The UK-Canada Trade Continuity Agreement will be subject to final legal checks before it is formally signed.
However, this comes with days to go until the updated deadline that has been set to ensure that the UK-EU trade deal is in place by the end of the transition on December 31.
Britain ships goods that include electric cars and sparkling wine to Canada, and imports products such as salmon and maple syrup from the Commonwealth country that also recognizes Queen Elizabeth II as head of state.
The stopgap agreement allows trade between the two countries to continue under the same terms as Canada's existing treaty with the European Union while negotiators begin work on a new bilateral deal between the United Kingdom and Canada, Prime Minister Boris Johnson said in a statement.
"Better Progress" has been made in crucial areas of post-Brexit trade talks with the United Kingdom, the European Commission's chief Ursula von der Leyen said during a G20 meeting on Friday, stressing, however that "time pressure is high".
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Trade body the Scotch Whisky Association (SWA) said the deal was "good news for Scotch whisky exports as it aims to secure fairer access for Scotch whisky to the Canadian market".
The document will pave the way for negotiations for a new, adapted agreement from 2021, according to London.
"Today's agreement underpins £20 billion (S$35.66 billion) worth of trade and locks in certainty for thousands of jobs", Liz Truss, the UK's worldwide trade secretary, said in a statement.
Thierry Breton, the French representative on the European Commission, the EU executive, said last week: "We shouldn't have in the Brexit deal revision clauses in one or two years, when everything would change again".
The deal with Canada is the second major trade agreement announced by Britain in less than a month, after it agreed to terms with Japan in late October.
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Tariff-free trade on 98% of export goods to Canada including beef, fish, seafood and soft drinks.
Mr Johnson's comments come after Britain and Canada agreed to continue trading under the same terms as the current European Union deal after the Brexit transition period ends at the close of the year.
"The UK and Canada have locked in their existing trading relationship, worth $ 27 billion ( €22.5 billion), and agreed to begin negotiating a new more ambitious trade deal as early as next year", the British government said in a statement.
"And the people of Australia able to get Penguins in exchange".
Without an agreement, trade between the two entities would be executed under the terms of the World Trade Organization.
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