In a significant development, the United Kingdom has officially suspended its trade negotiations with Canada after almost two years of discussions on a post-Brexit agreement. The existing trade between the two countries currently operates under the terms of a deal that the UK carried over from its time as a member of the European Union.

Under the previous agreement, a time-limited arrangement allowed the UK to continue exporting cars and cheese to Canada without facing high import taxes. However, the negotiations to extend these favorable terms as part of a new trade deal have now collapsed, jeopardizing the trading relationship between the two countries.

This marks the first time that the UK has formally halted talks with a trade partner since leaving the EU trading regime in 2021. As a result, the trading terms between the UK and Canada will now be less favorable than when the UK was a part of the EU's deal with the country.

The repercussions of this breakdown in negotiations will be felt across various industries. British car companies, in particular, are now facing the prospect of higher tariffs when selling into the Canadian market starting in April. Additionally, the expiration of the previous terms at the end of 2023 has already led to increased Canadian tariffs on British cheese earlier this month.

Talks between the UK and Canada began in March 2022, with the goal of reaching a bespoke agreement. However, disagreements over several key issues, including Canada's request for the UK to relax its ban on hormone-treated beef, have hindered progress. Canadian producers assert that this ban effectively shuts them out of the British market.

Reacting to the pause in talks, a spokeswoman for Canada's trade minister, Mary Ng, expressed disappointment and conveyed this sentiment to UK Business Secretary Kemi Badenoch. The spokeswoman criticized the UK's decision to maintain market access barriers for Canadian agriculture and described their unwillingness to reach a mutual agreement as detrimental to negotiations.

While the UK government reserves the right to pause negotiations if progress is not being made, they emphasized their commitment to negotiating trade deals that benefit the British people. They remain open to restarting talks with Canada in the future to build a stronger trading relationship if Canada presents a serious offer and a willingness to make progress.

According to the UK government, the total goods trade between the UK and Canada amounted to £19.2bn in 2020. UK imports from Canada reached £7.3bn, while UK exports to Canada stood at £11.8bn.

The fallout from the suspension of trade talks further underscores the challenges and complexities facing the UK as it navigates its post-Brexit trade relationships. The impact on British car manufacturers and cheese producers highlights the urgent need to secure favorable trading arrangements to safeguard the interests of these industries and ensure their long-term viability in the global market.