Britain has concluded its first “from scratch” trade deal since it exited the European Union post-Brexit.
The UK Prime Minister Boris Johnson and his Australian counterpart Scott Morrison reached agreement on the “historic” agreement during negotiations at Downing Street, London.
The free trade deal with Australia will scrap tariffs on products such as UK cars, Scotch whisky, confectionary, while providing young people with an opportunity to live and work in Australia, says an announcement by the UK government.
"Today marks a new dawn in the UK’s relationship with Australia, underpinned by our shared history and common values," UK Prime Minister Boris Johnson was quoted as saying.
Australian Trade Minister Dan Tehan referenced the Free Trade Agreement, as he said in a statement:
““Both prime ministers have held a positive meeting in London overnight and have resolved outstanding issues in relation to the FTA. Their agreement is a win for jobs, businesses, free trade and highlights what two liberal democracies can achieve while working together.”
Australian Agriculture Minister David Littleproud hailed the deal while speaking with the Australian Broadcasting Corp.
“The details are being nutted out from the in-principle agreement that our two prime ministers were able to get to last night over dinner. Our departments and the Trade Department are working through feverishly to make sure that an announcement can be made at our time tonight so that Australians will see exactly what is in that in-principle agreement,” he said.
The agreement penned with the UK is Australia’s 15th free trade agreement.
With exchange of goods and services valued at 36.6 billion Australian dollars ($28.2 billion) annually, Britain is Australia’s fifth largest trading partner. According to Tehan, the new deal can potentially boost these figures.
“British consumers are missing out on choosing high quality, well priced Australian products,” said Tehan in Parliament, citing beef and lamb exports which currently account for only 4.3 percent of UK consumption, due to import quotas set by earlier deals.
Tehan emphasized that when Britain joined the European Common Market in 1973, “Australia felt that a special bond was being broken.” Now, post-Brexit, “Australia stands ready again to be a willing partner with the U.K.,” Tehan said.
UK government documents suggest a tariff-free trade deal with Australia could boost GDP by 0.02 %, or £500 million ($914 million), writes The Sydney Morning Herald. Exports to Australia are anticipated to grow by between 3.6 and 7.4 per cent. The forecasts also suggest GDP in Australia could grow by up to £700 million ($1.3 billion).
‘Maximising Post-Brexit Opportunities’
In May, as Boris Johnson chaired a meeting of Cabinet ministers, he was warned by Labour's shadow international trade secretary, Emily Thornberry, that a trade deal with Australia that could “decimate” British farming "just to prove a political point" regarding post-Brexit economic independence.
The meeting was looking into specifics of phasing in zero tariffs for Australian beef and lamb.
Cabinet Office Minister Michael Gove and Environment Secretary George Eustice had also been pushing for a protracted 15-year phase out of tariffs to protect UK farmers. UK lamb and beef producers cited concerns they might be undercut by Australian competitors failing to abide by the same welfare standards.
Furthermore, there were fears the deal with Australia might pave the way for future similar agreements with the United States, South America, and New Zealand.
However, international trade secretary, Liz Truss, Cabinet Minister David Frost and Secretary of State for Business, and Energy and Industrial Strategy Kwasi Kwarteng were cited by The Telegraph as adhering to the stance that a zero-tariff agreement with Australia was of fundamental importance to the UK's post-Brexit future.
Downing Street stated that Boris Johnson "wants to maximise the massive opportunities presented by post-Brexit trade deals", vowing that British farmers would be protected in any deal with Australia.
Johnson insisted in May that a free trade deal with Australia should be regarded as an “opportunity” and not a “threat”.
“Any agreement would include protections for our agriculture industry and won't undercut UK farmers,” the Prime Minister's official spokesman was cited as saying.