As Britain prepares to end its transition out of the European Union on Dec 31, it has negotiated multiple rollover bilateral deals to maintain trade, with many simply replacing the terms the bloc had already agreed.
The two countries will begin negotiations next year to expand their commercial agreements to cover digital trade, the environment and women's economic empowerment, the U.K.'s Department for International Trade said in an emailed statement on Saturday.
Johnson's government says the ability to strike free trade agreements with countries around the world is one of the main benefits of leaving the EU.
"Today's agreement underpins 20 billion pounds worth of trade and locks in certainty for thousands of jobs", Liz Truss, the UK's worldwide trade secretary, said in a statement. Before it is formally signed, the UK-Canada Trade Continuity Agreement will be subject to final legal checks.
The agreement could provide a major boost to U.K. Prime Minister Boris Johnson in his efforts to plot a new course for Britain as a global trading nation outside the EU.
Labour's shadow foreign secretary Emily Thornberry welcomed the "necessary" deal.
"It is now vital that Boris Johnson and Liz Truss show the same urgency in securing the other 14 outstanding continuity agreements with countries like Mexico, Ghana and Singapore, where a total of £60bn of United Kingdom trade is still at risk, and time is beginning to run out", she said.
Britain ships goods ranging from electric cars to 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 deal with Canada follows an agreement struck last month with Japan, which largely replicated existing trading arrangements.
The Federation of Small Businesses chairman, Mike Cherry, said: "There was always a danger that the end of the transition period would mean losing wider worldwide market access that we enjoyed as part of European Union membership".
"The fact that this new agreement upholds the small business chapter that was previously in place is very welcome".