UK and Australia sign first brand new post-Brexit trade deal

LONDON — The U.K. and Australia have signed off on the first British trade deal negotiated from scratch since Brexit. 

It does not include a commitment to keep rising global temperatures to 1.5 degrees Celsius as some environmentalists had hoped, and the U.K. made a last-minute concession on agriculture. But the deal will deliver a boost to services and help Britain on the path to joining a trading bloc of Pacific nations. 

In a virtual signing event, U.K. International Trade Secretary Anne-Marie Trevelyan and her Australian counterpart Dan Tehan inked the agreement, a draft of which was shaken on in June.

The deal will allow U.K. firms to bid for an extra £10 billion worth of Australian public sector contracts each year and let services suppliers like architects and lawyers work in Australia without being subject to its changing skilled visas list.

It also removes tariffs on almost all goods — although there are initial protections for sensitive items like beef, lamb and other agricultural products. 

“Our U.K.-Australia trade deal is a landmark moment in the historic and vital relationship between our two commonwealth nations. This agreement is tailored to the U.K.’s strengths, and delivers for businesses, families, and consumers in every part of the U.K. — helping us to level up,” Trevelyan said in a statement. “We will continue to work together in addressing shared challenges in global trade, climate change and technological changes in the years ahead.”

Australian High Commissioner to the U.K. George Brandis said the agreement was “a historic moment for both our countries.” He added: “We made rapid progress on this deal, and we’ve now achieved a gold standard agreement that will see us not only strengthen our economic relationship but also our people-to-people ties.”

Shadow International Trade Secretary Nick Thomas-Symonds, of the U.K.’s opposition Labour Party, was more downbeat. He said it was “notable from the outset … that the government ‘list of benefits’ contains no mention of climate targets or the impact of the removal of import tariffs on U.K. agriculture.”

The British trade department argued the deal would lead to a 53 percent increase in trade between the U.K. and Australia in the long term. Internal economic modeling, which an independent watchdog endorsed, suggested it would add 0.08 percent to British wealth (GDP) by 2035, at which point it could also be delivering a £2.3 billion annual boost to the U.K.

An earlier forecast estimated the agreement would add 0.02 percent to GDP. Both forecasts are much lower than the cost to British GDP as a result of leaving the EU.

The biggest benefit to U.K. growth will be in the services sector, with the manufacturing of machines and cars being the areas set to thrive the most. Overall, the government believes the deal will boost bilateral trade by £10.4 billion a year over the next decade and a half. 

Climate campaigners will be scrutinizing the wording of the agreement on global warming ambitions, following reports Britain caved to Australian demands to junk specific numbers on keeping temperature rises below 1.5 degrees. The U.K. trade department insists the deal is the most ambitious on climate Australia has ever done and rejects the suggestion the absence of the 1.5-degree figure is a weakening compared with other agreements. 

But Sarah Williams of the Greener U.K. coalition of environmental campaigners said the deal “sets a poor precedent” and argued the government had “bargained away climate ambition.”

Meanwhile, farmers in Britain will be checking the small print of the transition to remove quotas on meat and other agricultural imports. The agreement in principle promised to phase the changes in over a decade and a half. 

There was an eleventh-hour dispute over whether the initial quotas on tariff-free meat would include entire carcasses or just cuts. While London conceded to Canberra to allow cuts, the U.K. position is that Britain did not cave but instead brokered a deal involving safeguards around the import weight issue.

The deal is a major stepping stone for Britain on the path to joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, for which its application is pending. “Today we demonstrate what the U.K. can achieve as an agile, independent sovereign trading nation,” Trevelyan said. “This is just the start as we get on the front foot and seize the seismic opportunities that await us on the world stage.” 

* This article was originally published here