New year, new opportunities

As Trade Minister Dan Tehan notes, Boris Johnson’s historic success in finally bedding down a post-Brexit trade deal with the EU, ahead of the December 31 deadline, opens up important opportunities for Australia. The doomsayers maintained it could not be done but 4½ years after the referendum in which British voters unequivocally expressed their wish to reclaim their country’s sovereignty from the Brussels bureaucracy, the British Prime Minister has delivered. The road has been rocky but British voters finally have what they supported. Mr Johnson, to his credit, has succeeded while dealing with the immense challenges the UK faces with the resurgent COVID-19 pandemic.

The trade deal is testimony to his unrelenting determination to keep Britain trading with Europe, despite leaving the EU. The country is also free now to strike independent trade deals with countries such as Australia and the US. This changed global trade environment, at a time when nations are seeking to rebuild post-COVID, provides Australia’s negotiators with a renewed urgency to achieve the free-trade agreements they have been working on with Britain and the EU. They should lose no time in finalising them.

The breakthrough comes as Australia is intent on diversifying export markets. Trade conflict with the Chinese leadership is deepening, with China apparently prepared to leave citizens shivering below freezing for want of electricity powered by our coal.

Mr Johnson has made it clear he wants to nail down free-trade deals with the US and Australia as soon as possible after the start of the new year, which will mark the end of the transition phase of Brexit. He missed the chance to strike a deal with the Trump administration and will now have to wait until the new Biden team is in place.

The UK already is Australia’s seventh-largest trading partner, with two-way goods and services trade valued at $30.3bn in 2018-19. The UK is also Australia’s second-largest source of foreign investment. Even with a new free-trade agreement, Australian agricultural exports to the UK are unlikely to reach the levels they achieved before Britain joined the EU in 1973 and high tariffs and trade barriers were imposed upon Australia. But as the China door closes, at least for now, opportunities will open up in the UK and the EU for wine, beef and other primary exports currently being red-carded by Chinese malevolence.

In the free-trade agreement with the UK being negotiated, Australia is seeking rules that increase opportunities for Australian businesses investing in the UK market. These were not available while the UK was a member of the EU. The deal will also ease rules for UK investment here. Australia, concurrently, is negotiating a free-trade deal with the EU, our third-largest trading partner and source of foreign investment, with two-way trade valued at $75bn in 2019. A free-trade agreement would enhance opportunities for Australian goods and services in a 27-nation market of more than 450 million people.

In Britain’s protracted negotiations, Mr Johnson did not secure everything he promised in the 2016 referendum, but he has succeeded where Theresa May failed abysmally. The 1246-page agreement with the EU will allow Britain tariff- and quota-free access to the EU’s single market for goods. This will not, Mr Johnson conceded, be frictionless. There will be new Customs and regulatory checks that will lead to disruption at the border. British passport holders will face checks and controls, including the need for visas when visiting Europe. He also had to give ground on the EU being allowed to fish in British waters. There will be a goods border in the Irish Sea between Britain and Northern Ireland. This is because the deal keeps Northern Ireland in the EU’s single market, preventing a hardening of the border between Northern Ireland and the Republic of Ireland.

The downsides do not detract from the importance of restoring British sovereignty and freeing the UK from Brussels’ diktat. December 31 will see the UK regain the ability to set its own labour, environmental and other regulations, without Brussels’ interference. It will see the end of interference by the European Court of Justice in British judicial decisions, which caused widespread outrage, as did the stream of EU citizens such as Romanians migrating to the UK, and the tendency of illegal immigrants from outside Europe to take advantage of relaxed EU borders to slip from nations such as Italy into Britain. Such issues were keenly resented in Britain, and contributed much to the Brexit vote result.