Britain's Prime Minister Boris Johnson (right) greets Australia's Prime Minister Scott Morrison at 10 Downing Street in London on June 14, 2021. (ALBERTO PEZZALI / AP)
CANBERRA/LONDON – Britain and Australia announced a free trade deal on Tuesday which the British government hailed as an important step in building new trade relationships following its departure from the European Union.
Britain said cars, Scotch whisky and confectionery would be cheaper to sell in Australia because of the agreement, which removes tariffs and reduces red tape. Australia said it was a "great win" for Australian agriculture.
The free trade agreement is the first bilateral trade accord Britain has negotiated from scratch since leaving the EU last year
The deal is the first bilateral trade accord Britain has negotiated from scratch since leaving the EU last year. The government sees it as an important piece of its post-Brexit strategy to shift Britain's economic centre away from Europe and seek new opportunities in higher-growth Indo-Pacific nations.
Australian Prime Minister Scott Morrison and Johnson overcame sticking points during talks after the Group of Seven (G7) meeting in Britain over the weekend, which Morrison attended as a guest.
"I think this is important economically, there's no question about that … but I think it's more important politically and symbolically," Johnson said. "We're opening up to each other and this is the prelude to a general campaign of opening up around the world."
Britain is Australia's eighth-largest trading partner and Australia is Britain's 20th largest, with two-way trade worth A$26.9 billion (US$20.7 billion).
"This is the most comprehensive and ambitious agreement that Australia has concluded," Morrison said.
Pending parliamentary approval from both sides, the deal is likely to be in force from July 2022.
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Prior to Britain joining the then European common market in 1973, Britain was Australia's most lucrative trading market.
The full agreement is yet to be published. According to British official estimates, it could add 500 million pounds to the country's economic output over the long term, a small fraction for an economy worth around 2 trillion pounds.
This is the most comprehensive and ambitious agreement that Australia has concluded.
Scott Morrison, Australia's prime minister
Australian Trade Minister Dan Tehan said the deal would give Britain market access to "high quality, well-priced Australian products," Xinhua reports.
Bigger prize
The bigger economic prize could be the precedent the deal sets for freer access in trade that allows Britain's services sector to export financial, legal and other professional services.
"It is a fundamentally liberalizing agreement that removes tariffs on all British goods, opens new opportunities for our services providers and tech firms, and makes it easier for our people to travel and work together," British trade minister Liz Truss said.
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The deal will be scrutinized 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 government said British farmers would be protected by a cap on tariff-free imports for 15 years.
Australian Minister for Trade David Littleproud declined to reveal details but said Australian farmers would benefit from the deal.
"Overall, this is going to be a great win for Australian agriculture," Littleproud told 4BC Radio.
Britain's National Farmers' Union said it would need to see the details of safeguards and how they could be deployed if the British market became flooded with Australian produce.
"The ultimate test of this trade deal will be whether it contributes to moving farming across the world onto a more sustainable footing, or whether it instead undermines UK farming and merely exports the environmental and animal welfare impact of the food we eat," NFU President Minette Batters said.
Australia and Britain formally launched negotiations for the FTA in June 2020.
Tehan and Truss hailed a significant breakthrough in April, but talks stalled again after the British agriculture sector pushed back against tariff-free access to its market for Australian red meat exporters.
With the dispute resolved, Australian Treasurer Josh Frydenberg said the deal would benefit both countries.
"Now after Brexit it's really important for both countries to seize this opportunity and put together a deal that will be mutually beneficial," he said.
With Xinhua inputs