The UK has secured its first major post-Brexit trade deal negotiated from scratch after prime minister Boris Johnson and his Australian counterpart Scott Morrison agreed to eliminate tariffs on all UK goods.
A final Agreement in Principle will be published in the coming days following a meeting of the two PMs in Downing Street last night, the government announced.
The agreement will make British products like cars, Scotch whisky, biscuits and ceramics cheaper to sell into Australia, boosting industries that employ 3.5 million people in the UK. The UK-Australia trade relationship was worth £13.9 billion last year and is set to grow under the deal.
British farmers, who have criticised the deal as opening them up to competition from cheap Australian meat, will be protected by a cap on tariff-free imports for 15 years, using tariff rate quotas, the BBC reports.
Farmers in Australia are allowed to use some hormone growth promoters, pesticides, and feed additives that are banned in the UK.
According to the National Farmers Union (NFU), Australian farmers are able to produce beef at a lower cost of production, and could undercut farmers in the UK.
Protection for farmers
Scottish secretary Alister Jack has responded to concerns from Scottish farmers about the deal saying there would be protection for domestic producers, reports the BBC.
"We will have safeguards built in around the amount of product coming so we don’t see the market swamped or dramatic price reductions,” he said, and ruled out hormone induced beef imports.
Boris Johnson said the deal represented global Britain looking outwards and striking deals.
“Our new free-trade agreement opens fantastic opportunities for British businesses and consumers, as well as young people wanting the chance to work and live on the other side of the world.”
Eliminating tariffs on Australian products would save UK households up to £34 million a year, the government claims.
'Pathway to CPTPP'
According to City AM, the deal is expected to add around 0.02% to UK GDP, however its lasting value may be in helping the UK join the CPTPP trade bloc.
Secretary of state for international trade, Liz Truss, said: “The agreement paves the way for us to join the Trans-Pacific Partnership, a £9 trillion free trade area home to some of the biggest consumer markets of the present and future.”
Commitments on market access will open new opportunities for UK services providers and tech firms, the government says.
The UK exported £5.4 billion worth of services, including £1.4bn of insurance and pension services and £780m of financial services, to Australia in 2020. Red tape and bureaucracy will be “torn down” for more than 13,000 SMEs who already export goods to Australia, with quicker export times.
Parliament will have the opportunity to scrutinise the agreement in detail once the text is published, along with an impact assessment and explanatory memorandum, the government said.
According to the FT, the government is under pressure for parliament to have greater powers to oversee trade deals. Currently, deals can only be scrutinised once a deal is complete.