The UK and Canada are accusing each other subsequent a disagreement over beef and cheese that resulted in the collapse of trade talks.
Discussions to thrash out a new arrangement to substitute the one the two countries had when the UK was in the European Union had been in use for nearly two years.
But on Thursday, it appeared the UK had ceased negotiations, due to an absence of improvement on the two food products.
It could mean harsher trading terms for the UK with Canada, which accounted for 1.4% of its entire trade in the 12 months to June 2023.
Goods trade between the two nations was worth £19.2bn in 2020, according to the UK government, with UK imports from Canada worth £7.3bn and UK exports to Canada worth £11.8bn.
- UK and Canada agree on provisional post-Brexit trade deal before negotiations begin
- What trade deals has the UK done so far?
The consequences of the talks collapsing could be sensed by consumers and farmers in the two countries. Another key sector, cars, will also be affected.
Here’s the likely impact on all three areas at a glance.
Beef
- Beef farmers in the UK possibly see the failure of talks as a big win
- Canada’s farming industry has formerly voiced its frustration to the UK, indicating its meat is disadvantaged under a provisional agreement
- Canada’s government had been aggressive in the UK in reducing a ban on hormone-treated beef
British farmers will see the breakdown in talks as a big win. The Organisation representing UK farmers, the National Farmers Union (NFU), has been exerting pressure on the government to defend its members.
Beef farmers in the UK are already fighting competition from those in New Zealand and Australia, whose exports benefit from free trade agreements with the UK, meaning tariffs are removed.
Minette Batters, the leader of the Nation Farmers’ Union of England and Wales, said stepping down from the Canadian trade agreement would have been problematic, “but it’s the right decision”.
Canada’s government had been pressurizing the UK to reduce a ban on hormone-treated beef, which its manufacturers say effectively closes them out of the British market.
The Canadian Cattle Association said the UK had revealed no indication that it is ready to fully receive Canada’s food safety system, which is broadly recognized as one of the best in the world.
It’s not the first time that beef has been a strong point in trade relations between the two nations. Canada’s farming industry has formerly voiced its frustration to the government, informing that its meat is “strictly disadvantaged” under a post-Brexit temporary agreement with the UK, and blocked out of that market.
Last year, an alliance of Canadian farming groups objected the UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership trade agreement over apprehensions about that mutual access. They demanded that either the UK accept Canada’s food safety scheme or pay compensation for their losses.
Cheese
- The UK is Canada’s fifth major supplier of cheese – but the failure of talks “doesn’t look rosy”
- A 245% tariff has been positioned on UK cheese exporters since the start of 2024, affecting prices
- Canadian cheese exports are largely to countries other than the UK
- But there are worries the conclusion of the agreement could “cripple” Canadian cheese importers and small cheese shops
British cheese exports to Canada were valued at £18.7m – or 2.4% of total cheese exports – in 2022, according to the Food and Drink Federation (FDF).
That interprets to Canada importing a little excess of two million kilograms of cheese from the UK (its fifth largest supplier), international trade data specifies.
British firm Coombe Castle International is the principal UK cheese exporter to Canada and around a third of the cheese it exports goes to the country.
Ben Hutchins, its sales and marketing manager, told the BBC the firm was “pretty gutted” that discussions had been suspended, adding that they have been exporting to Canada since 1980.
He said the interruption of talks “doesn’t look rosy” for cheese exports.
Mr. Hutchins indicated that with a third of the business tied up in Canada after 40 years, it would not be easy to quickly discover new markets.
Industry group Dairy UK said the interruption of talks was unfortunate, but there was little indication that Canada was willing to progress access to the Canadian cheese market.
Since the start of the year, UK cheese exporters have seen a 245% tariff imposed on British cheese going to Canada, affecting prices.
Cars
- There are now reservations over whether the UK will be able to endure to sell cars without high import taxes
- If tariffs on UK cars are reinstated, it would be bad for Canadian customers, says one trade group
- There are no substantial imports of Canadian-manufactured cars into the UK
The UK’s major goods export to Canada is cars, according to the Department for Business and Trade.
In the 12 months to the end of the second quarter of 2023, exports were worth £745.8m.
A time-limited contract had permitted the UK to continue to trade cars without high import taxes, but this is now uncertain.
Even though the UK’s exports to Canada are much smaller than those to the EU, Canada is still “a significant market”, according to Mike Hawes of the trade group The Society of Motor Manufacturers and Traders (SMMT).
Given the close ties between the two countries, the interruption of trade talks is particularly disappointing, and shows a signal that the UK’s world-class automotive products are not wanted in Canada, he said.
If tariffs on UK cars are reinstated, this would benefit no one, not least Canadian consumers, he said, adding: “We request all parties to get back around the negotiating table.”
There are no substantial imports of Canadian-manufactured cars into the UK, the BBC understands. There has been a quiet reaction from the Canadian automobile industry to the update.
