Brexit was driven, in part, by the desire of reluctant Europeans to take the UK out of the protectionist wall and restrictive regulatory regime of the EU. The idea was to then negotiate a series of bespoke free trade agreements with the rest of the world, upholding British interests while ensuring fair competition. A small step was taken in this direction on 14 June 2021, when Prime Ministers Boris Johnson and Scott Morrison agreed in principle the first major post-Brexit trade deal to be set up “from scratch”, with negotiations having opened on 17 June 2020. Over a dinner of Welsh lamb, Scottish smoked salmon and unspecified Australian wine, Mr Johnson proclaimed a “new dawn” in the relations between the two nations. The following day, a draft Australia-UK Free Trade Agreement was released to the public by the Department for International Trade.
But then Australia is already very much a part of the family. The UK and Australia share a common language, a common law system, a Head of State in the person of the monarch, societal values, a cultural heritage, strategic outlook, and intelligence and security relationships, all cemented together by enduring people-to-people ties.
The new relationship promises tariff-free and quota-free trade in goods and services between the two countries. This will lower prices of various “iconic” British exports, including beverages, cars, confectionery, and ceramics. It will also promote a boozier relationship, by further enhancing the UK’s role as the largest importer of Australian wine (Jacob’s Creek, Hardy, etc) by volume, hopefully in exchange for rising Scotch Whisky exports to Australia. And that’s not to mention the swapping of foods, potentially attracting more British subjects to the delights of Tim Tams (chocolate biscuits) and Vegemite in exchange for Australians embracing our own home-produced favourites.
When it comes to farming products, there are some concerns on the British side. Separate arrangements were initially proposed for dairy products, sugar, and red meat (lamb and beef) tariffs, to protect the British farming industry against its mightier Australian counterpart. But there remains uncertainty over the time period for which tariffs and quotas for Australian farming imports will be capped. Originally stated to be for up to fifteen years for beef and lamb and five years in the case of dairy products, it is being suggested that these trade barriers will be lowered much sooner or even not enforced at all. There is a widely shared view among the British farming community, the beneficiaries of subsidies and trade barriers, that cheaper Australian imports, with lower food safety and animal welfare standards, such as overuse of antibiotics as growth promoters, will undercut the domestic market and even force some farmers out of business. The good news, however, is that hormone-fed beef will be kept out of the UK.
Among the other promised benefits are the greater freedom for British citizens aged 35 and under to secure employment on working holiday visas for periods of up to three years, without committing to a period of work on farms or building sites. British digital and technological services are also promised better access to the Australian market, with a view to operate in the telecommunications sector and in emerging technologies such as artificial intelligence.
In reality, these small gains are completely outshadowed by the possibilities of British membership of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). CPTPP membership will open up eleven Pacific Rim markets, which together accounted for 13 per cent of GDP in 2018, to British trade. It is not surprising, given its geographical location, that Australia has increasingly looked to the emerging economies of Asia and the Pacific region for its trading partnerships, ever since the 1950s. It is equally unsurprising that the UK, a divorcee from the EU, has been forced to cast its nets wider as it seeks out new partnerships.
Notwithstanding all the hype, the projected gains to the UK from this agreement seem modest at best. Despite the triumphalist rhetoric, the UK’s GDP is predicted to increase by only around 0.02 per cent over the next 15 years as a direct result of the deal. And it also appears, at first glance, that the terms of the agreement are stacked somewhat in favour of Australia. What we now require to better assess this agreement are its finer details. The small print will no doubt trickle down over the coming weeks and months to enlighten us further .
Ashis Banerjee