UK withdraws from trade talks with Canada


British negotiators walked out of trade talks with Canada on Thursday – a dramatic development that puts the brakes on a bilateral trade deal between the two Commonwealth countries that has been years in the making.

A major sticking point remains between the two parties what duty-free access UK producers should have to the Canadian cheese market.

After Brexit, an interim deal kept British cheese duty-free on Canadian shelves for three years. This more permissive regime expired at the end of last year.

Negotiators were working on a longer-term bilateral trade deal to replace the liberalized trade enjoyed by the United Kingdom under the terms of the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union.

Following the renegotiation of the former North American Free Trade Agreement, which led to changes in the sectors subject to supply management, Prime Minister Justin Trudeau promised dairy producers that no part of the Canadian domestic market would not be offered to exporters during future negotiations.

“We have always said that we will only negotiate trade deals that benefit the British people. And we reserve the right to suspend negotiations with any country if progress is not made,” a spokesperson for the UK said. British government in a statement to CBC News.

“We remain open to resuming negotiations with Canada in the future to build a stronger trading relationship that will benefit businesses and consumers on both sides of the Atlantic.”

Trade Minister Mary Ng told reporters in Ottawa on Thursday afternoon that she had contacted her British counterpart, Kemi Badenoch, to express Canada’s disappointment with their decision to suspend negotiations.

“We are at the table. Frankly, I would say we continue to be at the table,” she said. “We will always look for the best deal for Canadians. That’s what we’ve always done. And this time it’s no different.”

“I am confident that we will be able to come back to the table and I would encourage my colleagues in the United Kingdom to come back to the table, because it is through negotiation that we reach an agreement.”

WATCH: Trade minister ‘disappointed’ by pause in UK trade talks

Trade Minister ‘disappointed’ by pause in trade talks with UK

Minister of Export Promotion, International Trade and Economic Development Mary Ng says she is “very confident” that the two sides will return to the table.

Dairy producers want to keep their heavily protected and supply-managed sector out of this agreement.

Instead, representatives of the Dairy Farmers of Canada argued that the UK should negotiate with the EU to reclaim its share (15 percent, based on the UK population) of market access that the Canada has granted to its foreign competitors under CETA.

“How is this the Canadian government’s problem to solve?” »wrote Jacques Lefebvre, CEO of PLC, in an email to CBC News.

The Canadian Cattle Association said it was “disappointed but not surprised” by the UK’s decision.

“The Canadian beef industry is a strong supporter of free trade. To avoid a bad trade deal for Canadians, we need trading partners who want to trade fairly and not use rules and regulations for their own benefit ” said President Nathan Phinney. in a report.

Agriculture Minister Lawrence MacAulay told reporters that Canada would not accept a deal that is not good for Canadian farmers.

“Supply management is not on the table,” he said, adding that ministers would prefer civil servants to talk about these issues at the negotiating table rather than speaking to the media.

Ministers said the dairy sector was not delaying a UK deal. “There are a number of questions on the table,” MacAulay said.

Negotiations on the automotive sector are also at a standstill

Discussions also fail on the development of new rules for automobile trade between the two countries.

Automobiles assembled in Canada and Europe benefit from reciprocal preferential access to each other’s consumer markets under CETA, in force with the European Union since 2017. The EU agreement sets out “rules of origin » which determine what constitutes a European automobile export for the purposes of lowering customs tariffs in Canada.

Production line workers at the Chrysler assembly plant in Windsor, Ontario, work on one of their new minivans January 18, 2011. A second round of layoffs of auto workers over in recent months has pushed politicians to intervene to reassure workers in the auto sector.  undergoes a significant transformation.  THE CANADIAN PRESS/Geoff Robins
Workers on the production line at the Chrysler assembly plant in Windsor, Ontario, work on a minivan on January 18, 2011. (Geoff Robins/Canadian Press)

As the United Kingdom is no longer part of the European Union, these rules expire on March 1. Exports from the now independent British automotive industry risk losing preferential access to the Canadian market.

Auto trade to and from Canada is subject to a tangle of trade agreements, each with different rules: CETA for the EU, the revised North American trade agreement for the United States and Mexico (known as CUSMA), the comprehensive and progressive agreement for Trans-Pacific Partnership that liberalized auto trade with Japan and bilateral trade agreement between Canada and South Korea.

UK vehicles risk landing outside of these competitive, duty-free supply chains if both sides do not find a solution.

More risky for the United Kingdom than for Canada?

Failure to reach a deal with Canada before deadlines for cheese and cars expire could hurt UK exports. From Canada’s strategic perspective, there is less immediate economic urgency to reach an agreement.

In fact, resisting responds to a key demand from Canadian breeders, who have urged the Canadian government not to accept a new trade deal with the United Kingdom until food inspection standards are harmonized to recognize Canadian food safety rules as equivalent to British rules.

A specific amount of Canadian beef and pork exports were supposed to have access to European and British markets when CETA came into force, but imports have been kept at virtually zero because Canadian standards are not recognized as compliant .

Ng told reporters that these frictions in bilateral negotiations with the United Kingdom are a separate issue from Canada’s ratification process for the British to join the CPTPP. The final terms and text of this accession were agreed this summer, but each current party to this trade agreement must complete its own ratification process. In Canada, this requires a parliamentary consultation process in committee and the adoption of implementing legislation before the cabinet ratifies the expanded treaty.

Ng said that at present, the government is focused on ratifying the revised Canada-Ukraine trade agreement. The bill has not yet been approved by Parliament.

In the absence of a tailor-made bilateral agreement that these negotiations were trying to achieve, Canada’s current position commercial continuity agreement with the United Kingdom will remain in effect indefinitely to maintain customs duties on other products shipped between the two countries. But this “CETA rollover” agreement was only meant to be a transitional arrangement until something more comprehensive could be worked out.

Negotiators have completed eight rounds of negotiations since 2022 and were due to meet next month in the United Kingdom. These meetings will not take place at this time.

The United Kingdom is Canada’s third largest trading partner, with two-way trade in goods and services worth more than $46 billion in 2022.

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