In July, when congratulating Theresa May on her appointment as British Prime Minister, Malcolm Turnbull sounded a trifle eager, offering to start talks on a Free Trade Agreement ‘as soon as possible’? Trade Minister Steven Ciobo has now brought some reality to the time dimension. A deal is many years away.
Greg Earl covered this topic neatly here. Before Britain and Australia can have any substantive discussion, not only does Britain have to leave the European Union, but it first has to work out (and then negotiate) what it wants for the 50% of its trade which currently goes to Europe. Only then will Britain be talking seriously with non-EU countries. Australia, number 21 on the list of Britain’s most important export markets, will be a low priority for a bureaucracy bereft of trade negotiators.
That gives us plenty of time to think of the ways we might benefit from an FTA with Great Britain (or perhaps a smaller United Kingdom). The list is pretty skimpy. Urged on by Japan, Britain will probably end up with a preferential trading relationship with Europe (at least as close as Canada’s FTA with the EU, and perhaps as close as Switzerland’s near-seamless goods-market integration). Britain’s need to keep its closest links to Europe open and preferential will distort any deal it does with other countries. Australia would have the worst of all worlds; obtaining imports from a preferred supplier rather than the cheapest source, while still facing discrimination in Britain’s market from Europeans who are likely to retain competitive advantage.
What positive benefits could Britain offer? Certainly not to accept agricultural exports from Australia: half a century in the Common Agriculture Policy has fostered a hugely-protected domestic agriculture, which can’t be dismantled any time soon.
What about immigration for all of those Australians who still see London as the embodiment of ‘going overseas’? In the unlikely event that Britain restricts this path, it would be in Australia’s interests that our best emigrants looked more boldly to other regions where their subsequent experience would later be more useful to them and Australia – especially in the dynamic economies of Asia.
And there is the lesson we should have learned from the Australia/United States FTA. Once you get into detailed negotiations on an FTA, politicians are eager to claim advantage and plaudits from concluding a deal, thus removing the most important bargaining card from the hands of our negotiators – the ability to refuse to sign on to a dud deal.
Photo coutesy of Flikcr user Visit Britain