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What’s Behind The UK and Canada Trade Tension

Talks between the United Kingdom (UK) and Canada have stalled over the imposition of hefty tariffs, that Canada is introducing on some British exports including cars and cheese. In the last two years, the UK and Canada have been negotiating a Free Trade Agreement after Brexit where the UK could go around the world and renegotiate these agreements after leaving the European Union (EU). 

Canada had negotiated a three-year extension under which UK cheese would be exempt from tariffs in Canada. There was a continuation of the EU deal for the UK, but with a twist in a couple of sectors the dairy sector and the car industry; that continuation came with a time limit and that time has run out and Canada has decided not to extend it further so that means big tariffs on cheese and cars that the UK is selling to Canada which was mentioned in an article published by The Guardian on January 26, 2024. since the UK left, the EU has had to go out into the world and renegotiate free trade agreements previously run through the EU. 

The British High Commissioner in Canada 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 the progress is not being made. We remain open to restarting the talks with Canada in the future to build a stronger trading relationship that benefits businesses and consumers on both sides of the Atlantic

Canadian International Trade Minister Mary NG said to the press “Trade agreements that we work on here in Canada on behalf of Canadian exporters, farmers, workers, and businesses we are going to look for the best deal for Canadians it is what we have always done and this time is no different” and said, “The UK is a really important trading partner for Canada they are our third largest single-country trading partner at 46 billion a year.”

The dairy industry has accused the Canadian government in the past of giving away some of its market share in what is after all very protected industry in Canada to secure trade deals with other countries. The liberal government has promised the Canadian dairy industry not to do that anymore and with the exemption running out they were not willing to extend it anymore and that led to the negotiation being stalled.

The UK wants greater access to the Canadian dairy sector and Canada is not prepared to do it because Canada has a supply-managed system that protects the dairy industry, poultry industry, and egg sector. The UK has made it clear that it wants access to the Canadian dairy sector. 

Canada has free trade agreements with the Comprehensive Economic and Trade Agreement (CETA) with the EU, the United States–Mexico–Canada Agreement (CUSMA) with the US and Mexico, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) with some of the Pacific countries.


Edited by: Megha Siddapura Manjunatha

 Image: BBC News

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