Feb 25, 2021
A recent article in Canadian Lawyer looks at the proposed Canada-U.K. Trade Continuity Agreement (TCA), which was introduced on December 9, 2020. The article reports that, as of January 1, Canada and the U.K. are no longer covered by the Canada-European Comprehensive Economic and Trade Agreement (CETA), and that the Trade Continuity Agreement “aims to maintain the main benefits of the CETA, such as the removal of tariffs on 98[%] of products exported to the U.K., to preserve the preferential access and competitive advantage of Canadian exporters to the U.K. market and to ensure continuity, predictability and stability for trade between the two countries.” On January 31, 2020, the U.K. left the European Union.
To gain insight into the TCA, author Bernise Carolino turned to Alan Kenigsberg, a partner in Osler’s Tax Group, who states that while the proposed Canada-U.K. Trade Continuity Agreement may maintain business as usual between the two countries for the next few years, lawyers should not assume that the eventual comprehensive trade agreement will maintain the status quo. He also tells Canadian Lawyer that while Bill C-18, an Act to Implement the Trade Continuity Agreement between Canada and the United Kingdom of Great Britain and Northern Ireland intends to continue the rights and obligations between Canada and the U.K. post-Brexit, lawyers should take note of the possible differences in origin quotas in the TCA, as compared with CETA, which ceased to apply as of January 1.
“Further, when reviewing this agreement, it should be kept in mind that the agreement is only temporary in nature,” Alan says. “When the new comprehensive trade agreement is concluded, while it will likely be very similar to CETA, there are almost certainly going to be some changes.”
The article also taps into information from a publication Alan co-wrote with Chelsea Rubin, an associate in Osler’s Competition/Antitrust and Foreign Investment Group, titled “The post-Brexit Transitional Trade Agreement – What to expect post-CETA,” which discussed takeaways for businesses following the departure of the U.K. from the European Union. Their publication noted that because the TCA has yet to come into force, a memorandum of understanding was signed on December 22, to maintain the trade relationship between Canada and the U.K. — and while the two countries are expected to commence negotiations on the bilateral agreement this year, their governments may opt to delay such negotiations so businesses in Canada should be prepared for the possibility that a few years will pass before a bilateral agreement is finalized.
For more information, read author Bernise Carolino’s full article, “Cross-border tax lawyer shares post-Brexit insights on Canada-U.K. Trade Continuity Agreement” in Canadian Lawyer.