Free Trade Deal Agreed Between Australia and the UK

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Mzingaye Ndubiwa

Published Jun 21, 2021

Australia and Britain have confirmed a trade deal. The terms of the agreement were agreed upon, in principle, on the 14th of June, 2021, and the deal is set to act as a precedent for the UK's post-Brexit commercial policy. Specific terms are yet to be negotiated, with a comprehensive deal expected before the end of the year. The deal is also considered to be the first consequential bilateral agreement negotiated by the UK since Brexit.

*Boris Johnson (right) with the Australian prime minister, Scott Morrison, in the garden of No 10 Downing Street in London. (Source: Reuters)*

The trade deal is expected to remove tariffs on British goods through a 15-year transition period. In addition, the liberalization of taxes for certain products such as cheese will be staged to allow agriculture markets to transition. The agreement is also set to enable Britain to enter the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), a free trade agreement (FTA) between 11 countries, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. Membership in the CPTPP will open further trade opportunities for British farmers.

UK livestock farmers wary of trade deal

British livestock farmers have opposed the trade deal between the UK and Australia, as they are wary of cheap Australian imports undercutting local suppliers. UK farmers feel that permitting tariff-free imports of Australian beef, lamb, and sugar would harm the domestic agricultural sector. Another concern of British farmers is the questionable welfare standards in Australia, where beef producers can utilize hormones. Farmers in Australia can use some hormone growth promoters, pesticides, and feed additives banned in the UK. According to the National Farmers Union (NFU), beef production for Australian farmers is low and could undercut British farmers. 65% of Australian farms are between 100 and 400 head of cattle. Farms of more than 5,400 head of livestock account for 30% of the country's beef cattle. Farms with 400-5,400 head of livestock account for 52% of Australia's beef cattle. In comparison, the average beef cattle herd in the UK is 27 animals.

Green groups from the UK have written to the British government to oppose the trade deal, citing Australia's limited global climate action. British green groups are also concerned that the trade agreement between the UK and Australia will push British farmers to compete with Australian farmers by utilizing more environmentally destructive farming methods.

However, the UK government has stated that protections for the British agriculture industry will be included in the deal to ensure that UK farmers are not undercut and that British agricultural standards are not compromised. For example, hormone-fed beef is currently banned in the UK, and the British government has stated that this will not change under the FTA with Australia.

Deal set to boost economic growth

If the trade agreement is concluded before the year ends, it will signify the first significant bilateral agreement entirely negotiated by the UK since Brexit in January 2020. Deals negotiated with Japan and Norway were built on existing arrangements agreed upon while the UK was still an EU member. According to the UK government, estimates show that a free trade deal with Australia would be worth an additional 0.01-0.02% of gross domestic product over 15 years, or GBP 200M-500M (USD 278M-695M) more than 2018 levels.