The UK has agreed with Australia its first big post-Brexit trade deal, with tariffs cut on a range of goods and a significant transition period to abate the concerns of British farmers.
The accord was agreed in principle by prime ministers Boris Johnson and his Australian counterpart Scott Morrison on Monday evening at a Downing Street dinner, despite concerns from the agriculture sector in both countries.
Tariffs will be eliminated on both Australian and UK goods, with a 15-year transition period and quotas. Liberalisation on categories such as cheese will be staggered to help agricultural markets make the transition. Britons will also be able to work and travel more easily in Australia.
“Our new free trade agreement opens fantastic opportunities for British businesses and consumers, as well as young people wanting the chance to work and live on the other side of the world,” Johnson said.
Tariffs on beer and sheep meat will be eliminated after a decade, while those on sugar will be cut over eight years. Dairy product tariffs will be eliminated over five years, with duty-free quotas starting on all goods immediately.
British farmers have feared that concessions allowing tariff-free, quota-free imports of Australian beef, lamb and sugar would seriously damage the domestic agriculture sector. They are also worried about farming welfare standards in Australia, including the use of hormones by many beef producers.
Minette Batters, president of the National Farmers’ Union of England and Wales, cautiously welcomed the deal but noted that scant details were known about what it would mean for farmers.
“It appears that the agreement will include important safeguards that attempt to strike a balance between liberalising trade and supporting UK farm businesses, as well as a reasonable time period to allow UK farmers to adjust to the new trading environment,” she said.
The City also welcomed the deal. Miles Celic, chief executive of TheCityUK lobby group, described the agreement as a “substantial achievement”, adding that it showed “the UK has the ambition and expertise to negotiate real commercial benefits through an independent trade and investment policy”.
Liz Truss, international trade secretary, said on Tuesday it paved the way for the UK to join the Comprehensive and Progressive Trans-Pacific Partnership, a group of 11 countries.
“Membership will create unheralded opportunities for our farmers, makers, innovators and investors to do business in the future engine room of the global economy,” she said.
If the trade deal can be signed before the end of the year, it would mark the first significant bilateral agreement entirely negotiated by the UK since it left the EU in January 2020. Deals announced with Japan and Norway were built upon existing arrangements that were agreed while the UK was still a member of the EU.
Mark Melatos, associate professor at the University of Sydney, said the Australia agreement was significant for the UK, but a double-edged sword.
“On the one hand, it shows that the UK can conclude bilateral trade agreements post-Brexit, albeit with a very close friend, Australia. This is important for political optics,” he said.
“On the other hand, this deal sets a precedent for later, likely more complicated, deals the UK negotiates. Any concessions granted now to Australia will form a baseline for the start of future negotiations with the US, EU etc,” he added.
But Australian farmers have raised objections about a British demand to remove a requirement that UK backpackers work at least 88 days on farms to extend working holiday visas.
David Littleproud, Australia’s agriculture minister, said on Tuesday that Canberra would introduce mechanisms to replace the roughly 10,000 British backpackers who work in Australia’s farm sector with alternative labour if required under the trade deal.
The government has estimated that a trade deal with Australia would be worth an additional 0.01-0.02 per cent of gross domestic product over 15 years, or £200m-£500m compared to 2018 levels.