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Post-Brexit: What Does The Future Hold For Australian Trade

31.08.2017 Tim Michael
Post-Brexit: What Does The Future Hold For Australian Trade

Britain’s decision to leave the European Union is a major turning point in Europe’s history. Brexit presents many challenges, much uncertainty, and the consequences are complex, says the Minister for Trade, Investment and Tourism, Steven Ciobo. The political turmoil in the UK following the recent cliff- hanger election has thrown another spanner in the works – with Britain’s post-Brexit arrangements with the EU now unclear.

Britain’s decision to leave the European Union is a major turning point in Europe’s history. Brexit presents many challenges, much uncertainty, and the consequences are complex, says the Minister for Trade, Investment and Tourism, Steven Ciobo. The political turmoil in the UK following the recent cliff- hanger election has thrown another spanner in the works – with Britain’s post-Brexit arrangements with the EU now unclear.

Pre-election polls all pointed to a landslide victory for British Prime Minister Theresa May. But the end result – a hung Parliament – has been the opposite to the Brexit mandate the PM expected.

So what does the future hold for Australia post-Brexit?

There is no doubt Britain will be looking for new trading partners and Australia is poised to strike.

Minister Ciobo says Australia wants to move as quickly as possible to negotiate a high-quality free trade agreement when Britain leaves the EU.

There are many other countries that will be keen to do a deal with the UK, but Australia is well-placed to benefit.

Britain has always been an important market for Australian trade, and London has long been a natural base for Australian companies.

Today, the UK is our second-largest foreign investor and our seventh largest trading partner. In 2014 the UK represented 37.4% of Australia’s total exports to the EU.

Australia has always enjoyed a special historical relationship with Britain, both culturally and commercially.

Both countries share strong sporting ties with rivalries in sports such as netball, rugby and, most notably, cricket.

Before the British election, Australian Prime Minister Malcolm Turnbull held preliminary talks with Prime Minister May over a possible free trade agreement.

“We make an attractive trading partner – we’re an open, innovative and pro- trade country with a stable, reliable and prosperous economy,” says Minister Ciobo. “And we’re ready to do business.

“I see great potential for Australia to take our work with Britain to a new level, after the UK departs the European Union.”

Australia is also in the early stages of negotiations for a free trade agreement with the European Union, Australia’s second- largest trading partner and largest source of foreign investment.

With Brexit, the Australia-EU Free Trade Agreement will still be important but by losing the UK as a key ally in the EU, it may become more difficult.

In 2015-16, two-way trade with the EU was worth $95.6 billion and total investment from the EU was worth almost $1 trillion.

The EU is Australia’s largest services export market, valued at nearly $10 billion in 2014. Services account for 19.7% of Australia’s total trade in goods and services, and will be an important component of any future agreement with Europe.

Mr Ciobo says Australia wants to build a deeper economic relationship with both the UK and EU through more and freer trade.

As well as being mutually beneficial, securing new free trade deals sends an important signal globally about the benefits of trade liberalisation, he says.

Earlier this year, Mr Ciobo met with key economic ministers in London, including Secretary of State for International Trade Liam Fox, and Minister of State for Trade Policy Lord Price.

The ministers agreed to establish a bilateral Trade Working Group to scope out the parameters of an ambitious and comprehensive Australia-UK Free Trade Agreement.

But first, Britain must go through the process of formally exiting the EU.

Legal obligations prevent Britain from signing deals while still an EU member, however Australian business is preparing to ramp up trade with their traditional British market.

Trade relations between Australia and the UK are mature and dynamic, with enormous potential, says Minister Ciobo.

Our bilateral trade has progressed from a basic commodities exchange to a highly sophisticated relationship in services and other advanced areas, reflecting the mutual trust between our two confident economies.

Mr Ciobo says Australia will utilise this relationship in areas like attracting fintech investment into Australia, and in helping Australian companies access the UK market.

A potential free trade agreement coupled with the effects of Brexit may also open the door to opportunities for Australian service providers in areas such as healthcare, education and research collaboration.

And of course, Australia’s agricultural industry may also be poised to benefit.

“I believe Australia has much to offer the UK in the post-Brexit period and vice versa,” said Mr Ciobo.

“We are, in short, ideal partners.”
 
*This article was first published on pages 26-27 of Winter 2017 International Business Today Magazine.

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