The UK has today published its negotiating objectives for free trade agreements (FTAs) with Australia and New Zealand, with talks for each agreement beginning shortly.
The UK, Australia and New Zealand are already important economic partners. UK businesses traded a significant £21bn worth of goods and services in total with both countries last year.
Drinks companies, the automotive industry and professional services firms are among those expected to benefit from removing barriers to trade with Australia and New Zealand.
Government analysis published today shows that the value of UK exports to the two countries could increase by around £1bn as a result of the deals. Expanding free and open trade in this way is essential to helping businesses and the whole of the UK overcome the economic challenge of Coronavirus.
Trade agreements with Australia and New Zealand will help boost our economic recovery by opening up new markets for businesses, creating jobs and supporting a range of industries across the UK. In the long term, UK workers’ wages could increase by £400m and £200m respectively, while consumers are expected to benefit from a greater choice of goods and lower prices.
Opportunities for UK businesses include additional access for UK services and investment, the removal of tariffs and other barriers to trade, and the chance to shape the future of digital trade.
Both agreements will include chapters on digital trade to maximise opportunities for businesses to trade digitally. They will also include dedicated SME chapters to help more small businesses to sell their goods and services to Australia and New Zealand for the first time.
These talks are also a logical step towards membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), one of the world’s largest free trade areas accounting for 13% of global GDP in 2018.
The Government has today reaffirmed its interest in joining the group and is stepping up engagement with its members. UK membership would increase and diversify the UK’s £110 billion trade relationship with its members and create opportunities in the world’s most dynamic economies. Both Australia and New Zealand support the UK joining CPTPP, and trade agreements with them could facilitate the UK’s accession.
International Trade Secretary Liz Truss said: “Our new-found status as an independent trading nation will enable us to strengthen ties with countries around the world. Ambitious, wide-ranging free trade agreements with old friends like Australia and New Zealand are a powerful way for us to do that and make good on the promise of Brexit.
“Pivoting towards the Asia-Pacific will diversify our trade, increase the resilience of our supply chains and ensure the UK is less vulnerable to political and economic shocks in certain parts of the world.”
Stephen Phipson, CEO of Make UK, commenting on the start of trade negotiations with New Zealand and Australia, said: “New trade opportunities and an emphasis on digital trade to boost business as we come out of the current COVID crisis will be welcomed by British industry.
“The emphasis on helping the UK’s smaller businesses access the opportunities of international trade particularly in liberalising access for UK manufacturing services will be good news for some of our most innovative companies, which sometimes struggle to navigate the intricacies of breaking into new markets.
“Business looks forward to being directly and closely involved in the ongoing programme of trade negotiations to ensure the best possible outcomes.”
Federation of Small Businesses (FSB) National Chair Mike Cherry said: “The UK is embarking on an ambitious new era of independent trade and these new deals are critical to the success of small businesses as well as the wider economy.
“Of the small businesses that export, 38% already do so with Australia while 30% are trading with New Zealand, which highlights the potential to build on these existing strong trading links via trade deals with both countries. A comprehensive small business chapter is equally important to ensure that the needs of SMEs are fully catered for in the years to come.
“Both nations are in the top 10 most important destination export markets for small firms over the next three years, making these deals vitally important.
“The UK already has a common connection with these nations as members of the Commonwealth and that is why businesses are looking forward to engaging with these trade negotiations in the weeks and months to come.”