Australian Style Trade Agreement

Thursday 8th April 2021 04.58 Published by

Boris Johnson said the EU had refused to approve the “Canada-style” trade deal it wanted for the UK, so it would now be “more like Australia`s.” “There must be an agreement with our European friends before the European Council on 15 October… If we do not reach an agreement between now and then, I do not see that there will be a free trade agreement between us, and we should accept it and continue. We will then have a trade agreement with the EU, like Australia.┬áThe WTO is the place where countries negotiate international trade rules – there are 164 members and if they do not have free trade agreements with each other, they operate under “WTO rules.” But these major economies are not just relying on fundamental WTO rules – they have all other agreements with the EU to facilitate trade. Australia has trade agreements with the EU, but there is no comprehensive free trade agreement yet; It has been negotiating with the EU since July 2018. Australia does not have a free trade agreement with the EU of 27 nations, the largest common trade area in the world, although its exporters want one. Non-tariff barriers include product standards, safety rules and food and animal hygiene controls. Some of them will be candidates with or without an agreement, but companies that trade with Europe fear that no agreement, in particular, will cause long delays. As a member of the EU, the UK was part of its trading system – the customs union and the internal market. This meant that there were no tariffs on goods traded between the two and that there was a minimum of border controls. Both sides have tried to reach a new free trade agreement that would get rid of tariffs and quotas, but not a new border bureaucracy.

But time is running out. The only bilateral agreement between the UK and the EU would be the withdrawal agreement reached by Boris Johnson in October 2019. In the end, the UK`s trade conditions in the absence of an agreement would be similar to Australia`s, but the broader relationship would not be. The 2019 Conservative manifesto did not mention an agreement on the Canadian or Australian model, but only the obligation to negotiate “a trade deal.” But if there is no trade deal by 31 December, the UK would automatically use World Trade Organisation (WTO) rules. The UK is currently in a transition phase with the EU until the end of the year, which means that it still complies with EU rules and that trade remains the same.

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