The United Kingdom, in its quest to reshape its trade policies following Brexit, has ushered in a fresh chapter by implementing its maiden trade agreements with Australia and New Zealand. This development, the government anticipates, will open the gates to more affordable Australian wine and New Zealand kiwi fruits for Britons.
These inaugural agreements signify the UK’s first standalone trade pacts since its departure from the European Union. The Secretary of State for International Trade and President of the Board of Trade, Kemi Badenoch, heralded the commencement of these deals as a significant landmark.
Despite the government’s enthusiasm, some experts remain unconvinced of any substantial economic repercussions. Trade expert David Henig has dismissed these trade pacts as “a bit of a nothingburger,” signaling that the economic effect might be inconsequential.
Broadly, these agreements promise to eradicate tariffs on most goods, simplify some regulatory processes, and foster easier mobility for Britons seeking employment opportunities in Australia and New Zealand, and vice versa.
To commemorate the new alliances, the British government dispatched care packages to Australia and New Zealand. These parcels were filled with products anticipated to see an upturn in exports, such as Welsh whiskey, English gin, and more.
Government projections suggest that these agreements could increase bilateral trade by 53% with Australia and 59% with New Zealand. Nevertheless, the aggregate trade volume with these nations remains relatively small, with Australia and New Zealand accounting for 0.9% and 0.2% of the UK’s trade respectively.
The consensus among several economists is that the economic setback resulting from Brexit may not be easily recuperated by these new trade pacts. Brexit has erected new barriers, affecting about half of all UK trade, primarily with the European Union – a potent economic force of 27 countries and 500 million people. The estimated GDP boost from these deals is only 0.1% by 2035, while Brexit is believed to have deducted 4% from UK’s GDP.
Additional criticism arises from former UK government officials who argue that the agreements favor Australia and New Zealand disproportionately. Meanwhile, British farmers express concerns about potential market saturation due to increased import quotas for Australian and New Zealand livestock products.
Trade deals have been a pivotal part of the Brexit discourse, yet their realization has been sluggish. Despite the UK extending a number of its pre-existing agreements from its EU tenure, and its intent to join the trans-Pacific trade partnership, a major free trade agreement with the US remains elusive. The upcoming visit of Rishi Sunak, the successor of Prime Minister Boris Johnson, to Washington, does not have a trade deal on the itinerary, signifying a cautious approach towards these negotiations.
