The Government of Canada has launched a public consultation regarding upcoming trade negotiations with the United Kingdom (UK). Interested parties are being asked to provide comments on all matters relating to Canada’s bilateral trade negotiations with the UK and/or negotiations toward the UK’s potential membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

BACKGROUND

As discussed in our December 2020 Blakes Bulletins: Canada-United Kingdom Trade: Seamless Transition Based on CETA Rules and Canada-United Kingdom Trade: Duty Remission Allowed on Imported Goods for Interim Period, Canada and the UK reached an agreement under the Canada-United Kingdom Trade Continuity Agreement (Continuity Agreement) in order to maintain the trading relationship established under the Canada-European Union Comprehensive Economic and Trade Agreement (CETA). The Continuity Agreement came into force on April 1, 2021 and will remain in effect until a replacement bilateral trade agreement is made. For trade prior to April 1, Canada and the UK had put in place a memorandum of understanding (MOU), as a stopgap measure to continue to apply the CETA. For imports into Canada this included the making of the United Kingdom Trade Continuity Remission Order, which ensured that qualifying goods would receive the same tariff treatment as under CETA, until such time as the Continuity Agreement came into force.

IMPLEMENTING THE CONTINUITY AGREEMENT

In Canada, the implementing legislation for the Continuity Agreement received royal assent on March 17, 2021. On March 31, the Canada Border Services Agency (CBSA) published Customs Notice 21-06, Customs Notice 21-07 and Customs Notice 21-08. Each details information regarding the implementation of the Continuity Agreement:

  • Customs Notice 21-06 provides notice that, effective April 1, 2021, qualifying goods from the UK may claim preferential tariff treatment under the newly created United Kingdom Tariff (UKT), once the CBSA’s systems are modified to accommodate this change.

  • Customs Notice 21-07 notes that importers should use a Special Authority code “21-1-85” on import entries in order to claim preferential tariff treatment on qualifying goods, as an interim measure until the unique tariff treatment code for the UKT becomes available at a later date. It also provides information on proof of origin and shipping requirements, as well as the four-year refund period under the Continuity Agreement.

  • Customs Notice 21-08 details amendments to six regulations under the Customs Act and describe two new regulations dealing with verification of origin of exported goods and imported goods, respectively.

NEGOTIATING THE TERMS OF A BILATERAL TRADE DEAL BETWEEN CANADA AND THE UK

Canada and the UK previously agreed to enter into negotiations for a bilateral trade agreement within one year of the ratification of the Continuity Agreement and to conclude negotiations within three years.

The upcoming bilateral negotiations come as the UK seeks to compensate for the impact of Brexit, and its resulting departure from CETA and other trade agreements, by creating new and independent economic ties with various countries in and outside the European Union. Since signing the Brexit Withdrawal Agreement, the UK has penned trade agreements with the European Union, Japan and Turkey. The UK’s other identified trade priorities include New Zealand, Australia and the United States. The UK Global Tariff also came into force on January 1, 2021 and replaced the Common External Tariff of the European Union.

In the lead up to these negotiations, both Canada and the UK have expressed eagerness to deepen their economic ties on a wide range of issues. Canadian Minister for Small Business, Export Promotion and International Trade, Mary Ng, and UK International Trade Secretary, Liz Truss, have indicated their shared commitment to improved measures in a number of areas including digital, data, the environment and women’s economic empowerment. These statements may point towards a new bilateral trade agreement that includes more progressive trade measures not found in the CETA but which are included in the CPTPP and the Canada-United States-Mexico Agreement; both of which were drafted after the CETA.

UK’S POTENTIAL ACCESSION TO THE COMPREHENSIVE AND PROGRESSIVE TRANS-PACIFIC PARTNERSHIP

In January 2021, the UK formally applied to join the CPTPP, a free trade agreement between Canada, Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The CPTPP represents £9-trillion in trade; UK trade within the CPTPP member countries was worth £111-billion in 2019. Joining the CPTPP would also deepen the UK’s ties with trade priority partners New Zealand and Australia.

A commission established under the CPTPP is set to determine whether to commence the accession process with the UK. Upon approval of the commission, an accession working group comprised of government representatives from each CPTPP member will be formed. The working group will review the UK’s market access offers, the changes that the UK has made or proposes to make to comply with the obligations of the CPTPP and any non-conforming measures. The UK will be encouraged to have consultations with each CPTPP member throughout the process.

The UK is expected to publish its trade objectives and launch a consultation process before formal negotiations begin later this spring. Minister Ng has already expressed support for the UK to join the CPTPP.

CANADA’S PUBLIC CONSULTATIONS ON TRADE WITH THE UNITED KINGDOM

To prepare for the upcoming trade negotiations, the Government of Canada is seeking input from the public regarding the terms of trade between Canada and the UK, including potential impacts and opportunities that a Canada-UK bilateral trade agreement may have on the Canadian labour market, and with respect to the environment and gender. With respect to the UK’s possible accession to the CPTPP, the Government of Canada is seeking input on any issues and concerns related to the trade of goods and services, financial services, investment, temporary entry for business persons, government procurement and state-owned enterprises.

The government is accepting written submissions until April 27, 2021. Interested parties should take advantage of this opportunity to help shape Canada’s future trade relationship with the UK.