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Britain on the Back Foot in the Second Round of Australia-UK Trade Negotiations

28 Aug 2020
By Kiara van Hout
 Prime Minister Boris Johnson inside No. 10 Downing Street filming his message to Australia to mark the start of the trade talks, on 15 June 2020 
Source: Andrew Parsons,

The UK’s lack of progress in trade talks with the US or the EU makes a deal with Australia more appealing than ever. Prime Minister Boris Johnson’s domestic political woes will make him keen for a win to show the public – providing opportunities to advance Australian objectives.

From 29 June to 10 July 2020, Australian and British negotiators embarked on the first round of virtual negotiations for a possible Australia-United Kingdom free trade agreement. One might have thought that the United Kingdom already had its hands full with two higher-profile sets of ongoing negotiations: namely, the ticking time bomb of its trade deal with the European Union, and trade talks with the United States. Quite so.

One of the jewels in the would-be Brexit crown was the promise of freedom from the EU’s exclusive responsibility over trade policy under Article 207 of the Treaty on the Functioning of the European Union. Brexit would allow the UK to “take back control” over trade and other matters. The UK could strike its own trade deals without regard for EU regulations. As the UK Department for International Trade indicated in a policy paper, “a free trade agreement (FTA) with Australia is part of delivering the government’s top strategic trade priority of using our voice as a new independent trading nation to champion free trade.” Yet more strategically important to the UK are the deals that it has sought to strike with the US and the EU with its newfound freedom.

It will come as no surprise that the reality has not been so rosy. The third round of negotiations towards a US-UK trade deal commenced on 27 July 2020, but there is now no hope of achieving a deal before the presidential election in November. Days before the commencement of Australia’s negotiations, the US Ambassador Robert Lighthizer told a congressional committee that their UK deal was beset by “very, very fundamental issues” and “unlikely” to reach a conclusion by November. The UK has now abandoned the possibility of a comprehensive deal by the end of this year.

The complete picture of the circumstances in which the UK finds itself is a dreary one. A US-UK trade deal anytime soon is out of the question. The Brexit clock continues to tick as the country hurtles towards the end of the transition period on 31 December, risking departure without a deal if it cannot resolve its ongoing disagreements with the EU as trade talks resume. The seventh round of Brexit talks, which ended on the 21 August, are the last scheduled. An agreement must be reached by October at the latest in order to be ratified in time. Both sides are reported to be hopeful, but substantial breakthroughs are far from clear. It is still unclear that the UK will walk away with a satisfactory deal, if any.

Meanwhile, a YouGov poll on the 12 August showed Opposition Leader Keir Starmer overtaking Prime Minister Boris Johnson as the preferred prime minister for the first time since Starmer won the Labour leadership in April. Mismanagement of the pandemic has translated into dwindling domestic support for Boris Johnson and his government, as the United Kingdom has experienced the highest level of excess deaths from COVID-19 in Europe. The government was also slammed recently when the algorithm used to predict A-level results resulted in 40 percent of students’ results being downgraded, causing many students to miss conditional university offers – the Department of Education has announced a U-turn triggered by public outrage.

The relevance of this series of unfortunate events is that the UK government is in desperate need of a win. Memories of the Conservative Party’s landslide victory in the general election have well and truly faded in light of all that has followed. Now, Prime Minister Johnson will be eager for a victory to sell to the public. The UK government is uniquely desperate for a piece of paper to wave around and restore public approval, especially if it can be used to sell a more optimistic vision of economic recovery post-pandemic.

Enter the Australia-UK Free Trade Agreement. Australian negotiators have an opportunity to capitalise on the UK’s trade deal dissolutions and domestic woes. In particular, they might be able to advance some of Australia’s more challenging objectives. The Department of Foreign Affairs and Trade have highlighted one objective as expanded trade in goods, including in the agricultural sector. This is not an easy sell, with the British farm lobby historically opposed to Australian agricultural exports in sensitive industries such as beef, lamb, and sugar. Any gains that Australian negotiators could make would be impactful. The Australian agricultural sector has faced several recent challenges, including the imposition of Chinese tariffs and bans on some agricultural exports in May, and COVID-19-related impacts on some industries due to reduced demand or disrupted production. Australia’s relatively strong food safety standards mean that chlorinated chicken and like products will probably not become sticking points for the UK, in contrast to challenges encountered in negotiations over US agricultural exports.

With regards to services, much can be done to improve visa access and flexibility for Australian professionals. Free movement of the likes shared by Australia and New Zealand is unlikely to be on the table, stated Australian Minister for Trade Simon Birmingham earlier in the year. But as Australia’s third largest two-way services trading partner, accounting for a 7.7 percent share ($14.7 billion), even a simplified and more flexible process would be warmly welcomed in financial and professional quarters.

It is difficult to imagine Australia having a stronger position going into the second round of negotiations in September. With the UK far keener to achieve a deal that they can sell as a victory to the British public, Australia finds itself with a chance to advance its objectives – including tackling tricky agricultural tariffs. A more ambitious agreement that might have been contemplated six months ago would be some consolation for the economically challenging present and future that we find ourselves saddled with.

Kiara van Hout is a final year Law student at St John’s College, University of Cambridge. Her research interests include international human rights law and international dispute settlement.

This article is published under a Creative Commons Licence and may be republished with attribution.