Britain signed an interim deal with Canada today as negotiators rush to cement trade ties in preparation for life outside the EU.
As a relief to businesses concerned about high tariffs, the government said the deal paves the way for negotiations to begin next year for a new deal with Canada.
Under the terms of the deal, the UK and Canada will continue to operate under the terms of the current EU system after the Brexit transition period expires.
Without a series of new bilateral agreements, trade with countries around the world could be hampered by obstacles such as tariffs and increased paperwork.
The UK government says the emergency agreement paves the way for future negotiations on a new bespoke trade deal between the UK and Canada.
Boris Johnson said today: & # 39; This is a fantastic deal for Britain that will secure transatlantic trade with one of our closest allies.
“British companies export everything from electric cars to sparkling wine to Canada. Today's deal will ensure that the trade keeps getting stronger.
& # 39; Our negotiators have worked tirelessly to secure trade deals for the UK and starting early next year we agreed to work with Canada on a new, bespoke trade deal that will further meet the needs of our economy. & # 39;
Mr Trudeau said the deal means that "we can now keep working on a bespoke deal, a comprehensive deal that will really maximize our trading opportunities and make things better for all in the years to come".
UK Chambers of Commerce Director General Adam Marshall said the deal was "warmly welcomed" but warned that similar continuity agreements with other key markets, including Turkey and Singapore, were urgently needed to "protect a damaging cliff edge for importers and exporters" to avoid.
Boris Johnson and Canadian counterpart Justin Trudeau sealed the "agreement of principle" in a video call today, the Department of International Trade (DIT) said
It is because UK negotiators are rushing to cement trade ties to prepare for life outside the EU while EU chief Brexit negotiator Michel Barnier continues to play hardball
And he reiterated his call for an agreement with the EU, describing it as "the most critical trade deal our business communities need".
The deal with Canada follows an agreement with Japan last month that largely mimicked existing trade deals.
Johnson and Canadian counterpart Justin Trudeau sealed the "agreement of principle" in a video call today, the Department of International Trade (DIT) said.
The deal goes beyond what the EU has reached with Canada under the Comprehensive Economic and Trade Agreement (Ceta) and does not offer UK businesses any new advantages.
However, the DIT said it would avoid an estimated £ 42 million in tariffs that UK exporters would have faced if the government had not reached a deal.
The ministers hope that future negotiations on “digital trade, women's economic empowerment and the environment” will continue, according to DIT.
Industry groups said they were relieved that companies will not have higher trade tariffs with Canada in the next month.
Mike Cherry, chairman of the Federation of Small Businesses, said: “There was always the risk that the end of the transition period would mean the loss of the broader international market access that we had under EU membership.
The EU has been accused of making "idle threats" to the city's banks after calling for jobs and money to be relocated to the continent if they want to continue doing business after Brexit – as Nissan warns of the impact if none Trade agreement is agreed
The EU has been accused of making "idle threats" tonight after the City of London banks were warned that they would have to move jobs and assets to the continent in order to act after Brexit.
The European Central Bank (ECB) said today that UK-based financial institutions cannot use the pandemic as an excuse to avoid relocating before the transition period.
The ECB, which oversees the eurozone's largest banks, said lenders operating in the bloc need to deploy sufficient capital, staff and management expertise to ensure the physical presence necessary for prudent risk management.
"The banking regulator has offered flexibility where necessary, in particular to take into account the effects of the lockdown measures and travel restrictions on the relocation of staff," it said.
"In principle, no additional flexibility is provided."
Brexiteers said, however, that demand posed an empty threat as most banks were already present in the euro zone.
Tory MP Peter Bone told MailOnline: “Basically every big bank already has something there. There is nothing to move … this is an idle threat.
“I'm afraid I don't think any of our banks will notice because they already have.
It came amid recent hopes for a trade deal as early as next week. France is said to have blinked about fishing rights in British waters – a key sticking point between the two sides.
& # 39; The fact that this new agreement maintains the previous chapter on small businesses is very welcome. We look forward to having such chapters at the heart of any future trade deal with the UK. & # 39;
Josh Hardie, director general of the Confederation of British Industries, said it was "good news for business" and that the deal could "lay the foundation for an even deeper trade deal".
International Trade Secretary Liz Truss said, “Today's deal strengthens £ 20 billion worth of trade and secures thousands of jobs.
"We look forward to a new, more ambitious deal next year to create more opportunity for business and improve the lives of people across the country."
The UK-Canada Trade Continuity Agreement will be subject to final legal scrutiny before it is officially signed.
This came after Brussels claimed a post-Brexit trade deal with the UK was "near and far" as the crisis was "persistent" on issues such as fishing rights.
High-level talks were suspended this week after a member of Michel Barnier's team tested positive for coronavirus.
Officials continue to work remotely on the details of the deal, but EU diplomats said this morning that the sticking points "still need time" to be resolved as the transition period ends in December.
Besides fishing, the other main points of contention are the so-called “level playing field” for competition and the future governance of the agreement.
Progress on these two issues is said to be "very, very slow", but "the fisheries are not really going anywhere right now".
EU diplomats were briefed on the status of the talks this morning by a high-ranking member of the European Commission. According to reports, some in Brussels believe that a deal is now 95 percent complete.
It seems to have been made clear that the two sides are very close to each other in almost every area except the three that have long prevented great advances.
A senior EU diplomat told Reuters after the meeting: “We are both near and far. It seems that we are very close on most of the issues, but the differences remain on the three issues at issue. & # 39;
A second EU diplomat said of the outstanding questions: “You still need your time.
& # 39; Some things at eye level have moved, albeit very, very slowly. The fishery is not really moving right now. & # 39;
Talks got into disarray yesterday after a member of the Barnier team tested positive for Covid-19 and negotiations at the highest level had to be suspended.
Downing Street said this afternoon that the two sides "have agreed to negotiate remotely for the time being" and that face-to-face talks will resume "if it is deemed safe".
The Prime Minister's official spokesman would not rely on reports that a deal was 95 percent closed, as he said: "Our assessment remains that we want a free trade agreement that was our goal and our negotiating position remains that." same. & # 39;
High-level Brexit trade talks were suspended yesterday after a member of Michel Barnier's team tested positive for coronavirus. Officials continue to work remotely on the details of the deal, but EU diplomats said this morning that the sticking points "still need time" to be resolved as the transition period ends in December
Mr Barnier, the EU's chief negotiator, said he and his UK counterpart Lord Frost had "decided to suspend negotiations at our level for a short time" following the test result.
Lord Frost said he will stay in "close contact" with Mr Barnier and insisted that "the health of our teams is paramount".
A UK government spokesman said ministers are now talking to Brussels about the "implications for the negotiations".
The positive test raises important questions about how and when to resume face-to-face meetings as negotiating teams may need to self-isolate.
Mr Barnier tweeted: & # 39; Update: One of the negotiators on my team tested positive for COVID-19. With David Frost, we decided to suspend negotiations at our level for a short time. The teams will continue their work in full compliance with the guidelines. & # 39;
Mr. Frost replied: “I am in close contact with Michel Barnier about the situation. The health of our teams comes first. I would like to thank the (European Commission) for their immediate help and support. & # 39;
A UK government spokesman said: “The Commission has informed us that an official in their delegation has tested positive for Covid-19.
& # 39; We are discussing the implications for the negotiations with you. We have and will continue to act in accordance with public health guidelines and ensure the health and wellbeing of our teams. & # 39;
Both sides have held intensive talks over the past few weeks, with the negotiating rounds alternating between London and Brussels. The last round of talks took place in the Belgian capital.
Mid-November was seen as the latest agreement between the UK and the EU as it took a long time to ratify and implement the new rules.
If an agreement is not reached before the end of the transition period, both sides will have to act on World Trade Organization terms from January 1, which means tariffs will be imposed on goods.
Business groups on both sides of the English Channel are calling on the EU and UK to compromise and reach an agreement as they continue to warn businesses not to afford a chaotic split, especially after being hit by the coronavirus crisis.
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