There was a time in British politics last year when the term ‘Australia-style’ was deeply fashionable. As Prime Minister Boris Johnson sought to navigate the UK’s departure from the European Union and secure a Brexit deal, the prospect of trading with the EU on WTO terms – akin to that of Australia’s trading relationship with Europe – was considered likely and, in some quarters, profoundly favourable (despite Australia’s trade with the EU being far from a free trade arrangement).
Fresh from his success with the Europeans, Boris Johnson and his Government now have a unique opportunity to secure an ‘Australia-style’ deal with none other than Australia itself. However, an Australia-style deal this time round will have to be modelled on Australia’s existing free trade agreements (FTAs) with its plethora of other trading partners – trade deals which deliver a free trade environment.
This week, esteemed British and Australian negotiators entered the fourth round of bilateral trade talks. This is a once in a lifetime opportunity to formalise and solidify our trading relationship, remove barriers to trade and secure an agreement that is beneficial for both parties.
The latest figures from the Department for International Trade indicate the existing relationship is strong but there is room for growth. Total trade in goods and services (exports plus imports) between the UK and Australia was £14.5 billion in the four quarters to the end of Q3 2020. The UK’s Foreign Direct Investment (FDI) footprint in Australia in 2019 was £37.3 billion and Australia’s in the UK £14.4 billion. And yet, Australia was just the UK’s 21st largest trading partner in the four quarters to the end of Q3 2020 accounting for 1.2% of total UK trade.
Exports to Australia span the length and breadth of the four nations of the United Kingdom; 8.2% of total exports came from Scotland, 9.5% from the North West of England and 4.4% from Northern Ireland. UK-AUS trade talks could scarcely present a better opportunity to ‘level up’ the United Kingdom by lowering trade barriers and creating an environment for exporters to flourish.
Welsh hill farmers, Scottish beef producers and their farm union representatives may well express their concern about how reduced barriers to entry might impact their dominance of the domestic agricultural market. But Australian farming groups have made it clear that their objective is to fill the gaps in seasonal supply and meet additional import requirements for high-quality sheepmeat and beef, not eat local farmers’ lunch.
Environmental groups and Members of Parliament may wonder if our regulatory regimes on animal welfare and food standards are compatible. The UK and Australia share the same philosophy, with animal protection enshrined in Australian law. In fact, Australia’s animal health and biosecurity system has been awarded the highest level of competence by the World Organisation for Animal Health (OIE).
Concurrently, as negotiating teams meet virtually to continue these bilateral talks, International Trade Secretary Liz Truss has formally applied to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), whose 11 members include Australia.
Membership of the £9 trillion global trading partnership would be the latest major marker in the UK’s ambition as a sovereign free-trading nation.
In December, Policy Exchange, the think tank of which I am the Chair of Trustees, published a research note describing how the UK’s bid to join CPTPP is “generating momentum”. Bilateral deals with the 11 individual members are likely to smooth the future accession process and I salute Liz Truss for already securing agreements with seven of them.
The immediate task for the UK in securing CPTPP accession is to conclude a comprehensive, trade liberalising, deal with Australia – a deal that would deliver immediate benefits for UK consumers and businesses, without of the impost of tariffs and quotas. I am confident that such an outcome would see the Australian Government give the UK a green light to CPTPP accession.
In the same year that Boris Johnson’s Government hosts the G7 and the COP26 summit, there could scarcely be a better signal of Britain’s place in the world than signing comprehensive trade deals with our closest allies like Australia, while taking progressive steps closer to joining one of the world’s biggest trading blocks.