Britain open to Australia-style EU trade deal but Canberra wants more

Sydney

AS Britain's negotiations with the European Union (EU) on a post-Brexit trade deal go down to the wire, Prime Minister Boris Johnson says his country could trade with the bloc on similar terms to Australia, if no agreement is reached.

But Australia itself is far from happy with its arrangements with the EU and is pushing for the better market access that only a fully-fledged trade deal with the wealthy 27-member bloc and its 500 million potential customers would bring.

Now, the bulk of Australia's 15 billion euros (S$24.5 billion) exports to the EU are subject to tariffs and quotas set under basic World Trade Organization (WTO) terms.

That is why Australian exporters are backing Canberra's moves to strike a new free trade agreement (FTA) with Brussels so they can get the certainty they need to invest and plan.

"If they are emulating our current access to Europe, it is a fairly fractured and limited access, so it's an interesting one they would like to copy," said Andrew McDonald, director of NH Foods Australia, a Japanese-owned beef producer based in Sydney with three processing facilities in eastern Australia.

Britain's aspirations for its future trading relationship with the EU have been gradually whittled down as disagreements between the two have emerged in often prickly negotiations following Britain's exit from the EU on Jan 31 next year.

Attempts by former premier Theresa May in 2017 to secure a "bespoke" deal with the EU were given short shrift in Brussels. Her successor Mr Johnson acknowledges any deal would have to be based on precedents and has cited the EU's tariff-cutting 2014 agreement with Canada as a possible model.

As talks stalled this year, Mr Johnson said Britain could also live with an Australian-style arrangement. Given that Australia does not have a free-trade agreement with the EU, domestic critics say the phrase is simply a euphemism for a no-deal.

On Sept 7, Mr Johnson repeated the view that an Australian-style EU deal would be a "good outcome" for Britain and this has become the government line. "A negotiated outcome remains our clear preference. However, whether we trade with the EU on terms similar to Canada or Australia, we will be reclaiming our independence as a sovereign nation at the end of the transition period, which is what the British people voted for," a government spokesman said.

"An Australia-style deal would give us full control over our laws, our rules and our fishing waters, as well as the freedom to strike free trade agreements with other countries around the world."

In Australia's case, the lack of an EU trade deal means falling back on WTO terms that impose a variety of restrictions.The former is a fixed quantity with a 20 per cent tariff and the latter is tariff-free, but it is shared with other countries on a first-come first-served basis.

Canberra wants to get rid of all EU tariffs on industrial goods, which currently include a 12 per cent duty on minerals and metals, 10 per cent on wood and paper, and 7 per cent on chemicals.

It is seeking to do the same for agricultural exports such as beef, sheep meat, sugar, cheese and rice, which Canberra says are significantly constrained by EU quotas. It recognises, however, that negotiations will be difficult for farm produce. Australia's foreign and trade ministry cites other advantages of a deal such as less red tape and alignment with EU's high standards on sustainable development. REUTERS