- By Harrison Jones and Tom Espiner in London, Jessica Murphy in Toronto
- BBC News
January 26, 2024
Updated 2 hours ago
Britain and Canada are blaming each other after a dispute over beef and cheese caused trade talks to collapse.
Negotiations to draw up a new agreement to replace the one the two countries signed when the United Kingdom was still in the European Union have been ongoing for almost two years.
This could mean tougher trading conditions for the UK with a partner that accounted for 1.4% of its total trade in the 12 months to June 2023.
According to the British government, trade in goods between the two countries was worth 19.2 billion pounds in 2020, with British imports from Canada worth 7.3 billion pounds and British exports to Canada worth 11.8 billion pounds had.
The impact of the collapse of the talks was felt by consumers and farmers in both countries. Another important sector, the automotive sector, will also be affected.
Here you can see the likely impact on all three areas at a glance.
beef
- Beef farmers in the UK are likely to see the collapse of talks as a big win
- Canada's agricultural industry has previously expressed disappointment to the UK, saying its meat would be disadvantaged under an interim agreement
- The Canadian government had pushed for the UK to relax its ban on hormone-treated beef
British farmers will see the collapse of talks as a big win. The British farmers' association, the National Farmers Union (NFU), is putting pressure on the government to protect its members.
Beef producers in the UK already face competition from those in New Zealand and Australia, whose exports benefit from free trade agreements with the UK, meaning tariffs will be removed.
Minette Batters, president of the Nation Farmers' Union of England and Wales, said it would have been difficult to withdraw from Canada's trade deal “but it is the right decision.”
The Canadian government had been pushing for the United Kingdom to ease its ban on hormone-treated beef, which it says is effectively driving producers out of the British market.
The Canadian Cattle Association said the U.K. has “shown no signs of being ready to fully accept Canada's food safety system, widely regarded as one of the best in the world.”
It's not the first time beef has been a sticking point in trade relations between the two nations. Canada's agricultural industry has previously expressed its disappointment to the government, saying its meat is at a “severe disadvantage” and effectively locked out of the market due to a post-Brexit interim deal with the United Kingdom.
Last year, a coalition of Canadian agricultural groups protested Britain's entry into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership trade deal over concerns about such reciprocal access. They demanded that the UK either accept Canada's food safety system or pay compensation for their losses.
- Britain is Canada's fifth-largest cheese supplier – but collapse of talks 'doesn't look rosy'
- Since the start of 2024, a 245% tariff has been imposed on UK cheese exporters, impacting prices
- Canadian cheese exports are primarily to countries other than the United Kingdom
- However, there are fears that the end of the agreement could “cripple” Canadian cheese importers and small cheese businesses
According to the Food and Drink Federation (FDF), UK cheese exports to Canada totaled 18.7 million pounds in 2022 – or 2.4% of total cheese exports.
This means Canada imports just over two million kilograms of cheese from Britain (the fifth largest supplier), international trade data shows.
British company Coombe Castle International is the largest British cheese exporter to Canada and about a third of the cheese it exports goes to the country.
Ben Hutchins, its sales and marketing director, told the BBC the company was “quite disappointed” that talks had been put on hold, adding that the company had been exporting to Canada since 1980.
He said the suspension of talks “doesn’t look rosy” for cheese exports.
Mr. Hutchins said it won't be easy to quickly enter new markets because after 40 years, a third of the business is based in Canada.
Industry group Dairy UK said the suspension of talks was “regrettable, but there is little indication that Canada is truly prepared to improve access to the Canadian cheese market.”
Since the start of the year, UK cheese exporters have seen a 245% tariff on British cheese exported to Canada, impacting prices.
image description,
In 2020, Prime Ministers Boris Johnson and Justin Trudeau agreed to continue trading on the same terms as the EU agreement at the time after the Brexit transition period expired
“This has disadvantaged UK dairy exporters and disrupted trade,” a Dairy UK spokesman said.
“However, exports to Canada represent a relatively small proportion of UK production and whilst some UK dairy companies will face a significant commercial challenge, we recognize that this will not be insurmountable,” the group added.
Canadian cheese exports, including cheddar, now go primarily to other countries. The UK is not in the top ten markets.
The Canadian Cheese Council of Canada, which represents small and medium-sized cheese importers and their suppliers, said its members have spent decades building relationships with Britain's cheesemakers.
The expiry in December of the temporary agreement, which allowed the UK to continue selling cheese without high tariffs, has already caused “significant” disruption to the industry and “will cripple cheese importers as well as small cheese shops across Canada,” it said.
This coupled with the pause in trade talks is jeopardizing efforts to build these bilateral ties, Council President Joe Dal Ferro told the BBC.
“We feel let down by both governments,” he said.
Afrim Pristine, who owns Cheese Boutique in Toronto, told the BBC that cheese from Britain was popular – in December he was selling about 250 kg (550 pounds) a day.
He hasn't had to raise prices at his store yet – he has enough in stock from last year – but when he does, he says, “A – will it be available and B – what will the cost be”?
“I don’t want to disappoint my customers, customers who have supported my company for decades. And that’s exactly what’s going to happen.”
cars
- There are now doubts as to whether Britain can continue to sell cars without high import tariffs
- Reintroducing tariffs on British cars would be bad for Canadian consumers, a trade group says
- There are no significant imports of Canadian-made cars into the UK
According to the Department of Business and Trade, cars are the UK's largest goods export to Canada.
In the 12 months to the end of the second quarter of 2023, exports were 745.8 million pounds.
A temporary agreement had allowed the UK to continue selling cars without high import duties, but this is now in doubt.
Although UK exports to Canada are much lower than those to the EU, Canada is still “an important market”, according to Mike Hawes of trade group The Society of Motor Manufacturers and Traders (SMMT).
“Given the close ties between our two countries, the suspension of trade talks is particularly disappointing and sends a signal that Britain's world-class automotive products are not welcome in Canada,” he said.
If tariffs on British cars were reinstated, “it would benefit no one, not least Canadian consumers,” he said, adding: “We urge all parties to come back to the negotiating table.”
According to the BBC, there are no significant imports of Canadian-made cars into the UK.
The Canadian automotive industry reacted cautiously to the news.