Question Period Note: Brexit and Implications for the Canada-European Union Comprehensive Economic and Trade Agreement (CETA)

Withdrawal Agreement ratification processes in the U.K. and EU are currently on track to allow the U.K. to leave the EU in an orderly way on January 31, 2020.

• Canada is watching Brexit closely and welcomes continued progress towards ratifying the Withdrawal Agreement

• With an EU-U.K. Withdrawal Agreement in place, Canada would agree that the U.K. continue its participation in CETA - and all other Canada-EU agreements - during the Brexit transition period

• Post-Brexit, any future trade arrangement between Canada and the U.K. would be influenced by the U.K.-EU trade relationship, as well as any unilateral U.K. approaches.

In June 2016, the U.K. voted by a narrow margin to leave the EU after over four decades of membership. A Withdrawal Agreement negotiated with the EU repeatedly failed to secure parliamentary approval, which forced the U.K. to seek two extensions to the Brexit deadline. A revised version of the Withdrawal Agreement was concluded on October 17, 2019, but could not be ratified before an act of parliament took effect that required the U.K. government to seek EU agreement for a further extension. A third extension to January 31, 2020, allowed for a U.K. general election on December 12, 2019, that resulted in a majority victory for Boris Johnson and the Conservative Party. On January 23, 2020, the Withdrawal Agreement received royal assent, finalizing the ratification process in the U.K. In the EU, the European Parliament is expected to hold a consent vote on January 29, 2020, to complete its ratification of the Withdrawal Agreement.
Once the Withdrawal Agreement is in place, Canada would consent to the U.K.'s continued participation in CETA during the Brexit transition period (up to December 31, 2020 with a possibility of extension by one or two years). Post-Brexit, Canada would assess with the U.K. the possibility of a mutually-beneficial, preferential trade agreement, taking into account yet-to-be-determined U.K. trade policy approaches. In addition, Canadian officials are engaged on the U.K.'s post-Brexit multilateral commitments at the WTO in order to ensure the rights of Canada's producers and exporters will be no worse off under WTO commitments following the Brexit transition period. The U.K. currently accounts for nearly 25% of Canada's total merchandise trade with the EU. Canada enjoys a significant trade surplus with the U.K. with exports totalling $16.3B and imports $9.2B in 2018. Gold, which is duty-free, accounts for 65% of current Canadian goods exports. The U.K. is Canada's top investment destination in the EU, with Canadian Direct Investment totalling $109B in 2018.

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