UK signs free trade deal with Australia

December 19, 2021

UK signs free trade deal with Australia

The UK has signed a free trade deal with Australia which it says will benefit consumers and businesses.

Trade Minister Dan Tehan signed the deal in a virtual ceremony in Adelaide with UK Trade Secretary Anne-Marry Trevelyan on Friday morning.

What’s in the deal?

In a huge win for Aussie farmers, the deal will liberalize Australian imports of beef, lamb, Australian wine, sugar, and dairy into the UK, which became free to set its own trade policy after the Brexit process ended in January.

The agreement will scrap tariffs on UK exports, allow young backpackers to visit for longer, and give greater certainty to scientists, lawyers, and other professionals seeking visas, the ministry says.

“This is the most comprehensive and ambitious free trade agreement that Australia has concluded, other than with New Zeeland,” Australian Prime Minister Scott Morrison and Trade Minister Dan Tehan said in a joint statement.

The government said the deal was also a gateway into the fast-growing Indo-Pacific region and would boost the UK’s bid to join the Trans-Pacific Partnership, one of the largest free trade areas in the world.

Ms. Trevelyan described it as “a landmark moment in the historic and vital relationship between our two Commonwealth nations”.

In a BBC interview, she rejected suggestions the deal would harm UK farmers.

She said the deal had “very clear safeguards” and “clear tariff quotas in the first 10 years”, as well as “an overarching safeguard mechanism”.

“The reality is that Australia sends about 70% of its beef and sheep meat to the Asia-Pacific markets,” she said.

In June, Mr. Johnson said the agreement was “important economically” but “more important politically and symbolically”.

“We are opening up to each other and this is the prelude to a general campaign of opening up around the world,” he said.

Both countries say the agreement will also help to buttress their close strategic ties. However, the United Kingdom and Australia were at odds over climate change during the negotiations.

China is Australia’s largest trading partner, but a diplomatic dispute led to Beijing imposing sanctions on a raft of Australian agricultural products last year.

This prompted the Morrison government to urge exporters to reduce their reliance on China.

The UK was Australia’s eighth largest two-way trading partner worth almost $27 billion in 2018.

It was also Australia’s third-largest services trading partner, with Australian service exports valued at $5.5 billion and imports totaling $9.2 billion in the same year.

A free trade deal aims to encourage trade- usually in goods but occasionally in services- by making it cheaper. This is often achieved by reducing or eliminating tariffs- taxes or charges by governments for trading goods across borders.

Trade can also be made simpler if countries have the same rules, such as the color of wires in plugs. The closer the rules are, the less likely that goods need to be checked.

The final terms of the deal will be put before the UK parliament for scrutiny. Legislators can theoretically block a treaty indefinitely, but this power has never been tested, according to a House of Commons Library briefing.

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