A new set of trade deal terms have been offered to Australia by the United Kingdom according to which the two trading partners will phase out taxes on imports over a period of 15 years.
There were reports of a division of in the UK cabinet about the terms to propose to Australia because of concerns of undercutting of beef and lamb farmers of the UK by the much larger producers of Australia.
However after Boris Johnson pushed for unity, the dispute was apparently resolved.
The offer from the UK to the Australian counterpart on Friday was formally made by the UK’s International Trade Secretary Liz Truss. If the terms of trade are accepted by Australia, the result will be quotas – limits – on tax-free trade between the two countries which will be phased out.
There will potentially be hundreds of British cow and sheep breeders who would be going out of business of the UK-Australian trade in meat is freed up, warned the National Farmers’ Union (NFU).
Following Brexit, there has been an urgency of the UK government to strike as many trade deals as possible. Truss wants to finalize a free trade agreement with Australia within the UK hosting the G7 summit of the 7 leading economies of the world in June.
However UK’s Environment Secretary George Eustice had been in opposition to Truss pushing the deal over potential impact of such a deal on British farmers because of removal of import tax or tariffs which are usually charged by a government for imported goods.
The terms of a trade deal were formally put forward to Australian counterpart Dan Tehan at an online meeting on Friday after the differences between Eustice and Truss were apparently resolved at a meeting chaired bvy the prime minister on Thursday.
“We are certainly looking at doing free trade deals around the world. They present a fantastic opportunity for our farmers, for businesses of all kinds, for our manufacturers. We should see these new openings not as threats but as opportunities,” Johnson said speaking on a visit to Portsmouth.
Australia was confident of striking a trade deal with the UK by early June, Tehan said because of the “very positive discussions” with Truss, according to a report by the news.com.au website.
The trade in goods and services between the UK and Australia was worth about £20.1bn for the financial year of 2019-20. Both the trading partners hope that they would be able to significantly expand that trade.
Currently, the biggest goods exports from Australia to the UK include metals, wine and machines. On the other hand, cars, medicines and alcoholic drinks are the primary exports from the UK to Australia.
However the two countries have a small amount of trading in meat. Only about 0.15 per cent of Australia’s beef exports being exported to the UK while about 14 per cent of sheep meat imported to the UK are from Australia.
There will be a “massive impact” on British farms by the removal of the tariffs on these products as players in the British industry will not be able to compete in terms of scale because of the economies of scale achieved by Australia’s vast cattle and sheep farmers, warned NFU president Minette Batters.
“We continue to maintain that a tariff-free trade deal with Australia will jeopardise our own farming industry and will cause the demise of many, many beef and sheep farms throughout the UK. This is true whether tariffs are dropped immediately or in 15 years’ time,” she added.
(Adapted from BBC.com)