The UK-Canada trade dispute: What it means for cheese, beef and cars

The UK-Canada trade dispute: What it means for cheese, beef and cars

  • Harrison Jones and Tom Espiner in London, Jessica Murphy in Toronto
  • BBC News

Britain and Canada are blaming each other after a dispute over beef and cheese caused trade talks to collapse.

Negotiations have been ongoing for nearly two years to scrap a new deal to replace the deal the two countries reached while the UK was still in the European Union.

This could mean tougher terms of trade for the UK, with the partner accounting for 1.4% of its total trade in the 12 months to June 2023.

According to the UK government, trade in goods between the two countries was worth £19.2 billion in 2020, with UK imports from Canada worth £7.3 billion and UK exports to Canada worth £11.8 billion.

The consequences of the collapse of the negotiations may be felt by consumers and farmers of both countries. Another major sector, automobiles, will also be affected.

Here’s the likely impact on all three areas at a glance.

Beef

  • UK beef farmers will see the collapse of talks as a major victory
  • Canada’s farming industry has previously expressed frustration with Britain, saying its meat is at a disadvantage under the interim deal.
  • The Canadian government was trying to relax a ban on hormone-treated beef from the UK

British farmers will see bankruptcy as a major victory in the negotiations. The National Farmers’ Union (NFU), the body representing UK farmers, is pressing the government to protect its members.

Beef farmers in the UK already face competition from those in New Zealand and Australia, whose exports benefit from free trade deals with the UK, meaning tariffs are raised.

Minette Butters, president of the National Farmers Union of England and Wales, said walking away from the Canadian trade deal would be difficult, “but it’s the right decision.”

The Canadian government has been trying to ease UK bans on hormone-treated beef, which its producers say effectively shuts them out of the British market.

The Canadian Cattlemen’s Association said the U.K. “has shown no signs that it is ready to fully adopt Canada’s food safety system, which is recognized as one of the best in the world.”

It is not the first time that beef has become part of trade relations between the two nations. Canada’s farming industry has previously expressed frustration with the government, saying its meat is “severely disadvantaged” under the post-Brexit interim deal with Britain and essentially shut out of that market.

Last year, a coalition of Canadian farming groups protested the UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership trade agreement. They demanded that Great Britain either accept Canada’s food safety system or pay compensation for their losses.

  • UK is Canada’s fifth-biggest cheese supplier – but talks collapse ‘doesn’t look rosy’
  • From the beginning of 2024, a 245% tariff was imposed on UK cheese exporters, affecting prices.
  • Canadian cheese exports are mainly to countries other than England
  • But there are fears that ending the deal could “cripple” Canadian cheese importers and small cheese shops

According to the Food and Drink Federation (FDF), British cheese exports to Canada were worth £18.7 million in 2022, or 2.4% of total cheese exports.

International trade data show that this means Canada imports just over two million kilograms of cheese from the UK (its fifth largest supplier).

British company Coombe Castle International is the UK’s largest exporter of cheese to Canada, with about a third of its exports going to the country.

Its director of sales and marketing, Ben Hutchins, told the BBC the firm was “very disappointed” that the talks had stalled, adding that the company had been exporting to Canada since 1980.

According to him, the suspension of negotiations on the export of cheese “does not look brown”.

Finding new markets quickly won’t be easy, Mr. Hutchins said, with a third of the business closing in Canada after 40 years.

Industry group Dairy UK said the stalling of talks was “regrettable, but there is little indication that Canada is truly prepared to improve access to the Canadian cheese market.”

Since the beginning of the year, UK cheese exporters have imposed a 245% tariff on British cheese going to Canada, which has affected prices.

image caption,

In 2020, Prime Ministers Boris Johnson and Justin Trudeau agreed to continue trade on the same terms as the then EU deal after the end of the Brexit transition period.

“This has put UK dairy exporters at a disadvantage and disrupted trade,” said a Dairy UK spokesman.

“However, exports to Canada are a relatively small part of UK production and while some UK dairy companies face a significant commercial challenge, we recognize that it will not be insurmountable,” the group said.

Meanwhile, Canadian cheese exports, including cheddar, are mainly 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 UK cheesemakers.

The expiration in December of a limited-time deal that allowed the U.K. to continue selling cheese without high tariffs has caused “significant” disruption to the industry and will “cripple Canadian cheese importers as well as small cheese shops,” he said.

The council’s chairman, Joe Dal Ferro, told the BBC that this, along with the pause in trade talks, had “jeopardised” efforts to build the bilateral relationship.

“We feel abandoned by both governments,” he said.

Afrim Pristine, owner of Cheese Boutique in Toronto, told the BBC that the cheese from England is popular – in December he sold about 250 kg (550 lb) of the cheese every day.

He hasn’t had to raise prices in his store yet – he has enough stock from last year – but when he does, he says, “A – will it be on sale and B – how much will it cost”?

“I don’t want to disappoint my customers, my customers who have supported my business for decades. And it will.”

Cars

  • There are now doubts whether the UK can continue to sell cars without high import taxes
  • A trade group says it will be bad for Canadian consumers if tariffs are reimposed on UK cars.
  • There are no significant imports of Canadian-made cars into the UK

According to the Department of Business and Trade, the UK’s top export to Canada is cars.

Exports were worth £745.8 million in the 12 months to the end of the second quarter of 2023.

A time-limited deal allowed the UK to continue selling cars without high import taxes, but that is now in doubt.

Mike Hawes of the trade group The Society of Motor Manufacturers and Traders (SMMT) said that while UK exports to Canada are significantly lower than those to the EU, Canada is still “an important market”.

“Given the close relationship between our countries, the suspension of trade talks is particularly disappointing and sends a signal that the UK’s world-class automotive products are not welcome in Canada,” he said.

If tariffs are reimposed on UK cars, “it will not benefit anyone, least of all Canadian consumers,” he said, adding: “We urge all parties to come to the negotiating table.”

The BBC understands that there are no significant imports of Canadian-made cars into the UK.

The Canadian auto industry reacted quietly to the news.

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