Despite boasting of signing a transitional agreement, Canada may not have a trade deal ready with the United Kingdom by the time 2021 rolls around.
Exporters could be forced to pay British tariffs if the deal isn’t ratified into law by the end of the year.
Canada’s International Trade Minister Mary Ng has failed to offer a firm date on when a bill to ratify the provisional deal between the two nations will be introduced, creating doubt it will be done before MPs break for the holidays.
Pressed for details on what exporters would do in the absence of a trade deal during a recent committee meeting, Ng said officials from both countries were endeavouring to find solutions.
On Nov. 21, Canada and the U.K. announced an interim deal, allowing the parties more runway to finalize a comprehensive trade agreement; but there is a pressing need to ensure the transitional deal is ratified by the end of the year to ensure trade continues without interruption.
The U.K. will formally leave the European Union in 2021, excluding itself from the terms of CETA and possibly exposing Canada to recently introduced tariffs.
“Our officials on both sides of the U.K. and Canada are finalizing the review of the legal text,” Ng said during a Nov. 30 meeting of the Standing Committee on International Trade. “Know that it is my absolute commitment to make sure that I get this to you and all of my colleagues as soon as possible.”
Despite asserting she is “moving very quickly” to get the terms of the deal formalized and introduced as a law before Dec. 11, it was clear opposition MPs had doubts.
During her appearance at the committee meeting, Ng was unable to provide MPs with the number of pages included in the transitional agreement. Asked if she had read the draft text, she said she “had read the elements of the agreement.”
Ng said the government was looking at “mitigation efforts” to ensure trade between the two nations can continue unimpeded by tariffs in the absence of a deal, but failed to offer further details.
Asked for specifics on what tools governments had to ensure trade would avoid disruption, Ng chose not to elaborate with details and simply reiterated a commitment to minimizing those disruptions.
“I don’t want to provide uncertainty. What I want to do is provide certainty for businesses,” she said.
Pressed to tell MPs what the process would be for a scenario in which a deal wasn’t ratified into law by either, or both, nations, Ng said, “We will endeavour to look at a range of potions that can help mitigate any disruptions there may be.”
Opposition MPs criticized Ng for not having more information available, despite the deal being announced on Nov. 21, and the apparent lack of a sunset clause in the agreement.
“I don’t understand how we can have certainty and continuity when we don’t have a plan when this will be coming to Parliament,” said Conservative Party MP and international trade critic, Tracy Gray. “It sounds like you haven’t plotted out a plan over the nine days since this splashy announcement, when this would play out.”
Ng said the deal commits both countries to conclude a comprehensive free trade agreement within three years of the transitional deal coming into force.
The deal, according to Ng, does not penalize either nation for failing to return to the negotiating table, and she offered no clarity on if the transitional agreement would remain in place if that was the case.
Claire Citeau, executive director of the Canadian Agri-Food Trade Alliance has previously told the committee the U.K. is a “high-value market” and that the transitional agreement was “an important first step to ensuring that exporters preserve the existing access and benefits that are already in place.”
Citeau told members of Parliament on Nov. 23 that the transitional agreement should not be the basis for a permanent deal.
Preferential tariffs remain in place for grain and cereal exporters under the transitional deal, which is a positive for those commodities; but beef producers continue to be concerned over the existence of non-tariff barriers that could continue to impact their ability to succeed in the U.K. market.
“The important point to really understand is the priority for our members should be to negotiate a real, meaningful trade deal… that will remove non-tariff barriers and deliver on viable commercial access.”
Last year, Canada exported about $20-billion worth of goods to the U.K.