Could the UK get a deal down under?
How might a new trade deal look between Australia and the UK once Britain leaves the EU? We asked experts for their points of view.
So much of the final shape of the trade relationship between Australia and the UK will depend on how the UK and the EU are functioning after the Brexit split is complete.
54% of the UK’s total exports are made to the EU and produce 20% of British GDP. From an EU perspective, 16% of exports go to the UK, compared to only 15% to the USA. The UK and EU are each other’s most important trading partners.
Their relationship will therefore be unpicked very carefully. But until we know the final shape of that arrangement, we won’t know how it all affects other territories, such as Australia.
'An important part of the conversation'
“The EU piece will obviously be an important part of a conversation with Australia,” said David McCredie, CEO of the Australian British Chamber of Commerce. “This will also be an opportunity for the UK to look with fresh eyes at free-trade agreements with other parts of the world, which they previously never had the opportunity to do. For 43 years the UK’s trade negotiations have effectively been managed from within the EU.”
Ministers at senior levels have already been discussing the big picture. Since Brexit became a reality, the British Secretary of State, Boris Johnson, has met with the Australian Minister for Foreign Affairs, Julie Bishop.
The pair reportedly discussed opportunities for a post-Brexit free-trade deal and Australian Treasurer, Scott Morrison, has come together with Philip Hammond, Chancellor of the Exchequer, at the G20 meeting in China this year.
But it’s the small details that Australian businesses will be concerned with.
“There are interesting things that could happen with trade,” commented Michael Croker, Tax Australia Leader at Chartered Accountants Australia & New Zealand.
“Access to markets is one that business will be watching."
“The idea of being able to have talented men and women from both territories working in the other country is great for our profession, and for many others. We have a long history of sending Australian accountants to the UK, and in particular to London. Continuation and expansion of that access would be very welcome.”
For what it is worth, Boris Johnson has in the past supported easier migration processes for Australians and Brits. Also interesting to Australian businesses will be the matter of access to mainland Europe for those with a base in the UK.
A free-trade agreement, according to David, will likely be a priority for the new British government.
He said: “Given the strong similarities and the historical ties between Australia and the UK, there is a common belief that a free-trade agreement between us should be a priority. It would potentially be an early win in the process of the UK re-engaging with the rest of the world once independent of the EU.
“It is often said by diplomats and politicians that there are no two more similar countries in the world. We have very deep ties and Australian institutions are built from British models.
“There is an interoperability between two, so when it comes to the negotiating of free-trade agreements, it begins with a position of most concepts and rules being the same. Most boxes are ticked very easily.”
Free-trade agreements have been a centrepiece of the Coalition government’s economic policies, with ink still drying on recent deals with Japan, South Korea and China. That will all have been good training for negotiations coming up with the UK and, of course, with EU member nations over the next few years.