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Brexit and United Kingdom-European Union trade negotiations: Summary information for Canadian companies

The United Kingdom (UK) left the European Union (EU) on January 31, 2020, and is now in a transition period with the EU until December 31, 2020.

Canadian firms will see no change in how they trade with the UK for the duration of the transition period.

Recognizing the need for certainty during the transition period, Canada has agreed to the UK remaining as a party to the Comprehensive Economic and Trade Agreement (CETA) and all other Canada-EU agreements for the duration of the transition period. This includes multilateral agreements in force between Canada and the EU.

The Government of Canada will continue to pay close attention to the UK-EU trade negotiations in the transition period and monitor how Canada’s trade with the UK might be affected. We will continue to update this web page as more details of the UK-EU future trade relationship and the potential impacts on Canadian firms become known.

Important notice

The information on this web page summarizes key considerations and timelines only, and is not intended as legal or other professional advice. Firms should obtain appropriate professional advice relevant to their particular circumstances.

Key information for Canadian companies:

What is Brexit?

Brexit, short for “British exit,” is the word used to refer to the UK’s decision to leave the EU. The UK left the EU on January 31, 2020, and entered a transition period.

The ratified withdrawal agreement allows the UK and the EU to negotiate their future relationship while in the transition period until December 31, 2020. There is no certainty yet as to what the future EU-UK trade agreement will look like, nor whether it will be concluded by the end of the transition period.

During the transition period, the UK continues to be bound by the entire body of EU law, including new legislation adopted during the transition. The UK is being treated largely as if it were an EU member state, except it no longer has representation and voting rights in EU institutions.

After the transition period, the UK will no longer be bound by EU treaties with third countries such as Canada and will have the ability to put in place its own agreements.

What does this mean for Canada?

Canadian firms will see no change in how they trade with the UK for the duration of the transition period.

Recognizing the need for certainty during the transition period, Canada has agreed to the UK remaining party to CETA and all other Canada-EU agreements for the duration of the transition period. This includes multilateral agreements in force between Canada and the EU.

When the transition period ends on December 31, 2020, the UK will no longer be bound by the EU’s treaties with third countries, including CETA. Canada-UK bilateral trade would no longer benefit from any CETA preferences and would be based on WTO rules, including most-favoured nation (MFN) tariffs on goods. 

Now that the UK has left the EU, it will have the jurisdiction to negotiate trade agreements. And once there is more clarity on the UK’s trade relationship with the EU, Canada intends to re-engage with the UK to discuss how our bilateral trade relationship can be strengthened. Any future trade agreement between Canada and the UK would be influenced by the UK-EU trade negotiations, as well as any unilateral UK approaches.

Whatever the outcome of the UK-EU trade negotiation, Canada’s trade with the EU will continue to be governed by the terms of CETA.

What happens after the transition period?

Whatever the outcome of the UK-EU trade negotiation, Canada’s trade with the EU will continue to be governed by the terms of CETA.

Whatever the outcome of the negotiations on the UK-EU future relationship, whether the transition period concludes without an agreement between the EU and UK or with an agreement that covers only some parts of the current trade relationship, there are likely to be immediate changes to the trade and investment rules between the UK and the EU at the end of the transition period.

Without an agreement with the EU, trade preferences between the UK and the EU would disappear and UK-EU trade would be determined by each parties’ international commitments.

Goods traded between the UK and the EU would be subject to the requirements normally imposed on goods from third countries along with checks prior to importation for compliance with these requirements, e.g. tariffs, customs, value-added tax, sanitary and phytosanitary measures. This is referred to as trading under MFN rules of the WTO and has the potential to lead to delays at UK entry points.

If there is an agreement, the details will dictate the changes in the UK-EU trading relationship and their timing.

At the end of the transition period, the UK’s participation in the EU’s international treaties will end.

For Canada, this means that our bilateral trade with the UK would return to MFN rules until a new bilateral agreement could be put in place.

Whatever the outcome of the UK-EU trade negotiation, Canada’s trade with the EU will continue to be governed by the terms of CETA.

How can a Canadian firm prepare?

Canadian firms will see no change in how they trade with the UK for the duration of the transition period.

Canada has agreed to the UK remaining party to CETA and all other Canada-EU agreements for the duration of the transition period. This includes multilateral agreements in force between Canada and the EU.

However, Canadian businesses should consider how any new UK-EU relationship at the end of the transition period, including an outcome of no trade agreement, could potentially affect them and take the appropriate steps to mitigate risks.

It would also be prudent to consider whether to acquire legal advice and/or engage a migration agent, customs broker, freight forwarder or logistics provider to support preparations for all eventualities, including a no-agreement outcome.

Some important aspects to consider

Contact a Trade Commissioner in the UK

Canadian companies looking for more information, including how to expand their activities in the UK, should contact the Canadian Trade Commissioner Service in the UK.

Resources for business

Export Development Canada

Exporting to the UK? Contact Export Development Canada to learn how it can help you manage risk, secure financing or access working capital so you can grow your business with confidence.

Additional resources

Should the UK leave the EU without an agreement (in English only):

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