The Prime Minister of United Kingdom (U.K.) – Boris Johnson has said that he is open for an Australia-like agreement with European Union (E.U.), in case both the sides fail to strike a post-Brexit deal.
This comes 2 days after Johnson spoke to the President of European Commission – Ursula von der Leyen where they agreed on the importance of finding a post-Brexit deal.
What’s noteworthy is that even Australia is not happy with its ties with the bloc. Australia is eyeing a full-fledged trade deal with the 27-members bloc, comprising of 500 million potential customers.
Australia does not have a trade deal with E.U. and its 15 billion euros exports to the E.U. are subject to tariffs and quotas set under basic World Trade Organisation (WTO) terms. This is compelling Australia to look for a full-fledged trade deal. However, Johnson is happy with such an arrangement.
Johnson had earlier said, “An Australia-style deal would give us full control over our laws, our rules and our fishing waters, as well as the freedom to strike free trade agreements with other countries around the world.”
The E.U. is Australia’s 2nd largest trading partner after China. Australia is E.U.’s 18th largest trading partner. Australia’s exports are dominated by mineral and agricultural goods, while 37% of trade is in commercial services, especially transportation and travel. There are more than 2,360 European companies in Australia with an estimated turnover of €200 billion, providing job to more than 500,000 people. In August 2019, Australian Senator Simon Birmingham, released a list of names that the EU wants to protect as a part of its new trade deal. The list of proposed names included beers, spirits and cheese and meats, which as per E.U. is aimed at protecting the identity of European products from non-European products.
Johnson favours an Australian-style EU deal as it would allow U.K. full control of laws relating to fisheries. E.U. wants access to U.K.’s fishing grounds for its boats and says reaching a fair deal is a pre-condition of a deal. The U.K. says that priority should be given to British boats.
The challenges faced by Australia are numerous. For example, farmers in Australia can export meat to the E.U. at reduced tariffs with two tranches, one for “high quality” and another for “grain-fed” beef. The former is a fixed quantity with a 20% tariff and the latter is tariff-free but is shared with other countries on a first-come first-served basis.
Australia also wants to be free of E.U. tariffs on industrial goods, which currently include a 12% duty on minerals and metals, 10% on wood and paper and 7% on chemicals. It is also seeking reducing in tariffs on agricultural produce such as beef, sheep meat, sugar, cheese and rice.
