Almost 15% of the UK’s iron and steel exports to Canada came from Wales, worth £10m in 2019.
- Over 10% of the UK’s non-ferrous metals exports to Canada came from Wales, worth £12m in 2019.
- Over 13% of UK exports of cereals & cereal preparations to Canada came from Wales, worth £5m in 2019.
