London (AP) — On Tuesday, Britain and Australia unveiled the preliminary framework of a free trade agreement that will eliminate tariffs on a wide range of goods. This move comes as the U.K. aims to expand its global connections following its departure from the European Union.
The agreement is expected to enhance exports of traditional British products like Scotch whisky, while also increasing imports of Australian lamb and wine. Crucially for Britain, it will ease barriers to trade in financial and other services. The U.K. anticipates that this deal will pave the way for its participation in the trans-Pacific trade partnership, providing opportunities for increased trade across the Asia-Pacific region.
This marks the first trade agreement that Britain has negotiated independently since its exit from the EU. Previous agreements with nations such as Japan and Canada were based on existing EU deals.
British Prime Minister Boris Johnson and his Australian counterpart Scott Morrison appeared outside Downing Street on Tuesday to emphasize the benefits that both countries will derive from the agreement and underscore the longstanding ties between the two nations.
Morrison stated, “This is an ambitious free trade agreement. This is not a standard cookie-cutter agreement. This is an agreement with great ambition for both countries.”
While both leaders expressed enthusiasm about the deal, specific details remain limited. The U.K. has announced that a final agreement in principle will be published “in the coming days.”
Australia is the U.K.’s 14th largest trading partner, accounting for £13.9 billion ($19.5 billion) in exports and imports last year, according to British government data. This partnership is even more significant for Australia, which ranks Britain as its 5th largest trading partner.
Australian farmers are likely to benefit substantially from this agreement, as agricultural products make up approximately 14% of the country’s total exports. However, this has raised concerns among British farmers, who worry about competing with inexpensive imports from Australia, which has different regulations concerning animal welfare and environmental protection.
British farm groups have reacted cautiously, indicating that they are waiting to review the agreement’s specifics.
National Farmers Union President Minette Batters stated, “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 U.K. farming and merely exports the environmental and animal welfare impact of the food we eat.”
Johnson defended the deal, stating that tariff-free agricultural imports would be limited for 15 years to safeguard British farmers. The government also pledged to increase agricultural exports to Asia and the Pacific.
“I want everybody to understand that this is a sensitive sector for both sides, and we’ve got a deal that runs over 15 years and contains the strongest possible provisions for animal welfare,” Johnson remarked. “But I think it is a good deal, and I think it’s one that will benefit British farmers and British consumers as well.”
Dmitry Grozoubinski, a former Australian trade negotiator who now runs the Geneva-based consultancy ExplainTrade, suggested that the deal’s significance may lie in the precedent it establishes for future trade agreements, particularly for British farmers.
Johnson’s government has been actively pursuing free trade agreements worldwide to stimulate economic growth following Brexit. The United States, with its substantial export-focused agricultural industry, represents the most significant potential prize.
While much attention has been focused on agricultural products during these free trade negotiations, the provisions relating to professional services could have a more profound impact on the British economy.
Last year, Australia imported £5.4 billion worth of services from the U.K., making it the 10th largest market for Britain’s service industry. Services constitute approximately 80% of the U.K. economy.
Catherine McGuinness, policy chair for the City of London Corp., which represents the U.K. financial services sector, stated, “It is encouraging to see services recognized in the Free Trade Agreement, and going forward we are confident there will be continued momentum to strengthen ties in financial and professional services specifically.”
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