Trade discussions broke down due to a disagreement over cheese and beef, and now the UK and Canada are blaming each other.

The two nations had been engaged in over two years of negotiations to hammer out a new deal to replace the one that existed when the UK was still a member of the EU.

However, it was revealed on Thursday night that the UK had called off talks because the two food products had not advanced.

With a partner that made up 1.4% of the UK’s total commerce in the year ending June 20,23, it might result in more stringent trading conditions.

The UK government estimates that the value of goods traded between the two nations in 2020 was £19.2 billion, with £11.8 billion coming from UK exports to Canada and £7.3 billion coming from UK imports from Canada.

Consumers and farmers in both nations may be affected by the collapse of the negotiations. Cars, another significant industry, will also be impacted.

The expected effect on each of the three areas is summarised here.

Beef

UK beef farmers would probably consider the discussions’ breakdown to be a major victory. The farming sector in Canada has previously expressed its dissatisfaction to the UK, claiming that its meat is at a disadvantage under the temporary agreement. The Canadian government has also been pressuring the UK to loosen the prohibition on hormone-treated beef. UK farmers will consider the breakdown of negotiations as a major victory. The National Farmers Union (NFU), the organisation that advocates for farmers in the United Kingdom, has been applying pressure on the government to defend its members.

Australia and New Zealand, whose exports profit from free trade agreements with the UK, which eliminate tariffs, are already posing a threat to British beef farmers.

The Nation Farmers’ Union of England and Wales president, Minette Batters, stated that although quitting the Canadian trade agreement would have been challenging, “it’s the right decision.”

The UK’s ban on hormone-treated beef, which, according to its producers, essentially keeps them out of the British market, has been pushed for relaxation by the Canadian government.

The UK has “shown no indication that it is prepared to fully accept Canada’s food safety system, which is widely recognised as one of the finest in the world,” according to the Canadian Cattle Association.

Beef has always been a source of contention in the two countries’ trading relations.

A post-Brexit interim deal with the UK has left Canada’s farming sector “severely disadvantaged” and effectively shut out of that market, the industry has previously complained to the government.

Concerned about that reciprocal access, a coalition of Canadian farming organisations demonstrated against the UK’s entry into the Comprehensive and Progressive pact for Trans-Pacific Partnership trade pact last year. They insisted that the UK reimburse them for their losses if they did not accept Canada’s food safety regime.

Cheese

Although the UK is Canada’s fifth-largest cheese exporter, the status of the talks appears to be dire. Since the beginning of 2024, UK cheese exporters have been subject to a 245% duty, which has an effect on prices. The majority of Canada’s cheese exports are to nations other than the UK. However, some worry that the agreement’s termination may “cripple” small cheese businesses and Canadian importers of cheese.

The Food and Drink Federation (FDF) reports that in 2022, British cheese exports to Canada accounted for £18.7 million, or 2.4% of all cheese exports.

According to international trade data, that amounts to Canada buying slightly more than two million kilogrammes of cheese from the UK, which is its fifth-largest supplier.

About one-third of the cheese exported by the British company Coombe Castle International, which is the biggest supplier of cheese from the UK to Canada, is consumed there.

Its head of sales and marketing, Ben Hutchins, told the BBC that the company was “pretty gutted” that negotiations had been put on hold. The company has been exporting goods to Canada since 1980.

He added the status of talks on cheese exports “doesn’t look rosy” due to the stoppage.

According to Hutchins, finding new markets rapidly will be difficult because, after 40 years, a third of the company is still based in Canada.

“Regrettable, but there was little indication that Canada was really willing to improve access to the Canadian cheese market,” stated industry association Dairy UK in regards to the discussions’ postponement.

Since the start of the year, British cheese exporters have seen pricing fluctuations due to a 245% tax imposed on the product travelling to Canada.

At the 2019 G7 summit in Biarritz, France, Prime Minister Boris Johnson meets Prime Minister Justin Trudeau of Canada.

A Dairy UK representative stated, “This has disrupted trade and put UK dairy exporters at a disadvantage.”

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

In the meantime, the majority of Canada’s exports of cheese, particularly cheddar, go overseas. Not among its top ten markets is the UK.

According to the Canadian Cheese Council of Canada, its members have been cultivating ties with UK cheesemakers for decades. The council represents small and medium-sized cheese importers and their suppliers.

The industry has already experienced “significant” disruption as a result of the time-limited deal that allowed the UK to continue selling cheese without heavy tariffs expiring in December. It further stated that the pact “will cripple cheese importers as well as small cheese shops across Canada.”

The efforts made to forge those bilateral ties were “in jeopardy” as a result, according to council chair Joe Dal Ferro, who made this statement to the BBC along with the suspension of trade negotiations.

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

The BBC was informed by Afrim Pristine, owner of the Cheese Boutique in Toronto, that UK cheese is well-liked; in December, he sold roughly 250 kg (550 lb) of it every day.

Since he has enough inventory from last year, he hasn’t had to raise prices yet, but when he does, he asks, “A-is it going to be available, and B-what’s the cost going to be”?

“I don’t want to disappoint my customers, clients who’ve been supporting my business for decades. And that’s what’s going to happen.”

Cars

It is now questionable if the UK will be able to keep selling automobiles without having to pay hefty import duties.  One trade association claims that Canadian customers would suffer if tariffs on cars from the UK were to be reinstated. The United Kingdom does not import a substantial amount of cars made in Canada.

The Department for Business and Trade states that automobiles are the UK’s top export to Canada.

The value of exports in the year ending at the end of the second quarter of 2023 was £745.8 million.

The UK had been able to continue selling cars without having to pay high import tariffs because to a time-limited deal, but this is now in question.

According to Mike Hawes of trade association The Society of Motor Manufacturers and Traders (SMMT), Canada remains “an important market” even though the UK’s exports to it are far lower than those to the EU.

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

“We urge all parties to get back around the negotiating table,” he said, adding that “this would benefit no one, not least Canadian consumers” if duties on UK automobiles were reinstated.

The BBC has been informed that there are no notable imports of automobiles made in Canada into the United Kingdom.

The news has not been well received by the Canadian auto industry.

(Adapted from BBC.com)

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