Why a post-Brexit trade deal could be good news for Australia

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Trade Minister Steve Ciobo in London to lobby for post-Brexit FTA with the UK. (Image via http://www.abc.net.au/news/abcnews24/)

A post-Brexit trade deal could be good news for Australia. Here's why, argues Roman Winter.

FOLLOWING MONTHS of uncertainty and news reports predicting everything from the fall of Europe and discussions of trade deals that might never get off the ground, Australia’s High Commissioner in London has finally offered some concrete news.

In an opinion piece for The Daily Telegraph on 17 December, 2016, High Commissioner Alexander Downer outlined his plans for striking a free-trade agreement between the UK and Australia.

But my head said that Britain’s departure from the EU would damage the EU: it would blow a hole in the EU’s budget and the EU would lose a member with substantial strategic reach and awesome soft power. And that would not be in Australia’s interests, which are best served by a strong UK and a strong EU.  

Nevertheless, once decisions are made, it is better to look to the future. So for our part, we are encouraging the UK and the EU quickly to establish a new, mutually beneficial relationship that sustains the economies and global influence of both. We are also keen to strike a free-trade agreement with the UK.

And talks are already underway, despite previous reports that nothing could be done until the Brexit process was made clearer by the UK government.

In the same piece, he outlined his belief that leaving the EU would not be in Australia’s interest, outlining a scenario where the UK’s departure from the European Union would create a hole in the budget and deprive it of a member with "substantial strategic reach and awesome soft power". Despite this warning, Downer was optimistic that a trade deal could be reached between Australia and the UK.

And where there’s trade there’s the possibility of free movement. Depending on where you stand, this could be seen as good news or bad news for Australia. With proposed changes to the Australian working visa, many are predicting the Brexit crunch will make Australia the far more attractive option for Brits, rather than the other way round. For Australian’s hoping to head to the UK, they’ll face a shrinking economy, rising prices and a shortage of jobs.

According to Steven Ciobo, the Australia's minister for trade, tourism and investment:

"More than half of Britain’s 18 to 25-year-olds saying they would consider a temporary move abroad to travel or work post-Brexit and Australia their most preferred place to do that outside of Europe."

Whether this would translate to easier access to UK visas, including Tier 1 visas for entrepreneurs, Tier 4 visas for students, and an accelerated path to indefinite leave to remain for Australian citizens living in the UK remains to be seen.

In 1970, when the UK was beginning talks to join the European Economic Area, Alexander Downer’s father, Alick Downer, was the Australian High Commissioner. During this time, he argued with the British Government against joining the EEC because of the damage it would do to trade between Australia and the UK. It may have taken a generation, but it seems that this series of events could go full circle within with Downer family.

Not only is the potential news beneficial to Australia from a financial point of view, but it’s also a welcoming deal from a political aspect too. Looking at the numbers, the UK is Australia’s eighth biggest export market. In 2015, it delivered the economy $8.8 billion. (Granted that’s only 3% of the overall exports and Australia actually imported $14.4 billion worth of goods from Britain in that year.)

Whilst these figures do contribute to the economy, this move is more of a win for PM Turnbull. After not getting off to the best start in office, Turnbull is under pressure. With the sharks circling, he needs some clear and quick wins in the now complicated new Parliament if he is to remain in office.

As a result, a post-Brexit trade deal could be that win for him. As history has shown, our country welcomes trade deals and when they’re free they’re even more attractive. During John Howard’s time, he would often voice how free trade deals were the cornerstone to the nation's prosperity.

With that in mind, Australia needs to look at who their biggest trader currently is: China. The free trade agreement that is currently in place is slowly being questioned now that Trump is about to take office and will likely not be ratified by the United States. This has left a lot of uncertainty across the globe and the Trans-Pacific Partnership is more than likely dead in the water now — which, once again, won’t be great news to Turnbull’s ears.

Therefore, simply put, Australia could use a reliable trading partner. Whether it will come quickly enough for Turnbull that remains to be seen but, as you have read above, the trade deal would be welcomed on all fronts … it’s just a case of whether a deal can finally be made after months of Brexit uncertainty.

You can follow Roman Winter on Twitter @RomanWinter5.

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Why a post-Brexit trade deal could be good news for Australia

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