The agreement will continue a settlement already agreed between the EU and Canada in the Comprehensive Economic and Trade Agreement (Ceta) and does not give any new benefits to UK businesses.
However, the government insisted it avoids an estimated £42 million in tariffs for businesses if negotiators had failed to secure a deal before the end of the Brexit transition period next month.
“This is a fantastic agreement for Britain which secures transatlantic trade with one of our closest allies,” Mr Johnson said in a statement.
“British businesses export everything from electric cars to sparkling wine to Canada, and today’s deal will ensure that trade goes from strength to strength.”
DIT added the settlement with Canada secured this weekend paves the way for negotiations to begin in the new year on a comprehensive deal with Canada, which Brexiteers have touted as a benefit of leaving the bloc.
But with negotiations over a trading agreement with the EU – the UK’s biggest trading partner – going down to the wire and key issues still unresolved, there remains a considerable amount of uncertainty for businesses.
And this week talks between London and Brussels were suspended at a crucial moment after a member of the EU’s negotiating team tested positive for coronavirus.
While welcoming the the UK-Canada agreement, the British Chamber of Commerce said: “The single most critical trade agreement our business communities need is one with the European Union.
“Firms expect the two sides to agree a deal. We urge government to redouble their efforts to secure this as soon as possible to give businesses the clarity they need.”
International trade secretary, Liz Truss, said: “Today’s agreement underpins £20 billion worth of trade and locks in certainty for thousands of jobs.
““The UK is bonded by history, culture and transatlantic trade with our friends and allies in Canada, and we want to continue to build partnerships around the world that support our shared values of freedom and democracy, and today marks another step towards membership of a group of like-minded nations- the Trans-Pacific Partnership.”
Josh Hardie, the acting director-general of the Confederation of British Industry described the agreement as a “milestone”, adding: “The signing of this deal can now lay the foundations for an even deeper trade agreement, tailored to both economies. Business stands ready to work with government to achieve that goal and to promote opportunities with Canada.”