The best thing to say about the UK kicking off preliminary trade talks with Australia is that they’re a start. In that they show Britain is looking to do business around the world, they’re a welcome signal in the wake of the vote for Brexit. Given that some have taken the referendum to be a sign of Britain slamming the door shut, any talk which counters this false narrative is refreshing. Yet there’s also a danger of overhyping the significance of such a deal. And it’s worth reminding ourselves that signing such an agreement won’t be the answer for all of Britain’s troubles.
The statistics make it clear that a trade deal with Australia would only cover a very small fraction of the UK’s dealings with the rest of the world. Exports from Britain to the EU, were worth around £229bn in goods and services last year; by comparison, exports to Australia tallied up to £7.1bn in 2014, a gap which gives you some idea of the disparity between the two. By this measure, we’d have to trade with Australia for 32 years to match what we’d export to the EU in a single year. This, of course, isn’t to say a trade deal with Australia isn’t worth having; but it helps put it into perspective.
What’s more, whilst Australia is likely to be very keen to put pen to paper, the UK isn’t as important to them as some have led us to believe. The UK might be, until Article 50 is triggered, Australia’s leading trade partner within the EU. But when you take the rest of the world into account, Britain is only Australia’s eighth largest export market; and our trade with Australia is worth less than a tenth of the country’s dealings with China. What’s more, whilst the UK does remain an important market for Australian goods and services, exports to the UK from Down Under have actually been falling – dropping by £0.1bn between last December and January 2016. Of course, this is, relatively speaking, only a small drop but one that signals a hint that Australian businesses rely on the rest of the world much more than they do the UK.
Finally, it’s also worth remembering again that any trade talks will only be preliminary until Britain formally leaves the EU. Australia’s trade minister Steven Ciobo has been in the UK making it clear that the agreement will only be reached ‘when the time is right’. Ciobo has also been emphasising that the EU is likely to be ahead of the UK in the queue for a trade deal. This isn’t an Obama-inspired desire to punish Britain; instead, it’s just a simple fact of timing – Australia has been talking to the EU for longer about this deal, meaning it’s likely to materialize sooner.
A trade deal with Australia will have the benefit, as Ciobo pointed out on the Today show, of making Australian wine cheaper for Brits. It’ll also be a welcome signal of Britain’s intent to continue to do business around the world. But it’s also key we don’t fall into the trap of overhyping this possible deal and instead seeing an agreement for what it is – merely the start of Britain’s post-Brexit plan.
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