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UK and Canada begin formal talks for a free-trade agreement

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Bloomberg | 24 March 2022

UK and Canada begin formal talks for a free-trade agreement

By Emily Ashton and Philip Aldrick

The U.K. government announced the formal start of negotiations on a new trade deal with Canada, seeking to replace an interim deal put in place following Britain’s departure from the European Union.

The U.K.-Canada trading relationship was worth over 19 billion pounds ($25.1 billion) in 2020, the U.K. trade department said in a statement. A free-trade pact has “huge potential to strengthen and grow trade between our two countries,” Trade Secretary Anne-Marie Trevelyan said.

Britain is trying to secure trade deals to help make up for a decline in commerce with the EU, its biggest trading partner, since Brexit. The U.K. has agreed pacts with New Zealand and Australia, and begun talks with India.

But progress has stalled with the U.S. — the deal most touted by Prime Minister Boris Johnson. Following a meeting with Trevelyan in Baltimore this week, U.S. Trade Representative Katherine Tai suggested that a free-trade deal may be archaic and that new approaches are needed.

U.K. has become a less trade-intensive economy since Brexit. The government’s Office for Budget Responsibility said trade as a share of GDP fell 12% since 2019, which is 2 1/2 times more than in any other Group of Seven country.

A new Canada deal is not expected to add much, since 98% of goods exports are already tariff-free under the existing agreement in place. Instead, the government hopes to cut red tape and agree new digital terms to “make trade cheaper, faster and more secure” while protecting the U.K.’s data-protection standards.

The Department for International Trade is looking for greater recognition of qualifications such as architecture to boost trade in services, which already account for 48% of U.K. exports to Canada, and to loosen its relatively restrictive rules around direct investment.

Small businesses are a priority. Roughly 10,300 already trade with Canada but struggle with administrative requirements more than when trading with other countries, research for the department found.

Any deal is expected to preserve U.K. agricultural standards and permit more movement of workers between countries.

 source: Bloomberg