Britain and Canada, long-standing allies with deep historical ties, are facing a hiccup in their post-Brexit trade relations. The recent announcement that trade arrangements enabling British carmakers to avoid high tariffs in Canada are likely to expire next week has cast a shadow over their trade discussions.
The pause in talks over a new free trade agreement, initiated in January, stems from disagreements over Rules of Origin (ROO) arrangements and mutual dissatisfaction with access to agricultural markets. The current ROO arrangements, due to expire at the end of March, were used as a temporary measure while both sides negotiated a comprehensive trade deal.
Under these arrangements, UK goods using inputs from the EU or processed in the bloc are considered made in the UK, qualifying for lower tariffs in Canada. The expiration of this agreement could result in a 6.1% tariff on British auto exports to Canada, affecting carmakers that do not meet the new ROO requirements.
Britain’s Department for Business and Trade expressed disappointment at Canada’s decision not to roll over the ROO arrangements, stating that it would increase trade costs and harm businesses on both sides of the Atlantic. Despite this setback, the UK government remains open to finding a solution that benefits both countries but is firm in its stance against regressing from the current terms.
The Society of Motor Manufacturers & Traders (SMMT) echoed this sentiment, urging all parties to be pragmatic and resume negotiations for an upgraded trade deal. The SMMT also called for an extension of EU cumulation to avoid tariff impositions until a new deal is finalized.
The negotiation of new trading terms has highlighted the competing interests between Britain and Canada, particularly regarding issues such as hormone-treated beef and cheese quotas. Despite these challenges, both countries are committed to finding a resolution that preserves their strong bilateral relationship.
As Britain and Canada navigate this bump in their trade relations, their shared commitment to finding mutually beneficial solutions underscores the strength of their historic alliance.
(Source: Reuters | Financial Times)
