The first major trade deal, post-Brexit, has been signed. The new trade agreement, between the UK and Australia, will see the two economies transacting freely with each other. UK sectors such as vehicle manufacturing, whiskey, and biscuits are likely to benefit heavily, while Australia will enjoy free access to the UK’s food market, with no tariffs or limits, making it very lucrative for Australian food producers. The UK too will gain access to Australia’s markets and British citizens will be able to live and work more freely in Australia.
Overall, the deal appears to be mutually beneficial. For Australia, it may also help to ease some of the pressure the country is under as a result of tensions with China. For over a year now, Australia’s main exports to China have been subjected to various tariffs and restrictions; wine, beef, barley, and coal have all been affected. The deal will also pave the way for the UK to join wider trade agreements in the Asia Pacific region.
What Could Go Wrong?
While the deal is mutually beneficial, the UK’s farming industry could end up being negatively impacted. Challenges may emerge when UK farmers have to compete with Australian products. Costs and thus prices of farm products in the UK are high, while Australia enjoys lower costs and major economies of scale; 8 of the 10 largest farms in the world are in Australia. Some members of the UK National Farmers Union believe that this new trade deal will seal the fate of small family farms, sending them into steep decline.
Some concerns have also been raised within the UK with regard to Australia’s relatively lower food and animal welfare standards. For example, hormone-injected beef is banned in the EU, so pre-Brexit, Australian suppliers had to meet this requirement. However, now that may no longer be the case.
On the flip side though, sectors catering to Australia’s main imports from the UK will flourish. These include cars, medicines, and alcoholic beverages, and employ over 3.5 million people in Britain. Thus, these areas of the economy can expect to see new opportunities emerge. Regardless, as this trade deal is likely to set the tone for future post-Brexit agreements, one thing is clear; there will be winners and there will be losers in Britain’s post-Brexit economy.
