Canada and the United Kingdom (UK) struck a transitional trade deal on Saturday, November 21, 2020, to protect the flow of goods once Brexit takes place January 1, 2021, when the UK is no longer part of the European Union (EU) benefiting from the Canada-European Union Comprehensive Economic and Trade Agreement (CETA).
The new deal, Canada-United Kingdom Trade Continuity Agreement (Canada-UK TCA), is an interim measure that will be in place as Canada and the UK work towards negotiating a comprehensive bilateral free trade agreement over the next year.
As CETA will no longer apply to the UK beginning January 1, 2021, this new agreement will provide continued access to the benefits of CETA on a bilateral basis, including the elimination of tariffs on 98% of Canadian products exported to the UK. This will provide a competitive edge to Canadian exporters and businesses who will maintain preferential access to the UK market, even as the country exits the EU.
At this time the text of the agreement has not been published which leaves exact details up in the air, however, it is likely the new transitional deal will require valid CETA Origin Declarations for 2021. Additionally, assuming the new formal deal will incorporate the same Rules of Origin as CETA, importers should confirm with suppliers in the UK if their goods will still qualify for preferential status when made with EU inputs which will be deemed as “non-originating”.
Once the new deal is finalized, we would expect that EU origin goods being shipped from UK suppliers will be deemed as “non-originating” and subject to duty upon import (unless shipped direct from the EU to Canada). Watch for additional updates as information becomes available.
For more information, contact Brian Rowe, Director – Customs Compliance & Regulatory Affairs.