International treaty

Memorandum of Understanding between the UK and Canada

Published 23 December 2020

MEMORANDUM OF UNDERSTANDING BETWEEN THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND CANADA CONCERNING TEMPORARY ARRANGEMENTS TO CONTINUE CERTAIN BENEFITS OF THE CANADA-EUROPEAN UNION COMPREHENSIVE ECONOMIC AND TRADE AGREEMENT (“CETA”) PENDING THE ENTRY INTO FORCE OR PROVISIONAL APPLICATION OF THE CANADA-UNITED KINGDOM TRADE CONTINUITY AGREEMENT

The United Kingdom of Great Britain and Northern Ireland (“the United Kingdom” or “UK”) and Canada (together, hereinafter referred to as “the Participants”),

• Noting that international agreements concluded by the European Union, by Member States acting on its behalf or by the European Union and its Member States acting jointly, will cease to apply in respect of the United Kingdom at the end of the transition period, in accordance with Part Four (in particular, Articles 126 and 129) of the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, signed on 24 January 2020,

• Recognising that the Participants signed on 9 December 2020 in Ottawa the Agreement on Trade Continuity between the United Kingdom of Great Britain and Northern Ireland and Canada (“TCA”) (including the agreement, in the form of an exchange of letters between Canada and the United Kingdom, entitled “WTO Cheese TRQ – UK Transitional Access to the European Union Reserve”, also signed 9 December 2020) to continue the benefits, as between them, of CETA,

• Recognising that the necessary domestic procedures required for the TCA to enter into force or be provisionally applied at the end of the transition period will not have been completed,

• Desiring nevertheless to continue the benefits of CETA, as replicated in the TCA, to the extent possible, as between them, without interruption, once CETA ceases to apply to the United Kingdom, until the TCA enters into force or is provisionally applied,

Have reached the following understandings:

1. Section 1: Purpose and Territorial Effect

1. The Participants intend that the benefits arising from selected provisions of CETA that are also set out in the TCA, should be preserved as between them, without interruption, through the commitments set out in paragraphs 2 and 3 of Section 2 of this Memorandum, once CETA ceases to apply to the United Kingdom, until the TCA enters into force or is provisionally applied.

2. This Memorandum will have effect in relation to the territories described in the TCA.

2. Section 2: Commitments intended to preserve the benefits arising from selected provisions of CETA as between Canada and the United Kingdom

1. Pursuant to the purpose set out in Section 1, the Participants will ensure that the commitments set out in paragraphs 2 and 3, which correspond to certain provisions of CETA that are also incorporated into and subject to modification in the TCA, are given effect, as between the Participants, for the period between the date on which CETA ceases to apply to the United Kingdom and the entry into force or provisional application of the TCA.

2. Canada makes the following commitments:

a) Products imported from the United Kingdom that were eligible for preferential tariff treatment under CETA prior to the date that CETA ceased to apply to the United Kingdom will be eligible for the equivalent preferential rates of customs duty.

b) Without prejudice to the generality of sub-paragraph a), for the avoidance of doubt:

(i) materials produced in the European Union that qualify as originating under CETA rules of origin, and processing of non-originating materials that takes place in the European Union, will count towards the originating status of products imported into Canada from the UK; and

(ii) products originating in and imported from the United Kingdom that were eligible for preferential tariff treatment under the CETA origin quotas, including those products falling under sub-sub-paragraph (i), will remain eligible for equivalent preferential rates of customs duty while this Memorandum is in effect.

c) Cheese originating in the United Kingdom will continue to be eligible to be imported into Canada under the European Union reserve within Canada’s WTO cheese tariff rate quota (“TRQ”).

3) The United Kingdom makes the following commitments:

a) Products imported from Canada that were eligible for preferential tariff treatment under CETA prior to the date that CETA ceased to apply to the United Kingdom will be eligible for the equivalent preferential rates of customs duty, subject to the modifications in the TCA referred to in sub-paragraphs c) and d).

b) Without prejudice to the generality of sub-paragraph a), for the avoidance of doubt:

(i) materials produced in the European Union that qualify as originating under CETA rules of origin, and processing of non-originating materials that takes place in the European Union, will count towards the originating status of products imported into the UK from Canada; and

(ii) products originating in and imported from Canada that were eligible for preferential tariff treatment under the CETA origin quotas, including those products falling under sub-sub-paragraph (i), will remain eligible for equivalent preferential rates of customs duty while this Memorandum is in effect.

c) Volumes and administration of United Kingdom TRQs and origin quotas will be modified as specified in the TCA.

d) On the TCA being provisionally applied or entering into force:

(i) the volumes of the TRQs and volumes of origin quotas utilised under this Memorandum will be deducted from the volumes for the year 2021 set out in the TCA; and

(ii) as a result of these deductions, the volume of origin quotas and TRQ volumes for the year 2021 will not be prorated on the date of entry into force or provisional application of the TCA.

4) The Participants will maintain the commitments set out in paragraphs 2 and 3 until the TCA enters into force or is provisionally applied unless this Memorandum is otherwise terminated in accordance with Section 5.

3. Section 3: Entry into force or provisional application of the TCA

1) The Participants will use their best endeavours to bring the TCA into force, or to apply it provisionally, as between them within 3 months of this Memorandum coming into effect.

2) Following the entry into force or provisional application of the TCA, any action carried out pursuant to this Memorandum prior to the entry into force or provisional application of the TCA will be understood by the Participants to have been carried out pursuant to the TCA.

4. Section 4: Amendment

This Memorandum may be amended at any time by the mutual written consent of the Participants.

5. Section 5: Termination

1) This Memorandum may be terminated by either Participant by giving one month’s written notice to the other Participant, or such shorter period as the Participants may jointly decide.

2) Notwithstanding paragraph 1, but subject to paragraph 3, this Memorandum will terminate without any further notice on the earlier of:

a) 3 months from the date this Memorandum comes into effect, unless the Participants jointly decide to extend the application of this Memorandum; or

b) the date of the TCA entering into force or being provisionally applied.

3) The Participants will consult to determine jointly how to address any outstanding matters arising from termination.

6. Section 6: Consultations

At the request of a Participant that has identified a concern about the interpretation or application of this Memorandum, the Participants will consult and endeavour to find a mutually acceptable solution.

7. Section 7: Status of this Memorandum

This Memorandum is not legally binding and records the understanding between the Participants on the matters referred to in this Memorandum.

8. Section 8: Effective date

This Memorandum will come into effect on the date CETA ceases to apply to the United Kingdom.

Signed in duplicate in English and French, both texts being equally valid.