IT’S BEEN A top priority for Brexiteers for some time but this week, Downing Street finally announced the broad terms of a new trade agreement between the UK and Australia.
After a year at the negotiating table, the proposed deal is aimed at removing arguably already modest trade barriers between the two countries.
The deal hasn’t actually been signed, sealed and delivered just yet but the reasons for the timing of the announcement this week are obvious.
Six months on from the end of the Brexit withdrawal period, the UK government “needs to keep up the momentum to show that Brexit is a success”, says trade expert David Henig, UK Director at the European Centre For International Political Economy.
Sovereignty over trade policy was, of course, a major selling point for Britain’s withdrawal from the European Union in the run-up to the 2016 referendum.
From Boris Johnson’s perspective, Henig says, “You then need a flow of deals coming in.
“So the deal is politically significant. Economically, less so.”
The numbers seem to bear that out. Based on some estimates, the free trade agreement will add a modest 0.02% to UK gross domestic product within 15 years.
So what are the major points of the deal and who will reap the benefits? Let’s take a look.
Perhaps the key element of the deal — and certainly the most controversial on the other side of the Irish Sea — is how generous it appears to be towards Australian farmers.
In principle, the deal commits to the “full liberalisation” of Australian goods entering Britain.
Australian winemakers, sugar cane growers and dairy farmers will all benefit.
But most significant are the ample quotas the deal provides for Australian meat producers for the shipment of tariff-free beef and lamb to the UK.
Those quotas will rise from 35,000 and 25,000 tonnes for beef and lamb respectively at the outset to 110,000 and 75,000 tonnes by year 10 of the deal.
Caps will disappear altogether after 15 years, allowing for the free flow of Australian agricultural produce into the UK market.
British farmers are expressing deep concern about this element of the deal, particularly given the fact that animal welfare and food safety standards are lower in Australia.
Because they are held to completely different welfare and environmental standards
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And have a whole post colonial landscape to scale up on pic.twitter.com/aJG3xxucKt
This means, in theory, that Australian farmers can produce meat at a much lower cost, making them much more competitive within the UK market.
“It’s hard, always to get a sense of how much is a justified concern and how much is straight protectionism,” Henig says.
“There is an element of both.”
Post-Brexit, he says that UK farmers are nervous “about the fact there’s going to be a lot of trade deals that offer free access without conditions.
“Australia might not, in fact, send us that much meat or they might,” Henig explains. For context, Australia shipped just 7,788 tonnes to the UK in 2019, far below the initial 25,000-tonne quota.
But the concern for UK farmers is whether similar deals will be put in place with New Zealand and other countries.
Henig says, “Part of this is also about a longer-term conversation between UK farmers and the government. They want to make it clear that they’re unhappy so that the government has to think again about other trade deals.”
Key to understanding the agreement, Henig argues, is that for the government, it’s less about the economic benefit to the UK and more about the optics of it in the post-Brexit landscape.
In a nutshell, “the deal is very generous agriculture quotas in return for a photo opportunity for Boris Johnson”, he says.
That’s exactly what he got on Tuesday when he posed for snaps with Australian Prime Minister Scott Morrison with both leaders exchanging packets of biscuits from their respective countries.
But the UK negotiators did manage to wring a few concessions from their Australian counterparts on behalf of British exporters.
For one, the deal removes tariffs of up to 5% on £4.3 billion worth of UK goods travelling to Australia.
These include biscuits, Scotch whiskey and cars made in Britain.
“So there should be a little bit extra, certainly for whiskey. It’s not clear that we will send any more cars anyway because of the nature of that trade,” Henig says.
But rather than tariffs, the main barrier to trade between the UK and Australia is and always has been how far apart the two countries are in a geographic sense, he explains.
“So there’ll be a few processed food products that get slightly cheaper tariffs. But the tariffs weren’t that high in Australia to start with.”
Although it’s characterised by a number of “small, incremental improvements” rather than anything earth-shattering, there are some “nice-looking commitments” in the agreement for the UK services sector and for workers, Henig says.
According to the text of the agreement in principle, the two countries have agreed that “UK and Australian lawyers can practise in the other country’s territory using their original qualifications and title”.
Some barriers will still exist, according to the Law Society of England and Wales.
But I. Stephanie Boyce, President of the Law Society, said this week that she would “would welcome a clear framework for regulatory dialogue” in the final trade deal to “further this cooperation” between the two nations.
Under the agreement, British citizens under the age of 35 will be able to stay in Australia for up to three years without having to undertake certain, specified types of work.
The deal also commits the two countries to “outlining visa pathways to facilitate mobility for those involved in agricultural work”.
Most of these details aren’t “going to make a huge economic difference” for British citizens, Henig says.
On the contrary, the agreement is more about the political message it sends than anything.
“I think it says [the government] sees getting the trade deal itself as being a win,” Henig believes.
“It says, ‘We’re not overly worried about the content. We’re not going to sweat the details too much.’
“That might not be the worst thing in the world because in some ways, you get the agreement and you can work from there to address some of the key issues… But there will be more pressure now to change it; to try to get better and better deals and better outcomes.”
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