UK and Australia sign trade deal that ‘opens new frontiers’ for firms

International Trade Secretary Anne-Marie Trevelyan said it was a ‘landmark moment’ but critics questioned the impact on farmers and the environment.

David Hughes
Thursday 16 December 2021 22:30
Prime Minister Boris Johnson with Australian Prime Minister Scott Morrison (Dominic Lipinski/PA)
Prime Minister Boris Johnson with Australian Prime Minister Scott Morrison (Dominic Lipinski/PA)

The UK and Australia have signed a “landmark” trade deal which will cut tariffs on imports of wine and surfboards and make it easier for young Britons to work Down Under.

The deal, announced by prime ministers Boris Johnson and Scott Morrison in June, has now been finalised at a virtual signing ceremony.

But the agreement, the first to be negotiated from scratch since Brexit, is expected to add little to economic growth in the long run while critics have warned about the impact on British farmers and questioned its commitments on tackling climate change.

Today we demonstrate what the UK can achieve as an agile, independent sovereign trading nation

Anne-Marie Trevelyan

The final deal was signed in a virtual ceremony by International Trade Secretary Anne-Marie Trevelyan on Thursday night, and will now be laid in Parliament for a period of scrutiny.

Ms Trevelyan said: “Our UK-Australia trade deal is a landmark moment in the historic and vital relationship between our two commonwealth nations.

“This agreement is tailored to the UK’s strengths, and delivers for businesses, families, and consumers in every part of the UK – helping us to level up. We will continue to work together in addressing shared challenges in global trade, climate change and technological changes in the years ahead.

“Today we demonstrate what the UK can achieve as an agile, independent sovereign trading nation.

“This is just the start as we get on the front foot and seize the seismic opportunities that await us on the world stage.”

The agreement gives UK firms guaranteed access to bid for an additional £10 billion worth of Australian public sector contracts per year and allows 18-35-year-olds to work and travel in Australia for up to three years at a time, removing previous visa conditions.

Service suppliers including architects, scientists, researchers, lawyers and accountants will have access to visas to work in Australia without being subject to the country’s changing skilled occupation list.

Officials said the deal removes tariffs on all UK exports while making Australian products like Jacob’s Creek and Hardys wines, Tim Tam chocolate biscuits and surfboards potentially cheaper for British consumers.

Ministers also hope it will be a stepping stone to membership of the Comprehensive and Progressive Trans-Pacific Partnership trade bloc.

The deal is expected to increase trade with Australia by 53% and boost the economy by £2.3 billion, the Department for International Trade said.

Official estimates of the impact of a deal have previously suggested that in the long run, it would produce an increase of between 0.01% and 0.02% of gross domestic product (GDP) – a measure of the size of the economy.

This is partly because Australia accounts for only around 1.7% of UK exports and 0.7% of imports and because tariffs on most UK-Australia trade are already low.

Shadow international trade secretary Nick Thomas-Symonds said Labour supported a free-trade deal with Australia but would scrutinise it very carefully.

“Notable from the outset is that the Government ‘list of benefits’ contains no mention of climate targets or the impact of the removal of import tariffs on UK agriculture,” he said.

Liberal Democrat rural affairs spokesman Tim Farron said: “This trade deal fails to protect our farmers in the long term.”

Farming leaders have previously raised concerns about the impact of tariff-free imports from Australia hitting UK producers.

Frances O’Grady, general secretary of the Trades Union Congress, said the deal “poses a threat to working people while contributing almost nothing to our economy” because there was “no effective means to enforce fundamental labour rights” or protect migrant workers from exploitation.

Greenpeace UK executive director John Sauven said: “What people will want to know is whether this trade deal will stop beef from farms involved in destroying habitats for koalas and other endangered species from reaching our supermarket shelves and whether Boris Johnson has used his clout to confirm a commitment to the Paris goal of keeping the global temperature rise to within 1.5C.”

But business groups welcomed the deal and the opportunities for exporters.

Confederation of British Industry president Lord Bilimoria said it “opens new frontiers” and is a “truly comprehensive and modern agreement that plays to Britain’s economic strengths and competitiveness”.

British Chambers of Commerce head of trade policy William Bain said: “There are opportunities for exporters in a new speedier customs process, zero tariffs on the vast majority of UK exports, improved market access on services, free flow of data and generous provisions on labour mobility for under-35s for up to three years.”

Stephen Phipson, the head of manufacturers’ organisation Make UK, said: “Achieving a new preferential trade arrangement with Australia is welcome for Britain’s manufacturers who will benefit from day one with tariff-free access on goods sold and witness improvements in business mobility between the two countries.”

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