A Canadian official has confirmed the UK’s no-deal tariff schedule, which would allow many imports to enter the country duty-free, led to the shutdown of Brexit continuity trade talks.
Doug Forsyth, Canada’s director general for trade policy, who was responsible for heading up the negotiations, said there was ‘no need to continue the discussions’ after the UK published its no-deal tariff schedule, which meant 95 per cent of imports would enter without any duties.
Though the UK is unlikely to leave the EU on October 31 without a deal, the EU Withdrawal Agreement Bill just published by the Government allows a no-deal Brexit to take place after the transition period ends, on December 31 2020, if the future relationship is not agreed at that time.
Speaking at the AHDB Global Britain conference in London this week (October 22), Mr Forsyth said: “We have over the past year been trying to replicate the terms and conditions of CETA [the EU-Canada trade deal] with respect to Canada-UK trade, but unfortunately those discussions have been paused.
“The reason they were paused was due to the fact that in March, the then UK Government announced what the [no deal] tariffs would be.
“We decided we would see what this meant for Canadian exports, and found the bulk of Canadian exports would come in duty-free.
“At that point, there was no need to continue discussions on the preferential trade agreement.”
Mr Forsyth went on to say the minor adjustments made by Boris Johnson’s Government did not affect this decision, because most Canadian trade would still be duty-free.
UK food exports to the Canadian market account for 14.5 per cent of total exports to countries the EU has free trade agreements with.
Without a continuity deal in place, these exports would face World Trade Organisation (WTO) tariffs instead of being tariff-free under CETA.
Though 76 per cent of Canadian tariffs are already at zero, some agricultural products, such as cheddar, would face tariffs 245 per cent of the overall price.
“In the event of a no-deal Brexit, it would be a return to pre-CETA days,” said Mr Forsyth.
“But even at that time, Canada-UK trade was still strong. I am not trying to scare anybody or say tariffs are going to increase 100 per cent, but there will be some missed opportunities.”