CANBERRA/LONDON (Reuters) — Britain and Australia announced a free trade deal June 15 that the British government hailed as an important step in building new trade relationships following its departure from the European Union.
Britain said cars, Scotch whisky and confectionery would be cheaper to sell in Australia because of the agreement, which removes tariffs and reduces red tape. Australia said it was a “great win” for Australian agriculture.
The deal is the first bilateral trade accord Britain has negotiated from scratch since leaving the EU last year. The government sees it as an important piece of its post-Brexit strategy to shift Britain’s economic centre away from Europe and seek new opportunities in higher-growth Indo-Pacific nations.
Australian prime minister Scott Morrison and British prime minister Boris Johnson overcame sticking points during talks after the recent Group of Seven advanced economies meeting in Britain. Morrison attended the summit as a guest.
“I think this is important economically, there’s no question about that … but I think it’s more important politically and symbolically,” Johnson said. “We’re opening up to each other and this is the prelude to a general campaign of opening up around the world.”
Britain is Australia’s eighth-largest trading partner and Australia is Britain’s 20th largest, with two-way trade worth US$20.7 billion.
“This is the most comprehensive and ambitious agreement that Australia has concluded,” Morrison said.
Prior to Britain joining the then European common market in 1973, Britain was Australia’s most lucrative trading market.
The full agreement is yet to be published. According to British official estimates, it could add millions to the country’s economic output over the long term, a small fraction for an economy worth around $2.8 trillion.
The bigger economic prize could be the precedent the deal sets for freer access in trade that allows Britain’s services sector to export financial, legal and other professional services.
Britain has applied to join a trans-Pacific trading bloc, of which Australia is also a member, that includes other countries where ministers predict demand for digital, legal and professional services will grow rapidly.
— Reuters (@Reuters) June 15, 2021
That deal, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, is also seen as an important economic counterweight to China’s influence in the region.
The deal with Australia will be scrutinized by British farmers, who fear they could be forced out of business if the deal eliminates tariffs on lamb and beef imports.
Britain said its farmers would be protected by a cap on tariff-free imports for 15 years.