Britain hopes to reach a trade agreement with Australia after G7

Britain’s goal is to sign the first major post-Brexit trade agreement with Australia shortly after the upcoming G7 summit, as a major Pacific trade group formally approved Britain’s application to start negotiations.

Senior Whitehall officials stated that negotiations between the UK and Australia are nearing completion, and a provisional agreement was “drawn” within the week starting on June 14 after the Cornwall G7 summit. Australian Prime Minister Scott Morrison will attend a gathering of Western leaders as a guest of British Prime Minister Boris Johnson on June 12.

On Wednesday, the Comprehensive Progress Agreement for the Trans-Pacific Partnership (CPTPP) approved the United Kingdom to begin the negotiations, further indicating that a trade agreement with Australia is about to be finalized. A person close to the negotiations described the agreement with Canberra as an “important stepping stone,” which is a founding member of the Group of Eleven.

A senior insider in Downing Street confirmed that Morrison will stay in the UK for bilateral talks with Johnson one week after the G7 meeting.

People close to each other said they hope that the leaders of the two countries will agree in principle to the Anglo-Australia agreement. An official said: “Everyone hopes it will happen by then.” This will be the first major trade agreement after Brexit. It is not an “extension” of the existing agreement enjoyed by the United Kingdom as a member of the European Union.

The signing of the Anglo-Australia trade agreement will be seen as the political gospel of Liz Truth, the British Secretary of State for International Trade, and will consolidate her reputation as one of the rising stars of the Conservative Party.But it also has risks political Some cabinet members worried that this would trigger strong opposition from British farmers. They warned that if their Australian counterparts were granted duty-free access to the British market, it would cause serious damage.

According to Conservative Home, a website favored by the party’s grassroots, the 45-year-old is at the top of its rankings. Rank Served as cabinet minister for four consecutive months. The website reports that she has a net approval rating of 89 points among its members.

ConHome’s editor Paul Goodman said: “It’s difficult for a member like a minister to play a role in politics. But Leeds has been reaching a large number of trade agreements. The fact that almost all of this has been reversed does not exist. Does not exist either.”

Terrass’ growing image and eager use of social media have caught the attention of some of her colleagues, who some call it “enthusiastic self-promotion.” Another senior Conservative party said that this behavior made them doubt whether the Ministry of International Trade should be renamed the “Instagramming Truss Ministry.”

A senior DIT official warned that the sensitivity of agricultural issues means that the UK will not rush to reach an agreement with Australia. “We are in the final stage, but one of the sticking points is agriculture,” the person said. “If you have to postpone a transaction in order to make the right transaction, then so be it.”

People familiar with the negotiations said that the transition period for the introduction of new trade terms is another sticking point. “Australia is reluctant to wait 10 or 15 years to implement the agreement,” said a senior British official.

The bar chart of major UK exports to Australia in 2019 (US$ million) shows the trade between the UK and Australia

Despite Truth’s fanfare, the free trade agreement with Australia has little impact on the British economy. The government’s own estimates indicate that it will increase GDP by an additional 0.01% to 0.02% within 15 years.

In the 12 months to March 2021, the United Kingdom exported approximately 4.5 billion pounds worth of goods to Australia, 139 billion pounds to the EU, and 45 billion pounds to the United States.

Services exports in 2020 are slightly higher, at 5.4 billion pounds. But last year’s total exports of goods and services still accounted for only 1.7% of the total UK exports, making Australia the 14th largest export destination for the UK. In 2020, Australia’s goods and services accounted for less than 1% of total UK imports.

Like the Australian deal, Truss is also eagerly pursued The members of the CPTPP, which include fast-growing economies such as Mexico, Malaysia, and Vietnam, and mature regional players such as Japan, Australia, New Zealand, and Canada, are the Johnson administration’s post-Brexit “Global Britain” agenda.

The bar chart of the share of UK merchandise exports by destination (%) shows that the trade between the UK and CPTPP countries is relatively small compared to the trade with the EU and the US

The UK moved quickly and submitted an application to join the European Union within a few weeks after the Brexit transition period that ended in December.

Australian Trade Minister Dan Tehan welcomed the start of the UK’s accession to the negotiations. He said on Twitter: “By joining a high-quality, ambitious economy, the economic and strategic weight of the’CPTPP’ will be strengthened.”

Truss said that it is “good news” that the joining process has begun, describing the CPTPP as a “vibrant free trade zone.” Truss added that the British plan will be submitted to Parliament before formal negotiations begin.

The 12-month rolling sum (billion pounds) histogram shows that UK exports to CPTPP countries are dominated by Canada and Japan

In addition to setting the negotiation objectives of the CPTPP negotiations, the government also intends to issue an assessment of the economic impact of Britain’s accession to the European Union.

Professor Michael Gasiorek, Director of the UK Trade Policy Observatory, University of Sussex, caveat “The bargaining power here is mainly in the hands of CPTPP countries. For these countries, the UK market is not very important.”

He also pointed out that in bilateral negotiations, the United Kingdom can obtain a better agreement than the many service exceptions in the CPTPP. He concluded that “in general… the economic benefits of Britain’s accession to the CPTPP do not seem to be high”.

In the 12 months ending in March 2021, the UK’s merchandise exports to 11 CPTPP members were worth 25 billion pounds, accounting for 8% of the total UK merchandise exports and more than five times the export to the EU.

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