27 Mar

'UK trade deal talks to start on 'Brexit day one', says Australian minister' Nick Miller, SMH

Australia wants to start negotiating a trade deal with the UK on 'day one' of Brexit next year and has it ready to put into effect on January 1, 2021, Trade Minister Steve Ciobo said.

Britain's trade secretary Liam Fox supports this ambition, he added.

In a speech at Bloomberg's London HQ on Monday, Ciobo sang the praises of free trade - in what may be interpreted as a swipe at US President Donald Trump’s recent push for new tariffs.

Mr Ciobo encouraged the UK to choose free trade over protectionism as it shapes its trade policy outside the European Union.

“Protectionism destroys wealth and it slows economic growth,” Mr Ciobo said. “We want to see the UK government succeed in its ambition to be a global champion for free trade… a vigorous free-trading Britain that backs its principles with action will be an important influence in Washington too.”

The UK cannot begin formal negotiations on a trade deal with Australia - or anyone else except the European Union - until it leaves the EU on March 29 next year.

Last week the UK struck a deal with Brussels for a two-year ‘transition’ stage after that, during which the UK may sign trade deals, but not put them into effect until the end of 2020.

Mr Ciobo said he wanted to act swiftly on securing a free trade agreement.

Australia's trade minister Steve Ciobo in Whitehall after meeting with his UK counterpart Liam Fox

Photo: Nick Miller

A ‘working group’ was established in September 2016 to lay some of the groundwork for an Australia-UK deal, but it is limited in what it can do before Brexit.

“We should commence formal negotiations on the 30th of March 2019 - on the day that Brexit implementation begins,” he said.

Australia intends to have the trade deal "ready to go on the first of January 2021". Mr Ciobo had discussed the timing with Mr Fox and "he was supportive of that ambition... we are in lockstep in terms of that aspiration," Mr Ciobo said.

He anticipated an ambitious deal that would liberalise trade in services and the digital economy. Agricultural products are also likely to come under the deal.

European Union tariffs are relatively low on machinery and textiles, but are very high on goods such as dairy products, sugars, beverages, cereals and animal products.

The average tariff on agriculture is 8.5 per cent. The UK is yet to start negotiating its post-Brexit trade deal with the EU, and it may end up having to pay EU tariffs, which could mean new opportunities for Australian exporters.

Mr Ciobo warned Britain that free trade required some sacrifices.

“If Britain is serious about taking the opportunity to liberalise its trade and investment settings, then some business sectors will have to make what are sometimes painful adjustments,” he said.

Australia’s experience from the mid-1980s was that opening the national economy made it stronger and gave it new momentum.

“Old industries that no longer made sense, in the emerging world and region that was taking shape, did fall away. Some people lost their jobs or struggled to adjust to work in the new services industries that were created in their place.”

It was the role of government to provide strong social security nets and education and training to help people find new careers.

Last month, the UK’s Policy Exchange think tank released a report - with a foreword written by High Commissioner Alexander Downer - arguing the UK should dismantle almost all trade barriers, unilaterally if necessary, after Brexit.

It argued the British economy “does not have to produce its own food, cars or textiles to be a success”, and while dismantling tariffs could mean less British agriculture and manufacturing, these sectors “would be unlikely to completely disappear”.

Mr Ciobo travelled to London on the new Qantas direct flight from Perth, to meet Britain’s Secretary of State for International Trade, Liam Fox, to discuss a free agreement with the UK and the global trade environment.

He will also meet the Secretary of State for Environment, Food and Rural Affairs, Michael Gove.

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