Update on Brexit from the Market Access Secretariat (AAFC)

March 29, 2019

On March 29, 2017, the United Kingdom (UK) invoked Article 50 of the Treaty on European Union (EU), initiating a 2-year period to negotiate terms of its exit from the EU. As a part of this process, the UK Parliament has passed legislation stating that it would leave the EU on March 29, 2019.

In November 2018, the UK and EU concluded a Withdrawal Agreement that would provide for a transition period that would keep existing EU systems in place, including in the UK, and during which both parties would negotiate the terms of their future relationship.

The UK Parliament has voted to reject the Withdrawal Agreement twice, leaving the outcome of Brexit uncertain.  In response to a formal request by the UK to extend the Article 50 Brexit deadline, the EU-27 Leaders agreed to an extension until May 22, 2019, provided the Withdrawal Agreement is approved by the UK Parliament before March 29, 2019. The EU also agreed that if the UK Parliament does not approve the Withdrawal Agreement before March 29th, an extension would be granted until April 12, 2019 with the expectation that the UK will indicate a way forward before this date for consideration by the EU-27 Leaders. During any extension of the Brexit deadline, bilateral trade between Canada and the UK would continue to be governed by CETA as the UK would remain an EU Member State.

Even with an extension to the Brexit deadline, a “No Deal” scenario (i.e., the UK leaves the EU without an agreement) remains a possible outcome. In this case, the UK would return to WTO terms of trade with the EU and other WTO Members.

In preparation for this potential outcome, the UK has published proposed tariffs that would apply to all goods imported from all WTO Members (i.e., on a most-favoured nation or ‘MFN’ basis) in the event of a “No Deal” Brexit for a period of up to 1 year (link to UK Government webpage on No Deal applied rates). Under this proposal, the vast majority of Canadian agriculture exports to the UK would enter duty-free, quota-free, with significantly reduced applied tariffs or duty‑free tariff rate quotas for the remaining products. Additionally, the UK has published information on how it will manage the border between Ireland and Northern Ireland in the event of a “No Deal” Brexit (link to UK Government webpage on Ireland/Northern Ireland border). Given the complicated nature of a “No Deal” Brexit, Canadian firms should be aware that any potential delays at UK ports of entry could affect all traffic passing through.

The Canadian Food Inspection Agency has been working with its UK counterparts on sanitary and phytosanitary certification requirements for agricultural commodities (food, plant and animal products) and organic equivalency to minimize any potential trade disruptions past the Brexit deadline (i.e., when the UK leaves the EU).

Regarding Canadian exports, no impacts are anticipated in either Brexit scenario (“No Deal” or Withdrawal Agreement) as Canada understands that the UK will continue to accept existing EU model health certificates and establishment listings for food, plants and plant products, animals and animal products for at least six months after the Brexit deadline, while the UK determines a longer term approach.

For UK exports to Canada, the UK has provided assurances that all relevant EU legislation, processes and standards will remain in force for at least six months from the Brexit deadline and only minor administrative certificate changes will be required.

With respect to organic products, Canada and the UK have agreed to transition to a UK-Canada reciprocal recognition of equivalence of organics based on the existing EU-Canada recognition, and therefore no disruption in the trade of organic products is expected.

Given the ongoing uncertainty with Brexit, Agriculture and Agri-Food Canada will continue to update stakeholders via the MAS-SAM account to provide information as it becomes available.