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Britain's car exports to Canada face tariffs of more than 6% in the coming days, as the deadlocked trade dispute between the two countries' allies escalated further on Wednesday.
British Trade Secretary Kemi Badenoch felt like she was „banging her head against a brick wall“ as the April 1 tariff cliff date approached, British government officials said.
tension escalated last month Canada denied Mr. Badenoch's claims that trade negotiations were continuing despite unilaterally suspending them on January 25th.
The resulting standoff means that the post-Brexit trade agreement with Canada expires on April 1st, and if some UK car exports contain significant EU content, the 6.1 % customs duty will be imposed.
„It is unfortunate that Canada is not seeing that now more than ever, it is important that our allies work together to remove trade barriers, rather than strengthen them,“ a British official said. „You only have a limited amount of time to bang your head against a brick wall when the other person won't find a solution.“
The dispute began in January when Mr. Badenoch suspended a series of free trade negotiations with Ottawa over Canadian hormone-treated beef, a move that would have left British cheesemakers and carmakers facing hefty tariffs. is what happened.
The UK and Canada had a trade agreement that was withdrawn when the UK left the EU. The agreement included preferential terms regarding rules of origin for certain products. These expire on April 1st.
50% of British cars must be British-made to be exported to Canada duty-free, and that will rise to 55% in September.
Until April 1, British car manufacturers can include parts from their EU supply chains to meet this standard. Preferential terms for British cheesemakers expired at the end of last year.
After halting negotiations on Jan. 25, Badenoch told MPs he was continuing to negotiate with Canada. Canada's High Commissioner in London, Ralph Goodale, denied his claims on February 20th.
Mr Badenoch met with Canada's Mary Ng at a World Trade Organization meeting in Abu Dhabi late last month, but discussions remain at an impasse.
„Canada's decision not to carry forward these rules of origin will increase trade costs and hurt businesses on both sides of the Atlantic,“ the UK Department of Commerce and Trade said in a statement.
The dispute covers a relatively narrow area of trade. Eight out of 10 British cars are exported, but only 1.3% (worth around £700m in 2023) goes to Canada, with Jaguar and Land Rover accounting for the majority.
The Canadian High Commission in London said: „Canada has been clear that any agreement extending these provisions must be mutually beneficial.
„Canada also emphasized that any extension should contribute to the timely conclusion of a mutually beneficial bilateral free trade agreement.“
„While the UK's decision to suspend bilateral trade negotiations was disappointing and did not help achieve an outcome on this issue, Canada remains committed to building on its existing strong and long-standing trading relationship with the UK. We stand ready to engage further with the UK.”
another UK-India trade talks The deal was originally scheduled to be signed before the Hindu festival of Diwali in October 2022, but after months of negotiations failed to yield a breakthrough, it was put on hold until after India's general elections this month.