The UK and Canada have agreed a deal to continue trading under the same terms as the current EU agreement after the Brexit transition period ends.
The government said it paved the way for negotiations to begin next year on a new comprehensive deal with Canada.
The PM and Canadian PM Justin Trudeau made the "agreement in principle" in a video call, the Department for International Trade said.
The agreement does not give any new benefits to businesses.
But it rolls over the Comprehensive Economic and Trade Agreement reached by the EU and Canada after seven years of negotiations.
Boris Johnson said the extension was "a fantastic agreement for Britain", adding: "Our negotiators have been working flat out to secure trade deals for the UK and from as early next year we have agreed to start work on a new, bespoke trade deal with Canada that will go even further in meeting the needs of our economy."
Welcoming the continuity deal, Mr Trudeau suggested a new comprehensive trade agreement with the UK would take several years to negotiate.
Speaking during the video call, which also included International Trade Secretary Liz Truss and her counterpart Mary Ng, Mr Trudeau said: "Now we get to continue to work on a bespoke agreement, a comprehensive agreement over the coming years that will really maximise our trade opportunities and boost things for everyone."
Labour's shadow foreign secretary Emily Thornberry welcomed the "necessary" deal