Canadian Deputy Prime Minister Freeland announced on the 22nd local time that Canada and the United Kingdom have signed a temporary agreement to avoid the tariff problem caused by Britain’s “hard Brexit”.
The agreement basically follows the content of Canada’s trade agreement with the European Union and will take effect on January 1, 2021. Once the two countries negotiate a new trade agreement, the interim agreement will be invalidated.
Canada’s annual bilateral trade with the United Kingdom can reach 29 billion Canadian dollars, and the United Kingdom is also Canada’s third largest export market.
Canada’s trade rules with the United Kingdom still follow the trade agreement with the European Union. As the UK is likely unable to complete its “Brexit” negotiations with the EU, it will have to “hard Brexit” from January 1, 2021.
At that time, other countries will automatically incur tariffs for importing and exporting British goods. In order to avoid tariffs imposed on its exports by the United Kingdom, Canada needs to enter into an interim trade arrangement with the United Kingdom in order to continue to enjoy preferential trade status.