A deal to end or pause world’s largest corporate trade war will help dozens of industries caught in tit-for-tat tariffs.
The United Kingdom and Australia announced a new trade deal on Tuesday, the first such agreement the UK has negotiated from scratch since it left the European Union.
The pact, which will eliminate tariffs and red tape, was hailed by British Prime Minister Boris Johnson as “a new dawn” in the two countries’ relations.
Johnson’s Conservative Party government views the deal as an important element of its post-Brexit strategy to shift the country’s economic centre away from Europe and seek out fresh opportunities in higher-growth Indo-Pacific nations.
Earlier deals with other countries, including Japan, were built on existing agreements struck by the 27-member bloc.
Australian Prime Minister Scott Morrison and Johnson overcame sticking points during talks after the G7 meetings in the UK, which Morrison attended as a guest.
The UK said the deal will mean products such as cars, Scotch whisky, biscuits and ceramics will be cheaper to sell to Australia, a former British colony.
It will also see UK citizens under 35 able to travel and work in Australia more freely.
Going the other way, the deal will eliminate tariffs on Australian goods such as wine, swimwear and confectionery imported into the UK.
“Today marks a new dawn in the UK’s relationship with Australia, underpinned by our shared history and common values,” Johnson said in a statement.
“This is global Britain at its best – looking outwards and striking deals that deepen our alliances and help ensure every part of the country builds back better from the pandemic.”
Foreign Secretary Dominic Raab tweeted that the deal is “an important stepping stone” in efforts to join a free trade zone in the Indo-Pacific region – the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
Congratulations @trussliz. Great to secure a win-win FTA with our Aussie friends, which also provides an important stepping stone to CPTPP – both opening up enormous opportunities in the Indo-Pacific. #GlobalBritain https://t.co/nwjt4KS86G
— Dominic Raab (@DominicRaab) June 15, 2021
The UK is Australia’s eighth-largest trading partner and Australia the UK’s 20th-largest, with two-way trade worth 26.9 billion Australian dollars ($20.7bn).
Before the UK joined the then European common market in 1973, it was Australia’s most lucrative trading market.
Though further details about the deal have yet to emerge, some official estimates say the agreement could add 500 million pounds ($705.7m) to UK economic output in the long term – a fraction for an economy worth around two trillion pounds ($2.8 trillion).
The deal will be scrutinised by British farmers, who fear they could be forced out of business if the deal eliminates tariffs on lamb and beef imports from Australia.
The UK said British farmers would be protected by a cap on tariff-free imports for 15 years, using tariff rate quotas and other safeguards.
Australian Minister for Trade David Littleproud told 4BC Radio the deal marked a “win for Australian agriculture”.
Australia’s economy is, however, already focused on Asia.
“This free trade agreement is more about symbolism than immediately tangible material benefits,” said Ben Wellings, senior lecturer in politics and international relations at Monash University.