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  • John McDonnell

UK FTA better than a poke in the eye

Australian Prime Minister Scott Morrison (left) and UK PM Boris Johnson at Cornwall, UK during the G7 summit

Fran Kelly was interviewing the AFR’s Phil Coorey on Wednesday’s Radio National breakfast when she commented that the UK FTA didn’t amount to much.

“Well,” said the phlegmatic Coorey, “it’s better than a poke in the eye.”

In fact, it’s a lot better than a poke in the eye. It has given our beef and sheep-meat producers everything they wanted and expanded the opportunities for cheese exporters.

The deal also includes significant concessions for digital technology and services producers although the details of some of the deals are yet to be worked out, and the public won’t see them until the agreement is tabled in parliament.

The British negotiators adopted an interesting approach of taking bits and pieces that they liked from other trade agreements Australia had entered into and using them to formulate the basic text.

Australians under 35 will be able to get working visas so they can spend three years working in the UK and UK backpackers will be able to extend their stays in Australia for up to three years without having to go fruit-picking for 88 days. This will be a boon to the IT sector, which won’t need to send young British tech workers on fruit-picking leave in order to renew their visas.

British PM Boris Johnson said in a statement shortly before a press conference with Australian Prime Minister Scott Morrison:

"Today marks a new dawn in the UK's relationship with Australia, underpinned by our shared history and common values."

This was probably a more accurate statement than the later one describing the agreement as “the gold standard for free trade agreements”.

It’s nothing of the sort.

Article 24 of the General Agreement on Tariffs and Trade, which defines a free trade agreement, says that substantially all the trade between the two countries must be free of tariffs and restrictive regulations of commerce.

The schedules to this agreement are full of tariff quotas and restrictive regulations of commerce, many of them a hangover from Britain’s membership of the EU.

An example is the tariff quotas for beef. Starting on 1 July 2022, Australia will be able to send Britain 25,000 tonnes of tariff-free imports, with the quota rising to 71,000 tonnes over 10 years. After that, beef and sheep-meat will be duty-free but subject to potential safeguard action if British farmers suffer loss or damage from imports.

Quotas will be imposed on sugar for 8 years and dairy for 5 years.

According to the Meat and Livestock Corporation, the beef quotas suit Australian meat exporters because 25,000 tonnes is about the limit of the premium product that is currently available.

Nevertheless, deals like this don’t amount to free trade.

Mr Morrison told the media that the deal was:

"...the most comprehensive and ambitious agreement that Australia has concluded.
"Our economies are stronger by these agreements.
"Movement of people, movement of goods, movement of services – this is what underpins the strength of advanced economies and liberal democracies."

Mr Johnson said that British farmers would be protected:

"We're opening up to Australia but we're doing it in a staggered way, and we're doing it over 15 years.
"We're retaining safeguards and making sure that we have protection against sudden influxes of goods."

Australia and the UK are still yet to officially sign the agreement and still need to finalise some elements, including the legal text, but the deal has been agreed to in principle.


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