What does the UK-Australia trade agreement cover?
What does the UK free trade agreements mean?
What is UK’s goal in concluding a trade agreement with Australia?
What will be the implications of the UK-Australia trade agreement for the Australian economy?
The UK and Australia signed a Major Trade Deal the day after consultations on developing economic cooperation in the post-Brexit period, which includes the elimination of reciprocal tariffs between the two countries. The document, signed during a meeting between Boris Johnson and Scott Morrison in London, is the first major trade document to be negotiated since UK’s withdrawal from the EU.
Ambitious British-Australian agreement
Prime Minister Scott Morrison says a free trade agreement with UK is the most comprehensive and ambitious deal in Australian history. Morrison and British Prime Minister Boris Johnson announced the agreement on 14 June 2021 after signing an in principle agreement. Morrison said our economies would be strengthened by these agreements. This is the most comprehensive and ambitious agreement Australia has ever signed. The agreement will pave the way for more Australians to work and live in the UK and give Australian exporters more options. He said the changes would present “a great opportunity” for British and Australian youth to travel and work together. He added that “easy and comfortable” relations with Britain made Australia the first country to succeed in negotiating a post-Brexit free trade agreement with that country. “This is another big chapter in the story of Australia and UK,” Morrison said.
UK seeks free trade agreements
Britain’s exit from the EU has put many of its industries on the verge of bankruptcy. Britain, which left the EU in early 2021, is seeking free trade agreements with the rest of the world. It has already signed a number of free trade agreements with some countries, largely replicating British trade with them as part of EU trade relations. The agreement was signed as the British government seeks to expand its business after leaving the EU. The deal is expected to boost the UK economy to 0.02% over 15 years. Australia is still the 20th largest UK trading partner in the world, accounting for 1.2% of total UK trade by 2020. Boris Johnson is trying to save the economy from rampant inflation by concluding free trade agreements.
Agreement with Australia on tariffs
In addition to trade issues, the UK-Australia agreement oversees the development of defense, science and technology cooperation and climate change. The agreement will give food producers and other companies on both sides better access to each other’s markets and reduce import tariffs on goods such as beverages, cars and clothing. This agreement actually means that from now on the goods of the two countries will be sold in each other’s markets without tariffs and cheaper. The U.K. was Australia’s fifth largest trading partner in 2019 and in 2020, and last year the U.K.-Australia trade relationship was worth £13.9 billion ($19.6 billion). Trade is expected to grow under the deal, the government said, adding that it will also offer more opportunities to young people (Brits under age 35 will be able to travel and work in Australia more freely following the agreement).
Britain hopes to improve trade conditions
Boris Johnson described as a “new dawn” in the UK’s relationship with Australia after the two countries struck a free trade deal. He added that the agreement provides significant opportunities for British businesses and consumers, as well as the country’s youth who want to experience the chance of living on the other side of the world. The UK government says the ability to conclude free trade agreements around the world is one of the main benefits of choosing. After the Brexit, the country seeks to reach an agreement with other countries, especially the United States, but negotiations are slow.
A key step for UK to join the Asia Pacific free-trade agreement
British experts say the agreement with Australia could be used as a cornerstone of other trade documents with other countries. This agreement is a key step for the UK to join the larger Asia Pacific Free-trade Agreement. The government said the trade deal with Australia “is also a gateway into the fast-growing Indo-Pacific region and will boost our bid to join CPTPP, one of the largest free trade areas in the world, covering £9 trillion of GDP and 11 Pacific nations from Australia to Mexico.” Prior to leaving the EU, UK was automatically part of any agreement Brussels made with other countries. At the time of the Brexit, the union was involved in about 40 trade deals with more than 70 countries. So far, London has negotiated the agreement with 66 countries.
British ranchers worried about agreement with Australia
However, the agreement raised many concerns, especially among the government as well as British ranchers. They are worried about losing out to Australian beef and lamb. The UK government hopes that this agreement with Australia will easily pave the way for the Asia-Pacific trade bloc. The Asia-Pacific trade bloc consists of 11 American and Asian countries. These countries allowed UK to begin the process of joining this great trade agreement in early June. UK has already reached agreements with the EU and Japan, and is in talks with the US, India and New Zealand. Talks are also planned with Canada and Mexico.
After UK left the EU at the beginning of 2021, UK’s trade relations and the volume of its exports and imports sharply decreased, and many British factories and industries that had extensive trade relations with other countries freely and without high tariffs. They either went bankrupt or were forced to leave the country and work in other EU countries. That is why the UK government is looking for alternatives to the EU to prevent economic bankruptcy. Alternatives that can fill the gap left by UK’s absence from the EU. Hence, UK seeks to conclude trade agreements with countries with which it can establish extensive trade and economic relations. Although negotiations with many countries have not yet been concluded and are slow, the Boris Johnson Government hopes that by concluding free trade agreements, it will be able to bring its economic growth back to pre-Brexit levels.
