The UK and Canada have paused their negotiations on a post-Brexit trade deal, after failing to reach an agreement on key issues such as cheese and beef access. The talks, which started in March 2022, were expected to resume in February 2024, but the UK government announced on Thursday that it was suspending the talks until further notice. The decision has sparked disappointment and frustration on both sides of the Atlantic, as the two countries seek to strengthen their economic ties and cooperation.
The background of the trade talks
The UK and Canada have a long-standing and close relationship, as members of the Commonwealth, NATO, and the G7. They share common values, interests, and challenges, such as democracy, human rights, climate change, and security. According to official UK data, the total bilateral trade in goods and services between the two countries was £25.9 billion in the year ending 30 June 2023, making Canada the UK’s 18th largest trading partner.
The trade between the two countries currently takes place under the terms of a rollover agreement, which was signed in December 2020, before the UK left the European Union. The agreement replicated the benefits of the Comprehensive Economic and Trade Agreement (CETA), which was signed by the EU and Canada in 2016, and eliminated 98% of the tariffs on goods traded between the two parties. The rollover agreement also included some temporary measures, such as quotas for cheese and beef, which expired at the end of 2023.
The UK and Canada launched formal negotiations on a permanent and comprehensive trade deal in March 2022, with the aim of building on the existing agreement and enhancing the cooperation in areas such as digital trade, services, investment, environment, and labour. The two countries held six rounds of talks, the last one in November 2023, and were expected to hold the seventh round in February 2024.
The reasons for the suspension of the trade talks
However, on Thursday, the UK government announced that it was pausing the trade talks with Canada, citing the lack of progress and the unwillingness of Canada to offer more market access for UK agricultural products. A UK government spokesperson said: “We have always said we will only negotiate trade deals that deliver for the British people. And we reserve the right to pause negotiations with any country if progress is not being made. We remain open to restarting talks with Canada in the future to build a stronger trading relationship that benefits businesses and consumers on both sides of the Atlantic.”
One of the main sticking points between the two sides was the access to the cheese and beef markets, which are highly protected by Canada’s supply management system. The system regulates the production and pricing of dairy, poultry, and eggs, and imposes high tariffs on imports above a certain quota. The UK wanted to increase its cheese quota from the current level of 20,412 tonnes, which was inherited from the EU, to 40,000 tonnes, which would make it the largest cheese exporter to Canada. The UK also wanted to lift the ban on hormone-treated beef, which is widely used by UK farmers, but prohibited by Canada on health and environmental grounds.
Canada, on the other hand, wanted to maintain its cheese quota and beef ban, and argued that the UK was asking for more than what the EU had negotiated under CETA. Canada also wanted to secure more access for its services and investment sectors, such as financial services, engineering, and mining, which are of strategic importance for its economy. Canada’s trade minister, Mary Ng, expressed her disappointment at the UK’s decision to suspend the talks, and said: “We are at the table. Frankly, I would say that we continue to be at the table. We’re always going to look for the best deal for Canadians. It’s what we have always done. And this time is no different.”
The implications and prospects of the suspension of the trade talks
The suspension of the trade talks between the UK and Canada has raised concerns and uncertainties for the businesses and consumers on both sides, as they face the risk of higher tariffs and trade barriers in the absence of a deal. The UK’s automotive and cheese sectors, which rely heavily on the Canadian market, could be hit hard by the potential tariffs, which could reach up to 25% for cheese and 6.1% for cars. The Canadian services and investment sectors, which account for 70% of the bilateral trade, could also face more restrictions and costs in accessing the UK market.
The suspension of the trade talks also reflects the challenges and difficulties that the UK faces in negotiating new trade deals after Brexit, as it has to balance its own interests and demands with those of its trading partners, and deal with the complexities and sensitivities of different sectors and regions. The UK has signed over 60 trade deals with countries around the world since leaving the EU, but most of them are rollover agreements that replicate the existing terms. The UK is still in the process of negotiating more ambitious and comprehensive deals with major economies, such as the US, Australia, New Zealand, and India.
The UK and Canada have both expressed their willingness and openness to resume the trade talks in the future, and to find a mutually beneficial and satisfactory solution. The two countries have also reaffirmed their commitment and cooperation on other issues, such as climate change, Covid-19, and international security. The two countries are expected to maintain close contact and dialogue, and to explore other ways to enhance their trade and economic relationship, such as through the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a multilateral trade deal that both the UK and Canada are part of.