Although Britain formally withdrew from the European Union in January, it continues to trade with other countries under the bloc’s umbrella during a transition period that ends on December 31.
Without a series of new bilateral agreements, trade with countries around the world could be hampered by obstacles like tariffs and increased paperwork obligations..
The UK government says the temporary agreement paves the way for future negotiations on a new UK-Canada trade agreement.
The Johnson government sees the ability to enter into free trade agreements with countries around the world as one of the main benefits of leaving the European Union. It counts on increasing trade with countries such as the United States and India to offset any negative impact of broken ties with the European Union, which accounted for 47 percent of Britain’s total trade last year..
British Prime Minister Boris Johnson said in a statement, “This is a lovely deal for Britain that secures trade across the Atlantic Ocean with one of our closest allies. British companies export everything from electric cars to sparkling wine to Canada, and today’s deal will ensure that trade moves from strength to strength. ““.
“Our negotiators have worked extensively to secure trade agreements for the United Kingdom, and since early next year we have agreed to begin work on a detailed new trade agreement with Canada that will further meet the needs of our economy,” he added .“.
The agreement with Canada guarantees existing trade rules relating to 20 billion pounds ($ 27 billion) of trade between the two countries, or about 1.5 percent of the UK’s total trade in goods and services last year..
The British government said the UK has now concluded post-Brexit trade deals with 53 countries, representing 164 billion pounds ($ 218 billion) in bilateral trade. This is less than 12 per cent of the 1.4 trillion pounds (about $ 1.9 trillion) of British trade recorded last year..
Britain has yet to strike a deal with the European Union on trade rules after Brexit.
He warned both sides that there could be an end without agreement for the transitional period next month unless both sides can settle their soon-to-be differences over fishing, state support for industries and future dispute resolution..
Without an agreement on future relations between Britain and the European Union, trade between the two entities is conducted under the terms of the World Trade Organization.
The Johnson government has said that this kind of relationship will not hinder trade, but opponents warn that tariffs will increase prices for British consumers and that border checks will lead to shortages of some goods..