Information is key as UK free trade agreement defies the sceptics

Liz Truss and Dan Tehan earlier this year. Picture: Twitter

They said Brexit wouldn’t happen. They said an Australian European FTA would happen before a British one. They said Australia’s stand on carbon emissions would cruel an Australian UK trade deal. They were wrong.

For the true believers, the signing of the free trade agreement by Trade Minister Dan Tehan and International Trade Secretary Anne-Marie Trevelyan early on Thursday morning is a watershed.

The real win is not the trade, it is the underpinning of a tsunami of knowledge exchange and investment between Australia and the UK, and also within the newly formed AUKUS.

This is the week that Australia scored an FTA with Britain and Caroline Kennedy as the new US ambassador.

It is true that after marathon negotiations this year, the UKFTA almost stumbled ahead of the finish line. In Britain a cabinet reshuffle in mid-September swapped out Trade Secretary Liz Truss for Anne-Marie Trevelyan and there were media mutterings about climate and agriculture ahead of COP26.

Bizarrely it was a Covid-19 intervention that got the deal over the line. In late November Dan Tehan flew Qantas to London on his way to the WTO weekend meetings in Geneva but further meetings for the following week in Geneva were cancelled and he found himself with a spare day or so back in London.

Tehan suddenly had the time to talk again to Trevelyan face-to-face and to break the impasse between negotiating parties. It is understood that outstanding items were more around definitions and interpretation of what had been broadly agreed. In all complex trade deals change has ramifications – and nothing is agreed until everything is agreed.

The final deal removes tariffs for 99 per cent of Australian goods to the UK, around $9.2bn in value, but far more interesting is what the deal means for skills mobility, data and digital capability and cross-border investment.

The services sector in Australia generates almost 70 per cent of GDP and employs around 80 per cent of all Australians. The UK is Australia’s third largest services trading partner. Again, think of this in the context not just of the AUKFTA but also AUKUS.

Australian British Chamber of Commerce CEO David McCredie was in Adelaide as the FTA was signed, visiting the Australian Institute of Machine Learning at Lot 14. For McCredie, skills mobility is the most exciting part of the new agreement.

“When you look at AUKUS, one part is the submarine deal. But more important are the areas of cyber, artificial intelligence and quantum,” he says.

“We have people here doing incredible stuff. This give us the opportunity to do the work and then share experiences and understanding.”

The free trade agreement presents upside in renewable energy, health and infrastructure development where in many cases, the UK is ahead of Australia.

Digital trade will be boosted by the liberalisation of data flows, e-trade and the commitment to establish cross-border digital identity frameworks. And on investment, FIRB thresholds for UK-originated investment have been raised and requirements for Australian companies expanding into the UK are eased. Australia and the UK are each other’s second largest investor.

In Britain the FTA is the first after Brexit to be negotiated from the ground up and is a good news story for Prime Minister Boris Johnson as he battles a number of issues on the home front including a lost by-election on Friday.

For Australia the most important forces that underpin AUKUS and Australia’s low carbon technology partnerships will be greater people mobility, recognition of qualifications, and ease of investment.