Brexit – Summary information for Canadian companies – CETA
Brexit – Summary information for Canadian companies
If a Withdrawal Agreement between the UK and the EU is approved, there is likely to be a transition period to December 31, 2020, and possibly beyond, during which the UK would be treated largely as if it were an EU member state. This arrangement could be extended by up to two years if the EU and UK agree. During a transition period, the UK could also be part of the international treaties that the EU has with third countries, such as the Comprehensive Economic and Trade Agreement (CETA) with Canada.
Depending on the details of the transition, Canada would consent to the UK remaining party to CETA and all other Canada-EU agreements. After the transition, the UK and Canada would need a bilateral agreement to maintain preferential trade, depending on the UK’s future relationship with the EU.
If the UK leaves the EU without an agreement, the UK would no longer be bound by the EU’s treaties with third countries, including CETA. In this scenario, Canada-UK bilateral trade would no longer benefit from any CETA preferences and would be based on WTO rules, including MFN tariffs on goods.
Canadian business should note that the UK recently released a proposed tariff schedule that would eliminate import duties on nearly 95% of its tariff lines in the event it leaves the EU without a deal. This would be offered on an MFN basis to all WTO members for up to one year. Canadian business should also refer to notifications issued by the UK concerning technical certifications that would apply in a no-deal scenario.
Once the UK departs the EU and gains jurisdiction to negotiate trade agreements – and there is more clarity on the UK’s trade arrangements – Canada intends to re-engage with the UK to discuss how our bilateral trade relationship can be strengthened. Any future trade arrangement between Canada and the UK would be influenced by the terms of withdrawal agreed between the UK and the EU, as well as any unilateral UK approaches.