For Brexit supporters, Tuesday, June 15 will have been a symbolic day: for the first time since leaving the European Union (EU), the United Kingdom has signed an independent free trade agreement, in this case with Australia. It is, for now, only an agreement in principle, the details of which are not published, but Downing Street does not hesitate to qualify it “Historical”.
“This agreement shows what can be achieved as a sovereign nation”, underlines Liz Truss, the British Minister for International Trade. Before Brexit, trade policy was the prerogative of the European Commission, since it applies to the entire single market. During the Brexit referendum campaign in 2016, the “Brexiters” brandished possible independent trade deals as one of the main reasons for leaving the EU.
Basically, however, no one dares to assert that this agreement will mark a turning point. According to the forecasts of the British government itself, in an optimistic scenario, the agreement with Australia could cause an increase in the gross domestic product of the United Kingdom of… 0.02% over fifteen years. “0.00% is more realistic”, replies David Henig, trade specialist and director of the UK Trade Policy Project. Australia is too far geographically to be a major trading partner. Trade between the two countries amounts to 13.9 billion pounds sterling (16.1 billion euros) per year, or less than 2% of British trade.
Reduced or eliminated customs duties
London assures that the agreement will benefit a few sectors (the list of which is not specified at this stage) for which customs duties must be reduced or eliminated. In addition, an agreement allowing young Britons to obtain work permits in Australia, already in place for those under 30, will be extended to those under 35.
On the Australian side, the main victory concerns the removal of tariffs on imports of beef and lamb. With its gigantic farms, some exceeding the size of Belgium, and its sunny climate, Australia is able to produce meat at an unbeatable price.
The subject has caused great concern among British farmers. He also deeply divided Boris Johnson’s government, with several ministers opposing this gift to the Australians. A compromise was found, with the introduction of a very long transition period of fifteen years before the full entry into force of the agreement. Until then, quotas will be set on the import of meat. Joe Spencer of the accounting firm MHA MacIntyre Hudson breathes a sigh of relief.
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