UBS UBS Group AG

LONDON—Canada's finance minister said Wednesday the U.K. will need to complete exit talks with the European Union before it can pursue a trade deal with Canada.

Speaking to reporters on the sidelines of a conference hosted by UBS Group AG, Bill Morneau said that the U.K. is Canada's fourth-largest trading partner and Ottawa expects to maintain close economic ties with Britain after its EU exit.

But he added formal talks on a post-Brexit trade deal can't begin until the U.K. withdraws from the 28-member club.

On talks between the EU and the U.K., he said "that's a discussion that will precede any discussion with Canada," adding that "any discussion with the U.K. will be a positive one."

"We're going to respect the process the U.K. is going through with the European Union, and only with the outcome of those discussions will we have the context to answer questions of what the next steps are," Mr. Morneau said.

His remarks highlight a challenge facing U.K. Prime Minister Theresa May as she charts the U.K.'s EU exit following a referendum on membership in June, where voters elected to leave the bloc.

Proponents of Brexit argued the U.K. could quickly forge new trading relations with faster-growing parts of the world to augment or replace trade with Europe, which sucks in almost half U.K. exports. But EU treaties prevent member states from negotiating their own trade deals, meaning the U.K. can only formally ink new accords once it leaves.

In the U.S., President-Elect Donald Trump has signaled he intends to renegotiate the terms of the North American Free Trade Agreement between the U.S., Canada and Mexico, which he blames for whittling away at American jobs.

Mr. Morneau said the jobs and growth in both the U.S. and Canada that depend on trade between the two nations provides "a really excellent foundation from which we can talk about how to improve our relationship going forward."

Write to Jason Douglas at jason.douglas@wsj.com

(END) Dow Jones Newswires

November 16, 2016 10:55 ET (15:55 GMT)

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