Automotive manufacturers in the UK are exploring a new trade route to Canada through the Pacific. While not a literal route from Felixstowe or Sheerness to Vancouver via Asia, involvement with an Asian trading bloc could help offset the UK government’s failure to secure a free trade deal with Canada.
Negotiations that began in March 2022 failed to reach an agreement, leading to the suspension of talks in January due to disagreements over access to agricultural markets. This impasse has consequences for UK exports incorporating EU-made parts, as rules-of-origin provisions that allowed tariff-free sales to Canada will expire soon.
Last-minute talks for an extension between UK and Canadian trade officials broke down in February, leaving UK exporters facing a 6.1% levy on products sent to Canada. Despite concerns in the auto industry and aerospace sector, an alternative access route through the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPATPP) could provide a solution.
The UK government’s agreement to join CPATPP, pending ratification from current members, offers hope for continued trade with Canada. While tariffs have not been imposed by Canada yet, the situation remains uncertain for exporters. Despite these challenges, manufacturers in the UK seem unperturbed, with traffic flows unaffected and discussions about alternative product origins minimal.
Trade between Canada and the UK totaled £25.9bn in the 12 months leading up to September 2023, showing a slight increase from the previous year. The impact of the trade impasse on both countries’ economies remains to be seen.
